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The Start-up India Initiative

Every individual with a path-breaking idea wishes to turn it into a reality. Unfortunately, they do not possess the knowledge of the pre-requisites to conceptualise it. This is where the Start-up India Initiative comes into picture.

Overview:

The Startup India Initiative is a flagship initiative of the Government of India, intending to build a strong eco-system for nurturing startups and innovations in the country. This will enable a sustainable economic growth and generation of large scale employment opportunities in India. 

Benefits:

How can a start-up benefit from this initiative?

A start-up can benefit from this initiative in the following ways:

1.       One stop Registration

To commence operations, a start-up would need to get themselves registered with the relevant regulatory authorities. They might face uncertainty regarding the exact procedure to be followed and the list of necessary documentation. To help an organisation with this, a start-up can download the Government of India (GoI) app for android phones here.

The mobile app will help the start-up in the following ways:

  1. Registration:
  • The app will register your start-up with the relevant agencies of the government. It will provide you with a simple form for the same.
  1. Tracking:
  • The start-up will be able to track the status of the registration application and download the registration certificate at any given time. The mobile app will provide a digital version of the final registration certificate which can be easily downloaded.
  1. Compliance:
  • The app will help the start-up file for compliances and obtain information on various clearances, approvals and registrations required.
  1. Networking:
  • The app provides a collaborative platform with a national network of stakeholders (venture funds, incubators, academia and mentors) of the start-up ecosystem.
  1. Schemes:
  • The app will help you apply for various schemes that are being undertaken under the Start-up India Action Plan.

2.       Self-certification for Compliance

In order to make it easier for start-ups to be compliant to all applicable laws and regulation, the government has made a few simplifications. While other agencies certify normal companies for their compliance, start-ups can self-certify themselves.

They can do so through the start-up mobile app with the below mentioned nine labour and environment laws.

The labour laws:

  • The Building and Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
  • The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
  • The Payment of Gratuity Act, 1972
  • The Contract Labour (Regulation and Abolition) Act, 1970
  • The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  • The Employees’ State Insurance Act, 1948

The environment laws:

  • The Water (Prevention & Control of Pollution) Act, 1974
  • The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003
  • The Air (Prevention & Control of Pollution) Act, 1981

In case of labour laws, the government will not conduct any inspections for a period of 3 years. The start-up will be inspected only on receipt of credible and verifiable complaint of violation (filed by an officer who’s at least one level senior to the inspection officer).

  • If a start-up falls under the “white category” (as defined by the Central Pollution Control Board), they will be able to self-certify compliance and only then random checks would be carried out.

3.       Start-up India Hub

The government understands that many start-ups do not reach their full potential due to limited guidance and access to financial assistance. Therefore, it has set-up a platform called ‘Start-up India Hub’ where start-ups can easily collaborate with key stakeholders, receive financial assistance, and guidance under mentorship programmes.

The Startup India Hub will provide the following support and assistance:

  • The Hub will work in a Hub & Spoke model and help a start-up collaborate with Central and State governments, Indian and foreign venture capitalists (VCs), Angel networks, Banks, Incubators, Legal partners, Consultants, Universities, and R&D institutions.
  • It will assist a start-up in obtaining financing, conducting feasibility testing and providing advisory services for business structuring.
  • The Hub will help you enhance your marketing skills, technology commercialization, and management evaluation.
  • It will organise mentorship programmes in collaboration with government organisations, incubation centres, educational institutions and private organizations who aspire to foster innovation.

Note:

The Hub will be operational from 10:00 AM to 5:30 PM on working days and can be reached via the toll free number: 1800115565 or the email ID: dipp-startups@nic.in

Register to the Hub online by clicking, here

4.       Relaxed norms of public procurement for Start-ups

In order to provide an equal opportunity to start-ups in the manufacturing sector, the government has relaxed the norms for public procurement. The eligibility criteria for a Normal Company to bid for the tenders floated by the government entity or a public sector undertaking (PSU)requires ‘prior experience’ or ‘prior turnover’.

Therefore, in order to help start-ups, the government has exempted them from the criteria of ‘prior experience/turnover’. However, there will be no relaxation in quality standards or technical parameters. A start-up will have to demonstrate the necessary capabilities to execute the project as per requirements and they should have their manufacturing facility in India.

5.       Faster exit for Start-ups

Even though start-ups are highly innovative in nature, they have lower success rates. The government understands that when a start-up fails, it is critical to reallocate capital and resources to more productive avenues.

To tackle this critical situation, the government has proposed a swift and simple process that start-ups can follow to cease their operations. This initiative helps first-time entrepreneurs to experiment with innovative ideas without having to worry about facing a long-drawn exit process where their capital tends to be interminably stuck.

As per the Insolvency and Bankruptcy Bill 2015 (IBB), if a start-up has a simple debt structure or has met all the specified criteria, they can discontinue their operations within a period of 90 days from the time of submitting the application.

In such instances, the government appoints an insolvency professional who would be in charge of the start-up in place of the promoters and management. The professional will take care of liquidating the start-up’s assets and pay its creditors within six months of their appointment. This process respects the concept of limited liability.

6.       Credit guarantee fund for start-ups

The major concern for most start-ups is receiving funding support for their business ventures. The government understands that in order to encourage experimentation among budding entrepreneurs, they need to provide a type of credit guarantee comfort.

The Department of Industrial Policy and Promotion (DIPP) are therefore in the process of setting up a corpus of ₹2,000 crore that will provide 80% risk cover and hence enable banks and financial institutions to provide collateral free credit to start-ups. The government has also envisaged a credit mechanism scheme through National Credit Guarantee Trust Company (NCGTC) and SIDBI with a budgetary corpus of ₹500 crore for the next four years.

7.       Providing funding support through a Fund of Funds with a corpus of ₹10,000 crore

In the initial stages of the establishment of a start-up, it is highly difficult for them to gain financial assistance. This is mainly because the start-up might lack collateral or not have any existing cash flow. Also as the probability of a start-up failing is really high which make them an unattractive investment.

Therefore, the government has set up a fund with an initial corpus of ₹2,500 crore and a total corpus of ₹10,000 crore over a period of four years. This fund would be in the nature of ‘Fund of Funds’ which will be managed by SIDBI. The fund will invest in SEBI registered Alternative Investment Funds (AIFs) which, in turn, will invest in start-ups.

This fund would help a start-up attract private capital in the form of equity, quasi-equity, soft loans and other risk capital.

The key highlights of the ‘Fund of Funds’ are as follows:

  • Life Insurance Corporation (LIC) of India will be a co-investor in the ‘Fund of Funds’
  • A wide range of sectors will be covered under this fund. The sectors covered will include manufacturing, agriculture, health care and education
  • A contribution of up to 50% will be made by the ‘Fund of Funds’ to the daughter fund. In order to be eligible for contribution by the ‘Fund of Funds’ the daughter fund should have already raised 50% or more of the stated fund

8.       Tax exemption on capital gains

Investing in a start-up during its initial stages is very risky, hence the government has come up with various incentives in order to attract investors. Investors can now avail exemption on capital gains, if the gains are invested in the ‘Fund of Funds’ recognised by the government.

This will in turn increase the funds available to various VCs/AIFs for investment in start-ups. The government has also extended the existing capital gain tax-exemption for investment in newly formed start-ups.

In order to avail the exemption, the entity needs to purchase new assets with the capital gains received. Investment in computer or computer software will also be considered as purchase of new assets.

9.       Tax exemption to Start-ups for 3 years

The government is aware of start-ups making significant capital investments in order to embrace ever-changing technology, combat rising competition, and overcome the challenges of running a start-up.

In order to facilitate the growth of start-ups and provide them with a competitive edge, they will be exempted from paying income tax for a period of 3 years. Start-ups that are incorporated between April 1, 2016 and March 31, 2019 will be eligible for the exemption.

To avail this benefit, the start-up must also get a Certificate of Eligibility from the Inter-Ministerial Board. Start-ups should not distribute dividends in order to avail the exemption.

10.     Tax exemptions on investments above Fair Market Value

Under the Income Tax Act, 1961, any consideration received for the issue of shares that’s above the ‘Fair Market Value’ (FMV) of such shares, the excess consideration received is taxable under ‘Income from Other Sources’. However, when it comes to start-ups, it becomes difficult to determine the FMV of these shares. The FMV generally tends to be significantly lower than the value at which the capital investment was made.

Under the Start-up India plan, start-ups are exempted from paying this tax. Therefore, investments can be made by venture capital funds and incubators without being taxed.

11.     Organising start-up fest for showcasing innovation and providing a collaboration platform

In order for a start-up to grow, it is necessary to have regular communication and collaboration within the start-up community, i.e., both national as well as international. However, an effective start-up ecosystem is dependent upon the participation of academia, investors, industry and other stakeholders.

In order to strengthen the start-up ecosystem in India, the Government has introduced start-up fests at the national and international level.

These fests will help a start-up showcase their work in front of a larger audience comprising of potential investors, mentors, and fellow start-ups. There will be one fest held at the national level on an annual basis. This will help all the stakeholders of a start-up ecosystem to come together at one platform.

There will also be one fest held at the international level on an annual basis. This will be held in an international city that is known for its start-up ecosystem. The fest will be full of activities and interactive sessions.

It will have exhibitions and product launches, where start-ups can pitch their ideas. It includes:

  • Mentoring sessions
  • Curated start-up walks
  • Talks by disruptive innovators
  • Competitions such as Hackathon, Makerspace, etc.
  • Announcements of rewards and recognitions
  • Panels and conferences with industry leaders, etc.

12.     Building innovation centres at National Institutes

The government understands there’s a need to increase the incubation and R&D efforts in the country. It

Under this initiative, the following benefits will be provided:

  • The government shall set-up 13 start-up centres
  • An annual funding support of ₹50 lakh will be provided for 3 years in order to encourage student driven start-ups from the host institute. The funds will be provided by the Department of Science (50%) and the Ministry of Human Resource Development (50%)
  • The government shall set-up or scale-up 18 Technology Business Incubators (TBI) at NITs/IITs/IIMs etc

The start-up centres and TBIs will be set-up at the following locations –

Start-up Centres Technology Business Incubators
RGIIM Shillong NIT Goa MANIT Bhopal IISER Bhopal NIT Warangal
NIT Delhi NIT Agartala NIT Rourkela IIM Rohtak MNIT Jaipur
MNIT Allahabad NIT Silchar NIT Jalandhar IIT Mandi NIT Tiruchirappalli
VNIT Nagpur IIT Bhubaneswar IIM Udaipur IISER Mohali IIT Patna
IITDM Kancheepuram NIT Patna NIT Calicut IIT Roorkee
PDPM – IITDM Jabalpur NIT Arunachal Pradesh IIT Ropar IIM Kozhikode
ABVIIITM Gwalior IISER Thiruvananthapuram IIM Raipur

13.     Setting up of seven new research parks modelled at IIT Madras

In order to promote innovation through incubation and joint R&D efforts between academia and industry, the government will set up seven new Research Parks. These will be modelled based on the existing Research Park at IIT Madras. Each Research Park will require an initial investment of ₹100 crore.

The government plans to set-up Research Parks at the following locations –

  • IIT Guwahati
  • Hyderabad IIT
  • IIT Kanpur
  • IISc Bengaluru
  • IIT Kharagpur
  • Gandhinagar IIT
  • IIT Delhi

IIT Madras Research Park tries to enable companies who want to focus on research to set up a base in the Park. These companies can make use of the expertise provided at IIT Madras. The Research Park breaks down the traditional, artificial barriers of innovation through its connectivity and collaborative interaction.

This will help the industry to create, integrate and apply advancements in knowledge. It leverages the best practices from successful Research Parks such as those at Stanford, MIT, and Cambridge.

The guiding principles behind the park assist start-ups:

  • To create a collaborative environment between the industry and academia through joint research, projects, and consulting assignments
  • Create a self-sustaining and technologically fertile environment
  • To encourage and enable R&D activities and start-ups which are aligned to potential needs of the industry
  • Provide world class infrastructure for R&D activities and incubation
  • To enable development of high quality personnel and motivating professional growth for researchers in companies through part time Masters and PhD Programs

14.     Harnessing private sector expertise for incubator setup

The government is aware about the lack of incubation facilities across India.

The incubation facilities include physical infrastructure, provision of mentorship support, access to networks, and access to markets. The government can provide the capital required for setting up the physical infrastructure. However, the technical skills required for operating on an incubator are also pivotal. For this, expertise from the private sector can be sought.

Thus considering all of this, the government proposes to:

  • Set up 35 new incubators in existing institutions. The Central Government shall provide 40% of funding support (up to ₹10 crore), the state government shall also provide 40% and the remaining 20% will be funded and managed by the private sector for the establishment of new incubators.
  • Set up 35 new private sector incubators. The Central Government shall provide a grant of 50% (up to ₹10 crore) for the establishment of new incubators. The incubator shall be managed and operated by the private sector.

NITI Aayog will provide the funding for setting up of incubators as a part of the Atal Innovation Mission.

The following departments and agencies will be the participants for setting up of new incubators –

  • Department of Science and Technology
  • Department of Electronics and Information Technology
  • Ministry of Micro, Small, and Medium Enterprises
  • Department of Higher Education
  • Department of Industrial Policy and Promotion
  • NITI Aayog
  • Department of Biotechnology

The above mentioned departments/agencies would enter into a standard MoU with identified private sector players for creation of academia-industry tie-ups in order to nurture innovations in academic institutions.

15.     Launching of innovation focused programs for students

The government understands the importance of promoting research and innovation among young students. It has therefore implemented the following measures:

  • Innovation core:

This programme will target school kids and plans to reach out to 10 lakh innovations from five lakh schools. Out of these 10 lakh innovations, one lakh innovations will be targeted and the top 10,000 innovations will be provided with prototyping support. Out of these 10,000 innovations, 100 will be shortlisted and showcased at the Annual Festival of Innovations in the Rashtrapati Bhavan.

  • National Initiative for Developing and Harnessing Innovations (NIDHI):

This programme will help start-ups with initial funding. It aims to support 20 student-driven start-ups each year. The start-ups would be selected through a national-level competition.

The selected start-ups would receive a grant/award of up to ₹10 lakh.

The eligibility criteria to receive this funding is as follows:

  • The programme would only support student-driven start-ups. A student cannot be a part of more than one start-up
  • The start-up should be a registered company/LLP
  • It should be a project supported by the Innovation and Entrepreneurship Development Centre (IEDC)/New-Gen IEDC in the previous 5 years
  • The projects should be nominated by IEDC/New-Gen IDEC
  • The start-up should be the sole owner of the IP, the host institution should be transferred or forgone their rights on the IP

The funds would be disbursed to the start-up as per the following milestone: 70% on selection and 30% on achievement of milestone/pre-defined deliverables.

Uchhattar Avishkar Yojana

This scheme was set-up by the Ministry of Human Resource Development (MHRD) and the Department of Science and Technology (DST). IT provides financial assistance to IIT students for undertaking high quality research.

They’ve earmarked Rs.250.00 crore per annum for this scheme.

The funding towards this research will be 50.00 per cent contribution from MHRD, 25.00 per cent from DST and remaining 25.00 per cent from the industry.

Eligibility Criteria

What is the eligible criteria to be a start-up?

The eligibility criteria to be a start-up is as follows:

  1. Firm is no older than five years
  2. Annual turnover should not exceed ₹25 Cr
  3. Work is related to innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property
  4. Entity should not have been formed by splitting up, or reconstruction of a business that was already in existence

Application

How can an aspiring company apply to be recognised as a start-up?

An aspiring company can apply to be recognised as a start-up by clicking here.

Source : SME First Post

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

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Scheme for Fast Track Exit Mode

Organisations sometimes show no business activity or operation for a year or more of their establishment. At such times they choose to strike their name off from the official records of the Ministry of Corporate Affairs (MCA). If you’re an MSME who wishes to do the same, the Fast Track Exit Mode scheme introduced by the MCA can benefit you.

Overview:

The Fast Track Exit Mode Scheme by the MCA enables an MSME to close down their non-operational business at a cheaper cost with fewer formalities under Section 560.

Benefits:

How does an institution benefit from this scheme?

An institution can:

  • Avail loans to close down its non-operational business at an affordable price
  • Gain assistance from the government to:

– Build intermediary institutions

– Manufacture new products

– Identify target markets

– Meet its training needs

  • Gain assistance from the government in the fields of:

-Technology

-Marketing

Features:

What are the features of this scheme?

  1. Arranging fixed deposits for MFIs/NGOs

The Government of India provides funds to SIDBI. These funds are used for the security deposit requirement of loan for MFIs/NGOs. SIDBI takes 10% as security deposit, out of which MFIs/NGOs get 2.5% (25% security deposit). The institutions can avail further loans on the basis of security deposit.

  1. Training and Studies on Micro-Finance Program

The Government of India would help SIDBI in meeting the training needs of NGOs, Self Help Groups, intermediaries and entrepreneurs and also in enhancing awareness about the program. This would be performed with the help of various developmental institutes.

  1. Assistance in building conciliatory institutions

The government of India will help in building intermediary institutions for MFIs that will help them with building new products, identifying target markets, and providing technical and marketing assistance.

Eligibility Criteria:

What is the eligibility criteria for this scheme?

An MSME is eligible for this scheme if it falls under the following categories:

  • The company is not operating or is not carrying any business since the last one year from the date of application
  • Company is not operating or not carrying out any business since its incorporation
  • The company has no assets and liabilities
  • The company’s status should be ‘active’ or ‘dormant’ on the MCA portal

What makes an MSME ineligible for this scheme?

An MSME is ineligible for this scheme if it falls under the following categories:

  • Listed companies
  • De-listed companies due to non-compliance of Listing Agreement or any other statutory laws
  • Companies under Section 25
  • Vanishing companies
  • The companies against which an investigation or inspection has been ordered and yet to be taken up or pending
  • Companies where order u/s 234 has been issued by ROC and reply is pending
  • The companies where prosecution for a non-compoundable offence is pending in court
  • Companies which have accepted deposits which are outstanding or have defaulted in repayment
  • The companies having secured loan
  • Companies having management dispute
  • The companies for which filing of docs have been stayed by court or CLB or CG or any other competent authority
  • Companies having dues of income tax / sales tax / central excise / banks / financial institutions / CG / SG / other local authorities
  • The companies not having active / dormant status on MCA portal

Application:

How can an MSME apply for this scheme?

If your company is eligible to apply for this scheme, you will need to file the Form FTE with the Registrar of Companies (ROC).

The form must be filed online for a fee of ₹5,000, here.

Documents Required:

The documents required to apply for this scheme are:

  • Statement of accounts (duly signed by one MD / director / secretary and certified by auditor of the company or any other chartered accountant)
  • Copy of board resolution authorizing directors to file application
  • Indemnity bond duly notarized and signed by all directors
  • Affidavit duly notarized and signed by all directors (separately)
  • Physical Copy of e-form FTE duly signed by director / MD / manager / secretary if no DSC is available
  • Attested copy of PAN / passport (in case DIN is not available)
  • NOC from government (if applicable)
  • Any other optional attachment
  • Source : SME First Post

 

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Private equity calling the shots on hiring in portfolio firms

On a dusty October day in Allahabad more than 200 sales executives queued up for an interview for the post of regional sales manager at a non-banking financial company. The person who interviewed them was not a company official, but a principal of a private equity fund that had recently invested in the NBFC.

Private equity has come a long way in the country, from fund management and investing to micro managing businesses, and their influence is not limited to the CXO level but increasingly extend to senior and middle management.PE funds such as Kedaara Capital, TrueNorth and Advent International are extensively engaged in hiring mid-senior to CXO level talent for their portfolio companies, industry insiders said. Principals, managing directors and investment teams at these funds are the first line of filters for hiring at the investee companies.

Others like Sequoia Capital, Multiples Asset Management, Everstone Capital and Apax Partners, too, play a crucial role in CXO and CXO-1 level hiring for portfolio companies, sources said.“We work not just as a traditional PE fund but also as a conglomerate. We have a dedicated team of seasoned HR professionals who not only hire for the portfolio companies but also see to it that best culture practices are implemented at these companies,” said Vishal Nevatia, managing partner at TrueNorth.

As volume of buyout deals increase in India and PE funds have a greater stake in their investee companies, and are exercising a stronger hold in people and talent, sometimes replacing the entire existing management with seasoned professionals, HR and talent experts said.According to Nevatia, the performance of any business is directly proportional to the talent which is there in the business and hence getting the right talent on board is critical not just at the top but all the way up.

Funds such as TrueNorth run management training programmes for Indian Institute of Management (IIM) graduates who can intern/train with various portfolio companies. “This gives the grads exposure to various industries and the companies an opportunity to tap top talent who have the potential to be business leaders in the future,” Nevatia said.

Some of CXO-level hirings in the past 12-18 months where investor funds are said to have played a leading role in identifying and recruiting include Anil Banchhor, CEO at RDC Concrete, and Maninder Singh Juneja, CEO at NBHC. They both are investee companies of TrueNorth.

Blackstone is said to have played a key role in the appointment of Nitin Rakesh as CEO at Mphasis while Apax Partners is said to have been involved in hiring of Sandeep Kishore, CEO at Zensar Technologies. Everstone Capital is said to have played a crucial role in senior-level hiring at Burger King.

“PE deal size in India has gone up, and funds are doing $500-750 millionplus deals. There is a lot of focus on hiring professional talent in portfolio companies,” said Anshul Lodha, director at recruitment agency Michael Page India.

Initially, PEs would pick small stake in promoter companies and literally have no say. But with stakes increasing, the level of engagement of funds with investee companies has gone up in the past 12-18 months, Lodha said.Earlier, initial screening would be done by the promoter company, now it is the PE firm shortlisting talent, sometimes even drafting job descriptions and running the entire search, experts said.

“What is crucial is that there is an alignment between the investor/PE company, the promoter/leadership of the investee company, and the incoming CEO/senior leader in terms of the vision for the investee company,” said Dhanpal Jhaveri, managing partner at Everstone Private Equity. “As a group, we often directly work with our portfolio companies to support their growth, and this deep operational experience helps us better in evaluating potential CEOs and senior leaders for our investee firms,” he said

K Sudarshan, managing partner at executive search EMA Partners India, said, “When funds are the majority shareholders, they want to ensure that the right kind of people are recruited. Funds exercise more say when it is a controlling stake.”

A greater involvement of the investor also helps in getting talent. “A marquee investor adds so much more to the ability of a company to attract top talent,” Sudarshan said. Motilal Oswal PE is said to have been active for CXO-level hiring of contract electronics manufacturer Dixon Technologies.

AION Capital Partners is said to have been closely engaged in the hiring of senior management of Clix Capital, a commercial lending and leasing company run by former GE India executives Pramod Bhasin and Anil Chawla. Kedaara Capital is said to have been involved in senior-level hiring for Hyderabad-based diagnostic chain Vijaya Diagnostics

CX Partners was involved in Mrs Bector’s Food senior sales hiring. “PEs are playing an active role in engaging and selecting leadership talent for portfolio companies with an objective of deriving long-term value,” said Vivek Kapadia, director at executive search firm Vito India. “Funds want people from established organisations with an ability to scale businesses’ profitably and create shareholder value,” he said.

Source : The Economic Times, New Delhi, 5th December 2017

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GSTN Chairman Urges with experts to simplify GST Returns filing

The committee tasked with simplification of GST returns filing will consult tax experts and trade bodies to make the process convenient for businesses that have minimal transactions, its chairman said today.

GSTN Chairman Ajay Bhushan Pandey-headed panel comprises VAT commissioners of Karnataka, Gujarat, Telangana, and senior officials from the Department of Revenue and the CBEC.


As many as 40 per cent of the businesses filing returns on GST Network (GSTN) portal has nil tax liability.

The Goods and Services Tax (GST) Council had set up this committee on November 10 to suggest ways for simplification of the returns filing process. It has also decided to keep in abeyance till March 31 the filing of GSTR-2 (purchase returns) and GSTR-3 (the matching of sales and purchase returns).

Now, businesses will have to file simplified initial GSTR-3B forms till March, along with sales returns GSTR-1.

“The committee would look into simplification exercise because all (GST returns) are intricately connected,” Pandey said, when asked if the committee would focus on only GSTR-2 and GSTR-3 or all the returns under GST.

The committee will collect feedback from people, the trade and industry and study the whole system in detail and then come out with an appropriate plan.

“If people have very minimal transactions, they should be able to file both the returns in a manner without going through full complications. Therefore, the display of the forms will be based on certain questions and the questions posed to the dealer,” Pandey said.

He added that the panel will also look into what information on returns should be taken and at what frequency.

Pandey said the ultimate goal will be to provide convenience to people so that those who are filing the returns can do so without any difficulty.

According to the data, 55.87 lakh GSTR-3B returns were filed for July, 51.37 lakh for August and over 42 lakh for September. Preliminary returns GSTR-3B form for a month is filed on the 20th day of the next month after paying due taxes.

According to the GSTN data, a huge chunk of businesses files their returns after the expiry of the due date.

While only 33.98 lakh July returns were filed by the due date, the number has now gone up to 55.87 lakh. Similarly, for August, 28.46 lakh returns were filed until the last date, but the figure went up to 51.37 lakh later.

Also, for September, while 39.4 lakh returns were filed by the due date, the number is rising and was over 42 lakh until October 24.

Also, the Council earlier this month substantially lowered late return filing fees for businesses from the Rs 200 at present. Businesses with nil tax liability will now have to pay only Rs 20 as late fee for the delayed filing of return while for the rest, the fee is Rs 50.

Source : Press Reports

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

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GST Rate Cut: Cabinet clears Setting up of Anti-Profiteering Authority

The anti-profiteering measures enshrined in the GST law provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to the consumers.

The Union Cabinet on Thursday gave its approval for the creation of the posts of chairman and technical members of the National Anti-profiteering Authority (NAA) under GST, following up immediately on yesterday’s sharp reduction in the GST rates of a large number of items of mass consumption.

This paves the way for the immediate establishment of this apex body, which is mandated to ensure that the benefits of the reduction in GST rates on goods or services are passed on to the ultimate consumers by way of a reduction in prices.

The establishment of the NAA, to be headed by a senior officer of the level of secretary to the government with four technical members from the Centre and/or the States, is one more measure aimed at reassuring consumers that government is fully committed to take all possible steps to ensure the benefits of implementation of GST in terms of lower prices of the goods and services reach them.

It may be recalled that effective from midnight of 14th November, the GST rate has been slashed from 28% to 18% on goods falling under 178 headings. There are now only 50 items which attract the GST rate of 28%. Likewise, a large number of items have witnessed a reduction in GST rates from 18% to 12% and so on and some goods have been completely exempt from GST.

The ‘anti-profiteering’ measures enshrined in the GST law provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to the consumers.

Affected consumers who feel the benefit of commensurate reduction in prices is not being passed on when they purchase any goods or services may apply for relief to the Screening Committee in the particular State.

However, in case the incident of profiteering relates to an item of mass impact with ‘All India’ ramification, the application may be directly made to the Standing Committee. After forming a prima facie view that there is an element of profiteering, the Standing Committee shall refer the matter for detailed investigation to the Director General of Safeguards, CBEC, which shall report its findings to the NAA.

The authority is to ensure benefits of the GST rate cut are being passed on to the consumers

The Union Cabinet on Thursday approved setting up of a National Anti-profiteering Authority under the GST, seeking to ensure consumers get the benefit of reduced prices under the new indirect tax regime.

Union Minister Ravi Shankar Prasad said currently there were only 50 items that attracted the highest tax of 28% under the Goods and Services Tax (GST) regime and rates on many items have been cut to 5% as well.

“The National Anti-Profiteering Authority is an assurance to consumers of India. If any consumer feels that the benefit of tax rate cut is not being passed on, then he can complaint to the authority,” Mr. Prasad told reporters after the Cabinet meeting.

This reflects government’s full commitment to take all possible steps to ensure benefits of implementation of GST to the common man, the minister added.

The approval by the Cabinet paves the way for immediate establishment of the apex body, which is mandated to ensure that the benefits of GST rate reduction is passed on to consumers.

The GST Council, chaired by Union Finance Minister Arun Jaitley and comprising state counterparts, had last week decided to slash tax rates of over 200 items in the GST regime as well as lowered tax rates on AC and non-AC restaurants to 5 per cent.

The Council had earlier approved setting up of a five-member National Anti-Profiteering Authority to enable consumers to file complaint in case price reduction was not passed on.

A five-member committee, headed by Cabinet Secretary P.K. Sinha, comprising Revenue Secretary Hasmukh Adhia, CBEC Chairman Vanaja Sarna and chief secretaries from two states, has been entrusted to finalise the chairman and members of the authority.

The authority will have a sunset date of two years from the date on which the chairman assumes charge. The chairman and the four members of the authority have to be less than 62 years.

As per the structure of the anti-profiteering mechanism in the GST regime, complaints of local nature will be first sent to the state-level ‘screening committee’, while those of national level will be marked for the ‘Standing Committee’

If the complaints have merit, the respective committees would refer the cases for further investigation to the Directorate General of Safeguards (DGS). The DG Safeguards would generally take about three months to complete the investigation and send the report to the anti-profiteering authority.

If the authority finds that a company has not passed on GST benefits, it will direct the entity to pass on the benefits to consumers. If the beneficiary cannot be identified, it will ask the company to transfer the amount to the ’consumer welfare fund’ within a specified timeline.

The authority will have the power to cancel registration of any entity or business if it fails to pass on to consumers the benefit of lower taxes under the GST regime, but that might be the final step.

According to the anti-profiteering rules, the authority will suggest return of the undue profit earned from not passing on the reduction in incidence of tax to consumers along with an 18% interest, as also impose penalty.

Source : PTI

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100% FDI to fuel the next phase of growth

Ecommerce Association of India (ECAI) welcomes the government’s decision for allowing 100% FDI in marketplace eCommerce. This is certainly a way forward in fuelling the growth of eCommerce in India. 

India has seen a very high growth in the marketplace eCommerce, which has in turn thrived many new manufacturers, traders and suppliers providing them limitless market with larger customer base. The industry has seen numerous success stories of startups and entrepreneurs and unabated growth. And, moreover, the government’s support and regulation shall make the growth process long-lasting and more stable.

With 100% FDI on the cards, the marketplace eCommerce companies expect to see a larger influx required for the next phase of growth. Existing marketplaces would grow bigger and the newer marketplaces may come up. We may also see niche marketplaces coming up and ultimately everything will lead to bigger opportunities for the sellers. The move will allow more capital infusion in the sector from the foreign investors and the same can be used for financing their development needs.

The marketplace model has been a big driver of growth for the small businesses which again has been on the priority list of the government. Many young entrepreneurs have benefitted from the marketplace model with the large market reach and larger customer base. They are now able to access a pan-India market which was not possible earlier for a small business with very low or zero marketing budget. Since the marketplace manage the entire logistics of sales and even return, the small businesses do not have to invest or manage the same. The marketplace model has also increased the efficiency of the small businesses. With almost 350 million internet users and almost 800 million mobile users and that too a considerable number using smartphones, it offers even a larger opportunity for the eCommerce companies.

Equitable growth

Though the honeymoon discount period may gradually fade away, but the growth will now be more structured and equitable among players. The sales shall also be not discount-driven, and this would be good for the smaller players with less funding support. They would not have to follow the discount race, as they do not have large bellies to do that. So, things will gradually fall in line in the larger interest of the industry.
The marketplace model also compliments the brick and mortar stores. Of late, the physical stores have also got a larger bandwidth of market space through eCommerce. They are now able to sell to a larger number of customers, and also the eCommerce players are also going offline.

The era of discounting will gradually be corrected, and this will certainly give more opportunities for the brands to reach out to larger pool of young customers through the online marketplace. Hence, the role of eCommerce players become even more important, as they have a huge young customer base following. Also, the rise of mCommerce has given rise to a convenience marketplace where anything and everything can be sold at the convenience of customers.

The government has been looking forward to support the growth of eCommerce industry and we are hopeful that we would see more such pro-industry moves by the government for the sector that has been the largest employment generator for the economy in the last five years. The eCommerce sector has also given rise to a more structured and organised businesses, as all the transactions are recorded. This helps in checking tax evasion and illegal transactions.

Also, with the government’s focus on building a strong manufacturing base in India, eCommerce can play an enabling role for manufacturers and suppliers to access the consumer base. With the borderless market, the manufacturers and suppliers can access any regional market and even global market as well.

(The author is the secretary general at e-Commerce Association of India)

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E Commerce Association of India

Ecommerce Association of India

E-Commerce Association of India (ECAI) is India’s first and nodal agency representing the e-Commerce community in India. ECAI is the association representing companies selling products and/or services online to consumers in India.

e-Commerce Association of India seeks to develop India as an e-commerce hub by collaborating with various e-commerce organizations across the country.

Its mission is to advance the interests and influence of e-commerce in India through advocacy, communication and networking.

ECAI is the only association in India that intends to dedicatedly works towards promoting the business of eCommerce in India. The association shall encompass the entire eCommerce eco-system including, the service providers, suppliers, PE & VCs, supply chain companies and as well as the consumers.

The scope of e-Commerce in India is ever increasing to include all the amenities like healthcare, education, retail, tourism, entertainment etc which is also aligned with the broadband revolution which India is witnessing.

ECAI through its concentrated efforts seeks to contribute in the development of the entire ecosystem for the growth of e-Commerce in India. ECAI seeks to develop India as a e-commerce hub by collaborating with various e-commerce organizations (both government and private) across the country.

Objectives & services

• To promote, project and develop the interests and influence of e-commerce in India through advocacy, communication and networking.

• To press forward the interest of B2C e-commerce industry with relevant stakeholders and institutions

• To provide with new brand recognition and membership engagement at all levels.

• To collaborate and associate with related National and International Organizations for update on technologies and latest practices the ecommerce and online business in India.

• To provide an avenue and forum for an open and constructive framework for the discussion of trends, forecasts, policies, directions and challenges of ecommerce industry in India.

• Political and legislative community supervision through analyzing and following up on political and regulatory developments

• Public affairs initiatives and actions to Indian institutions: meeting with institutions and relevant e-commerce stakeholders.

• Institutional communications: foster research, preparing position papers, white papers, reports, facts and figures relevant to the Indian e-commerce market.

• To collaborate and associate with related National and International Organizations for update on technologies and latest practices the ecommerce and online business in India.

• To actively initiate, organize, and support activities and programs for the development and growth of ecommerce and online business in India.

• To provide an avenue and forum for an open and constructive framework for the discussion of trends, forecasts, policies, directions and challenges of ecommerce industry in India.

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