Latest Company Law Compliance for a Director to Know

Whether a person is a director in one or more company or simply holds a DIN, he is suppose to be aware of the newest compliances shared below which put the onus of compliance in association with the director or the company on his shoulders in a direct or indirect manner. Therefore, as the director, he needs to keep in mind the compliances stated below to stay safe from any complications later on.

Compliances Every Director Should Know

Here is the list of compliances a director has to be aware of:

1. DIR- 3KYC

  • Directors holding DIN as on March 31st, 2018 were needed to file the DIR- 3KYC form.
  • As per MCA, all the DIN holders are required to annually file DIR- 3KYC.
  • Presently, the DIR- 3KYC forms available on the portal do not cater to DINs.
  • You will be able to download revised forms shortly from the portal.
  • This form will be required to fill by all the DIN holders within duration of 30 days of deployment.
  • All the DIN holders will need to file KYC form.
  • All the DIN holders who fall under “Deactivated due to non-filing of DIR- 3 KYC” will also need to get their DINs activated.

2. ACTIVE e-form INC-22A

  • The date to file INC-22A was April 25th, 2019 earlier but later it was extended to June 15th, 2019.
  • All the companies which have been incorporated on or before December 31st, 2017 will need to fill INC-22A.
  • For companies who fail to fill ACTIVE or Form 22A before the extended date then that company will be marked ACTIVE non-complaint.
  • In this situation, company will not be able to bring about any changes such as Changes in authorized capital (Form SH-07); Amalgamation or Merger (INC-28); Changes in paid-up capital (Form PAS-03), Changes in Registered Office (Form INC-22), Changes in Director (Form DIR-12) (cessation would be allowed).

3. MSME Form

  • All those companies which are getting supplies from MSMEs in form of goods or services are suppose to report and file MSME form -1.
  • This form is required to be filled in case of the payment for procurement has exceeded duration of 45 days counting from the date of receiving the supplies.
  • This form was made available on the portal from May 1st, 2019 and the late date to fill this form will be May 31st, 2019.
  • In case of failure to fill the form, a fine of up to Rs. 25,000 will be required to pay by the company.
  • Directors may also have to face an imprisonment of 6 months and fine ranging from Rs. 25,000 to 3,00,000.
  • To avoid such a situation, companies must clearly state the status of their creditors and also report balances in MSME forms.

These are the three forms which every director should be aware of in order to avoid attracting any penalties.

 

8 common reasons for getting income-tax notices and how to avoid them

The usual reaction on receiving Income Tax Notices is of tension and stress because that is the last thing we would want to receive. As a matter of fact, we must not get panicked about the situation until and unless we have gone through the notice and understood its purpose. Always remember there are various other small reasons because of which you can receive Indian Income Tax Notices from IT Department.

In this post, we have covered all possible reasons for receiving an Income Tax Notice. But despite what the reasons are, always remember that you must never ignore income tax notices and respond to them as quickly as possible to avoid inviting any trouble or penalty.

Reasons For Receiving Income Tax Notices and How To Avoid Them

Here are some common reasons because of which you can end up receiving an income tax notice:

Error in TDS Value

Reason:

  • Mismatch in TDS in IT return due to delayed return filing by your employer or filing of incorrect returns.

Solution:

  • Ask your employer to review the TDS amount that has been credited to you.
  • Always match the TDS amount with that of your employer before filing for your return to avoid any hassles later on.

Reminder for Filing Tax Returns

Reason:

  • I-T department every year send notices to all those who have not filed the income tax returns.
  • These reminders can be for up to six previous years.
  • There can also be a penalty of up to Rs. 5,000.

Solution:

  • Respond to the notice by filing your return immediately.
  • Always make sure that you file your return on yearly basis to avoid such situations.

Reporting High Value Transactions

Reason:

  • If you have failed to report any kind of high value transaction.
  • This includes credit card purchase beyond Rs. 2 lakhs, cash deposit in bank beyond Rs. 10 lakh, sale or purchase of real estate beyond Rs. 30 lakhs or mutual fund investment beyond Rs. 2 lakh.

Solution:

  • Always report such transactions to the I-T department to avoid getting notices.

Discrepancy in Return

Reason:

  • If there is a problem in your return then you will get served with a notice.
  • In case you have forgotten to declare any of your income or you have provided incomplete information then you may get a notice.

Solution:

  • In such a case, submit information related with the discrepancy mentioned in the notice.
  • Always ensure that you have made all the income declarations.
  • Ensure that you have claimed deductions under right sections.
  • Information that you are providing is complete and correct.

Non-Disclosure of Income From Interest

Reason:

  • If you have failed to pay tax on income received from your saving bank accounts, fixed deposits or recurring bank accounts, you will certainly get a notice.
  • Deductions of up to Rs. 10,000 on interest on saving account are allowed.
  • Interest on FD and recurring accounts are completely taxable if the income from interest is beyond Rs.10,000.

Solution:

  • Always remember to include income from interest from bank accounts as well.

Scrutiny at Random

Reason:

  • The I-T Department randomly scrutinizes returns in order to enforce tax compliance.

Solution:

  • Respond to the notice after checking its validity in the allotted time period.

Documentation Review

Reason:

  • Sometimes the department may ask you to review some documents using which you have filed your I-T returns to have some clarity.

Solution:

  • You must quickly submit the required documents which have been asked for.

Investments Made in Family Members’ Names

Reason:

  • In case you have made any investments in the name of your family members in order to evade taxes then any income from these investments is going to be taxable.

Solution:

  • On receiving a notice, you must declare that income and have the error rectified by paying the tax you are liable to pay.
  • Also make sure that you declare all such kind of incomes when you are filing the return to avoid any notices in future.

These are the probable reasons which can lead be the reason for you receiving an Income Tax notice.

 

FAQ on E commerce under GST

In last couple of years, e-commerce has become the latest business trend not only across the world but also in India. Ecommerce platform helps sell all kinds of products and services digitally. That’s the reason the numbers in suppliers is increasing and so are GST FAQs in relation with GST application on selling of different goods and services across e-commerce websites.

In this post we have come up with GST Frequently Asked Questions which bother e-commerce suppliers. Read these latest FAQs on GST which provide clarity to an e commerce operator under GST. Read these GST FAQ 2019 to clear all your doubts.

Question 1. Who is an e-commerce operator?

Answer. A person who owns, manages or operates any digital or electronic platform in order to sell the products and services online will be termed as e-commerce operator. Some popular examples of e-commerce operators are Flipkart, Amazon, Myntra etc.

Question 2: GST Registration for e-commerce operators- is it mandatory or not?

Answer. GST registration is mandatory for every e-commerce operator irrespective of the turnover. This means that every e-commerce operator has to be GST registered no matter what is their supply because at present, there are no threshold exemptions available to them.

Question 3: Will a person who is supplying products or services over an e-commerce platform be entitled for threshold exemption?

Answer. NO. Irrespective of the supply value made by an ecommerce operator, he will not be entitled for any kind of threshold exemption. This means that all the e-commerce operators, whether big or small, will have to be registered under GST irrespective of the turnovers they have.

Question 4: Instead of supplier, will the liability of paying tax in relation with supply of goods or services made by ecommerce operator will lie on him?

Answer. YES. But ecommerce operator will be liable to pay tax only in cases which involve application of reverse charge mechanism. Under such cases, the liability of paying tax is on ecommerce operator if products or services are supplied through his ecommerce platform and all the provisions mentioned in the Act also apply to him because he is the supplier of the services and therefore, he is liable to pay the related tax.

Question 5: Return of goods is a very common practice with ecommerce customers. In such scenario, how are adjustments to return goods are made?

Answer. Tax is collected on the net value of taxable supplies that have been made. This means that the tax is calculated on aggregated supplies which are derived after deducting returns from supplies.

Question 6: What do we mean by Net Value of Taxable Supplies?

Answer. Net Value of Taxable Supplies is the aggregate value of supplies made during a month by the ecommerce operator.

Net Value of Taxable Supplies = Aggregate Value of Taxable Supplies of Goods/ Services for a month – Aggregate Value of Taxable Supplies Returned During a month.

Question 7: On behalf of actual supplier, is each e-commerce operator is suppose to collect tax?

Answer. YES. Each and every e-commerce operator has to make tax collections on behalf of the actual supplier.

Question 8. When are these tax collection required to be made by an e-commerce operator?

Answer. When a reasonable amount is collected from recipient, tax collection has to be made during a month.

Question 9. What is TCS or Tax Collection Source?

Answer. TCS is defined as the tax amount collected by e-commerce operator at one percent rate of net value of taxable supplies that have been made through the platform.

Question 10. What is the duration of time in which TCS is suppose to be remitted to Government by e-commerce operator?

Answer. After the end of the month during which the amount was collected, within a duration of 10 days it has to be remitted.

 

Can a Foreigner be a Director of the Indian Company

Company being an artificial person has to be run, managed and controlled by a real person. These officials who manage a company are called directors and are the head of the company. They are the ones responsible for all the managerial and other official affairs in the company.

In this post, our special focus will be one can an NRI be a Managing Director of an Indian company or can a foreigner be a director of an Indian company.

NRIs and directorship in Indian firms

In India, as per law, a foreign national can become a director in an Indian company whether it is a public or private company provided at least one of the directors in the company is on Indian nationality. Share below are the laws in relationship with Foreign Nationals Director in Indian Company.

Criteria to Become a Director Under Companies Act, 2013

  • Director has to be a major, i.e. above 18 years and has to be a natural person.
  • There is no restriction on becoming a director of an Indian company because of nationality.
  • An NRI or foreign director is eligible to become an executive or non-executive director.

Steps to Follow for Foreign National to Become a Director

We have come up with essential steps for becoming a foreign national to become a director in Indian company:

Director Identification Number

  • Before being appointed as a director, it is mandatory for the foreign national to have a Director Identification Number (DIN).
  • This is allotted by Central Government against the application of allotment of DIN filled by person who intends to become a director under Sec 153.
  • Electronic Form DIR- has to filled and submitted along with fees of Rs.500.
  • Form DIR-3 can be downloaded online and has to be submitted electronically along with a photograph, proof of identity and residence, Form DIR-4, duly verified digital signature.
  • Details of valid passport have also to be submitted in Form DIR-3. The certified copy of the same is also to be attached with DIN application.
  • Digital verification of Form DIR-3 can be done by a practicing CA or CS or Cost Accountant. It can also be verified by CS of the company or MD or director of the company for which applicant is applying for directorship.
  • Once DIN application is submitted online, provisional DIN gets generated automatically.
  • Person is not allowed to use provisional DIN until approved and confirmed by Central Government.
  • The Central Government issues DIN within one month from issuing the receipt of application.
  • In case Central Government finds any defect then the same is communicated using email or putting it on website asking to rectify the errors within 15 days.
  • In case the person doesn’t rectify the defects within 15 days, the application becomes invalid along with provisional DIN.

Foreign National as Independent Director

  • Foreign national must possess experience and knowledge in more than one fields of management, sales, finance, marketing administration, technical operations etc. which are related to the governance of the company.

Foreign National as Managing Director

  • He should be a resident of India. He should be staying in India at a stretch for at least 12 months immediately after date of appointment.
  • He should be between 21 to 70 years of age.
  • He should not have convicted any offence for duration of over 6 months.
  • In case the above mentioned criterion is not fulfilled then approval from Central Government is needed.
 

Format of letterhead as per companies act 2013

A letterhead is a significant document for a company. Not only it shares details about your company but also represents your business. Though there is no particular legal format of a letterhead but there are legal provisions for letterhead. As per format of letterhead as per Companies Act 2013, here are some of the things which must be included:

  • Company’s Name
  • Company’s registered address
  • Telephone number
  • Email Id
  • Company’s website
  • Corporate Identification Number
  • Fax number

These are the letterhead legal requirements in India. Private Limited Company letterhead in India have to include these heads to create a perfect letterhead for their organization.

Check this : How to write a Letterhead Format

Download the Indian company letterhead sample to create your own. Follow the letterhead format word and PDF to create an impressive letterhead in sync with the legal requirements.