Benefits Provided to MSMEs Under New Economic Package of 20 Lac Crores by Government

The whole world is suffering from coronavirus pandemic.

Lockdown announced by various Governments may result in permanent lockdown for a lot of businesses.

The economy is in a fix to taste the biggest ever recession in history. Being confident of a powerful leader, Indians expected revolutionary reforms to unlock the economy.

The announcements were fast and the 20 lack crore package was trending.

We will be discussing here what’s in it for you?

A whopping 20 lac crore fund by the government has been passed which is almost 10% of Indian GDP.

That means INR 15k per person in a 130 Cr populated country.

But hold on, will you get a penny out of it? Let’s see!!!


This economic package by the government may help SMEs to regain position at the market. Reforms focused on various small and medium businesses, industrial units, agriculture sector and so on.“MSME”, (the buzz word) plays a very vital role in contribution towards GDP.

To help and encourage MSME units, the Indian government announced various packages to finance them at a very cheap rate. Excited to know what are these schemes and how to benefit from them?


Let us discuss point by point:

More businesses in MSME ambit:

At the time of introducing such package, Honorable finance minister Nirmala Sitharaman has given new definition to MSME by eliminating the difference between the manufacturing sector and service sector.

New threshold limits for micro, small and medium units have been given benefiting 45 lakhs new units. For people interested in obtaining MSME Registration for their small scale business, it is a piece of good news.

3 Lakh Cr Collateral free loan:

Out of 20 lakh crore, Ministry of finance allocated INR 3 lakhs crore to SME’s as collateral-free loans.

Under such packages, the micro and small firms are providing opportunities to raise loan from banks and the financial institution at a nominal interest rate with the retention period of up to 12 months (maximum duration of the loan is 4 years).

Under this package, the major relief is that the government provide a guarantee of a loan to lenders on full amount without any guarantee fees.

20k Cr to stressed SMEs:

Apart from the above government also allocated amount of

INR 20,000 crore to those MSME’s units who are facing the problem of Equity.

The amount of 20,000 Crore is provided as subordinate debt for equity stressed MSME units.MSME registration in India will become a little easier.

Rs. 50,000 crores Fund of Funds:

Equity infusion for MSMEs through fund of funds scheme. This will benefit fast-growing industries to raise funds through Private Equity.

If you are an SME with high growth prospects, have you ever thought to make it big? Yes, all Big Bs (businesses) were SMEs at some point in time. And when they can do, we can too. Govt.fund of funds scheme is a strategy of investing in professional funds which in turn invests in businesses.

Let’s be ready with our business plans and financial models. Certainly, we will get you to list of Private Equity players where you can shoot your decks in other articles.

B2G opportunities:

Atma Nirbhar Bharat dream foundation is laid with a decision to not allow foreign companies to apply for Government tenders of less than 200 Cr. 5. Early recoveries from Government departments: Government also promised to clear all receivables of MSME with the government which will be released within 45 days.

Other than above mentioned benefits, the Government also gave relief for various tax filings due dates and rates of tax.

Why not consult experts to know how to get something out of the treasure.

Starters’ CFO ensures that its clients are getting fully benefitted from Government initiatives.

Foreign Company Starting Business in India

The initiative by Government of India under the “Make in India” campaign has attracted many foreign companies across the world to invest in India or to open their own branch in India.

It’s not that easy for a foreign company to start its business in India.

There are many approvals which are to be taken and, numerous regulations which are to be followed.

Are you a foreign company willing to start your own business in India?

Well, in that case, let us help you understand all the regulations that you will have to follow while you start your business in India.

Let us first understand the concept of foreign companies in India.

WHAT DO YOU MEAN BY A FOREIGN COMPANY IN INDIA?

“Foreign Company” as per section 2 (42) of Companies Act 2013 is defined as any company or body corporate which is located outside India and

  1. has its place of business in India either by itself or through an agent, physically or through an electronic mode;

and

  1. conducts any business activity in India in any other manner. 

After understanding the concept of foreign companies in India, let us go through the requirements of a foreign company while getting itself registered in India.

REQUIREMENTS

For a foreign company to start its subsidiary company (i.e. private company) in India, minimum of two people and a place of business in India are required.

For a private limited company to be registered in India, a minimum of two directors and two shareholders are required.  As per section 149 (3) of Companies Act, 2013, for any private limited company to be registered in India; it is necessary that at least one director be and Indian citizen and resident.

An authorized representative is to be appointed by the foreign company to register its Indian subsidiary company. 

The authorized representative will be responsible for whole of the registration process and communication with the MCA for the same.

A place of its business in India is also required which will be considered as its registered office. The city in which the registered office of the company is situated will also be treated as the place of legal jurisdiction for the company.

Let us now comprehend the registration process for a foreign company willing to start its business in India.

REGISTRATION OF A FOREIGN COMPANY STARTING BUSINESS IN INDIA

Any foreign company within 30 days of establishment of its place of business in India must submit the following documents with the Registrar for registration as per section 380 (1) of Companies Act, 2013:

  • a certified copy of the charter, statute or memorandum and articles of the company or any other instrument establishing or defining the constitution of the company and if the document is not in English language, a certified translation thereof in the English language;
  •  Full address of the registered office of the company;
  • Details of the all the directors and secretary of the company;
  • Name and address of the resident authorized representatives who can accept on behalf of the company service of process and any notices or other documents required to be served on the company;
  • Full address of the office of principal place of business in India;
  • details of opening and closing of a place of business in India on earlier occasions;
  • declaration that none of the directors of the company or authorized representative in India has ever been condemned or barred from formation of companies and management in India or abroad; or
  • other prescribed specifics.

Apart from the above mentioned, a list of directors and secretary also needs to be sent to the Registrar under Rule (3) of Companies (Registration of Foreign Companies) Rules, 2014.

Within a period of 30 days of establishment of its place of business in India, the foreign company must file form FC -1 of Companies (Registration of Foreign Companies) Rules 2014 along with an attested copy of the approval from the Reserve Bank of India under Foreign Exchange Management Act,1999 or Regulations and from other regulators, if any.

After understanding the registration process of a foreign company starting its business in India, let us now go through the regulatory provisions under Foreign Exchange Management (Establishment in India of Branch or Office or other place of business) Regulations, 2000.

REGULATORY PROVISIONS UNDER FOREIGN EXCHANGE MANAGEMENT (ESTABLISHMENT IN INDIA OF BRANCH OR OFFICE OR OTHER PLACE OF BUSINESS) REGULATIONS, 2000

A foreign company willing to start to set up its business operations in India can also do so through a Liaison Office / Representative Office, Project Office or a Branch Office which is governed under the provisions of Foreign Exchange Management (Establishment in India of Branch or Office or other place of business) Regulations, 2000.

Such companies will have to make an application in form FNC. It may be noted that RBI has authorized AD Category I bank to forward FNC along with the necessary enclosures along with the comments and recommendations to – The Chief Manager-in-charge, Reserve Bank of India, Foreign Exchange Department, Central Office Cell, New Delhi.

The requests will be considered by Reserve Bank of India under Reserve Bank route or Government route.

Hope reading this would help you in understanding the process for a foreign company to start its business in India.

Also, in case if you want any further clarities related to how can a foreign company start its business in India, please fill in the below form and our experts will get back to you.

What are the necessary compliances for a Private Limited Company?

Are you an entrepreneur or a businessman? 

Are you looking for ticking all the boxes of necessary compliance of your private limited company?

Well, compliances have always been a bit of headache for entrepreneurs and businessman who are managing the day to day operations of their business.

Private Limited Company is the most widespread type of business entity in India that is governed by the Companies Act, 2013 under the statutory body, Ministry of Corporate Affairs (MCA). Moreover, as per the MCA, every Private Limited Company has to fulfil certain compliance filings or RoC compliances within a specified time to avoid penalties. 

What are RoC compliances?

Registrar of Companies or RoC is a body working under the Companies Act, 2013. RoCs is designated under Section 609 of the Companies Act.

The purpose and duty of these RoCs are to ensure that the Private Limited Company and Limited liability partnership companies comply with all the statutory requirements of the act.

company compliances

So, what are the mandatory RoC compliances under the Companies Act for Private Limited Companies?

The mandatory RoC compliances under the Companies Act are as follows;

Board meetings:

Every company registered under the Companies Act, 2013 need to conduct Board Meetings at least four times in a year such that there is a gap of not more than 120 days between two consecutive meetings

Annual General Meeting:

Annual General Meeting or AGM has to be conducted by every company each year and there should be a gap of at most fifteen months between two consecutive AGMs.

Appointment of Auditor:

A company must appoint its First Auditor within 30 days of incorporation. Furthermore, the First Auditor should be appointed by filing the Form ADT-1. A First Auditor is appointed for a period of five years.

Commencement of Business- Every company within 180 days of its incorporation must file for Commencement of Business Form INC 20 A. The company must have its own bank account for filing the same.

Director disclosure:

The directors of the company have to disclose their interest in other companies through Form MBP 1 in the first Board meeting, every year.

Annual returns:

Every year a company needs to file their annual returns in the form MGT 7 within 60 days from the date of holding of the Annual General Meeting. 

Filing of financial statement: It has to be done within 30 days from the date of holding of the AGM.

Audit of accounts:

Every company must prepare their accounts and get them audited by a Chartered Accountant at the end of the financial year.

Maintaining registers:

Maintaining statutory registers, Minutes of AGM books, Minutes of Board Meeting books, creditors meeting, debenture holder meetings are mandatory for a company. 

 

Other non-RoC compliances:

 

  • TDS/TCS payment 
  • Tax audits
  • GST payment and GST filing
  • Filing of tax audit reports
  • Other payments of periodic dues 
  • Advance tax payment
  • Filing of quarterly TDS returns
  • Filing of IT returns

 

These are the mandatory compliances by a company registered under the Companies Act, 2013 which may lead to penal actions against the company otherwise. 

Essential professional help can certainly ensure timely fulfilment of required compliances.

Why GST Registration is important for your company?

GST Registration is Important and mandatory compliance for every business entity in India.

If you own a company, you need to obtain GST Registration as per the criteria specified for your business.

It may vary as per the location of your business or the type of work you are involved in.

Besides, not obtaining the GST Registration could lead to heavy penalties against your entity.

So, obtaining one is obligatory.

Why GST is Important?

Businesses with a turnover exceeding 40 lakhs per year for all states and 10 lakhs per annum for North-Eastern states need to obtain registration as a normal taxable person. This process of registration is called GST registration.

Mostly it is mandatory for all businesses to obtain GST Registration. However, for some type of businesses, it is not mandatory to obtain one.

These types of businesses come under the Exempted Category.

Tax Icons Accounting Money - Free image on Pixabay

Who needs to obtain GST Registration?

The following type of business entities need to obtain registration under GST;

  • Individuals registered under the Pre-GST law (for example, VAT, Excise, Service Tax etc.)
  • Businesses with turnover over the threshold limit of Rs. 40 Lakhs and Rs. 10 Lakhs for Uttarakhand, North-Eastern States, Jammu & Kashmir, and Himachal Pradesh. 
  • A casual taxable person or Non-Resident taxable person
  • Input service distributor 
  • Agents of a supplier  
  • People giving tax below the reverse charge mechanism
  • A person who furnishes through e-commerce aggregators
  • All e-commerce aggregator

Penalty if GST Registration is not obtained

Any taxable person who fails to obtain registration under GST is liable for a fine of Rs. 10,000 or amount of tax evaded, whichever is greater as per Section 122 of CGST Act

Documents required for registering under GST

You need to submit the following documents to register under GST;

  • PAN of the Applicant
  • Digital Signature (in case of Company)
  • Identity (PAN and Aadhaar) and Address proof (Voter ID/Passport/DL) of Promoters or Director with their photographs
  • Proof of registration of the business or Incorporation Certificate
  • Board Resolution or Letter of Authorization 
  • Address proof of the location of the business (Electricity Bill and Rent Agreement/Sale Deed)
  • Bank Account statement or Cancelled cheque
  • Brief Objects of the business

GST Registration is important and mandatory compliance for every business entity in India as per their eligibility criterion.

Any company or entity who do not obtain registration under GST is liable for a penalty.

Moreover, it is also compulsory for businesses to file GST Returns after obtaining GST Registration, within the specified period to avoid any legal action against their companies.

Are you a Startup? This is why you need a Virtual CFO service provider.

In a fast-growing company, it is easy to lose sight and lose focus on Bookkeeping, payroll automation, compliances and accounting.

This is something that has always haunted startups.

So the question is what to do for the same?

how do get things sorted out without shedding a lot of money?

Well, Virtual CFO is what you are looking for.

Virtual CFO Services comprises of accounting, expense management, strategy, forecasting, and much more. Virtual CFO service providers help you maintain that balance.

Therefore, all businesses, whether small or large must take help from Virtual CFOs to better manage their companies.

What is a Virtual CFO?

Virtual CFO means virtual Chief Financial Officer. A virtual CFO is an outsourced service provider offering advanced financial assistance and related services to a business entity. In other words, virtual CFO does all the functions of a Chief Financial Officer of a company without directly associating with the company.

Furthermore, a Virtual Chief Financial Officer could be an individual person or a company. Some of the services provided by them are bookkeeping, payroll automation, obtaining necessary licenses like GST Registration, TDS Registration, etc.

Why you need virtual CFO services?

Virtual CFO services are helpful for both big and small companies. However, as a matter of fact, they are more crucial for small businesses and startups.

This is because generally big companies can afford to hire a full-time CFO in their companies. But startups and small companies can not do that because they need finances to expand their businesses and look for new horizons of opportunities for the growth of their companies.

Therefore, outsourcing a virtual CFO proves beneficial for them in many ways such as;

They help manage finances

Being a new company you might be facing problems with regular bookkeeping, especially when it is not automated. It is easy to lose track of your finances and forget where you are spending your money in the growth stage of your company.

In fact, most startups fail to manage their book of accounts when they get busier and busier by the day as they grow.

Virtual CFOs helps such type of companies in maintaining and investing their monies in the right path and also keep a track of their investments.

They help in better decision making

As a young business entity, it is bound to happen that you will lack in many areas of the business world, decision making being one of them.

Being a new business settlement, you might lack the knowledge about the next step or you might be unsure about it, or you may have been making decisions from the emotional side of you rather than the rational abet.

Virtual CFOs help you with rational decision making to increase your overall growth.

Hiring or outsourcing a Virtual CFO could be beneficial to your company’s overall growth as they not only help you with your finances; they also provide services such as fetching the basic necessities for your company such as basic licenses, helping with fulfilling statutory compliances and maintaining your book of accounts.

12 Key issues for SaaS startups seeking financing

The reason many tech companies fail is not a bad product/market fit, the wrong technological approach or lack of experienced CFO, but the design — not just the website UX but the design in its entirety.

The way things are integrated together.

The creative process.

Many founders see their product as a problem-solver and not as a visual and spiritual endeavor.

The whole culture of the Bay Area is based on the idea of building things fast, prioritizing speed over taste, beauty, creativity and perfection. In the era of obsessing over technology and growth, we became very tolerant of the trivial.

The tech scene is like Hollywood, but the experiences are not so cinematic.

There are, in fact, many similarities between building a startup and making a movie. Storytelling is one of them.

Storytelling

Founders have mastered this skill to perfection in their fundraising efforts. Series A and seed rounds have ballooned in recent years.

However, having money in the bank is not the only step to building a great product. There is one more skill that we all need to learn — throwing something away when it’s not great.

Branding

Let’s talk Nike. The visionaries on the team managed to create their own design paradigm for the brand. Throughout its entire history, Nike hasn’t tried to manipulate the existing design patterns.

They made a breakthrough by putting the design on the pedestal and taking it to the next level, even though they sell a commodity.

Steps to using automation to help scale your company

The reason many tech companies fail is not a bad product/market fit, the wrong technological approach or lack of experienced CFO, but the design — not just the website UX but the design in its entirety. The way things are integrated together.

The creative process.

Many founders see their product as a problem-solver and not as a visual and spiritual endeavor.

The whole culture of the Bay Area is based on the idea of building things fast, prioritizing speed over taste, beauty, creativity and perfection. In the era of obsessing over technology and growth, we became very tolerant of the trivial.

The tech scene is like Hollywood, but the experiences are not so cinematic.

There are, in fact, many similarities between building a startup and making a movie. Storytelling is one of them.

Storytelling

Founders have mastered this skill to perfection in their fundraising efforts. Series A and seed rounds have ballooned in recent years.

However, having money in the bank is not the only step to building a great product. There is one more skill that we all need to learn — throwing something away when it’s not great.

Branding

Let’s talk Nike. The visionaries on the team managed to create their own design paradigm for the brand. Throughout its entire history, Nike hasn’t tried to manipulate the existing design patterns.

They made a breakthrough by putting the design on the pedestal and taking it to the next level, even though they sell a commodity.

HOW TO CLAIM REFUND UNDER GST?

Tax refund refers to the money received back from a tax return. They are a return of excess amounts of tax that a taxpayer has paid to the state or central government throughout the past year. However there are varied situations under which refund can be claimed. GST or Goods and Service Tax is the comprehensive tax brought into effect in order to replace all the other indirect taxes imposed by the state and central government. It is levied on manufacture, sale and use of the goods and services. The amount collected after levying GST will be used to propel the economic growth of the country.

The provisions pertaining to refund contained in the GST law aim to streamline and standardise the refund procedures under the GST regime. Thus, under the GST regime, there is a standardised form for making any claim for refunds. The claim and sanctioning procedure are completely online and time-bound, which is a marked departure from the existing time consuming and cumbersome procedure.

Situations when refund can be claimed

A claim for refund (Source: CBEC GST) may arise on account of:

  1. Export of goods or services
  2. Supplies to SEZs units and developers
  3. Deemed exports
  4. Refund of taxes on purchase made by UN or embassies etc.
  5. Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court
  6. Refund of accumulated Input Tax Credit on account of inverted duty structure
  7. Finalisation of provisional assessment
  8. Refund of pre-deposit
  9. Excess payment due to mistake
  10. Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India
  11. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied
  12. Refund of CGST & SGST paid by treating the supply as intra state supply which is subsequently held as inter-State supply and vice versa

The GST law requires that every claim for refund is to be filed within 2 years from the relevant date.

Procedure for making a refund claim

1. Documentation

Whenever one makes a refund claim, there are a certain set of documents that need to be submitted along with the refund claim. For every claim, the main document prescribed is a statement of relevant invoices (not the invoices itself) pertaining to the claim. In case refund is on account of export of services, apart from the statement of invoices, the relevant bank realisation certificates evidencing receipt of payment in foreign currency is also required to be submitted. If it is a claim made by the supplier to the SEZ unit, an endorsement from the Proper Officer evidencing receipt of such goods/services in the SEZ also needs to be submitted. Further, a declaration is also required from the SEZ unit to the effect that they have not availed ITC of the tax paid by the supplier.

For crossing the bar of unjust enrichment, if the refund claim is less than Rs.2 Lakhs, then a self-declaration by the applicant to the effect that the incidence of tax has not been passed to any other person will suffice to process the refund claim. For refund claims exceeding Rs. 2 Lakhs, a certificate from a Chartered Accountant/Cost Accountant will have to be given. It is to be noted that such document need not be given if it is a claim arising on account of zero rated supplies or claim of accumulated ITC or payment of wrong tax (integrated tax instead of central tax and state tax and vice versa) or a claim where supply is not done or a refund voucher has been issued.

2. Compliance with Natural Justice

If there is any case arising where the applicant’s claim is to be rejected, he/she is given an online notice for the same stating the ground on which the refund is sought to be rejected. The applicant needs to respond online within 15 days from the receipt of such notice. Thus no claim can be rejected without putting the applicant to notice.

3. Payment to be credited online

Digital transfer of payment takes place for crediting the refund. The amount is directly transferred to the applicant’s bank account and he need not come to authorities to collect cheques or cash.

4. Power with the Commissioner to Withhold Refund in Certain Cases

In extreme cases such as the ones where further proceedings may be required or in default cases, Commissioner has the rights and power to withhold refund in such cases. He may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine.

To summarize, following figure is a step by step depiction to easily understand the process.

For step 5, In the case of non-qualification, the refund would be transferred to CWF (consumer welfare fund). The application for refund can be made after every quarter. An amount less than 1000 is not eligible for the refund.

Starters’ CFO has well – trained professionals for resolving your queries regarding refund mechanism under GST. Any other assistance in relation to compliance with GST and related procedures can also be provided here.