Are you an Exporter/Importer? Read on!!

Posted By admin   |   Posted On May 17th, 2012

Cogzidel would like to inform its readers about a recent circular from the Reserve Bank of India (RBI). The  Circular about Exchange Earner’s Foreign Currency (EEFC) Account (Circular no. 124 dated 10 May) states that, in respect of all future forex earnings, an exchange earner is eligible to retain 50% in non-interest bearing EEFC accounts. The balance 50% shall be surrendered for conversion to rupee balances. Previously, an exchange earner was allowed to retain the entire 100% in EEFC accounts.

Full circular is reproduced below:

RBI/2011-12/547
A. P. (DIR Series) Circular No. 124

May 10, 2012

To

AD Category I Authorised Dealer Banks

Madam/ Sir,

Exchange Earner’s Foreign Currency (EEFC) Account

“Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to A.P. (DIR Series) Circular No.15 dated November 30, 2006 in terms of which all foreign exchange earners were permitted to retain 100% of their forex earnings in EEFC account with any AD in India.

2.  On a review of the Scheme, it  has been decided as under :-

a)  50% of the balances in the EEFC accounts should be converted forthwith into rupee balances and credited to the rupee accounts as per the directions of the account holder.  This process may be completed within a fortnight from the date of the circular and compliance reported to the Chief General Manager, Foreign Exchange Department, Central Office, Trade Division, Amar Building, Sir P.M. Road, Fort, Mumbai 400 001

b)  In respect of all future forex earnings, an exchange earner is eligible to retain 50% (as against the previous limit of 100%) in non-interest bearing EEFC accounts.  The balance 50% shall be surrendered for conversion to rupee balances.

c)  The facility of EEFC scheme is intended to enable exchange earners to save on conversion/transaction costs while undertaking forex transactions in future. This facility is not intended to enable exchange earners to maintain assets in  foreign currency, as India is still not fully convertible on Capital Account.  Accordingly, EEFC account holders henceforth will be permitted to access the forex market for purchasing foreign exchange only after utilising fully the available balances in the EEFC accounts.  ADs may, accordingly, obtain a declaration while selling foreign exchange to their constituents.

3.  It may be noted that the provisions at paragraph 2(b) and 2(c) above will apply, mutatis mutandis, also to holder of  either a Resident Foreign Currency  Account (RFC) or a Diamond Dollar Account (DDA).

4. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.”

Yours faithfully,

(Rashmi Fauzdar)
Chief General Manager

 

Posted in Statutory Matters | No Comments »

Another financial year has ended! Have your company’s books been audited?

Posted By admin   |   Posted On May 11th, 2012

A private limited company is a company incorporated under the Companies Act, 1956 with a minimum paid-up share capital of Rupees One Lakh or such higher capital as may be prescribed and its Articles shall prohibit invitation or acceptance of deposits from the public. It must comply with the legal provisions laid down by the Companies Act, Income Tax Act and various other statues. One of the important legal obligations of private limited companies is to get their accounts audited and to file the Income Tax (IT) and Registrar of Companies (RoC) returns for every financial year ending March 31st

Obligations of private limited companies

In detail the obligations of private limited companies are listed below, with regard to accounting, auditing, statutory audit and ROC filing:

Accounting or Maintenance of books of accounts for the financial year 2011-12:

- Books of accounts need to be prepared for the period April 2011 to March 2012

- The books of accounts need to be audited by a Chartered Accountant appointed as the auditor of the company

- Income Tax liability needs to be computed and the income tax due needs to be remitted

- On remittance of the income tax liability, the Income Returns need to be filed with the IT department on or before 30th September 2012

- The audited accounts need to be filed with the RoC through appropriate forms within 30 days from the date of the company’s Annual General Meeting (AGM)

- The annual returns need to be filed with the RoC through the appropriate form within 60 days from the date of AGM

Audit of books of accounts:

Statutory Audit is an Audit of Books of Accounts to comply with statutes such as Companies Act, 1956 and Income tax Act, 1961. Every company incorporated under the Companies Act, 1956 is required to get its accounts audited by a Chartered Accountant in Practice to ensure true and fair view of the accounts.  Statutory Audit is a legal review of the accuracy of the company’s financial records.

Statutory Audit:

-    Statutory Audit is a mandatory and legal requirement for all private limited companies registered under the Companies Act, 1956

-     Statutory Audit is done to get a fair and accurate representation of the financial position by examining information such as bank balances, bookkeeping records and financial transactions.

-     Statutory Audit ensures reliability of annual accounts of the company for various users of the books of accounts of the company like government, debtors, creditors and bankers etc..

RoC requirements:

Registrar of Companies appointed under Section 609 of the Companies Act, ensures whether the companies are complied with the statutory requirements. All the companies registered under the Companies Act are required to file the financial statements and annual return every year with the RoC. Default in filing and complying with these statutory requirements will lead to many complications in the future. Continuous default in complying with the statutory requirements may result in striking off of the name of the company by the Registrar of Companies.

Posted in Entrepreneurship, Statutory Matters | No Comments »

Rajiv Gandhi Equity Savings Scheme (RGESS)

Posted By admin   |   Posted On April 24th, 2012

What is a Stock Market?

As per Securities Contract (Regulation) Act 1956, stock market means any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying and selling or dealing in securities. The Stock Market a platform for buying and selling of securities. It facilitates the exchange of securities (share, debenture etc) in to money and vice versa.

Rajiv Gandhi Equity Savings Scheme (RGESS):

The Finance Minister has introduced a new scheme called ‘Rajiv Gandhi Equity Savings Scheme’ in the Union Budget 2012-2013. Rajiv Gandhi Equity Savings Scheme benefits investors to avail tax exemption by making direct equity investments in the stock market.

Rajiv Gandhi Equity Savings Scheme was announced by the Finance Minister to encourage the retail investors’ participation in the stock market. Retail investors are those who purchase small quantities of securities in the stock market as opposed to ‘institutional investors’.

A scheme similar to Rajiv Gandhi Equity Savings Scheme was first introduced in Belgium, followed by France and some East European countries. The scheme was highly successful in France and helped in increasing the retail investors’ participation to a greater percentage.

Features of RGESS:

- The scheme is applicable to investors whose annual income is below Rs. 10 Lakh

- The investment under this scheme must be made in direct equities

- The amount of investment in direct equities are subject to maximum of Rs.50,000

- The scheme is subject to a lock in period of 3 years

If the investor satisfies the above conditions, he will be able to avail a tax deduction of 50% of the investment made. For instance, if an investor invests Rs.50000 he can claim Rs. 25000 (50% of Rs. 50000) as tax deduction.

Benefits:

- The scheme helps to bring in large amount of equity investors and also helps in generating long-term money in to the stock market.

- Under this scheme the investors will be allowed to invest in the top 100 companies listed on BSE and NSE.

- Unlike mutual funds which are meant for indirect participation in the stock market, with no involvement of the asset holder, the RGESS aims at encouraging direct participation in the stock market.

- The retail investors can avail 50% tax deduction under this scheme.

- The 50% tax deduction will certainly be a big incentive to retail investors to enter into the stock market.

- The Finance Minister had also proposed to cut the Securities Transaction Tax (STT) from 0.125 per cent to 0.1 per cent with effect from July 1 to reduce transaction cost for equity investment.

- The scheme helps the government in channelizing household savings into stock markets

Key differences between RGESS and Equity Linked Savings Scheme (ELSS):

- The RGESS is limited to only a class of investors (i.e. whose annual income is less than Rs 10 lakh). In case of ELSS, the benefit is available to all retail investors.

- RGESS stresses on direct participation of investors in stock market. Under ELSS, indirect participation of investors takes place through Mutual Funds.

- RGESS offers an income tax deduction of 50% on the amount of investment. ELSS offers income tax deduction up to Rs 1 lakh under section 80C.

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How to get an Import Export Code (IEC)?

Posted By admin   |   Posted On April 17th, 2012 


What is an IE Code:


IE Code stands for Import Export Code. IE Code number is a unique 10 digit code issued by the DGFT – Director General of Foreign Trade, Ministry of Commerce and Government of India to facilitate import or export in India.


Need for IE code Registration:


IE Code number is authenticated as the primary document by Government of India to identify the person or entity as an importer/exporter.


A Sole Proprietor or Partnership firm or Company which has obtained the IE Code number, are entitled to receive the benefits under various departments. They are eligible to avail benefits on the imports or exports made by them under the departments namely:


- Director General of foreign Trade


- Customs Act


- Export Promotion Council


IE Code registration is Mandatory, in case of:


IE Code number is mandatory for any person or entities like Partnership Firm or Companies, if they make any import or export in India for commercial purposes.


As per law, no person or entity shall make any Import or Export without IE Code number.


Procedure for IE Code registration:


An application for grant of IE Code number shall be made by the applicant to the nearest Regional Authority of Directorate General Foreign Trade (DGFT), along with the  prescribed documents and fees. As an acknowledgement of the application, a receipt having “File Number” will be generated and issued to the applicant by the authority of DGFT.


The IE Code application will be then scrutinized by the authority of DGFT and the application may be accepted or declined by the authority, at the end of the scrutiny. The acceptance or rejection will be intimated to the applicant, in the below manner:


- If the application is found with all details in the prescribed form (as required), an  IE Code number will be generated by the authority and will be sent by post to the  address mentioned in the application.


- If the application is not in the prescribed form with all the details, a deficiency letter will be generated and the same will be sent by post to the applicant to the address mentioned in the application.


Validity of IE Code number:


The IE Code number which is generated and allotted by the DGFT department to the applicant will remain valid to all its branches/divisions/units/factories as indicated in the IE Code application.


IE Code registration – Exempted Categories:


- All Ministries/Departments of the Central Government.


- All Ministries/Departments of the State Government.


- Import or export made by Persons /Institutions / Hospitals for personal use and not connected with commercial purposes such as for trading, manufacturing etc.


- Persons importing/exporting goods from/to Nepal provided the CIF (Cost, insurance and freight) value of a single consignment does not exceed Rs.25,000.


- Persons importing/exporting goods from/to Myanmar through Indo-Myanmar border areas provided the CIF (Cost, insurance and freight) value of a single consignment does not exceed Rs.25,000.


- Persons / Charitable Institutions / Registered NGOs importing goods which are exempted from Customs duty under Notification issued by Ministry of Finance.


- Entities that are authorized by the Reserve Bank of India are entitled to make non-commercial imports and exports.


Issuance of duplicate IE Code number:


Duplicate IE Code number will be issued by the authority of DGFT, if the IE Code number is lost or misplaced. On receipt of the request made by the applicant for duplicate IE Code number, the authority may grant a duplicate IE Code number, if accompanied by an affidavit.


Surrender of IE Code number:


The IE code number shall be surrendered by the IE code holder, if he wishes not to make any import or export. The IE Code holder can surrender the IE Code number by informing the same to the issuing authority. On receipt of the request made by IE Code holder, the issuing authority will cancel the same and he will intimate the cancellation to the Customs and Regional authorities.

				


				
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What is SSI Registration?

				Posted By admin   |   Posted On April 10th, 2012

				

					
SSI Registration 


SSI stands for Small Scale Industries. Registering an organisation as an SSI will entitle the organisation to various benefits. A brief account of SSI registration, procedures and benefits are given below


Benefits of Registering:


Even though there is no statutory basis for SSI registration, organisations would normally get registered to avail some benefits, incentives or support given either by the Central or State Government. Some of the incentives are as follows:


    

  • Credit prescription (Priority sector lending), differential rates of interest
    • 

  • Excise Exemption Scheme
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  • Direct Tax exemption
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  • Statutory support
    • 



Banking Laws, Excise Law and the Direct Taxes Law have incorporated the word SSI in their exemption notifications. Though in many cases they may define it differently, generally the registration certificate issued by the registering authority is seen as proof of being registered as an SSI


States/Union Territories have their own set of facilities and incentives for small scale industries. They relate to development of industrial estates, tax subsidies, power tariff subsidies, capital investment subsidies and other support. Both the Centre and the State Governments, whether under law or otherwise, target their incentives and support packages generally to organisations registered with them.


Objectives of Registration under the SSI scheme:


    

  • To have track of small scale industries to which the incentives and support can be targeted.
    • 

  • To provide a certificate enabling the organisations to avail statutory benefits and protection.
    • 

  • To enable collection of statistics.
    • 

  • To create nodal centres at various levels to promote SSI.
    • 



Features of SSI Scheme:


    

  • District Industries Centre is the primary registering authority
    • 

  • Registration is voluntary and not mandatory
    • 

  • There are two types of registrations. Initially, a provisional registration certificate is issued and after commencement of  production, a permanent registration certificate is issued
    • 

  • The provisional registration certificate is valid for a period of 5 years and permanent registration is given in perpetuity.
    • 



The permanent registration certificate entitles the organisation to the following benefits:


    

  • Income-Tax exemption and Sales Tax exemption as per State Govt. Policy.
    • 

  • Incentives and concessions in power tariff etc.
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  • Price and purchase preference for goods produced.
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  • Availability of raw material depending on existing policy.
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  • Permanent registration of tiny units should be renewed after 5 years.
    • 



Registration Procedure:


    

  • An organisation can apply for provisional registration certificate for any item that does not require an industrial license.
    • 

  • On receipt of application, a provisional registration certificate is issued without any further field enquiry
    • 

  • Once the organisation commences production, it will be required to apply for permanent registration in the prescribed form.
    • 



The following factors are considered while issuing the permanent registration certificate


    

  • The organisation has obtained all necessary clearances whether statutory or administrative.
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  • The organisation does not violate any location-specific restrictions in force, at the time of evaluation.
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  • Value of plant and machinery is within the prescribed limits.
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  • Organisation is not owned, controlled or subsidiary of any other industrial undertaking as per notification.
    • 



De-Registration:


A Small Scale Organisation’s registration can be revoked if the following conditions are violated


    

  • Investment limits are crossed.
    • 

  • Manufacturing of a new item or items that require an industrial license or other kind of statutory license.
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  • It violates the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.
    • 



Cogzidel can help you in getting your SSI registered.. For any assistance in SSI registration please contact us at info@cogzidel.in

				


				
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