Company - Definition and explain the types of company as per income tax act 1961
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The document summarizes the key differences between a Memorandum of Association (MOA) and Articles of Association (AOA). The MOA is the root document of a company that contains its basic details and defines its objectives and powers. It must be registered at incorporation. In contrast, the AOA contains the internal rules and regulations of a company and is subordinate to the MOA. It details the relationship between a company and its members.
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Tax planning
This document discusses various tax planning strategies under Indian law. It defines tax planning as legally arranging one's financial affairs to minimize tax liability. Tax planning is legitimate if done within the law, unlike tax evasion which is illegal. The document outlines three common tax practices - planning, avoidance, and evasion. While avoidance is legal but aims to reduce taxes, evasion is illegal. It also discusses the importance of tax planning for expenses, investment, and economic stability. Areas of planning include strategies for individuals, setting up new businesses, and existing companies.
GST I The Framework
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- The origin and development of GST over time from 2006-2016.
- Key aspects of the proposed GST framework such as the types of taxes (CGST, SGST, IGST), the GST council and committees established, registration process, payment methods, and anticipated benefits.
- Details on the registration process including obtaining registration, approval process, surrender and cancellation of registration.
- An explanation of the various payment methods under GST particularly internet banking and over the counter payments.
Set off and carry forward of losses
Losses can be set off against income of the same year or carried forward to future years to offset income. Set off of losses occurs either intra-head, where losses of one source offset income of another source within the same head, or inter-head, where losses offset income across different heads. Strict rules govern which losses can offset which incomes both currently and when carried forward. House property losses can be carried forward 8 years against house property income, while long term capital losses can only offset long term capital gains.
MOA & AOA
The document summarizes the key differences between a Memorandum of Association (MOA) and Articles of Association (AOA). The MOA is the root document of a company that contains its basic details and defines its objectives and powers. It must be registered at incorporation. In contrast, the AOA contains the internal rules and regulations of a company and is subordinate to the MOA. It details the relationship between a company and its members.
FEMA-Foreign Exchange Management Act
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Reliance Infrastructure was asked to pay Rs. 125 crore in compounding fees by RBI for violating FEMA guidelines. It had parked $300 million from a foreign loan in mutual funds in India for 315 days before repatriating the funds overseas.
RBI's order said that under FEMA, borrowers must keep foreign loan funds abroad until actual requirement in India, and cannot use funds for any other purpose. Reliance admitted contravention but said its power project was delayed.
RBI rejected Reliance's arguments, saying it took 315 days to realize funds weren't needed in India, and the company made an additional Rs. 124
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- Under GST, input tax credit is available for goods, services, and capital goods used in the course of business. This is a significant expansion of credit compared to earlier tax systems.
- Credit can be claimed by registered businesses against central GST, state GST, integrated GST, and Union territory tax paid on business purchases.
- Certain documents like tax invoices and bills of entry must be possessed, and payment must be made to the supplier within 180 days, for credit to be claimed.
- There are also time limits, apportionment and reversal
Income from business or profession
The document discusses key aspects of income from business and profession under the Income Tax Act of 1961 in India. It defines business and profession, outlines the basis of charge for income from business/profession, and describes various deductions that are allowed under sections 30-37 of the Act such as rent, repairs, insurance, depreciation, bad debts, and more. It provides explanations and conditions for claiming many of these deductions.
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Residential status
The document discusses the residential status and tax liability of individuals and entities in India. It defines the basic conditions to determine if a person is a resident, ordinary resident, or non-resident based on the number of days spent in India. An ordinary resident's total income and tax liability is the highest, including both Indian and foreign income. A non-resident's total income and tax liability is based only on Indian income. The residential status of entities like HUF, companies, firms, and AOP is also determined based on the control and management of their affairs being within or outside of India.
Foreign portfolio investment
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Foreign Institutional Investor
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Foreign exchange management act (FEMA), 1999
The FEMA (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA)
FEMA came into act on the 1st day of June,2000
49 sections in the Act.
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The document discusses India's balance of payments over the past 10 years. It defines the balance of payments and its key components: current account, capital account, and official reserves account. The current account covers trade in goods and services and investment income. The capital account covers investment flows. The official reserves account covers assets like gold and foreign currencies. Recent trends show India running a current account deficit from 2004-05 onward, with the deficit peaking in 2012-13 at 4.8% of GDP. Measures to address imbalances include export promotion, import restrictions, and managing the exchange rate. Quarterly data from 2014-2016 shows the current account deficit improving but still in deficit.
Foreign Exchange Management Act (FEMA)
The document discusses the Foreign Exchange Management Act (FEMA) of 1999 which replaced the earlier Foreign Exchange Regulation Act (FERA). FEMA aims to facilitate external trade and payments. It is applicable to all of India and branches/offices of Indian residents abroad. FEMA was enacted due to India's liberalized EXIM policy, increased foreign investment, reserves, and WTO commitments. It regulates capital account transactions through the Reserve Bank of India and dealings in foreign exchange.
Role of foreign capital
This document provides an overview of foreign capital in India. It discusses the different forms of foreign capital including foreign direct investment, foreign portfolio investment, external aid, and external commercial borrowings. FDI can take the form of joint ventures, technical collaborations, or private placements. FPI includes investments in stocks, bonds, and funds raised through instruments like GDRs and ADRs. External aid may come from other governments, international organizations, or private sources, and can be tied to certain conditions or untied. ECBs comprise loans and credits from foreign commercial and multilateral sources used to finance commercial activities in India. The document also outlines advantages and disadvantages of foreign capital.
Indirect taxes
1. Indirect taxes are taxes that are paid indirectly by consumers when purchasing goods or services, with the impact being on one person and the incidence on another.
2. Examples of indirect taxes include excise duty, customs duty, sales tax, service tax, and octroi. These taxes can be shifted from the original payer to other persons.
3. While indirect taxes constitute a major source of government revenue, they are generally considered regressive as the tax burden does not vary based on ability to pay.
Residential status
This document discusses residential status under Indian income tax law. It explains that an individual's tax liability depends on their residential status, which can be resident, non-resident, or ordinarily resident. It also discusses how residential status is determined for individuals, HUFs, firms, companies and other persons. Key factors include number of days present in India and control and management of affairs. The document provides examples to illustrate how residential status is assessed and its implications for taxing different types of income received in or outside of India.
Tax Planning, Tax Evasion, Tax Avoidance,
This document discusses different methods for taxpayers to minimize tax liability: tax planning, tax avoidance, and tax evasion. Tax planning involves legally taking advantage of exemptions, deductions, and rebates to reduce taxes. Tax avoidance also reduces taxes legally by exploiting loopholes. Tax evasion illegally underreports income or falsifies information to pay less tax than owed. The document provides examples of actions considered tax planning, such as certain investments, and tax evasion, like falsely claiming donations. Overall it aims to explain legal and illegal options and their objectives in paying the minimum required tax.
Assessement of companies
This document defines key terms related to companies under the Income Tax Act such as company, Indian company, company in which public are substantially interested, domestic company, foreign company, industrial company, and investment company.
It also summarizes provisions related to Minimum Alternative Tax (MAT) under section 115JB, which specifies that the tax payable for any assessment year cannot be less than 18.5% of the company's book profit. It provides details on how book profit is computed for MAT purposes.
Finally, it outlines rules around carrying forward and set off of losses for closely held companies under section 79 when there is a change in shareholding.
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Minimum Alternate Tax
This document summarizes Minimum Alternate Tax (MAT) in India. MAT was introduced to ensure companies paying large dividends but avoiding tax through exemptions pay a minimum tax. It applies to companies and is the higher of normal tax rate or 18.5% of book profits with adjustments. Any excess MAT paid can be carried forward up to 10 years. Over time, applicability has expanded creating some uncertainty, though foreign portfolio investors are now exempt for post-2015 income.
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Financial services refers to services provided by the finance market such as banking, insurance, and investment. Financial regulation subjects financial institutions to requirements and guidelines to maintain integrity in the financial system. It influences banking by increasing available financial products. NABARD was established in 1982 to oversee agricultural credit and rural development. Its roles include providing credit and refinancing to rural banks, identifying credit potential, monitoring credit plans, and inspecting regional rural banks to regulate the rural banking sector.
Foreign Exchange Management Act
Reliance Infrastructure was asked to pay Rs. 125 crore in compounding fees by RBI for violating FEMA guidelines. It had parked $300 million from a foreign loan in mutual funds in India for 315 days before repatriating the funds overseas.
RBI's order said that under FEMA, borrowers must keep foreign loan funds abroad until actual requirement in India, and cannot use funds for any other purpose. Reliance admitted contravention but said its power project was delayed.
RBI rejected Reliance's arguments, saying it took 315 days to realize funds weren't needed in India, and the company made an additional Rs. 124
New industrial policy 1991
The all-round changes introduced in the industrial policy framework have given a new direction to the future industrialization of the country.
Input tax credit under GST
The document discusses India's Goods and Services Tax (GST) policies and regulations related to input tax credit. Key points include:
- Under GST, input tax credit is available for goods, services, and capital goods used in the course of business. This is a significant expansion of credit compared to earlier tax systems.
- Credit can be claimed by registered businesses against central GST, state GST, integrated GST, and Union territory tax paid on business purchases.
- Certain documents like tax invoices and bills of entry must be possessed, and payment must be made to the supplier within 180 days, for credit to be claimed.
- There are also time limits, apportionment and reversal
Income from business or profession
The document discusses key aspects of income from business and profession under the Income Tax Act of 1961 in India. It defines business and profession, outlines the basis of charge for income from business/profession, and describes various deductions that are allowed under sections 30-37 of the Act such as rent, repairs, insurance, depreciation, bad debts, and more. It provides explanations and conditions for claiming many of these deductions.
Foreign Direct Investment (Theories of FDI)
This document discusses different theories of foreign direct investment (FDI). It begins by covering Stephen Hymer's theory of imperfect markets, which views multinational corporations as oligopolistic firms that seek to establish control and maximize profits by taking advantage of market imperfections in host countries. It then briefly mentions the product life cycle theory. The majority of the document is spent explaining the internalization approach theory and eclectic theory of FDI, which incorporate factors of ownership advantages, locational advantages, and internalization to explain why firms undertake FDI. It concludes by listing some common objectives of companies engaging in FDI, such as reducing costs, gaining economies of scale, and knowledge sharing.
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The document discusses the residential status and tax liability of individuals and entities in India. It defines the basic conditions to determine if a person is a resident, ordinary resident, or non-resident based on the number of days spent in India. An ordinary resident's total income and tax liability is the highest, including both Indian and foreign income. A non-resident's total income and tax liability is based only on Indian income. The residential status of entities like HUF, companies, firms, and AOP is also determined based on the control and management of their affairs being within or outside of India.
Foreign portfolio investment
Foreign portfolio investment (FPI) refers to foreign investments in Indian stocks, bonds, and mutual funds. Since 1992, India has opened up to FPI inflows which have provided a large source of non-debt creating private capital. FPI can help fill capital needs in developing countries and influence domestic markets. However, irregularities and lack of protections have caused declines as FPI becomes less active and domestic investors withdraw from markets. Proper regulations aim to balance attracting investment while controlling volatility.
Foreign Institutional Investor
The document provides an overview of foreign institutional investors (FIIs) in India. It discusses how FIIs started investing in India in 1992, the registration process for FIIs with SEBI, eligibility criteria, where FIIs can invest, taxation rules, the impact of FIIs on the Indian market including stock market volatility, and FIIs performance compared to foreign direct investment. It also summarizes FII inflows and outflows during a market crash in January 2008.
Foreign exchange management act (FEMA), 1999
The FEMA (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA)
FEMA came into act on the 1st day of June,2000
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The document discusses India's balance of payments over the past 10 years. It defines the balance of payments and its key components: current account, capital account, and official reserves account. The current account covers trade in goods and services and investment income. The capital account covers investment flows. The official reserves account covers assets like gold and foreign currencies. Recent trends show India running a current account deficit from 2004-05 onward, with the deficit peaking in 2012-13 at 4.8% of GDP. Measures to address imbalances include export promotion, import restrictions, and managing the exchange rate. Quarterly data from 2014-2016 shows the current account deficit improving but still in deficit.
Foreign Exchange Management Act (FEMA)
The document discusses the Foreign Exchange Management Act (FEMA) of 1999 which replaced the earlier Foreign Exchange Regulation Act (FERA). FEMA aims to facilitate external trade and payments. It is applicable to all of India and branches/offices of Indian residents abroad. FEMA was enacted due to India's liberalized EXIM policy, increased foreign investment, reserves, and WTO commitments. It regulates capital account transactions through the Reserve Bank of India and dealings in foreign exchange.
Role of foreign capital
This document provides an overview of foreign capital in India. It discusses the different forms of foreign capital including foreign direct investment, foreign portfolio investment, external aid, and external commercial borrowings. FDI can take the form of joint ventures, technical collaborations, or private placements. FPI includes investments in stocks, bonds, and funds raised through instruments like GDRs and ADRs. External aid may come from other governments, international organizations, or private sources, and can be tied to certain conditions or untied. ECBs comprise loans and credits from foreign commercial and multilateral sources used to finance commercial activities in India. The document also outlines advantages and disadvantages of foreign capital.
Indirect taxes
1. Indirect taxes are taxes that are paid indirectly by consumers when purchasing goods or services, with the impact being on one person and the incidence on another.
2. Examples of indirect taxes include excise duty, customs duty, sales tax, service tax, and octroi. These taxes can be shifted from the original payer to other persons.
3. While indirect taxes constitute a major source of government revenue, they are generally considered regressive as the tax burden does not vary based on ability to pay.
Residential status
This document discusses residential status under Indian income tax law. It explains that an individual's tax liability depends on their residential status, which can be resident, non-resident, or ordinarily resident. It also discusses how residential status is determined for individuals, HUFs, firms, companies and other persons. Key factors include number of days present in India and control and management of affairs. The document provides examples to illustrate how residential status is assessed and its implications for taxing different types of income received in or outside of India.
Tax Planning, Tax Evasion, Tax Avoidance,
This document discusses different methods for taxpayers to minimize tax liability: tax planning, tax avoidance, and tax evasion. Tax planning involves legally taking advantage of exemptions, deductions, and rebates to reduce taxes. Tax avoidance also reduces taxes legally by exploiting loopholes. Tax evasion illegally underreports income or falsifies information to pay less tax than owed. The document provides examples of actions considered tax planning, such as certain investments, and tax evasion, like falsely claiming donations. Overall it aims to explain legal and illegal options and their objectives in paying the minimum required tax.
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- The conditions under which an Indian company can merge with a foreign company or vice versa, including compliance with FEMA regulations, treatment of offices and assets/liabilities, valuation requirements, and other regulatory conditions.
- Specific provisions for inbound and outbound mergers depending on whether the resultant company is Indian or foreign. This includes timelines for compliance on guarantees, borrowings, and non-compliant assets.
Commercial & Corporate Laws
The document outlines various laws and regulations that govern foreign investment and business operations in India, including the Foreign Exchange Management Act, Companies Act, tax laws, and others. It also summarizes different modes of foreign investment such as liaison offices, branch offices, joint ventures, technology transfers, and wholly-owned subsidiaries. For each investment type, it provides brief details on approval requirements, statutory compliances, taxation implications, and other considerations.
Doing Business in India
“While looking at the prospect of setting-up business in India, it would be careful to see what all options are available to a new entrepreneur. Before setting-up a business in India, an entrepreneur generally faces with the following important questions: Which form of business to set-up, Where to set-up, How to set-up, what are post set-up compliances?”
“In case you are a Foreign National/ resident and are planning to set up your business either independently or in Joint Venture with an Indian Party, it is necessary to check the Foreign Direct Investment policy of India before taking any decision.”
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Company - Definition and explain the types of company as per income tax act 1961
- 1. TOPIC :DEFINE COMPANY AND EXPLAIN THE TYPES OF COMPANY AS PER INCOME TAX ACT 1961 Presented by, MANGALA B 2nd M.com G F G C W HOLENARASIPURA Under the guidance of Sundar B. N. Asst. Prof. & Course Co-ordinator GFGCW, PG Studies in Commerce Holenarasipura
- 2. INTRODUCTION In India income tax is a tax you pay to the government based on your income.The Government uses this tax money for various purposes including public services infrastructure, development defence spending and subsidies among other options. It is compulsory that one has to pay income tax if the income he or she earns crosses beyond a certain limit.
- 3. MEANING OF COMPANY Company whether Indian or Foreign is liable to taxation under the income tax act 1961 corporation tax is a tax which is levied on the incomes of registered companies and corporation . A company means any Indian Company or any corporate body incorporated by or under the laws of a country outside india.
- 4. DEFINITION OF COMPANY • According to justice Lindley a company means association of persons who contribute in shape of money or money’s worth to a common stock and employ it for some specific purpose. • According to justice James A company is an association of persons United for a common object.
- 5. TYPES OF COMPANIES INCOME TAX ACT 1961 • Company • Widely held company • Closely held company • Indian company (section 2(26) • Domestic company (Section 2 (22A) • Foreign company (section 2(23A) • Investment company • Industrial company
- 7. • It is a company in which the public are substantially interested.
- 8. • It is a company in which the public are not substantially interested .
- 9. • Indian company: . Indian company means a company formed and registered under the companies act 1956 and includes A company formed and registered under any law relating to companies formerly in force in any part of India (Other than the state of Jammu and Kashmir and the union territories.
- 10. • A domestic company means an Indian company or any other company which in respect of its income liable to tax under the income tax act • (Including dividends on preference share) payable out of such
- 11. • Foreign company means a company which is not a domestic company i.e a company registered outside India in any other foreign country.
- 12. • Investment company means a company whose gross total income consists mainly of income which is chargeable under the heads income from House property capital gains and income from other sources.
- 13. Industrial company : Industrial company means a company whose business consists mainly of the constitution of ships or other manufacturing or processing of goods or in mining the generation or distribution of electricity
- 14. CONCLUSION Many of these companies offers similar Perks and benefits but those do not determine the culture completely . The approach taken with how employees are treated and what level of ownership and trust they are given is also a key