Annual Return on Foreign Liabilities and Assets

Annual Return on Foreign Liabilities and Assets

A.     Reference of law

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=10083&Mode=0

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=7287&Mode=0

B.     When to be filed i.e. Due date

15^th July every year

C.     Which entities required to file (LLP/ Company)

ELIGIBLE COMPANIES TO SUBMIT THE FLA RETURN

-          by all the Indian companies and;

-          LLPs ;

which have received FDI (foreign direct investment) and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year i.e. who holds foreign Assets or Liabilities in their Balance Sheets.

It is important to note that if the company which has not ‘received any fresh FDI and/or ODI (overseas direct investment)’ in the latest year but the company has outstanding FDI and/or ODI, then that company is also required to submit the FLA Return every year by July 15.

That means even of the company has nil return, it needs to intimate RBI on the outstanding FDI/ ODI in their company account.

For the first time, all the eligible entities are required to send a request mail to RBI to get a dummy CIN. But this CIN is valid for filing annual return on foreign assets and liabilities and not for any other purpose. 

Companies which are not eligible are;

-In case Indian company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year, the company is not required to submit the FLA Return.

-There are cases wherein the company has received only share application money and not full allotment money and does not have any foreign direct investment or overseas direct investment outstanding as on end-March of the reporting year, then that company is also not required to file FLA return.

-If all non-resident shareholders of a company has transferred their shares to the residents during the reporting period and the company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year, then the company need not submit the FLA Return.

-If Shares are issued by reporting company to non-resident on Non-Repatriable basis, then it should not be considered as foreign investment; therefore, companies which have issued the shares to non-resident only on Non-Repatriable basis, are not required to submit the FLA Return.

How to file

There is excel in set prescribed format in which we needs to file FLA return by 15^th July every year.

At which website

www.rbi.org.in

What if not filed on time?

Penalty clause for violation of FEMA could be invoked for non filing of FLA by the due date.

It is important to note that even if the company’s accounts are not audited before the due date of submission, i.e. July 15, then also the FLA Return should be submitted based on unaudited (provisional) account.

Once the accounts gets audited and there are revisions from the provisional information submitted by the company, they are supposed to submit the revised FLA return based on audited accounts by end – September.

Contact us at csnehaseth.cp@gmail.com or call us at 9871903449

Understanding DIR 5

Form DIR-5 Application for surrender of

Director Identification Number

As per recent update by Ministry of Corporate Affairs form RD-1 has been replaced by E-form DIR-5  w.e.f 21st June 2017 for the purpose of filing application for surrender of Director Identification Number i.e. DIN

Generally what is seen is that often person apply and obtain multiple DIN which is a contravention to the provision of companies act 2013 i.e section 155 companies act,2013 and contravention of the said provision results in imprisonment of such director for a term which may extend to six months or with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which the contravention continues. (Section 159)

Therefore, in order to avoid compliance issues MCA offers individuals/directors who hold more than one DIN to surrender their unused/not intended for future reference/multiple obtained DIN by way of an application by filing an E-form DIR 5 along with the necessary documents required In pursuance to Section 153 read with rule 11(f) (Appointment and Qualification of Directors) Rules, 2014

Relevant Sections:

Ø  Section 153:

Every individual intending to be appointed as director of a company shall make an application for allotment of Director Identification Number to the Central Government in such form and manner and along with such fees as may be prescribed.

Ø  Rule 11(f):

(f) on an application made in Form DIR-5 by the DIN holder to surrender his or her DIN along with declaration that he has never been appointed as director in any company and the said DIN has never been used for filing of any document with any authority, the Central Government may deactivate such DIN:

Provided that before deactivation of any DIN in such case, the Central Government shall verify e-records.

Ø  Section 159 :

If any individual or director of a company, contravenes any of the provisions of section 152, section 155 and section 156, such individual or director of the company shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which the contravention continues.

In order to file eForm DIR 5, we need the following documents/ information in eform DIR 5:-

ATTACHMENTS/ INFORMATION	INDIAN NATIONAL	FOREIGN NATIONAL
1.      Full Name of Applicant	√	√
2.      Director Identification Number (DIN) of Director	√	√
Reason of Surrendering DIN	√	√
Proof of Identity of applicant (Voters Identity Card/ Passport/ Driving License/ Aadhaar Card/ PAN Card ) Anyone	√	√
3.      Copy of Address Proof (passport, election (voter identity) card, and ration card, driving license, electricity bill, telephone bill or aadhaar card ) • In case of Indian applicant, documents should not be older than 2 months from the date of filing of the eForm. • In case of foreign applicant, address proof should not be older than 1 year from the date of filing of the eForm.	√	√
To be digitally signed by chartered 4.      accountant or company secretary or cost accountant in Practice	√	√

For more queries, pls contact us at csnehaseth.cp@gmail.com or call us at 9871903449

Wholly-Owned Subsidiary in India

Wholly-Owned Subsidiary in India

As the name suggests, wholly owned Subsidiary means wholly owned by parent company. It’s the trend going on wherein the majority of multinational corporations register a Wholly-Owned Subsidiary as means of extending business in the target country for the ultimate purpose of capturing market in the destination country.

Let’s understand this with example;

➢     What is a wholly owned subsidiary?

WOS is the entity whose shares is 100% held by the holding company. Though Companies Act 2013 says to have minimum two shareholders so keeping in mind the compliance under Companies Act 2013, we have generally two shareholders i.e.;

n  Steerabidance Inc. USA as Body Corporate registered outside India through its Authorised Representative Mr. X holding 9999 equity shares

n   Mr. Y as Nominee Shareholder holding 1 equity share

n  Pls note that here we assume that the total number of equity shares in the Company is 10,000 equity shares.

➢     Registration of a Wholly Owned Subsidiary Company in India is a 4 step Procedure

1. Obtaining Digital Signature for foreigners:

a. Digital Signature of each applicant is required.

b. The form of the digital signature should be attested by a CA or a CS.

c. Documents requirements:

-          Notarized and apostilled passport copy

-          Notarized and apostilled address proof

-          passport size photo

-          mobile number and email id

2. Obtaining Director Identification Number (DIN) for foreigners:

Read the blog for more information on how to obtain DIN for Foreigner;

http://csnehasethassociates.blogspot.in/2016/06/din-of-foreigner.html

a. Documents/ Information requirements:

-          In addition to the above documents provided for obtaining DSC, we require;

-          Notarised & Apostilled Present and permanent address proof

-          Educational qualifications and occupation

-          Whether resident in India?

-          Citizenship

-          Father’s name ( if not reflecting in passport)

-          Digital signatures

3. Filing Name Application with ROC :

a. Requirements

-          Board resolution

-          certificate of incorporation (USA)

-          DIN for both the directors

-          registered office details (India)

4. Registration of the Company:

a.      Filing of Registration in eForm SPICE 32

-          Once name gets approved, we need to file eForm SPICe  along with INC 33 and INC 34 with the following documents: -

-          INC 9 Affidavit

-          Affidavit Cum Declaration

-          Declaration for first Director

-          DIR 2 consent from Directors

-          Registered office Proof in Chennai along with NOC from Owner

-          Subscription Sheet AOA

-          Subscription Sheet MOA ( note that there is requirement to get the above documents notarised and apostilled or else if the promoters travel India on Business VISA and then, Notary & Apostilled requirement will not be there, just we need to attach the Business VISA along)

b. Filing of eForm INC 33 & INC 34

-          We shall draft MOA & AOA of the company and file the same along with Spice 32

-          Subscription Sheet AOA (Notary +Apostilled)

-           Subscription Sheet MOA (Notary +Apostilled)

c. Applying for PAN & TAN

-          Only DSC needs to be affixed on the form and PAN & TAN shall be applied

d. Opening of Bank account

e. FDI in Bank Account

The Subscribers are required to invest the subscription amount in their currency into the bank account of Company within 60 days of Registration, otherwise penal actions be attracted

f. Filing of Advance Reporting form at ebiz portal

-AD bank will issue us FIRC upon KYC be completed.

-Documents required -

-Declaration and other forms for signing by the Investor

g. Filing of Form FC GPR

-Board Resolution

- FIRC

- CA Certificate

- CS Certificate

In case of any queries, please contact CS Neha Seth at 9871903449 or email us at csnehaseth@gmail.com

Why GST Migration important?

Why GST Migration important?

What is GST Migration?

Those who are already registered under any of the following;

-          Central Excise

-          Service Tax

-          State Sales tax

-          VAT

-          Entry Tax

-          Luxury Tax

-          Entertainment Tax

Are required to migrate themselves to the GST regime to get GSTIN Number.

Where to migrate?

At their website i.e. www.gst.gov.in. The enrollment system is being taken up in stepped manner, so that taxpayers of each States shall get an appropriate time for enrollment.

The Migration process is as follows :

1)      Create User ID & Password on GST Portal: - 

This is the first step towards enrollment for migration to GST, which start by obtaining  provisional ID and password as given to the taxpayer by respective State Vat department through dealer's login.

On entering provisional Id & Password, GST Common portal will ask for Email Id and Mobile number of authorized person on which two different onetime passwords shall be sent.

(2)      Filling the form GST-REG-20

After successful creation of user Id & Password, taxable person need to login into GST common portal. After login on the dashboard itself a provisional GST number shall be seen, which shall start with state code followed by 10-digit pan number and 3 more system generated digits.

In very first tab taxpayer has to enter various business details. Some details like PAN number, Legal Name are auto populated from the system and rest of the details such as various registration details along with the date of registration as provided underCentral Excise, Service tax, VAT, Luxury Tax, Entertainment Tax, IEC, CIN number etc. shall be filled manually.

Documents Required

1.      Proof of Constitution of Business

•         In case of Partnership Firm: Partnership Deed of Partnership Firm

•         In case of Others: Registration Certificate of the Business Entity

2.      Photograph of Promoters/Partners/Karta of HUF

3.      Proof of Appointment of Authorized Signatory

4.      Photograph of Authorized Signatory

5.      Opening page of Bank Passbook/Statement containing Bank Account Number of , Address of Branch, Address of A/C Holder and latest transaction details .

In addition to above a scanned copy of proof of constitution i.e. Shop Act License/Factory License in case of individual, Partnership Deed in case of Partnership Firm, or Registration Certificate/Proof of Constitution in case of Society, Trust, Club, Government Department, Association of Person or Body of Individual, Local Authority, Statutory Body and Others etc.) shall be attached. Scanned copy of proof of constitution should be in jpeg or pdf format with maximum size of 1 MB.

(3) Details of Proprietor, Partner, Managing and Whole Time Director, Karta: -  such as Full Name, Full Name of Father/ Husband, DIN Number, Date of Birth, Mobile Number, Gender, Designation, PAN Number, Aadhar Number shall be entered.

In addition to above details of Residential Address and Scanned copy of Photograph also required to be uploaded on common portal.

(4) Details of Authorized Signatory

All details of an authorized signatory along with acceptance letter shall be uploaded on GST common portal.

(5) Details of Principal Place of Business: - Details such as Address ,Official Email-Id, Mobile Number, Office Telephone Number, Nature of possession of premises (i.e. Own, Rented, Leased, Consent, Shared), Scanned copy of Proof of Principal place of business is required to be entered Following documents can be used a proof of Principle place of business

(a)		For Own premises –Any document in support of the ownership of the premises like Latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill.
(b)		For Rented or Leased premises –A copy of the valid Rent / Lease Agreement with any document in support of the ownership of the premises of the Lessor like Latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill.
(c)		For premises not covered in (a) & (b) above –A copy of the Consent Letter with any document in support of the ownership of the premises of the Consenter like Municipal Khata copy or Electricity Bill copy. For shared properties, also, the same documents may be uploaded.

It is important to note that principle place of business means a place from where major activities of business are carried out. It may happen that the registered office and principle place of business are different. 

(6) Details of Additional Place of Business:-

 Additional places includes factory, office, godown, warehouse or any other place where taxable person stores his goods or provides or receives any goods and/or services. All the details as specified for principal place of business are equally applicable for additional place of business also.

(8) Details of Bank Accounts: - A taxpayer needs to provide top 10 bank account numbers along with IFSC code and Scanned Copy of first page of Bank Statement/passbook of each bank account. 

(9) Verification: - After filling an application a person can submit the application using Class-II or Class-III digital signature (DSA). Filling of an application with DSA is mandatory for Companies and Limited liability partnership. Taxpayer other than Company and LLP can also file an application by using e-signature option. i.e. by using Aadhar number of authorized person. 

After successful verification GST Common Portal system, will generate acknowledgement containing acknowledgement receipt number (ARN) within next 15 minutes after submission& that is the last step of enrollment for migration to GST. This number should be kept into the record for all future correspondence with GST common portal as far as registration of taxpayer is concerned. After the appointment date of GST Act taxpayer can track status of his application using ARN number.

CURRENT STATUS OF GST MIGRATION

The commercial taxes department of each state have fixed a due date for GST migration and have began the validation of PAN data  of the dealers and communicated provisional id and password for GST migration .

Traders in some of the states who have enrolled themselves in the portal have been given a GSTN number.