/ Chartered Accountant

Basic myths about CA Examination Preparation

CA

Basic myths about CA Examination Preparation

CA is an Exceptionally Difficult Course

The CA curriculum is undoubtedly challenging, with its three levels of examinations and three years of practical training. The syllabus is extensive, requiring both practical and theoretical knowledge. However, with proper planning, hard work, and smart study techniques, success is achievable. Utilizing resources such as the CA Exam Test Series, which offers questions similar to those in actual exams, can significantly ease the preparation process.

Study 16 Hours/Day or Nothing

There is a widespread myth that CA aspirants need to study for 16 hours a day. This is not true; quality of study is far more important than quantity. Understanding and mastering the material is key. Effective study strategies and thorough preparation can lead to success without the need for excessively long study hours. The CA Final Test Series can help by thoroughly testing your knowledge chapter by chapter, ensuring you are well-prepared without the need for marathon study sessions.

Did You Choose Science/Arts? CA is Not for You

Another myth is that students from science or arts backgrounds cannot pursue CA due to a lack of foundational knowledge in accounting. This is baseless as the CA course begins with introductory-level subjects like economics and accounting, making it accessible to students from all educational backgrounds.

CA Will Take 10 Years of Your Life

There is a misconception that becoming a CA will take 8-9 years due to the 21 exams required. However, with consistent effort and proper planning, it is possible to complete the course in 5-6 years, similar to other professional degrees such as BTech to MTech or BA to Ph.D.

They Fail You on Purpose

Some believe that the ICAI intentionally fails students to maintain the prestige and exclusivity of the CA qualification. This is a myth. The ICAI adheres to high standards of impartiality and fairness in its operations, following internationally recognized testing standards.

CA is Only About ITR and GST

Chartered Accountants are not limited to Income Tax Returns (ITR) and Goods and Services Tax (GST). They possess comprehensive knowledge in various fields including auditing, accounting, taxation, mergers and acquisitions, and investment advisory. CAs have the flexibility to start their own practice or join organizations in diverse roles, offering a wide range of career opportunities.

Additional Myths and Clarifications

Sleep

Adequate sleep is essential for effective learning and retention. CA aspirants should aim for 6-7 hours of sleep regularly. Compromising on sleep can negatively impact concentration and productivity.

Social Media

Avoiding distractions from social media platforms like Instagram, Twitter, and Snapchat is crucial. These platforms can hinder your focus and make the preparation journey more challenging. Instead, use social media for study-related purposes, such as connecting with friends to clarify doubts.

Breaks and Relaxation

Taking regular breaks and engaging in activities you enjoy, such as listening to music, playing instruments, reading, walking, or meeting friends, is important for maintaining mental well-being. Allocate 30-40 minutes for these activities to relax and rejuvenate.

Preparation Tips of CA Examination Preparation

Studying Hours

Focus on the quality of your study sessions rather than the quantity of hours. Start with 8-10 hours daily and gradually increase to 14-15 hours as exams approach. Consistency in your study schedule is crucial for success.

Study Materials

Utilize class notes and the ICAI Study Material (ICAI SM) extensively. The ICAI SM is comprehensive and essential for all subjects, providing a solid foundation for your preparation.

Study Pattern

Consider studying during night hours, such as 1 am to 5 am, as these hours can be highly productive and peaceful. The calm environment at night can enhance focus and concentration, making your study sessions more effective.

By debunking these myths and adopting effective study strategies, aspiring CAs can navigate their preparation journey with confidence and clarity.

We provide the following Services i.e ITR RETURN (INDIVIDUAL & COMPANY BOTH), Accounting, Llp incorporation, Pvt ltd incorporation, NGO incorporation, Public limited incorporation, Trademark registration, Nidhi registration, LUT, GEM Registration, GST Registration & , All other compliances consultancy, You may contract us  at 9555 555 480  or email at Singh@caindelhiindia.com

/ INCOME TAX

List of codes NOT eligible for section 44AD

44AD

List of Professions or Businesses, which cannot Opt for Presumptive Taxation Schemes U/s 44AD

Section 44AD is applicable to any Hindu Undivided Family (HUF), resident individual or partnership firm (excluding LLPs) engaged in eligible business, with total turnover or gross receipts not exceeding INR 2 Crores in a financial year.

From FY 2016-17 onwards, professionals are not covered under Section 44AD. They fall under Section 44ADA if their gross receipts do not exceed Rs. 50 lakhs. Under Section 44ADA, 50% of the total gross receipts are deemed to be the income of the professional.

Section 44AD simplifies the tax filing process for small businesses by allowing them to declare income at a fixed rate of 8% of turnover, thereby reducing the compliance burden. However, certain types of businesses and professions, including those involving leasing, commission-based income, and specified professionals, are excluded from this scheme. It is crucial for taxpayers to understand these exclusions and requirements to ensure compliance with the provisions of the Income Tax Act.

44AD

List of codes NOT eligible for section 44AD (Codes related to nature of business)

The presumptive taxation plan u/s 44AD of the Income Tax Act 1961 applies to any resident individual, resident Hindu Undivided Family, or resident Partnership Firm (excluding Limited liability partnerships) with a gross receipts or total turnover of less than INR 2 Crore.  But, Following businesses are excluded from subscribing into the presumptive taxation plan u/s 44AD scheme:

  1. Business earning income from commission or brokerage
  2. Agency business
  3. Business of plying, hiring, or leasing of goods

Moreover that, additionally below list of professions/ businesses / business codes cannot opt for the presumptive taxation scheme u/s 44AD for filling of ITR

List of codes NOT eligible for section 44AD Professions or Businesses

Computer and Related Services:

  • Maintenance & repair of office, accounting and computing machinery: 14008
  • Data Processing: 14003
  • Other IT enabled services: 14005
  • Software development: 14001
  • Database activity and distribution of electronic content: 14004
  • Other software consultancy: 14002
  • BPO services: 14006

Health Care Services:

  • Nursing homes: 18003
  • Pathological laboratories: 18005
  • Diagnostic centres: 18004
  • Speciality and super speciality hospitals: 18002
  • Dental Practice: 18011
  • General hospitals: 18001
  • Ayurveda Practice: 18012
  • Medical clinics: 18010
  • Medical education: 18017
  • Practice of alternative medicine: 18019
  • Unani Practice: 18013
  • Homeopathy Practice: 18014
  • Medical research: 18018
  • Nurses or physiotherapists or other para-medical Practitioners: 18015
  • Veterinary hospitals and practice: 18016
  • Other healthcare services: 18020

Professions:

  • Accounting, book-keeping and auditing profession: 16002
  • Interior decoration: 16008
  • Business & management consultancy activity: 16013
  • Legal profession: 16001
  • Engineering and technical consultancy: 16005
  • Photography profession: 16009
  • Fashion designing profession: 16007
  • Tax consultancy profession: 16003
  • Architectural profession: 16004

Culture and Sport:

  • Literary activity: 20011
  • Individual artists (excluding authors): 20010
  • Other cultural activities: 20012

Others:

  • General Commission Agent: 9005
  • Film artist: 16020
  • Medical profession: 16019
  • Secretarial activities: 16018

Tax Rate and Audit Requirement

  • Assessees can declare income at 8% or more of the total turnover/gross receipts.
  • If the declared income is less than 8%, books of accounts must be maintained, and they need to be audited by a Chartered Accountant.
  • Assessees opting for Section 44AD are not required to pay advance tax. If income is derived from commissions and exceeds Rs. 10,000, advance tax must be paid.

Allowance and Disallowances

  • Disallowances: Assessees opting for Section 44AD cannot claim deductions under Sections 30 to 38, including depreciation.  Assessees cannot claim separate deductions for depreciation. The written down value (WDV) of assets will be calculated as if depreciation has been allowed and claimed under Section 32.
  • Allowances: No disallowance will be made under Sections 40, 40A, or 43B. In case of a partnership firm, additional deductions can be claimed for salaries and interest paid to partners under Section 40(b), but only up to the specified limits.

Section 44AD, 44ADA, 44AE For Business And Professions

/ ITR

Latest Income Tax Return (ITR) Forms update for FY 2023-24

Kind of Tax returns

Latest Income Tax Return (ITR) Forms update for the financial Year 2023-2024

These updates in the ITR forms for FY 2023-24 aim to simplify the tax filing process, enhance transparency, and ensure compliance with evolving tax regulations. Make sure to incorporate these changes while preparing your ITR to avoid any discrepancies and ensure accurate reporting. Share this information with peers to help them navigate the updated tax filing process effectively.

Below mention are detailed breakdown of the key changes:

  • Taxpayer required to report Dividend Income Reporting: dividend income received from a unit in an International Financial Service Centre shall be taxed at a reduced tax rate of 10% instead of 20%. Schedule OS has been amended in new Income tax return forms to incorporate such change in Form ITR 2, 3, 5 and 6
  • Income tax Filing Deadlines: Taxpayers now have a new column in income tax Forms ITR 3, 5 and 6 where they specify the deadline for filing income returns.
  • Taxpayer required to report Employee Stock Option Plans Tax Benefits: Enhanced reporting requirements for ESOPs required to disclosure of Permanent Account Number & Department for Promotion of Industry and Internal Trade Registration Numbers in Form ITR 2and 3.
  • You required to update on Adjustment of Unabsorbed Depreciation: The new provisions allow for the adjustment of unabsorbed depreciation in Form ITR 3 and 5.
  • Deduction under Section 80CCH for Agniveer Corpus Fund : A new column is introduced to claim deductions under Section 80CCH for Agniveer Corpus Fund in Form ITR 1, 2, 3 and 4.
  • Taxpayer required to report Cash Receipts Reporting: A new column for cash receipts reporting has been added to claim an enhanced turnover limit in Form ITR 3, 4 and 5.
  • Taxpayer required additional reporting on maintenance and medical treatment of dependents with disabilities in Schedule 80DD: Similar to Schedule 80U, Schedule 80DD is added to claim deductions for maintenance and medical treatment of dependents with disabilities in Form ITR 2 & 3.
  • Income tax Capital Gains Accounts Scheme Reporting: Detailed disclosure of deposits in the CGAS Scheme is now required in Form ITR 2, 3, 5 and 6.
  • You are needed to report on Start-up Deduction Details: New Schedules for claiming deductions under Sections 80-IAC & 80LA have been introduced in Form ITR 5 and 6.
  • Taxpayer required to report Legal Entity Identifier Details: LEI disclosure is now Compulsory for income tax refunds exceeding Rs. 50,00,00,000/- in Form ITR 2, 3, 5 and 6.
  • Now Taxpayer can verify tax audit via use of Electronic Verification Code: Individuals & HUFs under tax audits (ITR 3) can now verify returns using EVC. This simplifies the verification process & enhances ease of income tax compliance.
  • Now Taxpayer required to report Reasons for Tax Audit: Additional details are required from audited companies in Form ITR 3, 5 & 6 regarding the circumstances necessitating tax audits. This change enhances transparency and accountability in tax reporting the circumstances necessitating tax audits.
  • Online Gaming Winnings Taxation: Schedule OS has been amended to include reporting of income from online gaming in form ITR 2, 3, 5 & 6.
  • Taxpayer now report on Business Trust Sums : A new column under Schedule OS additionally added to allows for reporting sums received by unitholders distributed by business trust to avoid non-taxation in Form ITR 2, 3 & 5.
  • Taxpayer required to report Contributions to Political Party: Schedule 80GGC will require detailed disclosure of political party contributions in Form ITR 2, 3, 5 & 6.
  • Assesses report on all the Bank Account Disclosure: Taxpayers compulsory disclose all bank his accounts held, except dormant accounts in Form ITR 2, 3 & 5.
  • New Schedule 80U for reporting who claiming disabilities: Schedule 80U is added for claiming deductions for persons with disabilities, seeking detailed information in Form ITR 3.

Type of ITR

All the above changes & updates purpose to simplify income tax reporting, enhance transparency, & align with evolving income tax regulations. Save this comprehensive overview for future reference and share it with your peers to help them navigate the tax filing process effectively.

Can updating ITR cost you more than a reassessment?

Can updating ITR cost you more than a reassessment

Which is Better- Old vs New Tax Regime Comparison 2024 ?

We provide the following Services i.e Accounting, Llp incorporation, Pvt ltd incorporation, TAX RETURN (INDIVIDUAL & COMPANY BOTH),  NGO incorporation, Nidhi registration, LUT, GEM Registration, GST Registration & Public limited incorporation, Trademark registration,  All other compliances consultancy. You may contract us  at 9555 555 480  or email at Singh@caindelhiindia.com

/ Business Strategy

Overview on Setting up a Fintech Company in India

Setting up a Fintech Company in India.

Overview on Setting up a Fintech Company in India

  • The Fintech Company In India : Fintech businesses operating in India are subject to various laws and regulations that govern their operations. Under the Companies Act 2013, fintech businesses are required to register and comply with all applicable laws and regulations like any other business in the country.
  • FinTech is a mixture of two words finance and technology. FinTech companies are those that provide financial solutions using technology such as the internet, mobile phones, cloud services, or software technologies. 
  • The combination of finance and technology has emerged as one of the largest business sectors in the financial industry. FinTech is used by MNC, small-scale business industries, & individual customers to improve the management of their financial tasks. Previously, technology was used in Financial Services for back-end services such as organising day-to-day transactions and handling the company’s daily affairs. However, it has evolved and is now an important part of the financial sector.
  • There are numerous fintech companies in India, each offering a wide range of financial technology services. Here are a few example of fintech companies-Paytm; PhonePe; Razorpay; Policybazaar; Zerodha; Lendingkart; MobiKwik; BharatPe, These are just a few examples, and the fintech landscape in India is continually evolving with new startups and innovations emerging regularly.

Fintech Company in India.

What is Fintech framework?

  • Financial technology (better known as fintech) is used to describe new technology that seeks to improve and automate the delivery and use of financial services. ​​​At its core, fintech is utilized to help companies, business owners, and consumers better manage their financial operations, processes, and lives.
  • A fintech integration framework is a set of protocols and standards that can help you connect your fintech solution with other systems and platforms, such as banks, payment providers, and cloud services.
  • Fintech businesses operating in India are subject to various laws and regulations that govern their operations, just like any other business entity in the country. The Companies Act 2013 is one of the key legislations that regulate the establishment and functioning of companies in India, including fintech companies.
  • Under the Companies Act 2013, fintech businesses are required to register themselves as a specific type of company, such as a private limited company, public limited company, or LLP, depending on their structure and requirements. The registration process involves fulfilling certain legal formalities and requirements set forth by the MCA.
  • In addition to the Companies Act 2013, fintech companies in India are also subject to various other laws and regulations, including but not limited to:
  • Fintech companies dealing with payment services, lending, or other financial activities are regulated by the RBI. They need to obtain necessary licenses and approvals from the RBI and comply with its guidelines and regulations related to capital requirements, customer protection, cybersecurity, etc.
  • Fintech companies involved in activities related to securities trading, investment advisory, crowdfunding, etc., may fall under the purview of SEBI Regulations. They need to comply with Securities and Exchange Board of India (SEBI) guidelines, obtain necessary registrations, and adhere to disclosure and compliance requirements.
  • The Fintech companies providing taxable services are required to register under the Goods and Services Tax (GST) Act & comply with GST regulations for invoicing, tax collection, and filing of returns.
  • Fintech companies dealing with electronic transactions, data protection, and cybersecurity are subject to the Information Technology (IT) Act & related regulations. They need to ensure compliance with data privacy and security standards, such as the Personal Data Protection Bill (PDPB), once enacted.
  • Fintech companies engaged in cross-border transactions or foreign investment may need to comply with FEMA regulations governing foreign exchange transactions, capital flows, and repatriation of funds.
  • Compliance with above Law like RBI, FEMA, Co Act, GST law, Income tax Laws, and regulations is essential for fintech businesses to operate legally and sustainably in India while maintaining trust and confidence among customers and stakeholders. Additionally, regulatory compliance helps mitigate risks and ensures the stability and integrity of the financial system.

Setting Up A Fintech Company Operations In India

As a fintech business, devising a business plan is the first step in setting up a fintech company in India, however, one has to consider numerable factors before taking that step. Before moving forward with the strategy, Indeed, devising a comprehensive business plan is crucial for setting up a fintech company in India. Before moving forward with the strategy, it’s essential to consider several factors, as you’ve listed. It sounds like you’re highlighting the potential benefits and challenges of starting a fintech company and suggesting seeking professional assistance to navigate the complexities of the process.it is necessary to consider the indicative list of factors as mentioned below:

  • Identify your fintech business sector: Determine the specific sector within fintech in which you intend to operate. This could include payment processing, lending, wealth management, insurance, blockchain, or any other niche area.
  • Familiarize yourself with the regulations: Understand the regulatory landscape governing fintech operations in India. This includes compliance requirements set forth by regulatory bodies such as the RBI, SEBI, and others.
  • Discover your competitive edge: Conduct a thorough market analysis to identify your unique value proposition and competitive benefit. Determine what sets your fintech offering apart from existing players in the market.
  • Recruit your dream team: Build a talented and diverse team with expertise in technology, finance, compliance, marketing, and other relevant areas. Your team is instrumental in executing your business plan effectively.
  • Select the tech stack: Choose the appropriate technology stack and infrastructure to support your fintech platform. Consider factors such as scalability, security, interoperability, and regulatory compliance when selecting your tech stack.
  • Prioritize data protection: cybersecurity & Data protection are paramount in fintech operations. Implement robust security measures to safeguard sensitive customer information and comply with data protection regulations.
  • Obtain funding: Secure adequate funding to support your fintech venture. Explore various sources of funding, including venture capital, angel investors, bank loans, government grants, and crowdfunding platforms.
  • Develop and enhance: Continuously invest in the development and enhancement of your fintech platform. Stay abreast of technological advancements and market trends to ensure that your offering remains competitive and relevant.

By carefully considering these factors and incorporating them into your business plan, you can lay a strong foundation for your fintech company in India and increase the likelihood of success in the dynamic and rapidly evolving fintech landscape.

Steps To Set Up a Fintech Company In India

  1. Select the Appropriate Business Structure-
      • One Person Company
      • A Limited Liability Partnership (LLP)
      • Private Limited Company
    2. Register for GST
  1. Obtain legal contracts and agreements
      • Co-Founders Agreement
      • License Agreement for Intellectual Property
      • Privacy Policy
      • Website User Policy
      • Terms and conditions for mobile app users
      • Vendor Agreement
      • Product Development Agreement
      • Employment Agreements
    2. Obtain Intellectual property
  1. Licensing
      • For Payment service
      • For P2P
      • For Retail service providers
      • For Financial Management/Investment

6. Register domain name

Services offered by FinTech Company

Fintech companies have expanded their domain at both the micro and macro levels. Currently, such businesses provide a variety of services, such as personalising specialised digital platforms and online accounting software. So, let’s discuss the services that one can obtain from a FinTech company:

  • Peer-to-Peer Lending
  • Retail investment service
  • Crowdfunding services
  • E-commerce payment services
  • InsureTech
  • Regulatory Technology

What is the IFSC fintech incentive scheme?

Empower Indian Fintechs aiming for international markets: The objective of the scheme is to give money to Indian Fintech firms who want to enter international markets. The initiative promotes these businesses to grow internationally and positions India as a centre for Fintech innovation by providing grants and incentives.

Circular related to Framework for FinTech Entity Registration under IFSCA

IFSCA Circular dated April 27, 2022 on “Framework for FinTech Entity in the International Financial Services Centres Authority” empowers International Financial Services Centres Authority to grant Authorization or Limited Use Authorization to all eligible domestic and foreign Techfin/ FinTech entities, as a “Fintech Entity” under the said framework.

IFCCL Expertise In Fintech Company Setup

We have some of the top lawyers in the business on our fintech team. They have offered legal advisories on a wide range of legal issues that have an impact on the day-to-day operations of a typical fintech business. They have also assisted payment gateways and aggregators, drafted commercial agreements, and provided regulatory advice on the evolving regulatory framework (including advice on electronic transactions & payment services & related compliance requirements).

Role Of IFCCL In Setting Up A Fintech Company In India

  • Our team of professionals provides a range of legal services in the Fintech industry, from incorporating a start-up in India to guaranteeing data protection, adhering to regulatory requirements, and handling agreements in an all-encompassing way.
  • To provide the most comprehensive advice on fintech start-up business plans, strategic transactions, regulatory compliance, and litigation matters, we bring together experts from our venture capital, technology, banking and financial, securities litigation and white-collar defence, private investment funds, intellectual property, tax, and labour and employment practises.
  • The Financial Regulatory and Markets Practices at our firm is Professional experts who are the best at what they do & can’t wait to tackle any challenge that comes their way.

Conclusion 

  • In summary, while starting a fintech company holds immense potential, it’s essential for entrepreneurs to seek guidance from knowledgeable legal experts to navigate the complexities of the process effectively. With the right support and expertise, entrepreneurs can increase their chances of success in the dynamic and competitive fintech industry.
  • Fintech company concentrates on using cutting-edge technology for financial services, which makes them quicker and more effective. It will be a good decision to start your Fintech company since the industry seems to have a bright future.
  • Starting a new FinTech company is a difficult process for new entrepreneurs. Hence, consult a reputable and experienced legal expert of Online Legal India if you want to start a top-notch online financial platform. Our knowledgeable professionals will guide you and make the FinTech company registration procedure easier for you.
/ Audit

Income Tax Audit Applicability & Application in India

Myth vs Facts – Decoding Tax Audit u/s 44AB(e):44AD 

Tax Audit 1.

Tax audit 2.

Nature of Business or Profession When audit is Mandatory?

Business loss
In case of loss from carrying on of business and not opting for presumptive taxation scheme Total sales, turnover or gross receipts exceed Rs 1 Crore
If taxpayer’s total income exceeds basic threshold limit but he has incurred a loss from carrying on a business (not opting for presumptive taxation scheme) In case of loss from business when sales, turnover or gross receipts exceed 1 Crore, the taxpayer is subject to tax audit under 44AB
Carrying on business (opting presumptive taxation scheme under section 44AD) and having a business loss but with income below basic threshold limit Tax audit not applicable
Carrying on business (presumptive taxation scheme under section 44AD applicable) and having a business loss but with income exceeding basic threshold limit Declares taxable income that is less than the limitations set by the presumptive tax scheme but more than the basic threshold limit.

All about Presumptive Taxation Scheme us 44AD, 44ADA and 44AE

Presumptive Taxation Scheme u s 44AD, 44ADA and 44AE 2

Presumptive Taxation Scheme u s 44AD, 44ADA and 44AE 3

Quick Comparison: Statutory Audit vs. Tax Audit

Statutory Audit vs. Tax Audit

Aspect Statutory Audit Tax Audit
Governing Act 📌 Companies Act, 2013 (Sec 139-147) 📌 Income Tax Act, 1961 (Sec 44AB)
Applicability 📌 Mandatory for all registered companies, irrespective of turnover 📌 Applicable to Companies, LLPs, Partnership Firms, and Individuals if turnover/professional receipts exceed the prescribed limit
Threshold Limit 📌 No threshold; compulsory for all companies 📌 Required if Business Turnover/Professional Receipts exceed the threshold (Refer attachment for limits)
Purpose 📌 Ensures fairness, reliability, and transparency in financial statements 📌 Ensures accurate tax reporting and proper maintenance of books
Due Date 📌 Within 6 months of financial year-end, before AGM 📌 Due date for filing report: 30th September of the assessment year
Consequences of Non-Compliance 📌 Company Penalty: ₹25,000 – ₹5,00,000
📌 Officers in Default: ₹10,000 – ₹1,00,000 fine OR up to 1-year imprisonment		 📌 Penalty: Lower of 0.5% of turnover or ₹1,50,000

We are transparency and financial discipline. Recognition under the Income Tax Bill 2025 will enhance compliance and accountability in financial reporting.

/ INCOME TAX

Summarization of ITR Forms Under Income Tax Act

Kind of ITR Return

Summarization of ITR Forms Under Income Tax Act

ITR

FORMS

 ELIGIBLE ASSESSEE INCOME FROM SALARY EXEMPT INCOME CAPITAL GAIN INCOME FROM HOUSE PROPERTY BUSINESS INCOME INCOME FROM OTHER SOURCES
ITR-1 RESIDENT INDIVIDUAL AND HUF YES YES, PROVIDED AGRICULTURE INCOME IS UP TO RS. 5000. NO YES, FROM ONLY ONE HOUSE PROPERTY. NO NO
ITR-2 HUF AND INDIVIDUALS. YES YES NO YES NO YES
ITR-3 INDIVIDUALS AND PARTNERS OF FIRMS AND HUFS YES YES NO YES YES YES
ITR-4 FIRM, HUF AND INDIVIDUALS YES YES, PROVIDED AGRICULTURE INCOME IS UP TO RS. 5000. YES YES, FROM ONLY ONE HOUSE PROPERTY. YES, PROVIDED INCOME DECLARED UNDER PRESUMTIVE TAXATION YES
ITR-5 LLPS, PARTNERSHIP FIRMS, AOP AND BOI. NO YES NO YES YES YES
ITR-6 COMPANIES NO YES NO YES YES YES
ITR-7 TRUSTS NO YES NO YES YES YES

ITR FORMS

PROCEDURE

Once the taxpayer identifies the applicable ITR form, they are required to furnish the details asked in the form. Once the details are furnished, follow the following steps –

    1. Download the TDS certificate in Form 26AS and match the amount of TDS deducted, with the amount filled in the ITR form. In case of any mismatch, validate the same accordingly.
    2. Once all the details are furnished and tallied, the taxpayer can calculate their total income for the particular Financial Year.
    3. In the last step, the software will calculate the Tax Liabilities of the assessee, based on the inputs provided by them.

17 updates in the latest ITR Forms for FY 2023-24!

Here’s a detailed breakdown of the key changes:

1. Filing Deadlines: Taxpayers now have a new column in Forms ITR 3, 5 and 6 where they specify the deadline for filing returns.

2. Online Gaming Winnings Taxation: Schedule OS has been amended to include reporting of income from online gaming in form ITR 2, 3, 5 and 6.

3. Adjustment of Unabsorbed Depreciation: The new provisions allow for the adjustment of unabsorbed depreciation in Form ITR 3 and 5.

4. LEI Details: Legal Entity Identifier (LEI) disclosure is now mandatory for refunds exceeding INR 50 crores in Form ITR 2, 3, 5 and 6.

5. Political Party Contributions: Schedule 80GGC will require detailed disclosure of political party contributions in Form ITR 2, 3, 5 and 6.

6. Cash Receipts Reporting: A new column for cash receipts reporting has been added to claim an enhanced turnover limit in Form ITR 3, 4 and 5.

7. Start-up Deduction Details: New Schedules for claiming deductions under Sections 80-IAC and 80LA have been introduced in Form ITR 5 and 6.

8. Dividend Income Reporting: dividend income received from a unit in an International Financial Service Centre shall be taxed at a reduced tax rate of 10% instead of 20%. Schedule OS has been amended in new ITR forms to incorporate such change in Form ITR 2, 3, 5 and 6

9. ESOP Tax Benefits: Enhanced reporting requirements for Employee Stock Option Plans (ESOPs) needs disclosure of PAN and DPIIT Registration Numbers in Form ITR 2and 3.

10. EVC for Tax Audits: Individuals and HUFs under tax audits (ITR 3) can now verify returns using Electronic Verification Code (EVC). This simplifies the verification process and enhances ease of compliance.

11. Reasons for Tax Audit: Additional details are required from audited companies in Form ITR 3, 5 and 6 regarding the circumstances necessitating tax audits. This change enhances transparency and accountability in tax reporting.

12. Business Trust Sums Reporting: A new column under Schedule OS allows for reporting sums received by unitholders distributed by business trust to avoid non-taxation in Form ITR 2, 3 and 5.

13. Bank Account Disclosure: Taxpayers must now disclose all bank accounts held, except dormant accounts in Form ITR 2, 3 and 5.

14. CGAS Reporting: Detailed disclosure of deposits in the Capital Gains Accounts Scheme is now required in Form ITR 2, 3, 5 and 6.

15. Deduction under Section 80CCH: A new column is introduced to claim deductions under Section 80CCH for Agniveer Corpus Fund in Form ITR 1, 2, 3 and 4.

16. New Schedule 80U: Schedule 80U is added for claiming deductions for persons with disabilities, seeking detailed information in Form ITR 3.

17. Schedule 80DD: Similar to Schedule 80U, Schedule 80DD is added to claim deductions for maintenance and medical treatment of dependents with disabilities in Form ITR 2 and 3.

These updates aim to simplify reporting, enhance transparency, and align with evolving tax regulations. Save this comprehensive overview for future reference and share it with your peers to help them navigate the tax filing process effectively.

Income Tax Slab Rates for Residents for Financial Year 2023-2024 for Salary Income under Section 192 & Pension Income under Section 194P

income tax slab

Guide to select correct Income Tax Return. 

Guide to select correct ITRGuide to select correct ITR.

Important Alert in Taxation of RENTAL INCOME- B𝐮i𝐥𝐝𝐢𝐧𝐠 𝐚𝐥𝐨𝐧𝐠𝐰𝐢𝐭𝐡 F𝐮𝐫𝐧𝐢𝐭𝐮𝐫𝐞, F𝐢𝐱𝐭𝐮𝐫𝐞𝐬

  • Income received 𝐑𝐞𝐧𝐭𝐚𝐥 𝐢𝐧𝐜𝐨𝐦𝐞 from 𝐥𝐞𝐭𝐭𝐢𝐧𝐠 out of 𝐛𝐮i𝐥𝐝𝐢𝐧𝐠 𝐚𝐥𝐨𝐧𝐠𝐰𝐢𝐭𝐡 𝐟𝐮𝐫𝐧𝐢𝐭𝐮𝐫𝐞, 𝐟𝐢𝐱𝐭𝐮𝐫𝐞𝐬, 𝐞𝐭𝐜., would be taxable under the head ‘𝐢𝐧𝐜𝐨𝐦𝐞 𝐟𝐫𝐨𝐦 𝐨𝐭𝐡𝐞𝐫 𝐬𝐨𝐮𝐫𝐜𝐞𝐬’ &  𝐚𝐜𝐜𝐨𝐫𝐝𝐢𝐧𝐠𝐥𝐲, 𝐝𝐞𝐩𝐫𝐞𝐜𝐢𝐚𝐭𝐢𝐨𝐧 𝐰𝐨𝐮𝐥𝐝 𝐛𝐞 𝐚𝐥𝐥𝐨𝐰𝐚𝐛𝐥𝐞 as expense in terms of provisions of section 57(iii) of the Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: singh@caindelhiindia.com or call at 9555555480

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/ IBC

Reasons & Consequences of a company become struck off

1

Reasons & Consequences of a company become struck off

  • There are many ways for a company to go out of existence. One of them is having its name removed from the list of company names. This approach may be used by a business that has ceased operations and wants to have its name removed from the registrar’s records.
  • Let’s first describe striking off and liquidation before moving on to the next section of this discussion. Striking off is the phrase we use to describe when a firm is about to be struck off. In contrast, the procedure is finished at the liquidation or dissolution step. When the name is struck from the records, a company is considered liquidated.
  • A company that has been “struck off” the official Registrar of Companies (RoC) is no longer regarded by the law as a legitimate business structure. This may occur for a variety of reasons, including failing to submit necessary paperwork or pay fees to the appropriate regulating body, stopping operations, or ceasing to be active for a lengthy period of time.
  • Being struck off can have major repercussions for a business, such as losing its legal standing, having its assets seized, having its directors potentially held personally liable, having its reputation damaged, and having trouble getting back on its feet.

Reasons a company become struck off:

Striking-off-a-Company.

There are various reasons may lead a company may be struck-off, including:

  • The Company may be struck-off if it Being inactive for an extended period of time:
  • A company may be struck-off if it is found to be conducting fraudulent or illegal activities.
  • In case Company failure to submit required documentsor pay fees to the relevant regulatory agency:
  • Company may be struck-off if it Ceasing to carry on business and has no assets or liabilities,

The process for striking off a company is depending on the jurisdiction in which the company was incorporated and the particular circumstances surrounding the striking off,

Procedure will often begin with the relevant regulatory body sending a notice to the company, giving it a chance to address any problems or provide justifications for why it shouldn’t be deregistered. If the problems are not fixed, the agency may proceed with suspending the company’s operations.

It is important for Directors and shareholders of a company must be aware of their responsibilities and make sure the business complies with all applicable rules and regulations. Failure to do so may result in the company being struck off, which could have detrimental effects on the business

Ministry of Corporate Affairs plans to further intensify Crackdown on Shell Companies : 

According to the report the Ministry of Corporate Affairs is an Indian government ministry primarily concerned with administration of the Companies Act 2013,  is planning to rake up the physical verification of non-functional or non-compliant firms by the Registrar of Companies (ROC). 

Company being struck off- Various Consequences?

reason Striking-off-a-Company

A company being struck off has lots of consequences, including:

· Asset seizure: If a struck-off company has any assets, they may be taken and sold to settle any unpaid liabilities or debts. The business and its stockholders may suffer a large financial loss as a result of this.

·  Reputation damage: Being struck off can damage the reputation of a company and may make it difficult for the company to regain the trust of suppliers, customers & other stakeholders. This could significantly impair the company’s capacity to conduct business and cause a loss of revenue and profit.

· Personal liability for directors: Directors of a company that has been struck off may occasionally be held personally accountable for the company’s debts and liabilities. This is referred to as “lifting the corporate veil.” It is crucial for directors to be aware of their potential personal liabilities and to take the required precautions to safeguard their assets.

· Legal recognition Loss: A company that has been struck off is no longer allowed to run businesses or sign contracts since it is no longer recognised by the law as an authorised structure. This could have negative effects on the business operations and make it difficult for the organisation to stay in business.

· Difficulty restoring the company: Restoring a company can be difficult if it has been struck off the register. The procedure for reviving a firm that has been struck off can be challenging and may call for legal counsel. Before being reinstated, the corporation might also have to make good on any unpaid liabilities or debts, which could be a major financial strain.

Voluntary Strike Off/ Closure Services

We provide Voluntary Closure service for the companies/ LLP who have not filed Annual accounts and returns for previous financial years or since incorporation of the company/LLP or any other possible cases.

Who needs this Voluntary Strike Off/ Closure Services & who can approach us?

  • Company who has not filed Annual accounts & returns for previous financial years.
  • The Company has some pending Charge satisfaction matters and looking to close the company.
  • Company who has any pending Director Dispute matter
  • Any other matter in which the company wishes to file a closure application.

Although the process of closing a company in Delhi, India is simple, it is still advised to start the process online with the assistance of a company strike off specialist. At India Financial Consultancy Corporation Pvt Ltd, we have a team of professionals ready to help and support you at affordable company strike off fees that have excellent understanding of the private limited company closure procedure.

IBC Consultants in Delhi :

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About India Financial Consultancy Corporation Pvt Ltd.  

After growing and gaining experience in the Corporate World over a decade, now have own platform to provide Secretarial and Legal Services with the highest degree of professionalism. Our Co. aims at providing innovative and commercial solutions to corporate entities and has a network of associates in major cities around the country. Time is always the essence of our work. We firmly believe in strong work ethic culture, Few major areas of practice/service are:-

Ø  Drafting of Commercial Agreements/contracts.

Ø  Company Secretarial Services

Ø  Litigation, representation and appearances

Ø  Secretarial Audits

Ø  Legal Due diligence

Ø  Corporate Compliance Management

Ø  IBC law practice’s

Other allied and related services.

India Financial Consultancy Corporation Pvt Ltd is one of the top Company closure consultants in Delhi and offers services for Company Closure in India. With the lowest Company Closure fees, we make this task simple and cost-effective. Therefore, you can email us at Singh@caindelhiindia.com,  or call on 9555 555 480 if you’re looking for someone who can help you strike off your Company or LLP.

/ Accounting Services

How to choose an accounting method ? 

accounting

How to choose an accounting method ? 

  • Using the cash basis of accounting method may appear to lower your tax liability. However, it is probable that it will merely postpone your tax payment However, you will not be able to save any money on taxes
  • Once you’ve opted on an accounting method, you must follow it on a regular basis. If your goal is to save or avoid taxes, you are not allowed to change your accounting system frequently.
  • Unless your receipts are irregular, imprecise, or unpredictable, it appears more sensible to use the Accrual Basis. The Income Tax Act states that books of accounts must be maintained for the purposes of income taxation. Section 44AA and Rule 6F have made these mandatory.

Accrual Basis of Accounting (also called Mercantile Basis)

freelancing income tax india

Accrual Basis of Accounting Cash Basis of Accounting
When a right to receive arises, income is accounted for or recorded. When income, is received it is recorded.
When a payment obligation occurs, expenses are accounted for or booked. Expenses are recorded when they are paid.
When income is booked, tax is due; nevertheless, tax may be due even if income has not been received. Tax liability occurs in the year in which income is received, obliging you to pay tax only when income is obtained.
This method can be used for all types of income, however it is required for salary, house property, and capital gains. Only profits and losses from a business or profession, as well as income from other sources, are allowed to be calculated using this method.
Example 1: You issue your client an invoice for a transaction on February 2nd, but you don’t be paid until April 4th. Based on the date the invoice was sent to the client, the revenue will be recorded in your account. Example 1: When the payment is received, revenue will be accounted for on April 4th (which will be the tax year after the year in which the invoice was raised or work was performed)
Example 2: Your cellphone bill from February 15th to March 15th has arrived. For accounting purposes, this bill will be recorded as an expense in March.

This applies regardless of whether you pay by the 31st of March or not (you may actually pay in the next tax year). When your books of accounts are closed on March 31st for tax purposes, the mobile bill for the remaining 15 days of March will be incurred using a reasonable basis, based on an estimate.

 Example 2: Your cell bill from the 15th of February to the 15th of March has arrived, and if you pay it before the 31st of March, it will be recorded as an expense in the month of March (therefore, gets booked in the same tax year).

If you pay it in April, it will be recorded as an expense in the following tax year (though the expense or mobile usage pertains to the previous tax year).

It’s important to remember that the accounting method you chose must be followed for all clients, all revenues, and all expenditure.

Total taxable income and tax payable

  • Making full use of Section 80 deductions can help you save money on taxes. Section 80C of the Income Tax Act encourages taxpayers to save for the future by providing tax relief on specified expenditure (by giving deductions on investments in financial products).
  • Net Taxable Income = Gross Taxable Income – Deductions
  • By claiming a deduction for the amount actually invested/spent under this clause, you can lower your taxable income by up to Rs.1.5 lakh. If you are under the age of 60 and have a net taxable income of more than Rs.2.5 lakh, you must pay income tax.

Here is how tax will be calculated on your income:

Tax payable for a freelancer

Income-Tax-Rates-for-FY-2020-21-FY-2021-22
If a taxpayer’s total tax burden for the year exceeds Rs.10,000, he or she must pay taxes every quarter. This is referred to as advance tax.

How to calculate advance tax?

  • Calculate your overall income by adding up all of your receipts.
  • Subtract only the expenses that are directly relevant to your job.
  • Include earnings from other sources, such as a rental property or a savings account.
  • Determine your tax slab and compute your tax liability.

Remember to deduct TDS

  • If your tax payment exceeds Rs.10,000, you must pay advance tax by the deadlines listed below.

Due date for Advance Tax

On or before 15th June Not less than 15% of advance tax
On or before 15th September Not less than 45% of advance tax as reduced by the tax paid in the last installment.
On or before 15th December Not less than 75% of advance tax as reduced by the tax paid till the last installments.
On or before 15th March The whole amount (100%) of advance tax as reduced by the tax paid till the last installments.

Difference between accounting and bookkeeping

difference between accounting and bookkeeping

Books of Accounts under income tax law

India Financial consultancy corporation Pvt Ltd specialize in: 

•              Accounting

•              Bookkeeping

•              Payroll

•              Management Accounts

•              Accounts Receivable / Accounts Payable

•              Financial Modeling /Financial Reporting / Financial Statement

•              Taxation

•              Strategic CFO Support

•              Compliance & Reporting

By partnering with India Financial consultancy corporation Pvt Ltd. Services, you can expect:

  • Expertise and Experience:

Our dedicated team brings extensive knowledge and experience in accounting and bookkeeping services. We stay updated with industry best practices to provide you with top-quality solutions.

  • Tailored Solutions:

We understand that every organization is unique, and we customize our services to meet your specific requirements. We work closely with you to ensure our solutions align with your business objectives.

  • Data Security and Confidentiality:

We prioritize the security and confidentiality of your financial data. Our robust data protection measures and strict adherence to privacy regulations guarantee the safety of your sensitive information.

  • Cost Savings and Efficiency:

Outsourcing your accounting and bookkeeping needs to us allows you to reduce overhead costs associated with hiring and training in-house staff. Our streamlined processes and technology-driven solutions enhance efficiency and productivity. We would be delighted to discuss the possibilities of establishing with your company to fulfill accounting and bookkeeping requirements. Let’s set up a time to chat or call for further steps if this is something you are looking for!!

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Online utility of Traces(TDS), income tax, GST, ESI, PF

Online utility of Traces(TDS), income tax, GST, ESI, PF

Online utility of Traces(TDS), income tax, GST, ESI, PF

What is Gst Login portal page?

Gst Login Page:

http://www.gst.gov.in is the official Goods and Services tax website, widely known as the GSTN portal/ GST Portal, which facilitates many kinds of services for GST taxpayers, that is start from taking GST Registration, traversing via GST Return filing, GST Refund application filling, and GST registration cancellation application etc.

http://www.gst.gov.in

How to view my company information from MCA Master Data service?

MCA allows you to look at the your company master data by just entering the company’s CIN. The master data of any LLP  or company can be found at the website below.

http://www.mca.gov.in/mcafoportal/viewCompanyMasterData.do

Employee Provident Fund Login Portal:

PF Portal makes available a lot of its services online. It is useful to both Employer & Employee. Employee Provident Fund office also assists the Central Board in administering a mandatory contributory PF Scheme, an Insurance Scheme and a Pension Scheme for the workforce engaged in the organized sector in India.

https://unifiedportal-emp.epfindia.gov.in/epfo/

ESI Portal Login

Employee State Insurance is a health insurance scheme and self-financing social security for Indian Employee managed by ESIC under the Employee State Insurance Act 1948. Under this scheme, employees earning up to Rs. 21,000 per month should contribute 1.75% towards Employee State Insurance while the employer contributes 4.75% which shall be deposited with the Govt within 15 days from the end of the respective month.

Employee State Insurance corporation is providing a wide range of services using online mode via its portal. Below is the link to Employee State Insurance Portal.

http://www.esic.in/employeeportal/login.aspx

Traces (Tax Deduction, Reconciliation, Analysis and Correction Enabling System) Portal Login:

This is the official website of CPC(Tax deduction at source), Department of Revenue, Ministry of Finance, Government of India.

Centralized Processing Cell (Tax deduction at source ) is a technology-driven transformation initiative for TDS administration that provides a comprehensive solution through its portal TRACES. The Portal has been developed under the National E-Governance Plan of the Govt.

Below online enabled services are available on this portal:

  • Registration for taxpayers and tax-deductors.
  • Electronic filing of Tax deduction at source Statements – Original and Corrections
  • View Statement Processing Status and TDS Defaults
  • View Tax Credit Statement (26AS) of taxpayers
  • Digital Tax deduction at source Certificates – Forms 16/16A/16B in reconciliation with 26AS
  • Justification Report for details of TDS Defaults
  • Consolidated File for submitting corrections to the Tax deduction at source Statements
  • Total Tax deduction at source Compliance Report for Tax-Deductor PAN with multiple associated Tax Deduction and Collection Account Number
  • E -TDS Statement Corrections
  • Secured integration with corporate Tax-deductors
  • Tax deduction at source Refunds

https://www.tdscpc.gov.in/app/login.xhtml

How to check Tax deducted at source Challan Paid?

Challan Status Enquiry for Tax Payers:

Using this feature, taxpayers can track the status of their challans deposited in banks online.

This offers two type of TDS searches:

  1. a) Challan Identification Number (CIN) based view:

On entering Challan Identification Number (CIN) i.e. details such as BSR Code of Collecting Branch, Challan Tender Date & Challan Serial No.) and amount (optional)

The taxpayer can view the following details:

BSR Code, Date of Deposit, Challan Serial Number, Major Head Code with description, TAN/PAN, Name of Tax Payer, Received by TIN on (i.e. date of receipt by TIN)

– Confirmation that the amount entered is correct (if the amount is entered)

  1. b) Tax Deduction and Collection Account Number (TAN) based view:

By providing TAN & TDS Challan Tender Date range for a specified financial year, the Income tax taxpayer can view the below details:

CIN No, Major Head Code with description, Nature of Payment, Minor Head Code

In case income tax taxpayer enters the amount against a CIN, the system will confirm whether it matches with the details of the amount uploaded by the bank or not.

https://tin.tin.nsdl.com/oltas/servlet/TanSearch

How to check TDS Challan Paid status:- 

Challan Status Enquiry for Tax Payers : Taxpayers can track the status of their challans deposited in banks online with the help of this provided feature.

There have two type of searches available –

1st CIN based view, &

CIN based view:-

On entering Challan Identification Number (CIN i.e. details such as BSR Code of Collecting Branch, Challan Tender Date & Challan Serial No.) and amount (optional)

The taxpayer can view the following details:

BSR Code, Date of Deposit, Challan Serial Number, Major Head Code with description, TAN/PAN, Name of Tax Payer, Received by TIN on (i.e. date of receipt by TIN)

– Confirmation that the amount entered is correct (if the amount is entered)

2nd TAN based view.

How to make the application for a TAN Online?

Tax Deduction Account Number (TAN) can be applied through both  offline and online mode. If a person want to apply for TAN through online mode he/she have to application in FORM NO. 49B.

Link of FORM NO. 49B:-

https://tin.tin.nsdl.com/tan/form49B.html

How to Apply for a Pan Online?

Nowadays, PAN (PERMANENT ACCOUNT NUMBER) can be applied online from anywhere. Applying for PAN is a simple and easy process in which the require data must be filled online & after filling correct detail once the form is submitted, some mandatorily document which require should be sent at the NSDL Center as specified. Later, in case of any changes or correction that can also be made online through service portal.

With the help of below link online application can be made for PAN on NSDL website :-

https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html

How to Check Income Tax Refund Status?

The refund originated on processing of ITR (Income-Tax Returns) by the CPC- Bangalore or Assessing officers are transmitted to the , CMP Branch, SBI or Mumbai (refund Banker) on the very next day of the processing for additional distribution to the taxpayers.

Refund could be sent in two defined mode:-

NECS / RTGS: To permit credit of refund straight to the bank account , then Taxpayers bank account no. (which of at least ten digits),Bank branch’s MICR (Magnetic ink character recognition) CODE & correct mentioned address is mandatory.

Paper Cheque: Correct address & Bank Account No. is mandatory.

Amount of the tax can be seen by taxpayer after 10 days of their refund which has been sent by the Assessing Officer  to their refund banker , just by entering correct  ‘Assessment Year’ & ‘PAN’ (PERMANENT ACCOUNT NUMBER)  detail.

https://tin.tin.nsdl.com/oltas/refundstatuslogin.html

Where to Login for Filing ITR?

Online Income tax E-filing Portal – This is the official portal of Ministry of Finance, Income Tax Dept, Govt of India. Above said E-filing Portal has been developed as a Mission Mode Project under National E-Governance Plan. Aim of this income tax portal is to give one window access to income tax-related services for national citizens and related stakeholders.

https://portal.incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html?lang=eng

How to Pay Income Tax Online?

Online tax payment Facility, where the income tax taxpayer can submit online challan & fil it challan through the Internet. The income tax taxpayer must have a bank account with the selected bank’s Debit card/ Net-banking.

https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp

Telangana Commercial Taxes Website:

The Commercial Taxes Department is a pioneer in the use of information technology to offer fair and equitable tax administration. The majority of the Department’s critical functions are now available online. Key Dealer services such as Commercial Taxes Registration, returns & registrations are also available online. Key Online Dealer services are as follows:

  • E-Registration (PT registrations & VAT registrations for Liquor & Petrol)
  • E-waybill
  • E-Payment
  • E-Return

https://www.tgct.gov.in/tgportal/

Useful Taxation support help line No and email address of tax authorities 

Usefull No and Email ID.

/ IBC

Significantly improve ‘Ease of Doing Business in India

Non-Performing Assets (NPAs) of Banks

The Gross Non-performing assets (GNPAs) of banks are expected to Cross ₹10 lakh Crore by March 2022, an ASSOCHAM-CRISIL Joint Study.

“NPAs are expected to rise to 8.5-9 percent by March 2022, driven by slippages in Retail, Micro, Small and Medium Enterprise (MSME) Accounts, besides some Restructured Assets,”

Non-Performing Assets (NPAs) of Banks

Bank Loans are to be recovered through:

  • Earlier –Filing of Cases in Civil Courts.
  • Compromise – Bank, and Borrower.
  • SARFEASI, 2002.
  • DRT / DRAT.
  • Through Lok Adalat.
  • Write-Off the Loans.
  • Sale to ARCs.
  • IBC 2016

Bank Loans are to be recovered through

Why the new code is required to resolve business failures

Why the new code is required to resolve business failures

Limitations under the current process

Limitations under the current process

Why and How It Happens?

  • Liquidity Problem
  • Delay in Operations
  • Disruption in Operation
  • Delay in Payment
  • Operational Loss

Kingfisher Airlines – Case Study

  • Kingfisher launched in 2005
  • Nov-2005 : Ordered 30 Airbus Planes
  • Year-2006 – Despite Losses – KFA ordered more 5 Airbus
  • Year-2011 – Bankers agreed to lend another Rs.8000 crores to restructure loans.
  • Year-2009 – Despite Losses – Launched International Routes
  • Year-2007 – Despite Losses – Buys 26% stake in Deccan Airlines.
  • Dec-2011 – Chairman CBEC considering legal Action against KFA.
  • Year-2012 – Kingfisher starts cancelling flights and Service Tax Dept frozen around 40 Bank A/Cs of KFA. And delay in salary to employees of KFA.

Group Insolvency

  • Group Insolvency is a framework where if multiple entities of a single corporate group go insolvent, their resolutions can be consolidated in one court so that firstly, the group can be restructured as a whole, and secondly, its combined assets can be utilized in the best interest of both the group corporate and the debtor.
  • This structure allows substantive consolidation which enables the clubbing of assets and liabilities of the group members in a way that they can be treated as a single economic organism.
  • The Insolvency and Bankruptcy Code (‘Code’) provides detailed provisions to deal with the insolvency of a corporate debtor on a standalone basis, it does not envisage a framework to either synchronize insolvency proceedings of different corporate debtors in a group or resolve their insolvencies together.
  • Consequently, the insolvency of different corporate debtors belonging to the same group is dealt with through separate insolvency proceedings for each corporate debtor.
  • However, in the insolvency resolution of some corporate debtors, special issues arose from their interconnections with other group companies. While the Code is silent about group insolvency, the courts are trying to fill in this lacuna through judicial pronouncements.
  • Group Insolvency can be tackled by either Procedural Co-ordination or Substantive Consolidation. The process of procedural co-ordination is what the Indian courts have adopted in most group insolvency cases that have been tackled.
  • The Insolvency and Bankruptcy Board of India (‘IBBI’) constituted a Working Group on Group Insolvency on January 17, 2019, which submitted its recommendations for the framework of the procedure of group companies as ‘Report of the Working Group on Group Insolvency’ on September 23, 2019.

Top 12 Defaulters

S.no. Name of CD Successful Resolution applicant Amount  Admitted

(in cr)

 Amount  Realised

(in Rs cr)

 % of Claims  Released
1 Electrosteel Steels Limited Vedanta Limited 13175 5320 40.38
2 Bhushan Steel

Limited

 Bamnipal Steel Limited 56002 35571 63.50
3 Monnet Ispat & Energy

Limited

 Consortium of JSW and

AION Investments Pvt. Lt

 11015 2892 26.26
4 Essar Steel India Limited Arcelor Mittal India Pvt Limited 49473 41018 82.91
5 Alok Industries Limited Reliance Industries Ltd., JM

Financial Asset Reconstruction  Company Ltd.

 29523 5052 17.11
6 Jyoti Structures Limited Group of HNI led by Mr Sharad

Sanghi

 7365 3691 50.12
7 Jaypee Infratech Limited NBCC (India) Ltd 23176 23223 100.20
8 Bhushan Power and steel  Limited JSW Ltd. 47158 19350 41.03

Recovery under IBC v/s Other Forums

                                              Lok Adalats  DRT’s  SARFEASI  IBC
                    Recovery %

                    FY 2018

                  Recovery % 

                 FY 2019

 
                              4%                         5%
                              5%                         3%
                             32%                        14%
                             50%                        43%

Ease of Doing Business in India

  • According to the Ease of Doing Business Report 2020, India’s overall ranking has improved by 67 places to 63rd position among 190 countries since the inception of the Code.
  • With this India earned a place among the world’s top ten improvers in ease of doing business, for the third consecutive  year
  • The Code has improved the India’s ease of doing business’s ranking and also has resulted in better realization of dues by the  creditors

Ease of Doing business in India & Role of ‘resolving insolvency’ parameters

Particulars 2016 2017 2018 2019 2020
Rank   in

Resolving  Insolvency

 136 136 103 108 52
Time (yrs) 4.3 4.3 4.3 4.3 1.6
Recovery  Rate (Cents in  dollar) 25.7 26 26.4 26.5

 

 

 

 71.6

Objectives of the Code IBC, 2016 – Timeline

        2014         2015         2016       2016
August 2014 Bankruptcy Law        Recovery Committee was formed.

 

  

Nov  2015  –    Draft bill  submitted by BLRC

 

 

Dec 2015 – IBC Bill was  introduced in Lok  Sabha

 

 05 May 2016 – Passed by Lok Sabha.

 

 

11 May 2016- Passed by Rajya Sabha

 

  

28 May 2016-Received President’s accent.

 

 

01 Dec 2016 – IBC came in to effect.

 
  • The Insolvency and Bankruptcy Code, 2016 (“Code”) which seeks to streamline and consolidate bankruptcy, insolvency, and liquidation laws in India were introduced in Lok Sabha on December 21, 2015, by Finance Minister, Late Shri. Arun Jaitley.
  • Subsequently, after the incorporation of several comments given by the Joint Committee of Parliament the Code was finally passed by Lok Sabha and Rajya Sabha on May 5, 2016, and May 11, 2016, respectively.
  • Finally, the Code received the assent of the President on the 28th of May 2016.

Preamble States of IBC Code : 

  • “Consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms, and individuals in a time-bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit, and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto”.

Introduction to IBC and Regulatory Framework :-

  • Restructuring laws in India prior to IBC, 2016.
  • Objectives of the Code.
  • Scheme of the Code.
  • Four Pillars of IBC, Insolvency Professionals.
  • Insolvency Professionals Agencies (IPAs).
  • The Insolvency and Bankruptcy Board of India.
  • Adjudicating Authorities: NCLT, NCLAT, and the Supreme Court of India.
  • Insolvency Professional Entities.
  • Legal and Regulatory Framework of the Code.
  • Bankruptcy Law Reforms Committee.

Key Highlights of Insolvency & Bankruptcy Code, 2016

Objective behind the Code:

  • This code seeks to consolidate and amend laws relating to reorganization / revival and insolvency resolution of Corporate Persons, Partnership Firms and Individuals in a time bound manner.

The IBC code seeks to amend the following 11 laws:

  • Indian Partnership Act, 1932.
  • Central Excise Act, 1944.
  • Income Tax Act, 1962.
  • Recovery of Debts due to banks and financial Institutions Act, 1993.
  • Finance Act, 1994.
  • Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
  • Sick Industrial Companies (Special Provisions) Repeal Act, 2003.
  • Payment and settlement System Act, 2007.
  • Limited Liability Partnership Act, 2008.
  • Companies Act, 2013.

Repeal 2 Laws

  • Presidency Towns Insolvency Act, 1909.
  • Provincial Insolvency Act, 1920

Benefits of Insolvency & Bankruptcy Code, 2016

  • Time bound settlement of Insolvency.
  • The Insolvency and Bankruptcy Board of India will keep watch.
  • Banks and Asset reconstruction companies immediate gainers.
  • Locked-up assets will be freed.
  • Comprehensive Coverage – Companies, Partnerships, LLP, Individuals and more can be added.
  • Faster turnaround of Businesses
  • Database of serial Defaulters.
  • Shift from Equity to Debt.
  • Creation of Bankruptcy Regulator.
  • Protect workers
  • New Class of Insolvency Professionals.
  • Lift lender comfort.
  • Significantly improve ‘EASE OF DOING BUSINESS’.

IFCCL  Services

India Financial Consultancy Corporations Pvt Ltd offer a range of services as per your needs : – 

  1. Risk Management and Internal Audit: Review of Operations, Illustrative Coverage in Business Processes, Management Issues tailored as per your needs.
  2. Taxation: Transactional advice and tax planning relating to Corporate, Non-Corporate Entities etc.
  3. Advisory Services: Business Strategy, Corporate Restructuring, Corporate Finance, Shareholder Wealth Management, Corporate Governance, Building Accounting Manuals, Global Accounting Services.
  4. Valuations: Business Valuation, Real Estate, Brands, Intangible Assets, Securitization etc.
  5. Financial Reporting & Compliances: Setting Up, Running and Supervising Financial Accounting, Tax Payments (Direct, Indirect and Employee Related), including MIS, Interim Financial Statements, Data Analytics and More…
  6. Regulatory Filings: Filings with MCA (ROC), RBI, FEMA, FCRA, Municipal Corporation, Sub Registrar
  7. Legal Advisory & Support: We support in managing your litigations by coordinating with lawyers on our panel or as identified by client to offer support and systematic approach.
  8. IBC Services : We offer solutions related to IBC related services, like handling matters relating to Resolution Plan and related compliances under Corporate Insolvency Resolution Process (CIRP) and Pre-packaged Insolvency Resolution Process (PP-IRP).
  9. Family Office Service: Overall taxation impact minimization.