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Documents required for trading
     in domestic market
            SESSION 10
  LEGAL ENVIRONMENT OF BUSINESS



                                  1
 Retail is one of India's fastest-growing economic
  sectors because the working population is increasing
  and the buying power of the people is also
  increasing. Starting a retail business requires certain
  documentation that needs to be in place in order to
  adhere to the national and local law.


                                                        2
Documents/laws/acts related to
     trading in domestic market
Register the company’s name

Tax account no. (TAX)

PAN

Registration Act

Indian stamp act

Easement act 1882
                                    3
Documents/laws/acts related to
     trading in domestic market
Shop and establishment act
The Trade & Merchandise Marks Act, 1999
Laws relating to Employment
Contract Labour (Regulation and Abolition) Act, 1970
Inter-State Migrant Workmen (Regulation of
Employment and Conditions of Service) Act, 1979
Minimum Wages Act, 1948
                                                   4
Documents/laws/acts related to
     trading in domestic market

Payment of Bonus Act, 1965
Payment of Gratuity Act, 1972
Payment of Wages Act, 1936
Workmen’s Compensation Act, 1923
Industrial Dispute Act, 1947
Environment (Protection) Act, 1986


                                      5
Register the Company's Name
 Reserve the company's name with the Registrar
  of Companies.
 ID proof, PAN Card, Address Proof is needed
  along with the application form + registration
  fee to get the certificate of incorporation that
  legally approves the name of your business.


                                                     6
Tax Account Number(TAN)
 Obtain a TAN from an authorized agent approved by
  the National Securities Depository Limited.
 TAN is required of anyone responsible for collecting
  tax.
 The     application    form      is    available   at
  www.incometaxindia.gov.in and www.tin-nsdl.com


                                                      7
Permanent Account Number
 Application for PAN s.b. submitted to an
  authorized franchise approved by the National
  Securities Depository or the Unit Trust of India
  Investors Services
 PAN is essential for tax purposes

 Mandatory while opening a business account or
  while applying for a loan
                                                     8
Registration Act
 Objective : to ensure information about all land
  related so that correct land records could be
  maintained.
 Also used for recording of transactions relating to
  other immovable property
 provides for registration of supporting documents
  which give these documents more authenticity
 Registering authorities are present in all the districts
                                                             9
Indian Stamp Act 1899
 Original purpose was to raise revenue to Govt.
 However, today stamped document is considered much
  more authentic and reliable than an un-stamped document
 Instruments chargeable to duty under the Stamp Act which
  are not duly stamped are inadmissible in a court of law and
  have no evidentiary value.
 a penalty of up to 10 times the original stamp value has to
  be paid to rectify them


                                                                10
The Easement Act 1882
 governed by the Easements Act, 1882

 the right of easement is derived from the ownership of
  property
 It means a right which the owner or occupier of land
  possesses for the beneficial enjoyment of that land and
  which permits him to do or to prevent something from
  being done in respect of certain other land not his own.



                                                             11
The Easement Act 1882
 an easement may be acquired by the owner of
  immovable property, i.e. the “dominant owner”, or on
  his behalf by the person in possession of the property.
 Such a right may also arise out of necessity or by virtue
  of a local custom.




                                                              12
Shops and Establishment Act
 retail stores are governed by various Shops and
  Establishments Acts as applicable in the states
 These acts regulate the conditions of work and
  employment in shops and generally prescribe obligations
  in respect of inter alia
   registration,
   opening and closing hours,
   daily and weekly working hours,
   holidays, leave,
   health and safety measures
   wages for overtime work
                                                            13
The Trade & Merchandise Marks Act,
                     1999
       TRIPS defines Trademarks as any sign, or any combination
         of signs that can distinguish the goods and services of one
         organization from the other organization.
       TRIPS provides for initial registration and each renewal for
         a term of ten years
       The Trade and Merchandise Act 1999 is compatible with
         TRIPS and harmonizes it with international systems and
         practices

                                                                       14
*Trade Related Intellectual Property Rights
Laws relating to Employment
 A retail organization is governed by the provisions of
  the Employees’ Provident Funds Act, 1952.
 this act mandates periodic contributions to the
  Employees’    Provident   Fund    Scheme    and   the
  Employees’ Pension Scheme as applicable
 The firm also has to make contributions under the
  Employees’ State Insurance Act, 1948

                                                           15
Employees Provident Funds Act, 1952

 applicable to any estt. employing 20 or more persons

 provides for compulsory Provident Fund for the
  benefit of employees in factories and other estts.
 Employer’s contribution to be deposited to the EPF is a
  specified %age of the employee’s salary
 employee’s contribution = employer’s contribution



                                                            16
Employees State Insurance Act, 1948

 Provides for benefits to employees in case of
  sickness, maternity, employment injury, etc.
 Every estt. must register within the specified time
  and in the specified manner
 All employees in the estt. to which this act applies
  shall be insured


                                                         17
Employees State Insurance Act, 1948

 The   contribution   payable    =   employer’s   +
  employee’s @ decided by the Central Government
  and payable to the ESIC
 Contribution has to be made for all employees,
  whether directly or indirectly employed by the firm




                                                        18
Contract Labour (Regulation and
         Abolition) Act, 1970
 This legislation applies to every estt./contractor in
  which 20 or more workmen are employed or were
  employed in the past 12 months as contract labour
 Registration of an estt. is mandatory through an
  application to the registering authority



                                                          19
Contract Labour (Regulation and
         Abolition) Act, 1970
 Employer/each contractor in relation to each
  employer have to obtain a license from Govt.
  licensing officers to execute any work through
  contract labour
 The license may impose conditions as to work,
  fixation of wages and other essential amenities in
  respect of contract labour

                                                       20
Contract Labour (Regulation and
         Abolition) Act, 1970
 The Act provides for the welfare of the workers by
  imposing obligations on the employer to provide
  for canteens, rest rooms, washing facilities etc.
 Non-adherence to this this act is punishable with
  imprisonment or with fine



                                                       21
Inter-State Migrant Workmen (Regulation of
Employment and Conditions of Service) Act, 1979

 regulates the employment of inter-state migrant
  workmen and provides for their conditions of
  service
 applicable to every estt./contractor employing 5 or
  more inter-state migrant workmen currently or
  have employed in the past 12 months
 The estt. has to apply for the registration of the
  estt. in the prescribed manner and time
                                                        22
Inter-State Migrant Workmen (Regulation of
Employment and Conditions of Service) Act, 1979


 The contractor has to obtain the license from the
  licensing officer appointed by the Central/State
  Govt.
 The license is valid only for a specified period and
  requires to be renewed at its expiry
 The Act levies some duties on the principal
  employer and the contractor
                                                         23
Inter-State Migrant Workmen (Regulation of
Employment and Conditions of Service) Act, 1979

 principal employer provides for the displacement
  allowance and journey allowance
 contractor provides for adequate wages, medical
  facilities and other benefits




                                                     24
Minimum Wages Act, 1948
 applicable to any person who employs 1 or more
  person in any scheduled employment
 The employment can be direct or indirect
 AIM of this act is to prevent exploitation of labour
  and to provide sustenance and maintenance of
  the worker and his family



                                                         25
Payment of Bonus Act, 1965
 Objective : distribution of profits earned by the
  estt. among the workmen
 applicable to every estt. in which 20 or more
  persons are employed on any day during an
  accounting year
 An employer is bound to pay every employee a
  minimum bonus of 8.33% of the salary or wage
  earned by the employee.                             26
Payment of Gratuity Act, 1972

 applicable to any estt. in which 10 or more
  employees are employed or were employed on
  any day in the preceding 12 months
 An employee should be in uninterrupted service
  (as per conditions laid down in the Act) in order to
  be paid gratuity


                                                         27
Payment of Gratuity Act, 1972

 Gratuity shall be payable after the completion of 5
  years of continuous service upon the termination
  of   his   employment       on   superannuation   or
  retirement or resignation
 in case of death of an employee it is payable to the
  nominee of the employee


                                                         28
Payment of Wages Act, 1936
 “every    employee       has   a   right   to   receive
  remuneration for the services provided by him
 applies to persons employed in any estt. either
  directly or indirectly
 AIM : to ensure that the wages are paid by the
  employers within the prescribed time limit w/o any
  unauthorized deductions

                                                            29
Workmen’s Compensation Act, 1923
 Provides for protection from hardship faced by
  workmen due to accidents, death or occupational
  diseases
 Provides for assistance to the family members of
  the workmen
 An employer has to pay compensation for the
  personal injury caused to a workman by accident,
  death, etc. arising out of and in the course of his
  employment
                                                        30
Workmen’s Compensation Act, 1923

 A contractor for construction of building is also
  made liable for the personal injuries of his
  workmen
 amount of compensation depends on the nature
  and extent of the injury




                                                      31
Industrial Dispute Act, 1947
 Objective : to investigate and settle disputes
  between the employer and the workmen
 It is applicable to any industry wherein systematic
  activity is being carried on by cooperation between
  an employer and his workmen (direct/indirect)
 Arbiters       Works    Committee,    Boards    of
  Conciliation, Courts of Inquiry, Labour Courts and
  National Tribunals
                                                        32
Environment (Protection) Act, 1986

 Provides for standards for emission or discharge
  of environmental pollutants from various sources
 restricts areas in which operations or processes
  cannot be carried out or shall be carried out
  subject to certain safeguards




                                                     33
Info gathered from a store owner
          in Patna, Bihar


The documents required for trading in
domestic market:
1.CST
2.BIHAR VAT
3.LABOUR CERTIFICATE



                                        34
STEP 1
 Any shop has to apply for sales tax registration with
  that sales tax office in whose circle that shop falls in
 Patna has 6 circles implying 6 offices
 Both CST and Bihar VAT registration(5%) is done at
  the same Sales Tax Office
 CST and LST has to be paid before 15th of next month
  else there is a penalty of 1.5% per month on the
  unpaid amount of tax
                                                             35
Returns…..
 Quarterly RETURNS have to be filed by 31st of next
  month.
 The return includes the details of the goods
  bought as well as goods sold during the quarter
 also includes the details of the CST and LST (Bihar
  VAT) paid during the previous quarter

                                                        36
Docs required while applying for
         sales tax no.
 a) 2 Identity proof  PAN Card, Driver’s Licence,
    Voter ID, etc.

 b) Address proof of the commercial property
    from where store shall operate
     If property is self owned, attach the property
      papers
     If property is rented, attach the copy of rent
      agreement
                                                       37
Docs required while applying for
         sales tax no.
 c) Municipality receipt to be submitted whether
    the shop is self owned or rented

 d) Bank statement of the Current A/C held

 e) In case of CST, 2 such guarantors are required
    who belong to the same circle/city and who
    have been paying their taxes since at least 6
    months
                                                     38
Road Permit & ‘C’ Form
 For inter-state purchase, CST licence is a must.

 If we buy from local distributor, then CST is not required.

 When we place an order to a brand AND it’s the case of
  inter-state purchase, we send them the road permit (form
  D-IX).
 (Separate road permit is required for each order)




                                                                39
Road Permit & ‘C’ Form
 At the end of the quarter, we have to send the C
  form to the brand. (The C form is issued by the
  Sales Tax Office upon verification of the CST and LST
  paid during the previous quarter against the goods
  bought and sold during the previous quarter)

 Against the C form, a CST of 2% has to be paid.

 In absence of C form, a CST of 5% has to be paid.
                                                          40
41

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Session 10 leb

  • 1. Documents required for trading in domestic market SESSION 10 LEGAL ENVIRONMENT OF BUSINESS 1
  • 2.  Retail is one of India's fastest-growing economic sectors because the working population is increasing and the buying power of the people is also increasing. Starting a retail business requires certain documentation that needs to be in place in order to adhere to the national and local law. 2
  • 3. Documents/laws/acts related to trading in domestic market Register the company’s name Tax account no. (TAX) PAN Registration Act Indian stamp act Easement act 1882 3
  • 4. Documents/laws/acts related to trading in domestic market Shop and establishment act The Trade & Merchandise Marks Act, 1999 Laws relating to Employment Contract Labour (Regulation and Abolition) Act, 1970 Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 Minimum Wages Act, 1948 4
  • 5. Documents/laws/acts related to trading in domestic market Payment of Bonus Act, 1965 Payment of Gratuity Act, 1972 Payment of Wages Act, 1936 Workmen’s Compensation Act, 1923 Industrial Dispute Act, 1947 Environment (Protection) Act, 1986 5
  • 6. Register the Company's Name  Reserve the company's name with the Registrar of Companies.  ID proof, PAN Card, Address Proof is needed along with the application form + registration fee to get the certificate of incorporation that legally approves the name of your business. 6
  • 7. Tax Account Number(TAN)  Obtain a TAN from an authorized agent approved by the National Securities Depository Limited.  TAN is required of anyone responsible for collecting tax.  The application form is available at www.incometaxindia.gov.in and www.tin-nsdl.com 7
  • 8. Permanent Account Number  Application for PAN s.b. submitted to an authorized franchise approved by the National Securities Depository or the Unit Trust of India Investors Services  PAN is essential for tax purposes  Mandatory while opening a business account or while applying for a loan 8
  • 9. Registration Act  Objective : to ensure information about all land related so that correct land records could be maintained.  Also used for recording of transactions relating to other immovable property  provides for registration of supporting documents which give these documents more authenticity  Registering authorities are present in all the districts 9
  • 10. Indian Stamp Act 1899  Original purpose was to raise revenue to Govt.  However, today stamped document is considered much more authentic and reliable than an un-stamped document  Instruments chargeable to duty under the Stamp Act which are not duly stamped are inadmissible in a court of law and have no evidentiary value.  a penalty of up to 10 times the original stamp value has to be paid to rectify them 10
  • 11. The Easement Act 1882  governed by the Easements Act, 1882  the right of easement is derived from the ownership of property  It means a right which the owner or occupier of land possesses for the beneficial enjoyment of that land and which permits him to do or to prevent something from being done in respect of certain other land not his own. 11
  • 12. The Easement Act 1882  an easement may be acquired by the owner of immovable property, i.e. the “dominant owner”, or on his behalf by the person in possession of the property.  Such a right may also arise out of necessity or by virtue of a local custom. 12
  • 13. Shops and Establishment Act  retail stores are governed by various Shops and Establishments Acts as applicable in the states  These acts regulate the conditions of work and employment in shops and generally prescribe obligations in respect of inter alia registration, opening and closing hours, daily and weekly working hours, holidays, leave, health and safety measures wages for overtime work 13
  • 14. The Trade & Merchandise Marks Act, 1999  TRIPS defines Trademarks as any sign, or any combination of signs that can distinguish the goods and services of one organization from the other organization.  TRIPS provides for initial registration and each renewal for a term of ten years  The Trade and Merchandise Act 1999 is compatible with TRIPS and harmonizes it with international systems and practices 14 *Trade Related Intellectual Property Rights
  • 15. Laws relating to Employment  A retail organization is governed by the provisions of the Employees’ Provident Funds Act, 1952.  this act mandates periodic contributions to the Employees’ Provident Fund Scheme and the Employees’ Pension Scheme as applicable  The firm also has to make contributions under the Employees’ State Insurance Act, 1948 15
  • 16. Employees Provident Funds Act, 1952  applicable to any estt. employing 20 or more persons  provides for compulsory Provident Fund for the benefit of employees in factories and other estts.  Employer’s contribution to be deposited to the EPF is a specified %age of the employee’s salary  employee’s contribution = employer’s contribution 16
  • 17. Employees State Insurance Act, 1948  Provides for benefits to employees in case of sickness, maternity, employment injury, etc.  Every estt. must register within the specified time and in the specified manner  All employees in the estt. to which this act applies shall be insured 17
  • 18. Employees State Insurance Act, 1948  The contribution payable = employer’s + employee’s @ decided by the Central Government and payable to the ESIC  Contribution has to be made for all employees, whether directly or indirectly employed by the firm 18
  • 19. Contract Labour (Regulation and Abolition) Act, 1970  This legislation applies to every estt./contractor in which 20 or more workmen are employed or were employed in the past 12 months as contract labour  Registration of an estt. is mandatory through an application to the registering authority 19
  • 20. Contract Labour (Regulation and Abolition) Act, 1970  Employer/each contractor in relation to each employer have to obtain a license from Govt. licensing officers to execute any work through contract labour  The license may impose conditions as to work, fixation of wages and other essential amenities in respect of contract labour 20
  • 21. Contract Labour (Regulation and Abolition) Act, 1970  The Act provides for the welfare of the workers by imposing obligations on the employer to provide for canteens, rest rooms, washing facilities etc.  Non-adherence to this this act is punishable with imprisonment or with fine 21
  • 22. Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979  regulates the employment of inter-state migrant workmen and provides for their conditions of service  applicable to every estt./contractor employing 5 or more inter-state migrant workmen currently or have employed in the past 12 months  The estt. has to apply for the registration of the estt. in the prescribed manner and time 22
  • 23. Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979  The contractor has to obtain the license from the licensing officer appointed by the Central/State Govt.  The license is valid only for a specified period and requires to be renewed at its expiry  The Act levies some duties on the principal employer and the contractor 23
  • 24. Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979  principal employer provides for the displacement allowance and journey allowance  contractor provides for adequate wages, medical facilities and other benefits 24
  • 25. Minimum Wages Act, 1948  applicable to any person who employs 1 or more person in any scheduled employment  The employment can be direct or indirect  AIM of this act is to prevent exploitation of labour and to provide sustenance and maintenance of the worker and his family 25
  • 26. Payment of Bonus Act, 1965  Objective : distribution of profits earned by the estt. among the workmen  applicable to every estt. in which 20 or more persons are employed on any day during an accounting year  An employer is bound to pay every employee a minimum bonus of 8.33% of the salary or wage earned by the employee. 26
  • 27. Payment of Gratuity Act, 1972  applicable to any estt. in which 10 or more employees are employed or were employed on any day in the preceding 12 months  An employee should be in uninterrupted service (as per conditions laid down in the Act) in order to be paid gratuity 27
  • 28. Payment of Gratuity Act, 1972  Gratuity shall be payable after the completion of 5 years of continuous service upon the termination of his employment on superannuation or retirement or resignation  in case of death of an employee it is payable to the nominee of the employee 28
  • 29. Payment of Wages Act, 1936  “every employee has a right to receive remuneration for the services provided by him  applies to persons employed in any estt. either directly or indirectly  AIM : to ensure that the wages are paid by the employers within the prescribed time limit w/o any unauthorized deductions 29
  • 30. Workmen’s Compensation Act, 1923  Provides for protection from hardship faced by workmen due to accidents, death or occupational diseases  Provides for assistance to the family members of the workmen  An employer has to pay compensation for the personal injury caused to a workman by accident, death, etc. arising out of and in the course of his employment 30
  • 31. Workmen’s Compensation Act, 1923  A contractor for construction of building is also made liable for the personal injuries of his workmen  amount of compensation depends on the nature and extent of the injury 31
  • 32. Industrial Dispute Act, 1947  Objective : to investigate and settle disputes between the employer and the workmen  It is applicable to any industry wherein systematic activity is being carried on by cooperation between an employer and his workmen (direct/indirect)  Arbiters  Works Committee, Boards of Conciliation, Courts of Inquiry, Labour Courts and National Tribunals 32
  • 33. Environment (Protection) Act, 1986  Provides for standards for emission or discharge of environmental pollutants from various sources  restricts areas in which operations or processes cannot be carried out or shall be carried out subject to certain safeguards 33
  • 34. Info gathered from a store owner in Patna, Bihar The documents required for trading in domestic market: 1.CST 2.BIHAR VAT 3.LABOUR CERTIFICATE 34
  • 35. STEP 1  Any shop has to apply for sales tax registration with that sales tax office in whose circle that shop falls in  Patna has 6 circles implying 6 offices  Both CST and Bihar VAT registration(5%) is done at the same Sales Tax Office  CST and LST has to be paid before 15th of next month else there is a penalty of 1.5% per month on the unpaid amount of tax 35
  • 36. Returns…..  Quarterly RETURNS have to be filed by 31st of next month.  The return includes the details of the goods bought as well as goods sold during the quarter  also includes the details of the CST and LST (Bihar VAT) paid during the previous quarter 36
  • 37. Docs required while applying for sales tax no. a) 2 Identity proof  PAN Card, Driver’s Licence, Voter ID, etc. b) Address proof of the commercial property from where store shall operate  If property is self owned, attach the property papers  If property is rented, attach the copy of rent agreement 37
  • 38. Docs required while applying for sales tax no. c) Municipality receipt to be submitted whether the shop is self owned or rented d) Bank statement of the Current A/C held e) In case of CST, 2 such guarantors are required who belong to the same circle/city and who have been paying their taxes since at least 6 months 38
  • 39. Road Permit & ‘C’ Form  For inter-state purchase, CST licence is a must.  If we buy from local distributor, then CST is not required.  When we place an order to a brand AND it’s the case of inter-state purchase, we send them the road permit (form D-IX).  (Separate road permit is required for each order) 39
  • 40. Road Permit & ‘C’ Form  At the end of the quarter, we have to send the C form to the brand. (The C form is issued by the Sales Tax Office upon verification of the CST and LST paid during the previous quarter against the goods bought and sold during the previous quarter)  Against the C form, a CST of 2% has to be paid.  In absence of C form, a CST of 5% has to be paid. 40
  • 41. 41

Editor's Notes

  1. Currently Bihar VAT stands at 5% for all products since April’2011