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Make in India

The opening Page of Make in India greets with the words “To facilitate investment, foster innovation and enhance Skill development” These words signify the mass inclusion of Startups, the Government intends to do in line with Main Stream Market Leaders. With India emerging as the next most important hub with global dailies of China. This is the right time to make maximum out of ‘Make in India’ incentives for Manufacturing startups.

‘Make in India’ intends to move towards a manufacturing supported Economy.

KEY POINTS OF POLICY

  1. Main Area of Focus-The initiative focuses on 25 sectors, from Employment Intensive to Capital Goods Industries, Industries with Strategical Significance to Small, Medium, and Public Sector Enterprises thus identifying inclusive information technology, pharmaceutical, electronics, textiles, leather, shipping, Automobile, gems, Aerospace Companies in Market.
  2. Huge Regards to Intellectual Property– Make in India intends to protect intellectual property rights which are directly correlated with protecting the bright creations of young minds and hence foster innovations brought forward by Young Talent of India. Initiatives like faster and easy IP rights filing.
  3. Skill development & thrust on education– The policy further provides for new youth-focused programs and institutions dedicated to developing specialized skills as ‘Make in India’ cannot complete without Skill India. Specific sectors are asked to access Industrial Training Institutes (ITIs) located across the country to train manpower locally as per their needs. National Skill Development Agency (NSDA) initiated work on creating a labor market information system which would help industry sourcing their manpower requirement. Hence, a better-trained worker for you and an employment opportunity for him.
  4. Ease of Business and Transparency– Under the scheme, the government has introduced new de-licensing and deregulation measures in order to reduce complexity, delays and to make system more transparent regards to doing business.

The government also has simplified regulatory environment by Introducing the feature of applying for Industrial License online on a 24×7 basis through an e-Biz portal.

The process of clearances by the central and state authorities is also to be progressively web-enabled with a strict timeline for all clearances and integrating services of Central government departments and ministries with the e-Biz, a single window IT platform for clearance of services ensure lesser hassles and no unwanted delays.

  1. Industry Specific Policies: Government is also on the steps to create Policies targeting specific Industries, as a result of which area based incentives (SEZs), state based incentives as Make in UP, and incentives for the purpose of export under foreign trade policy are helping Entrepreneurs to Bud.


SPECIFIC INSIGHT IN ORDER TO FACILITATE MANUFACTURING

  1. Ease of Doing Business:– A unique identification number has been issued to all firms and Instead of earlier 17, only three forms exists now. Moreover, the minimum capital requirement has been done away with along with the requirement of Common Seal.
  2. E-Biz Portal: The Government to Business (G2B) portal has been set up to serve as a single window for services to investors as well as to address any needs through the entire lifecycle of Business.
    The process of applying for an industrial license (IL) and industrial entrepreneur memorandum (IEM) can now be applied on a 24×7 basis at the E-Biz website. Other services of the central government are also being integrated with the portal.
  3. Environmental and forest clearances: Online submission of applications for the environment, coastal regulation zone (CRZ), and forest clearances and decentralization of decision making.
    The requirement for environment clearance has been done away with for projects such as the construction of industrial sheds which house plant and machinery, educational institutions and hostels.
  4. Infrastructure: The government is seeking to improve the physical infrastructure in the country through the PPP mode of investment. Investment in ports and airports has been increased. The development of dedicated freight corridors is being done and these corridors are expected to house industrial clusters and smart cities.
    National Investment & Manufacturing Zone are Identified and acquisition of many areas has been done or is underway. The central government will be responsible for bearing the cost of master planning, improving/providing external physical infrastructure linkages including rail, road, ports, airports, and telecom, providing institutional infrastructure for productivity, skill development and the promotion of domestic and global investments.
  5. Investment Regulations: A Liberalised Investment Policy in the following manner
  • 100% FDI under automatic route for construction, operation and maintenance of specified rail infrastructure projects.
  • FDI cap in Defence raised from 26% to 49%.
    The norms for FDI in the construction development sector are being eased.
  • Liberalization of RBI norms for banks investing in venture capital funds with a focus on SMEs, in consultation with RBI.
  • The liberalization of IRDA guidelines to provide for investments by insurance companies.
  • The inclusion of lending to SMEs in manufacturing as part of priority sector lending.
  • Easier access to bank finance through appropriate bank lending norms.
  1. Labour-sector reforms: Multiple overlapping and inflexible labor laws have been an impediment to the growth of manufacturing sector in India. The new government has initiated a set of labor reform measures such as:
  • Shram Suvidha portal for online registration, the filing of self-certified online returns, computerized labor inspection scheme, online uploading of inspection reports within seventy-two hours and timely redressal of grievances.
  • A Universal Account Number has been launched to ensure portability of Provident Fund accounts for employees.
  • To provide flexibility in working hours and increased intake of apprentices for on the job training, the Apprentices Act, 1961 has been amended. An Apprentice Protsahan Yojana has been initiated for the micro, small and medium enterprises (MSME) sector.
  1. Taxation Reliefs: -Few Tax related reliefs also provided under Make in India by following steps
  • Rollover relief from long term capital gains tax to individuals on sale of residential property in case of re-investment of sale consideration
  • A tax pass-through status for venture capital funds with a focus on SMEs in the manufacturing sector.
  1. Special Provision for Industries Going for Sustainable Growth: -In a way to ensure Green Growth, Following incentives, are provided
    • 5% interest in reimbursement & 10% capital subsidy for the production of equipment/machines/devices for controlling pollution, reducing energy consumption and water conservation.
    • A grant of 25% to SMEs for expenditure incurred on audit subject to a maximum of USD 1538.46
    • A 10% one-time capital subsidy for units practicing zero water discharge.
    • A rebate on water cess for setting up wastewater recycling facilities.
    • Incentives for renewable energy under the existing schemes.
    • An incentive of USD 3076.92 for all buildings which obtain a green rating under the Indian Green Building Council (IGBC) / Leadership in Energy & Environmental Design (LEED) or Green Rating for Integrated Habitat Assessment (GRIHA) systems.

Few Startups Who Make It Big under MAKE IN INDIA.

There are some born with the golden spoon and some achieve it by their hard work. Few startups who emerged as Market Leaders after Make in India are –

  1. Shop Clues- Brought 500 merchants on board across the country. It is also working in collaboration with government bodies to encourage local craftsmen and traders.
  2. Goqii- A Smart wearable fitness band company secured funds worth 13.2 million USD and defeated Xiaomi, Fitbit and Huawei securing top position in Indian Market as per IDC Report on Q2.
  3. Grey Orange Robotics- Company aiming to provide robots to Retail Houses, Consumer Goods and Warehouses in order to Warehouse automation has now expanded its business in Countries considered to be global Leaders in Robotics as Japan, China, and South Asia.
  4. Hike Messanger- Introduced by Soft Bank as a new way to send a text message was able to raise 175million USD in a series D Funding with its Biggest competitor being Whatsapp only with other apps far behind in popularity.
  5. Ather Energy Private Limited- A new way to ride electrical two wheelers has created a huge demand and took International as well as Domestic Buyers by storm thanks to funding it was able to generate.

We Wazzeerians are huge fans of ‘Make in India’ we have helped a good number of startups to incentivize from ‘Make in India’ we would be glad to help you too. Let’s connect!

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Business Formation, Sole Proprietorship

There are 11 Crore Businesses in the unorganized sector, 75% of them registered as sole proprietors. But, why? You must have learned somewhere that, Sole proprietorship is a popular form of business organization and is the most suitable form for small businesses, especially in their initial years of operation. Well, that’s a fact, but the thing that might put you to surprise is even Coca Cola origin owes to a sole proprietorship.

In this article, I am going to jump deeper to help you uncover truths about Sole Proprietors.

The word “sole” implies “only”, and “proprietor” refers to “owner

Sole Proprietorship refers to a form of business organization which is owned, managed and controlled by an individual who is the recipient of all profits and bearer of all risks. This form of business is particularly common in areas of personalized services such as beauty parlors, hair salons, wholesalers, retailers, and small-scale activities like running a retail shop in a locality.

Salient characteristics of the sole proprietorship form of organization are as follows:

  • Ease in formation as well as the closure of business: There are no legal formalities like a business registration that is required to start a sole proprietary business. In some cases, one may require a license to start. There is no separate law that governs sole proprietorship. Closure of the business can also be done easily.
  • Sole proprietors have unlimited liability: This implies that the owner is personally responsible for payment of debts in case the assets of the business are not sufficient to meet all the debts. That is, in case run out of capital, your personal assets like car, an apartment may be liable for payment of debt.
  • Sole risk bearer and profit recipient: The proprietor borne all the risk and as well enjoys all the benefits too. He receives all the business profits which become a direct reward for his risk bearing.
  • Management Bandwidth: The right to run the business and make all decisions lies absolutely with the sole proprietor.
  • No distinction is made between the sole trader and his business: The owner is, therefore, held responsible for all the activities of the business.
  • Lack of business continuity: Since the owner and business are one and the same entity, death, insanity, imprisonment, physical ailment or bankruptcy of the sole proprietor will have a direct and detrimental effect on the business and may even cause closure of the business.

 

Talking of advantages in Sole proprietorship:

  • Decision making: There is no need to consult anyone to make decisions, a sole proprietor enjoys a considerable degree of freedom in making business decisions.
  • Confidentiality of information: A sole trader is also not bound by law to publish firm’s accounts. Sole decision-making authority enables the proprietor to keep all the information related to business operations confidential and maintain secrecy.
  • Only owner of benefits: A sole proprietor directly reaps the benefits of his/her efforts as he/she is the sole recipient of all the profit. The need to share profits does not arise as he/she is the single owner. This provides a maximum incentive to the sole trader to work hard.
  • Starting a business with minimal legal formalities: A sole proprietorship is the least regulated form of business, it is easy to start and close the business as per the wish of the owner.

Limitations that the sole proprietorship form of organization:

  • Limited resources: Resources of a sole proprietor are limited to his/her personal savings and borrowings from others. Banks and other lending institutions may hesitate to extend a long-term loan to a sole proprietor.
  • Limited life of a business concern: Death, insolvency or illness of a proprietor affects the business and can lead to its closure.
  • Unlimited liability: A major disadvantage of sole proprietorship is that the owner has unlimited liability. If the business fails, the creditors can recover their dues not merely from the business assets, but also from the personal assets of the proprietor.

Accounting compliance for sole proprietorship:

  • Bank account on your name or firm’s name.
  • Professional tax enrolment and registration
  • Personal Income tax filing
  • In case, you supply goods and services in Ecommerce platforms then you are subject to GST
  • In case, you are a supplier that does not have permanent office and your operations are seasonal like fire cracker business in Diwali, you will need GST
  • In case, you have an annual revenue of more than Rs. 18 Lakh (or Rs. 10 Lakh for businesses operating from special cities), you will need GST
  • In case you are an NRI and supplying goods and services in India, you will need GST
  • In case you are a distributor or broker supplying goods and services, you will need GST
  • In case you are suppling goods and services in states other than registered state, you will need GST
  • In case you are an operating on an Ecommerce model, you will need GST.

Though sole proprietorship suffers from various shortcomings, many entrepreneurs opt for this form of organisation because of its inherent advantages. It requires less amount of capital. It is best suited for businesses which are carried out on a small scale and where customers demand personalised services. 

Note, to maintain the health of your business, follow general accounting principles to monitor the actual cash inflow and outflow from your business.

We Wazzeerians are known to provide you the best reliable advice, we give you all options from economic to benchmark. ‘Get a Wazzeer’ to kick start your sole proprietorship!

 

 

 

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GST, TAXATION

E-commerce is a rapidly growing market currently valued at $30 billion and there is no stopping it. This rise and expansion of e commerce business paved the way for small suppliers to earn a little extra money and expanding customer base by selling their goods online. With GST in force, a few regulations that could significantly change the modus operandi of such small suppliers is what I am going to talk in this article, which will act as a reminder of GST for Suppliers on E-commerce Platforms.

As per GST Law, ‘electronic commerce’ shall mean the supply or receipt of goods and / or services, or transmitting of funds or data, over an electronic network, primarily the internet, by using any of the applications that rely on the internet, like but not limited to e-mail, instant messaging, shopping carts, Web services, Universal Description, Discovery and Integration (UDDI), File Transfer Protocol (FTP), and Electronic Data Interchange (EDI), whether or not the payment is conducted online and whether or not the ultimate delivery of the goods and/or services is done by the operator.

Compliance for Suppliers:

  • Tax Deduction at Source: As per GST law, E commerce aggregators/portals/ operators are responsible under the GST law for deducting and depositing tax at the rate of 1% from each of the transaction. Thus dealers/traders selling goods/services online would get the payment after deduction of 2% tax.
  • Compulsory Registration– The exemption limit of 20 lakhs(10 lakhs for hilly states as notified under GST) does not apply to E commerce Suppliers. E-commerce Suppliers are mandatory required to be registered under GST. Thus, All the traders/dealers selling goods/services online have to get themselves registered under GST even if their turnover is less than 20 Lakhs for claiming the tax deducted by E-commerce operators.
  • Tax Credit: Any tax paid by Operator in his monthly return will be treated as Tax paid by Supplier and hence he can take its credit in electronic cash ledge.
  • Double Entry System of Book Keeping: All the sellers are required to submit a monthly statement of outward supplies in his valid return for the same calendar month or any preceding calendar month. This statement must match monthly statement (containing inter alia, the details of the amount collected on behalf of each supplier in respect of all supplies of goods and/or services) furnished by e-commerce operator of outward supplies of goods and/or services through it, during a calendar month.
          If any discrepancy is found and not rectified by the supplier in his return for the month in which discrepancy is communicated will get added to the output liability of the said supplier, in the succeeding calendar month and he will be required to pay tax along with interest.
  • Complicated Paper Work: in order to avoid above-mentioned discrepancy a huge amount of paperwork is created, making it difficult for both the e-commerce operator and the supplier to comply with the tax department. Failing to comply can lead to a penalty of Rs. 25,000, which is a significant burden for a small supplier.

Additional Time Window granted to suppliers:

E-commerce sector is granted a time window to comply for GST. Thus as of now, Operators are not required to deduct TDS till a date which will be notified later. This additional time is given to Suppliers to get themselves registered under GST.

Wazzeer has been helping suppliers like yourself in smooth GST migration without causing any adverse effect in the supply chain. ‘Get a Wazzeer’ to do GST Registration for you 🙂

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Contracts and Agreement, Maintenance Contract

What is a maintenance contract?

A maintenance contract is basically a written document which constitutes the terms of an agreement between a client and a maintenance service provider. The client can be a consumer who gets a warranty for purchases of mechanical equipment. The overall purpose of a maintenance contract is to have consistent fees and regular availability of the service provider at saving over random or emergency calls. By securing a maintenance contract for the service provider, the client typically garners savings through the fixed or reduced fees and also gets a regular relationship with a service provider.

Why do you need a maintenance contract?

  • Guaranteed repair time to keep your hardware and production line running

  • Immediate telephone support to resolve repairs quickly and efficiently

  • Technical expertise of engineering team from maintenance service provider

  • Dedicated service schedules

  • Provides emergency service, when time is of essence and you need quick services

  • All standard parts and labor costs covered by the maintenance contract, hence, ensures cost savings for the time period of the contract

  • Paves way for longevity of operations as by sticking to a routine maintenance schedule, hardware will need to undergo thorough inspections designed to catch any serious issues

  • The best option for hardware which is out of guarantee time period or has been functional over a long period of time.

What are the different types of maintenance contract that service provider can enter?

Maintenance contracts apply to a wide range of products including printers, handheld computers, scanners, and software. They vary on the level of response you require:

Onsite contracts: an engineer will visit your site and respond within a period of time that you choose which typically ranges from 4 hours, 8 hours to 5 days. The quicker the response the greater the cost, but consider the cost of your hardware and production line fails!

Hot swap contracts: Ideal if you don’t need onsite support but require a next day replacement for your hardware. Hot swap works simply by a replacement hardware being sent to your site while the faulty hardware is sent away for repair. A lower cost option than an onsite contract, with next day turnaround.

Return to base contracts: Ideal if don’t need next day support – options include 3 to 5 days. Simply courier your hardware to the repair workshop and it will be fixed within a specified number of days. This is ideal for lower cost desktop and mid-range printers that are not mission critical or where you have a stock of spare printers. Return to the base is not recommended for larger, industrial printers because it is not always easy to find the packaging to ensure that the printer is not damaged in transit.

What should all your maintenance contract consist of?

Billing Structure: It is important to specify how you are going to pay the maintenance service company, whether you are going to pay them on an annual basis or on the basis of a number of services.

Scheduling: Another clause to add in the contract is regarding the schedule of services and routine maintenance schedule alongside the kind of contract you want.

Termination of Services: The clause regarding when and in what circumstances would the client terminate the services of the maintenance company shall also be included. Also, it should be included in the contract that in the case of any dispute, the matter should be referred to arbitration or the parties are free to go to court.

Scope and Term: The contract shall clearly specify the terms and scope of the services to be provided by the maintenance service provider with no ambiguity.

Duration of contract: The duration of the contract should be specified in the contract.

Other expenses: The contract should also contain the details regarding the other expenses like the cost of the hardware to be replaced would be paid by the client or the maintenance service provider.

We at Wazzeer have been experts in delivering Maintenance Contracts due diligence, negotiation matters, Contract drafting and other regulations, we would be glad to provide you a consultation on this matter, happy to help let’s connect

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Business Formation

As a freelancer, it is easy to put the legal and accounting compliance for freelancers on the backburner. However, being a freelancer is not just being free or independent self-employed worker, but it also means that you have a business running on you. In order to become a successful entrepreneur, it is very important to check the quality of the product or service you offer and most importantly how you organize it and what all you need to comply with.

Accounting and Taxation:

Not only Professionals working Under Trade Name, But Freelancers are also required to follow certain compliances. Most important of it is to File Income Tax Returns under Section 139 of IT ACT.

Section 44AA of Income Tax Act requires that every person who is into the profession of law, medicine, architecture, engineering, accountancy, technical consultancy, interior designing, authorized representative, film artist, company secretary and information technology, mandatorily needs to maintain proper books of accounts.

Rule 6F provides for documents necessarily maintained. As per it The books of accounts include the cash book, journal, ledger, carbon copies of serially numbered bills, original bills of expenses incurred and payment vouchers for petty expenses incurred during the year.

The others are required to maintain it only if their Income from the business/profession exceed Rs. 2.5 lakhs for Financial Year 2017-18 (Earlier it was1.2 Lakhs).

With the introduction of Negative List in Service Tax in Finance Act 2012, all the services included in the negative list are exempted from Service Tax. This has widened the scope of the Service tax net considerably since those services not included in the negative list are now taxable.

As for services not mentioned in Negative List as I.T. Services or engineering/ technical services are now taxable and, you are liable to

  • Register yourself if gross receipts or aggregate value of taxable service in a financial year exceeds 9 lakhs rupees.

  • Compulsorily charge service tax on bills raised on clients once the aggregate value of taxable service in a financial year exceeds 10 lakhs rupees.

A Freelancer may also claim deductions similar to those of professionals. To claim deductions and even to run a business you need to be incorporated.

Legal Entities a Freelancer can go for:

To help you decide which entity freelancers, here is a brief overview of common business entities in India. The laws of Each state are different, so it is recommended to consult a lawyer so he or she can advise on current rules and regulations of state before you make a decision.

  • Sole proprietorship

The simplest and most common entity most freelancers work under is a sole proprietorship. It is an individual running his/her own business. It requires few hassles and less paperwork. As a sole proprietor, you may give your business a different name for marketing purposes.

  • Partnership Firm / LLP

When two or more individuals go into business, they become a partnership. It may be registered or unregistered. Usually, no government filings ( apart from few tax registrations)are needed to form a partnership, but it is safer for partners to have a written agreement among themselves in order to avoid future complications or disputes on individuals roles and responsibilities or division of profits and losses LLP introduced in 2008, which is an improvement over general partnership.

This gives promoters an invaluable advantage of limited liability & the company can have continuous existence. The company has to be incorporated through Ministry of Corporate Affairs. Not even an audited annual returns need to be submitted to MCA.

  • One Person Company

OPC is a recently introduced improvement on sole proprietorship firm registration. This gives the promoter an invaluable advantage of limited liability & the company can have continuous existence. OPC has to be incorporated through Ministry of Corporate Affairs. Not even an audited annual returns need to be submitted to MCA. The company can nominate any other person as a director without executive powers.

Conclusion:

Potential threats revolve around for business not only from competitors but also government in the form of Penalties if Law is not abided by. Thus by complying with Legal and Accounting Compliance for Freelancers, you can save both money and time at the later stage. 

We at Wazzeer have developed a systematic process to get your legal and accounting compliance done seamlessly. We don’t talk jargon 🙂 we maintain a standard level of transparency in delivering our work. I think we should catch-up on a call, let’s connect!













 

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