What is MSME Registration in India?

MSME is termed as Micro, Small and Medium Enterprise and also include any other category of business which falls under. MSME enterprises are becoming a prime factor for developing countries to grow and helps to improve economic stability, promoting equitable development for all.  The government of India is also supporting such enterprises by providing various aid such as subsidies, schemes, and incentives to promote MSME. For availing such benefit from Central or State government, the enterprise needs to get registered under MSMED Act. Micro, Small and Medium enterprise whether a manufacturing or service sector needs to get registered under MSMED Act. Registration under MSMED is not compulsory, but to avail benefits for business, one should register it.

Definitions of Enterprises engaged in providing services:

·      Micro Enterprise: An enterprise where the investment does not exceed Rs. 10 Lakhs.

·      Small Enterprise: An enterprise where the investment is more than Rs.10 Lakhs but does not exceed Rs. 2 Crores.

·      Medium Enterprise: An enterprise where the investment is more than Rs. 2 Crores but does not exceed Rs. 5 Crores

Definitions of Enterprises engaged in providing Manufacturing:

·      Micro Enterprise: An enterprise where the investment does not exceed Rs. 25 Lakhs.

·      Small Enterprise: An enterprise where the investment is more than Rs. 25Lakhs but does not exceed Rs. 5 Crores.

·      Medium Enterprise: An enterprise where the investment is more than Rs. 5 Crores but does not exceed Rs. 10 Crores

However, as per the Press Release of 07the February, 2018, Section 7 of the Micro, Small and Medium Enterprises Development (MSMED)  Act, 2006 will accordingly be amended to define units producing goods and rendering services in terms of annual turnover are as follows:

·     A micro enterprise will be defined as a unit where the annual turnover does not exceed 5 crore rupees;

·     A small enterprise will be defined as a unit where the annual turnover is more than 5 crore rupees but does not exceed Rs 75 crore;

·     A medium enterprise will be defined as a unit where the annual turnover is more than 75 crore rupees but does not exceed Rs 250 crore.

·     Additionally, the Central Government may, by notification, vary turnover limits, which shall not exceed thrice the limits specified in Section 7 of the MSMED Act.

Presently the MSMED classifies the Micro, Small and Medium Enterprises (MSMEs) on the basis of investment in plant and machinery for manufacturing units, and investment in equipment for service enterprises.

Who can apply for MSME Registration?

·     Proprietorship firms,

·     partnership firms,

·     LLPs,

·     Private Limited Company’s, and

·     Public Limited Companies

When to apply for Registration?

MSME Registration can be done after the commencement of business. The date can be a past date but not a future date.

Benefits under MSME Registration?

·     Easy sanction of bank loans,

·     Lower rates of interest,

·     Excise exemption scheme

·     The exemption under Direct Tax Laws,

·     Development of specialized industrial estates,

·     Tax subsidies,

·     Power tariff subsidies and,

·     Capital investment subsidies,

MSME Registration Process:

Registration Process is divided into two parts namely Pre-operative and post-operative.

Registration before setup of unit: Depending upon the legal entity of the business whether a sole proprietor or a company, needs to submit PAN, Aadhar, Register office proof, MOA and AOA in case of company and other documents demanded by the authority. The Registration Certificate of MSME is issued for a maximum period of two years from its date of issue. The certificate is valid until the commencement of the production or for a period of two years from the date of issue, whichever is earlier.

Registration after the commencement of production: Once the entity is registered under MSME, the business gets various privileges during its post-operation period. The certificate is not mandatory and it can be applied once the production process starts.

Conclusion

The Development of Micro, Small and Medium Enterprise involves various acts and rules, among which MSMED Act is one of them. After the implementation of the Act, there have been many changes for the benefit of Micro, Small and Medium Enterprise in India. It is not compulsory to register under MSMED for every entity, however, it is beneficially to get it registered.

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Things to know about the Tax Audit

Audit is all about review. Tax audit involves the process of reviewing or examining of the books of accounts of a business entity to confirm the income tax computations, deductions and other such financial calculations have been done in compliance with Income Tax laws of the country.  Tax audit enables easy income tax computation as well as Income Tax Return filing easy. The Tax Audit limit is regulated by Section 44D of the Income Tax Act.  Person carrying business or in a profession have to be get their books of accounts audited compulsorily under Section 44AB pertaining to certain tax audit applicability.

The tax audit applicability categories the following persons who have to undergo the audit process on a mandatory basis:-

1.      Persons carrying on business with a turnover or aggregate sales exceeding 1 crore, but have not opted for Presumptive Taxation Scheme.

2.      Persons carrying out business with total or aggregate sales or turnover exceeding 2 crore and have opted for the Presumptive Taxation scheme

3.      Professionals whose gross receipts exceed Rs. 50 lakh annually

The presumptive taxation scheme under Section 44AD mentions that tax audit is not required for persons who are enrolled for the scheme and have a turnover of less than INR 2 crore annually.

Purpose of Tax Audit

·         The tax audit process ensures that the books of accounts have been maintained correctly and as per Income Tax provisions.

·         Tax audit brings out discrepancies as pointed out by the tax auditor after a thorough examination of the books.

·         Since the tax audit report follows a prescribed format, it saves time of tax authorities in checking out minute details and correctness of the information as filed in ITR.

Tax Audit Report Format

The audit report is required to be furnished either through –

1.      Form 3CA – this report is applicable for persons carrying out business or profession who need to get their books of accounts mandatorily audited as per the Act.

2.      Form 3CB – this form is required to be furnished by persons carrying out business or profession for whom it is not compulsory to get their books audited under the Act.

3.      Form 3CE – is applicable for Non-residents and foreign companies that receive any form of payment or fees for technical services or royalty from the Government of India.

Tax audit applicability has a legal validation only if submitted by a Chartered Accountant or a firm of Chartered Accountants or a Statutory Auditor. The tax audit report needs to be signed by the accountant or the auditor who has performed the audit.

For e-filing the online tax audit form, the report needs to be signed by the accountant or the auditor as well as his membership number needs to be mentioned alongside. The audit report first needs to be submitted to the concerned person or taxpayer digitally to get his approval before the online tax audit is filed electronically.

There is a tax audit limit for Chartered Accountants too. They cannot undertake more than 60 tax audits in a year.

The penalty for not getting the books of accounts audited for persons who are compulsorily required to get the audit done is 0.5% of the turnover or gross receipts, with a maximum limit of Rs. 1.5 lakh. The penalty is levied under Section 271B of the IT Act. However, the person is given a chance to give reasons for non-compliance, and if found acceptable, no penalty is imposed.

The audit report needs to be obtained before or by 30^th September of the said assessment year. Only the 3CE report has a due date of 30^th November of the said assessment year.  More info visit http://enterslice.over-blog.com/2018/10/things-to-know-about-the-tax-audit.html

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3 ways of NGO Registration in India

To setup an NGO in India, you must have genuine desire to help others. For NGO registration in India, you have to pass through a legal process and start making contacts with minded people of society. To run an NGO, funds must be arranged and proper plans must be there by preparing budget proposals.

NGO is not for profit therefore there should be enough transparency in its dealings. Without expecting any profit, functions of the NGO are carried out for the welfare of the society. You must have a strong vision and dedication to serve the society. NGO (Non-Government Organization) is a type of organization which works for the charitable purpose and not for profit.

There are mainly 3 ways of NGO registration in India:

a.       Trust Registration as per Indian Trust Act, 1882

b.      Society Registration as per Society Registration Act, 1860

c.       Section 8 Company Registration as per Companies Act, 2013

Now let’s discuss about the NGO registration under the above mentioned three heads.

v  Trust Registration in India

In India, NGO registration can be done under various acts. To setup an NGO by trust registration there is a requirement of minimum two persons, however there is no prescribed limit for maximum members in trust registration. In Maharashtra, trust registration is done as per Maharashtra Public Trust Act. In trust registration, trust deed is the main component as it describes the powers assigned to the members.

v  Society Registration in India

Society registration is done as per the Society Registration Act and there is a requirement of minimum seven members. At the time of society registration you must make sure that proposed name have never been used before in the same office you are applying for society registration. Under this, by laws are a very important component and it must be as per the legal format.

v  Section 8 Company Registration

Section 8 Company registration is done in order to promote non-profit activities such as activities concerned with trade, commerce, art, religion, education, environment protection, social welfare, sports and research, etc. The income generated from the operations of the company is applied towards the promotion of the object of the company and it cannot be distributed as dividend among the members of the company. If you want to incorporate section 8 company as a private limited company then there is a requirement of minimum two directors and members however maximum 200 members can be appointed. Whereas if you want to incorporate a company as a public limited company then there is a requirement of minimum 3 directors and there is no limit for maximum members. In case of section 8 company registration, there is no requirement of minimum paid up share capital.

Forms required to be filed for Section 8 Company Registration in India

Forms	Description
RUN(Reserve Unique Name)	Name approval form
SPICE (Simplified Proforma for Incorporating Company Electronically)	Incorporation Application
INC-9	Affidavit from each subscriber
DIR-2	Consent to act as directors from all the proposed directors
INC-12	Application for license
INC-13	Memorandum of Association
INC 14	Declaration from professionals
INC 15	Declaration from the each person making application for Section 8 Company Registration
INC-16	Section 8 Company license

Note: Now there is no need to file separate application for obtaining DIN, it can be directly applied through SPICE form.

Step by Step procedure for Section 8 Company Registration

Step 1: Initially, proposed directors of the section 8 company have to obtain DSC (Digital Signature Certificate) from the certifying authority.

Step:2 After obtaining DSC for all the proposed directors of the company, RUN form is filed with the ROC (Registrar of Companies) for name approval along with the prescribed fee of Rs. 1000/-. In RUN form maximum two names can be mentioned out of which one will be allotted by the ROC on the basis of the availability of the name.

Step: 3 After name approval, form INC 12 is filed with the ROC in order to obtain section 8 company license along with the necessary below mentioned attachments:

a.       MOA in form INC 13

b.      AOA of the Company

c.       Declaration by professional in form INC 14

d.      Declaration by each person making application in form INC 15

e.       Estimated Income & Expenditure for the period of next 3 years

Note: It must be ensured that subscription page of the Memorandum and Articles of Association of the company shall be signed by each subscriber along with their details such as name, address, and occupation, in the presence of at least one witness who shall attest the same.

Step: 4 After verification of the above mentioned documents, ROC will issue the license in form INC 16 to section 8 company.

Step: 5 Once the license is obtained, incorporation application in SPICE form will be filed with the prescribed fees along with the necessary below mentioned attachments:

a.       An affidavit from all the subscribers in form INC 9

b.      KYC documents of all the directors

c.       Consent of all the directors in form DIR 2 along with the interest in other entities

d.      Proof of registered office premises

e.       Rent agreement and NOC in case of rented property

Step: 6 After verification of the incorporation application, Certificate of Incorporation will be issued along with the Company Identification Number (CIN).

Note: There is no need to file DIN application separately as DIN (Director Identification Number) can be applied directly through SPICE form.

For more information, you may contact us.

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What is the impact of GST on e-commerce?

The e-commerce businesses are wide spread across the globe and are clearly overpowering the physical retail businesses with the digital distribution. But it has always been the goal to capitalize their e-commerce industry and apparently is quite successful in that.

When we talk about the e-commerce industry, what really comes to our mind is the global audience. An audience which is in control and getting their goods and services delivered to them conveniently at their doorstep. The keen e-commerce industryhas been observant of the consumer activity, tracking their behaviours via cookies on the websites to induce more relevant search results and attracting their attention. On top of that, they launch several schemes and discounts in order to continue with their expansion of horizon. Many smartphone users and digital device users not just with the speedy Wi-Fi connections but also through the 4G technology have boosted their operation which in turn boost the e-commerce industries via minimizing the gaps between the known popular brands and the mass population in demographics. The targeted population here is of the most active class of people, the youth. This goes on with reaching the semi-urban areas, where the physical outlets of the big brands are less and commerce shopping comes handy in these regions then. But the question here arise, is how the newly implemented GST law has affected or impacted the e-commerce empire?

What are the operators of E-commerce Under the GST Law?

Before the introduction of the GST law, there were separate taxes like VAT and CST etc which were to be paid by the sellers themselves to their respective state orcentral government. The e-commerce collects tax at the rate of just 1% it breaks as (0.5% of central GST + 0.5% of state GST), this is the net value of all the supplies that are taxable and the amount of tax collected from is called the TCS which is a short abbreviation of tax collecting at source. This TCS is applied over the collection of 1 month that is to be paid to the government.  The amount of TCS can be seen under the GST registered supplier’s GSTR-2 on whose behalf the TCS is collected.

All of the e-commerce operating sellers are supposed to submit a statement online with regard to the details of all the products that are sold by the respective sellers to the GST registration portal and the TCS via the form number GSTR-8. These submitted details by the respective sellers will be verified or matched with the seller’s furnished details in their form. In case both of the details are not matching, the seller and the e-commerce sales operating seller and the supplier are sent a notice mentioning the fact and to correct it.

The impact of GST on e-commerce industry sellers in the marketplace

-          GST implementation has increased the scope for the sellers by eliminating the  cascading effect of multiple taxes.

-          Because the GST taxation rates are same across the nation, the sellers no longer have to deal with the different taxes of the different states providing them with some degree of ease.

-          The sales that are executed on the inter-state level have now become a lot easier because the sellers no longer have to keep and maintain warehouses reducing their rental payments over inventories which in turn reduce the product prices.

-          The not so convenient impact of GST on e-commerce involves the matching of submitted forms by the suppliers and the sellers. If these don’t match though, both the parties get notices regarding the mismatch increasing the complexity of their business.

-          The sellers participating in the business through e-commerce are not eligible for the composition scheme.

-          These e-commerce sellers are supposed to be mandatorily having a GST registration and this shall be irrespective of their annual turnover.

-          No separate GST registrations are required for its sales in multiple states via e-commerce operators.

If you want to know more about the GST Registration and its impact on the e-commerce then you may anytime contact Enterslice where we are 24/7 hr available to help you with perfect solutions whenever you need to get in touch with us.

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