“Tax payments are required for civilization of society”

We help entrepreneur to commence and in smooth running of business – CA Manish Kumar

Style of business: Business can be setup in one of three styles i.e

1. Proprietor,
2. Firm (Partnership firm or LLP)
3. Company (Private Limited or Public Limited).

Statutory compliance is most important aspect for every business, few of them are discussed below:

Tax Deduction at source (TDS):

• Requirement: Every business person is liable to deduct tax before making payments to its service provider, if it exceeds prescribed limit, with specified rate of tax. Example: Payments to professional, Rent, Commission, payments to contractor etc.
• Deposit of TDS: The deducted tax should be deposited with governments of India within 7^th days of next month, otherwise they require to pay interest @ 1.5% per month.
• Penalty: The person has to file TDS return on quarterly basis on or before 31^st of next month after end of quarter. Penalty for non filing TDS return on time is Rs 200 per day or equal to TDS amount whichever is lower.
• Disallowance of Expenditure: If person is liable to deduct tax and fails to deduct tax or tax deducted but not deposited with governments before due date of filing of return, is not allowed to claim as expenditure in their profit and loss accounts.

Goods and Service Taxes (GST):

• Registration: Every person whose turnover or gross receipts exceed Rs 20L in any financial year has to get registered under GST.
• Payment: GST has to be paid monthly on or before 20^th days of next month.
• Interest & Penalty: Government levies interest of 1.5% per month on per day basis on late payments of GST and penalty of Rs 50 per day or Rs 5,000 whichever is lower on late filing of GST return.
• GST Register: Every person registered under GST has to keep GST Credit register and original bill up to 6 years.

Company Formation and its compliance:

• Statutory Meeting: All companies registered with MCA have to do first statutory meeting within 30 days from date of incorporation. Company should, issue share certificates , appoint auditor, adopt register.
• Company Act Register: Company should keep various registers at its registered office like (Fixed Assets, Director Register, Share holder register and Minute of meeting register etc).
• Penalty: ROC has power to levy penalty for non maintenance of various registers required under company act.

Writer is CA Manish Kumar, a member of eGrowth.  He can be reached on man.associate@gmail.com