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Statutory compliances for companies in India


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Statutory compliances for companies in India

  1. 1. By Anand Prakash Jangid ACA,DISA,CISA,CISM,ACP
  2. 2. <ul><li>Introduction </li></ul><ul><li>Why legal entities </li></ul><ul><li>Different Legal entities </li></ul><ul><li>Process of setting a company </li></ul><ul><li>Statuary compliances </li></ul><ul><li>Budgeting and Accounting </li></ul><ul><li>Treasury Management </li></ul><ul><li>Payroll </li></ul><ul><li>Discussion </li></ul>
  3. 3. <ul><li>Now what….. </li></ul><ul><li>Understanding your business need </li></ul><ul><li>Legal aspects </li></ul>
  4. 4. <ul><li>common type of business entity </li></ul><ul><li>sole owner who funds and operates the business </li></ul><ul><li>simplest form of business entities </li></ul><ul><li>no requirement of having your accounts audited and filing </li></ul><ul><li>no legal distinction between you and your business </li></ul>
  5. 5. <ul><li>Very easy to setup and start your business </li></ul><ul><li>Relatively formality free. So, less time spent upfront in legal procedures </li></ul><ul><li>No public disclosure of your finances required </li></ul><ul><li>You keep all the profits - no sharing of profits with others — since there arent any shareholders </li></ul>
  6. 6. <ul><li>Personal liability. If you go bankrupt, creditors get the right to your possessions - house, property etc. </li></ul><ul><li>Very difficult to get investment from VC’s, angels etc. </li></ul>
  7. 7. <ul><li>Partner with other individuals to own and run the business </li></ul><ul><li>Collection of sole proprietors </li></ul><ul><li>Access to a bigger pool of capital, skills and other resources to fund and run your business </li></ul><ul><li>All partners contribute capital, share profits and losses and have a say in business decisions. </li></ul>
  8. 8. <ul><li>Access to larger pool of resources and capital </li></ul><ul><li>You do not have the confidence to start the business on your own and need some one to shoulder the responsibility </li></ul><ul><li>Access to complementary skills. For example, if you are a geek, you may partner with someone with a marketing/management background to balance out the odds </li></ul>
  9. 9. <ul><li>Partner business mistakes, you are equally liable to bear the consequences </li></ul><ul><li>Partner goes bankrupt, his share in the business can be seized by his creditors. </li></ul>
  10. 10. <ul><li>Most common and preferred type while starting a company </li></ul><ul><li>A separate legal entity from its founders, shareholders and mangers </li></ul><ul><li>Liability of the shareholders is limited to the paid-unpaid capital that is issued as part of the company. </li></ul><ul><li>Needs to keep record of accounts, audit their records and file an annual report on return with the registrar of companies </li></ul>
  11. 11. <ul><li>Founders financial liabilities are limited </li></ul><ul><li>Proper structuring of the company management a- for example, who will be the managing director etc. </li></ul><ul><li>Easy to get funding from VC’s and other sources - by selling a stake (shares) in the company </li></ul><ul><li>Additional members / directors can be added to the company structure </li></ul><ul><li>Selling the company is a relatively easy (legally) because of the legal incorporation records, financial records, annual returns etc. have already been filed. </li></ul>
  13. 13. <ul><li>STAGES OF INCORPORATION </li></ul><ul><li>STAGE 2 </li></ul><ul><ul><ul><li>E – Stamping </li></ul></ul></ul><ul><ul><ul><li>MOA & AOA </li></ul></ul></ul><ul><ul><ul><li> Form32 ( Directors ) </li></ul></ul></ul><ul><ul><li> Form 18 ( Address ) </li></ul></ul><ul><li> Form1 </li></ul><ul><li> ( Subscribers , MOA, AOA ) </li></ul>
  14. 14. <ul><li>STAGES OF INCORPORATION </li></ul><ul><li>STAGE 3 </li></ul><ul><ul><ul><li> E – Filing </li></ul></ul></ul><ul><ul><ul><li> Submission of Physical Docs </li></ul></ul></ul><ul><ul><ul><li> Certificate of Incorporation </li></ul></ul></ul>
  15. 15. POST Incorporation > <ul><li>Central Registrations </li></ul><ul><li>PAN </li></ul><ul><li>TAN </li></ul><ul><li>Service Tax </li></ul><ul><li>IEC </li></ul><ul><li>PF </li></ul><ul><li>ESI </li></ul><ul><ul><ul><li>State Registrations </li></ul></ul></ul><ul><ul><ul><li>VAT </li></ul></ul></ul><ul><ul><ul><li>Professional Tax </li></ul></ul></ul><ul><ul><ul><li>Shops & </li></ul></ul></ul><ul><ul><ul><li>Commercial </li></ul></ul></ul><ul><ul><ul><li>Establishment Act </li></ul></ul></ul>
  16. 17. <ul><li>Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department. </li></ul><ul><li>It is mandatory to quote PAN on return of income, all correspondence with any income tax authority. </li></ul><ul><li>PAN application should be made only on Form 49A . A PAN application (Form 49A) can be downloaded from the website of Income Tax department or UTIISL or NSDL ( , or ). </li></ul>
  17. 18. <ul><li>Documents Required </li></ul><ul><li>Identity Proof for Companies – Registration Certificate, for Partnership - firm Partnership deed Trust deed etc. </li></ul><ul><li>Address proof </li></ul>
  18. 19. <ul><li>TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. It is compulsory to quote TAN in TDS/TCS return (including any e-TDS/TCS return), any TDS/TCS payment challan and TDS/TCS certificates. </li></ul>
  19. 20. <ul><li>It is mandatory for TAN to be quoted in all TDS/TCS returns, all TDS/TCS payment challans and all TDS/TCS certificates to be issued. Failure to apply for TAN attracts a penalty of Rs. 10,000/-. </li></ul>
  20. 21. <ul><li>Form No ST – 1 for registration </li></ul><ul><li>Documents required for registration </li></ul><ul><ul><li>Copy of PAN </li></ul></ul><ul><ul><li>Proof of address. </li></ul></ul><ul><ul><li>Constitutions of applicant ( MOA / Partnership deed etc - copies may be self certified by applicant. </li></ul></ul><ul><li>Registration Fees from RS 500 to RS 5000 depending on assesses. </li></ul><ul><li>Department will issue registration certificate within 7 days in the form No ST - 2 </li></ul>
  21. 22. <ul><li>IEC Code is unique 10 digit code issued by DGFT – Director General of Foreign Trade , Ministry of Commerce, Government of India to Indian Companies. </li></ul><ul><li>Its Required to import or export in India, IEC Code is mandatory. No person or entity shall make any Import or Export without IEC Code Number. </li></ul><ul><li>‘ Aayaat Niryaat Form - ANF2A’ to be apply to the nearest Regional Authority of Directorate General Foreign Trade </li></ul>
  22. 23. <ul><li>Required when Establishment cross 20 employees </li></ul><ul><li>For Registration </li></ul><ul><ul><li>Employer Registration Form </li></ul></ul><ul><ul><li>Xerox copy Pan No. of company </li></ul></ul><ul><ul><li>Address proof ( Electricity or telephone Bill) </li></ul></ul><ul><ul><li>Bank Statement of last 6 months </li></ul></ul><ul><ul><li>List of Board of Director </li></ul></ul><ul><ul><li>Board of resolution of signing authority of documents </li></ul></ul><ul><ul><li>Master Roll ( photocopy) </li></ul></ul><ul><ul><li>MOA( Memorandum of association) of company </li></ul></ul>
  23. 24. <ul><li>Every dealer who is liable to be register need to get register in one month from the first sale. </li></ul><ul><li>Submit an application in Form VAT 1 for registration to the jurisdictional Registering Authority </li></ul><ul><li>Make an application for registration, signed and verified as specified in the application and every person signing and verifying such application shall furnish two copies of his recent photograph in passport size along with the application and shall also furnish such photograph once in every five years. </li></ul>
  24. 26. <ul><li>A budget is a powerful tool you can use to help you take control of your money. </li></ul><ul><li>it helps you understand where your money goes so you can take control. A budget helps you decide what you want and plan how to achieve it. </li></ul>
  25. 27. <ul><li>Successful businesses invest time to create and manage budgets, prepare and review business plans and regularly monitor finance and performance. </li></ul><ul><li>Structured planning can make all the difference to the growth of your business. It will enable you to concentrate resources on improving profits, reducing costs and increasing returns on investment. </li></ul>
  26. 28. <ul><li>If you are planning for your business' future, you will need to fund your plans. Budgeting is the most effective way to control your cash flow, allowing you to invest in new opportunities at the appropriate time. </li></ul>
  27. 29. <ul><li>control your finances </li></ul><ul><li>ensure you can continue to fund your current commitments </li></ul><ul><li>enable you to make confident financial decisions and meet your objectives </li></ul><ul><li>ensure you have enough money for your future projects </li></ul>
  28. 30. <ul><li>Begin by asking these questions: </li></ul><ul><li>What are the projected sales for the budget period? </li></ul><ul><li>What are the direct costs of sales </li></ul><ul><li>What are the fixed costs or overheads? </li></ul>
  29. 32. <ul><li>Basic Salary </li></ul><ul><li>Dearness Allowance </li></ul><ul><li>HRA </li></ul><ul><li>Conveyance Allowance </li></ul><ul><li>Children Education Allowance </li></ul><ul><li>Leave travel allowance </li></ul><ul><li>Medical reimbursement </li></ul><ul><li>Annual bonuses </li></ul><ul><li>Food coupons </li></ul><ul><li>Other reimbursement </li></ul><ul><li>Ex-Gratia / Performance incentive </li></ul>
  30. 33. <ul><li>Creation & Maintenance of Employee database </li></ul><ul><li>Collection of Employee related data </li></ul><ul><li>Computation of Payroll </li></ul><ul><li>Reconciliation of Payroll </li></ul><ul><li>Disbursement of Paycheck </li></ul><ul><li>Reports </li></ul><ul><li>Compliance & MIS </li></ul>
  31. 34. <ul><li>ESI Act </li></ul><ul><li>PF Act </li></ul><ul><li>PT Act </li></ul>
  32. 35. <ul><li>This Presentation is meant for public discussion and informational purposes only and is not to be construed as legal advice. </li></ul>
  33. 36. <ul><li>For Any queries contact: </li></ul><ul><li>Anand : [email_address] </li></ul><ul><li> +91-9845467835 </li></ul>