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

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.

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.

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.

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
• Direct Tax exemption
• 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.
• Price and purchase preference for goods produced.
• Availability of raw material depending on existing policy.
• 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.
• The organisation does not violate any location-specific restrictions in force, at the time of evaluation.
• Value of plant and machinery is within the prescribed limits.
• 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.
• 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

An association already registered as a company, may also apply for a license u/s 25.

In order to become as Section 25 company, the below criteria is essential:

A license from the Central Government is required to carry on activities as a Section-25 Company. In order to obtain the license from the Central Government, the following conditions are to be fulfilled:

• Company is formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object;
• Company intends to apply its profits, if any, or other income in promoting its objects;
• Company prohibits the payment of any dividend to its members.

Privileges enjoyed by a Section 25 company:

• It need not add the suffix Limited or Private Limited at the end of its name.
• It can be registered even if the share capital is less than the statutory minimum (i.e. even if it is less than 1 lakh rupees and 5 lakh rupees in case of Private limited Companies and Public limited Companies respectively).
• It need not get its Memorandum and Articles stamped in accordance with the Indian Stamp Act, 1899.
• It can hold meeting of the directors once in every six months instead of once in three months.  
• It can increase the number of directors beyond the permissible limits without obtaining permission from the central government.
• It is required to maintain books of accounts only of the past four years instead of eight years.
• It can sell its shares to the public or can accept deposits from public, in order to raise money.

Obligations of a Section 25 company:

• It has to ensure that its profits and all other incomes are utilized only for the purpose of promoting its objects.
• It has to ensure that its profits are not distributed as dividend among its members.
• It can hold meeting of directors once in six months, but four meetings has to be held in a calendar year.
• It should maintain the minutes of every proceedings of every meeting of Board of Directors and Shareholders.
• It should maintain necessary accounting records at his registered office in respect of :

-          All the sums of money received and expended by the company.

-          Assets and Liabilities of the company.

• It should ensure Annual Fillings of returns are done each calendar year with the Registrar of Companies.

Revocation of License:

The Central Government may at any time revoke the license as it thinks fit, after giving reasonable opportunity of being heard.

We, at Cogzidel can assist you in starting a Section 25 company. Please do contact us at info@cogzidel.in

For instance, if a cheque is dated 01-05-2012, it will be necessary to encash the same on or before 31-07-2012. The cheque will not be honoured after 31-07-2012.

The notification has been reproduced below:

“As per the recent RBI Notification No RBI/2011-12/251 DBOD.AML BC.No.47/14.01.001/2011-12 dtd. 4th Nov 2011, the RBI has instructed the member banks that, from 01.04.2012 onwards, the Cheques bearing dates more than 3 months will not be paid by the banks. This is being done to curb the practice of circulating the same like cash for 6 months. At present these instruments are being honoured by the banks for a period of 6 months from the date in the instrument”

BNI is a 27 year old business networking organisation that operates in over 48 countries around the world. Cogzidel is a member of the first Chennai Chapter of BNI, Azure. Recently our CEO had given a testimonial about BNI stating how it has helped a great deal in improving our business and networking. The testimonial goes like this (suitably modified):

“I have generated Business via BNI for over 2.5 lakhs. I must tell that my business and networking skills have substantially developed because of BNI. Learnt how to network, how to improve presentation skills, how to project my business, how to ask for referrals. I have gained lots of friendship and associations, as everyone whom I meet is my target customer. BNI has brought many changes in terms of gaining self-confidence, scaling up my business, enhancing networking skills, doing business presentations, maintaining punctuality and many more.”

Bala Murugan, CEO – Cogzidel Consultancy Services Private Limited

BNI Azure Chapter, Chennai, Member for 1 year

Members of BNI from various parts of the country have also given their testimonials. Please click on the following link to read the rest of the testimonials

http://bni-india.com/member-testimonials/

]]> http://cogzidel.in/blog/2012/02/13/cogzidels-testimonial-on-bni-india-website/feed/ 0 http://cogzidel.in/blog/2012/02/06/how-to-apply-for-pan-for-nris-and-foreign-nationals/ http://cogzidel.in/blog/2012/02/06/how-to-apply-for-pan-for-nris-and-foreign-nationals/#comments Mon, 06 Feb 2012 07:57:32 +0000 admin http://cogzidel.in/blog/?p=1283 India being a country that encourages Foreign Investments, a good number of Foreign Nationals visit India frequently and also wish to start their business ventures here. Apart from capital, premises of business and various other factors, PAN for a Foreigner is essential for smoother operation of business in India

What is a PAN?

PAN stands for “Permanent Account Number”. It is a 10 digit alpha-numeric code generated by the Income Tax Department of India. The tax department has made it mandatory for everyone including NRIs to hold a PAN in order for them to enter into certain types of transactions in India

As per the current Income Tax Rules and regulations read with Income Tax Act, it is mandatory to quote one’s PAN in the following types of transactions.

A. Purchase of Assets

1. Securities

01.  Any contract for sale or purchase of securities of a value of exceeding Rs.1 lakh;

02. Making an application to any mutual fund for purchase of its units for an amount of
Rs.50,000 or more;

03. Making an application to a company for acquiring shares for an amount of Rs.50,000

or more. However, this provision shall apply only for public issue or right issue and
not for purchase through stock broker and from share holder;

04. Making an application to a company or institution for acquiring debentures for an amount
of Rs.50,000 or more;

05. Making an application to Reserve Bank of India for acquiring its bonds for an amount
of Rs.50,000 or more;

2. Other Assets

01. Sale or purchase of any immovable property valued at Rs.5 lakhs or more;

02. Sale or purchase of motor vehicle or vehicles, as defined sec.2(28) of the Motor
Vehicle Act, 1988 (Other than a two-wheeled motor vehicle, whether
having any detachable side car having extra wheel attached to such two-wheeled
motor car or not);

B. Transaction with Banks / Post Office

01. Opening an account with a banking company;

02. A deposit, exceeding Rs.50,000 in any account with Post Office Saving Bank;

03. A Time deposit with a banking company exceeding Rs.50,000. In case of a minor
opening a time deposit account or any other account with a banking company
and who does not have any income chargeable to Income-tax, he shall
quote the Permanent Account Number of his father or mother or guardian,
as the case may be;

04. Cash payment for purchase of bank drafts or pay orders or bankers cheque from a
banking company for an amount aggregating Rs.50,000 or more  during any one day;

05. Cash deposit aggregating Rs.50,000 or more with a banking company during any one
day;

06. Making an application to any bank or banking institution or any company or any
institution for issue of a credit card;

C. Other Transactions

01. Making an application for installation of a telephone connection including a cellular
phone;

02. Payments to hotels and restaurants against their bills for an amount exceeding
Rs.25,000 at any point of time;

03. Cash payment exceeding Rs.25,000 in connection with travel to any foreign country
at any point of time;

04. Demat account opening

05. Getting Loan

06. Applying for VISA or Passport

07. Rental Income

08. Foreign Remittance

How to apply for a PAN?

The procedure for applying pan card is simple and the steps are:

- The requisite application form should be filled up and signed in the appropriate place in ‘black ink’ only and within the boxes provided

- A recent, clear passport size photograph of the applicant needs to be affixed on the form

- Proof of identity and address need to be self-attested and attached with the application

- The following documents are to be submitted:
Proof of identity

Copy of any of the following :
- Passport
- Person of Indian Origin (PIO)card issued by Government of India

Proof of address

Copy of any of the following :
Passport
Bank statement of account in India
Residential permit issued by the State Police Authorities
Registration certificate issued by the Foreigner’s Registration Officer
Person of Indian Origin (PIO)card issued by government of India

If the address to which the PAN is to be delivered is outside India, the documents will be required to be attested by the Indian Embassy in the respective country

On submission of the above and payment of the requisite fee, an acknowledgment slip is given. The acknowledgment number can be used to track the status of the PAN, online

In case of lost/misplaced PAN, a duplicate can be applied for. However, applying for or holding more than one PAN is an offence  punishable with a penalty of Rs.10000/-

For any assistance in applying for a PAN for Resident/Non-Resident Individuals and Companies, please contact us at info@cogzidel.in