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Export Import Registration, Start up Lessons

The Foreign Trade (Development and Regulation) Act 1992, defines export as “taking out of India any goods by land, sea or air


Export is completed once the goods have left the territorial water of India. In order to qualify as a transaction of export, the following conditions must be satisfied:

  • Goods must go out of India
  • The foreign exchange must come into India.


Exports are beneficial for a country as they bring in profit; promote economic development and overall growth. For this reason, the government of a country always promotes exports.

To operate the business, an entrepreneur needs to form an organization which can be a sole proprietorship, partnership firm under the Indian Partnership Act, a public limited company or a private limited company registered under the Companies Act, 2013 or even a Limited Liability Partnership.

The most recommended course is to get registered as a private limited company since it offers many benefits such as limited liability protection for promoters, transferability, easy access to bank loans, etc. Furthermore, clients always prefer dealing with a registered corporate entity.


There are a few registrations that are to be done on a mandatory basis to start exporting, these are:

  1. Registration with Director General of Foreign Trade (DGFT): DGFT provides the exporter with a unique Import-Export Code (IEC), a ten digit code required for the purpose of export as well as import. No exporter is allowed to export his goods abroad without IEC number. It is a one-time registration, valid for the lifetime of the organization or proprietor.

However, if the goods are exported to Nepal or Myanmar through Indo-Myanmar border or to China through Gunji, Namgaya, Shipkila or Nathula ports then it is not necessary to obtain IEC number provided the CIF value of a single consignment does not exceed Indian amount of Rs. 25, 000 /-.

Application for IEC number can be submitted to the nearest regional authority of DGFT or “Aayaat Niryaat Form – ANF2A” can also be submitted online at the DGFT website: Along with the form, the applicant is required to submit his PAN number, Current Bank Account number, and Bankers Certificate. An application fee is also required to be submitted.


  1. Registration with Export Promotion Council: EPC is a non-profit organization for the promotion of various goods exported from India in international market. It acts as a platform for interaction between the exporting community and the government.

An exporter must obtain a registration cum membership certificate (RCMC) from the EPC. For this, an application accompanied with a self-certified copy of the IEC number should be submitted. The RCMC certificate is valid from 1st April of the licensing year in which it is issued and shall be valid for five years ending 31st March of the licensing year, unless otherwise specified.


  1. Registration with Commodity Boards: Commodity Board is registered agency designated by the Ministry of Commerce, Government of India for purposes of export-promotion and has offices in India and abroad. At present, there are five statutory Commodity Boards under the Department of Commerce. These Boards are responsible for production, development and export of tea, coffee, rubber, spices and tobacco.


  1. Registration with Tax Authorities: Goods exported out of the country are eligible for tax exemptions. To avail this benefit, an exporter must be registered with the Tax Authorities.


  1. Registration with Central Excise Department: If the items are excisable goods, registration with the Central Excise department is required.


  1. Registration according to Route of Export: If export is going to be carried out through the sea, registration/membership with the seaport customs is required and in case of export carried out through the air, registration with airport customs is necessary.


In case you need any help with these compliance works, do let us know, I am sure, we could work out an attractive package for you, just for you 🙂



What we know about a partnership firm is, that a partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by all of them or any one of them acting for all. The owners of a partnership business are individually known as the “partners” and collectively as the “partnership firm”. Partnerships are governed by the Indian Partnership Act, 1932. Apart from this, the general law of contracts, as contained in the Indian Contract Act 1872 also applies to Partnership Firms in India. In this blog we will pull the contracts part to the limelight, giving attention to the top 5 agreements for a partnership firm.


#1: Partnership Deed:


Irrespective of whether you register the partnership firm or keep it as an unregistered partnership firm, this document is mandatory. Partnership deed covers the partners by the drafted clauses and the firm will have to work as per the rules laid out in this document. Main features of this agreement:


  • A Partnership agreement must clearly specify the name of the partnership firm, the names of the partners, the capital to be contributed by each partner, the profit or loss sharing ratio between partners, the business of the partnership, the duties, rights, powers and obligations of each partner and other relevant details.
  • Must be signed by all partners and witnessed by independent persons
  • Specifies the duties and authority of all the partners
  • Details of salary and other payments to partners
  • Registration of partnership deeds is not compulsory; however, the Income Tax Act, 1961 provides that a partnership shall be assessed as a firm only if it is duly evidenced by an instrument. Therefore, it is desirable to draft and execute a proper deed of partnership.
  • Rights to the firm and its partners


#2: Agreement Modifying Partnership Deed:


In case the partners of the partnership firm decide to amend the existing partnership deed, there is special agreement called agreement modifying Partnership Deed, which has to be executed. Main features of this agreement:


  • This Deed is supplemental to the Deed of Partnership and duly signed by the said parties
  • Details of the old clauses that have to be will be modified and replaced by new ones
  • Witnesses, not partners, have to sign the agreement too


#3: Agreement on Introducing New Partner:


In case the partners of the partnership firm decide to add new partner(s), this agreement has to be freshly drafted and executed. Main features of this agreement:


  • Details of the new partner
  • Date from when this agreement will come into effect
  • Details of the capital contribution and interest on capital
  • Remuneration for the new partner
  • Details of drawing in addition to the remuneration that the new partner can make
  • Details governing carry forward or indemnity of Debts of Old Partnership
  • Details on how future Profits of old Partnership firm will be determined
  • Profit Sharing Ratio of a new partnership
  • The document should be signed by witnesses and all partners


#4: Deed of Dissolution:


Dissolution clauses, generally are covered in the Partnership Deed Agreement, but there will be cases where a separate agreement dedicated to dissolution is drafted. Main features of this agreement:


  • Details of all the partners
  • Date from when the partnership stands dissolved
  • Details on how the accounts would be settled
  • Details on how the partnership if not settle all penalties would be settling up
  • Should be duly signed by witnesses, and partners.


#5: Deed of Retirement:


This agreement will lay down rules that retiring partners should follow to have themselves retired from the existing partnership firm. Main features of this agreement:


  • Details of the retiring partner
  • Date from which the partner is officially considered retired
  • Details on how the partnership firm would be carrying on with purporting profits.
  • Details on how the payables to and receivables from retiring partners from the firm.
  • The retirement of the Retiring Partner shall be advertised in the Official Gazette and in the local newspapers as required by law and the registration entry of the Firm
  • Retiring Partner will pay the income tax on his income and other amounts of money received from the Firm.
  • Should be duly signed by witnesses and all partners.



Winding up of Company

When over 3L directors faced directorship suspension (which means they cannot be directors in any company for 5 years), entrepreneurs or directors who were lucky enough to have not brought under that radar, are now taking some serious decisions on filings and existence. In this blog, with an attempt help those directors who are considering winding up, we will look into things one must keep in mind in order to windup a Company.

Any company (Private Limited Company or One Person Company) continues to be in existence until it is dissolved according to the law.

#1. Dissolution can be done in following ways:

  1. By Removal of the company’s name from the register by the registrar without winding up order.
  2. By order of the Court
  3. By order of the central government.
  4. By winding up

#2. Dissolution and winding up are two different things:

  • Winding up procedure requires that liquidators acts of realizing and collecting the assets of the company, satisfying its debts and obligations, distributing its capital and surplus assets among the members of the company.
  • Dissolution comes after the liquidators have done all this in the winding up and tag the company as non-active.

#3. Winding can be done in following ways:

  1. Compulsory winding ordered by a court.
  2. Voluntary winding
  3. Subject to the supervision of the court

#4. While clearing out debts, assets from the members will be accounted in the following ways:

  • Every person liable to contribute to the assets of a company in the event of its being wound up, and includes holders of shares.
  • Past members will not be required to contribute in the following circumstance:
    • If he had ceased to be a member for a period of one year or more before the commencement of winding up
    • If the debt or liability of the company was contracted or incurred after he ceased to be a member
    • If the present members are able to satisfy the contributors required to be made by them under the Act.
  • In a company limited by shares, any past or present member is not required to contribute in excess of the amount, if any, unpaid on the shares in respect of which he is liable as such member.
  • In a company limited by guarantee, a past or present member is not required to contribute an amount which is in excess of the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up.

We at Wazzeer have been helping entrepreneurs in various legal, accounting, and secretarial requirements that come up from time to time. We would be very happy to help you -> Let’s connect!




In the current era of cross-border transactions and constant growth of international trade and commerce, more and more residents of a country are extending their sphere of business operations into other countries. This has led to the need for assessing the tax regimes of various countries and bringing about essential reforms. International double taxation has adverse effects on trade, services, and on the movement of capital and people. Taxation of the same income by two or more countries would constitute a prohibitive burden on the tax-payer.

Therefore, to avoid such hardship to individuals and also with a view to ensuring that national economic growth does not suffer, the Central government under Section 90 of the Income Tax Act has entered into Double Tax Avoidance Agreements with other countries. The double tax treaties (also called Double Taxation Avoidance Agreements or “DTAA”) are negotiated under the public international law and governed by the principles laid down under the Vienna Convention on the Law of Treaties.

Objectives of DTAA:

  • Protection against double taxation
  • Prevention of discrimination in an international context
  • Mutual exchange of information
  • Legal and fiscal certainty


What is Double Taxation?

The Fiscal Committee of OECD defines double taxation as ‘the imposition of comparable taxes in two or more states on the same tax payer in respect of the same subject matter and for identical periods’.


It is a fundamental rule of law of taxation that unless otherwise expressly provided, income cannot be taxed twice. The possibility of double taxation occurs when the taxpayer is resident in one country but has a source of income situated in another country. Two basic rules come into play in such situations, the source rule, and the residence rule. The source rule holds that income is to be taxed in the country in which it originates irrespective of whether the income accrues to a resident or a non-resident, whereas the residence rule stipulates that the power to tax should rest with the country in which the taxpayer resides. If both rules were to apply simultaneously to a business and it was to suffer tax at both ends, the cost of operating on an international scale would become exorbitant.


International double taxation arises when various sovereign countries exercise their sovereign power to subject the same person to taxes of substantially similar character on the same income. There are three distinct classes of cases in which international double taxation may arise:


  1. The first and most important class includes those cases where double taxation is ‘due to co-existence of personal and impersonal tax liability’. Personal tax liability is based on the personal status of taxpayer i.e. his nationality, domicile, and residence whereas impersonal tax liability arises when a state claims tax on income earned or received within its territory without having regard to the personal status of the recipient. A person may be subjected to tax on the same income in one country on account of his personal status and in another because the source of his income is situated within the territory. Property may be taxed in the country where it is situated and also by the country where its owner resides.


  1. The second class includes cases of simultaneous personal liability of a person in various countries. This may arise when different countries apply different criteria to personal liability to tax or where the conditions of the same criteria are differently defined in different countries. One country may claim personal tax on account of nationality, and the other because of domicile or residence of the person concerned within its borders. A person who has his domicile in one and a residence in another may be liable to tax in the country of his domicile and that of his residence as well. He may reside in various countries and be liable to personal tax in each of them. Also, the same person may be claimed as domiciled or residents by different countries in each of which he fulfills the legal conditions of such personal status.


  1. The third class of double taxation arises when various countries apply different tests of impersonal liability. Double taxation of this kind may occur, for instance when the assets or activities, that produce a given income are situated elsewhere than in the country where the income is earned or from which it is due. Business transactions may be subjected to tax both in the country of their origin and of their completion. Tax on salaries and other remuneration for professional activities or employment may be demanded by the country where the act is performed, or where it is paid for, or where the employee or professional man resides or belong by nationality.



  1. Exemption Method: One method of avoiding double taxation is for the residence country to altogether exclude foreign income from its tax base. The country of the source is then given exclusive right to tax such incomes. This is known as complete exemption method and is sometimes followed in respect of profits attributable to foreign permanent establishments or income from immovable property. Indian tax treaties with Denmark, Norway, and Sweden embody with respect to certain incomes.


  1. Credit Method: This method reflects the underlying concept that the resident remains liable in the country of residence on its global income, however as far the quantum of tax liabilities is concerned, credit for tax paid in the source country is given by the residence country against its domestic tax as if the foreign tax were paid to the country of residence itself.


  1. Tax Sparing: One of the aims of the Indian DTAA is to stimulate foreign investment flows in India from foreign developed countries. One way to achieve this aim is to let the investor avail benefits of tax incentives available in India for such investments. This is done through “Tax Sparing”. Here the tax credit is allowed by the country of its residents, not only in respect of taxes actually paid by it in India but also in respect of those taxes India forgoes due to its fiscal incentive provisions under the Indian Income Tax Act. Thus, tax sparing credit is an extension of the normal and regular tax credit to taxes that are spared by the source country i.e. forgiven or reduced due to rebates with the intention of providing incentives for investments.



The solution to the problem of double taxation is to establish a method in which the individual’s whole income is taxed, but is taxed only once, and the liability is divided amongst the taxing territories according to relative interests of the taxpayer in each territory. This is brought about by treaties between the governments of two territories, i.e., bilateral relief. When relief is provided to one’s own national irrespective of reciprocity by the Government of the other authority, it is called unilateral relief.


  • Unilateral relief:

Under this system of taxation, relief is given by way of a tax credit for the taxes paid abroad. The countries, which follow this method of the tax credit, are U.S, Greece, India, and Japan to name a few.

For example – A resident in India who has paid income tax in any country, with which India does not have a treaty for the relief or avoidance of double taxation, is entitled to credit against his Indian Income tax for an amount equal to the Indian coverage rate or the foreign rate whichever is lower applied to the double-taxed income. This is done as follows:

  • Where the foreign tax is equal to Indian tax, the full amount of foreign tax will be given credit.
  • Where the foreign tax exceeds the tax payable in India, the liability to Indian tax will be nil. However, no refund in respect of the excess amount is allowed, and
  • Where the foreign tax paid is less than the Indian tax after deducting the foreign tax would be payable by the taxpayer. The principle is that the credit allowable will never exceed the amount of Indian income tax, which becomes due or payable in respect of the doubly taxed income.


  • Bilateral relief:

Bilateral relief is provided when the governments of two States enter into tax treaties which may take any one of the following two forms:

  • The treaty may apply the exempting method, wherein the country in question refrains from exercising jurisdiction to tax a particular income.
  • Alternatively, the treaty may provide relief from double taxation by reducing the tax ordinarily due to one or both of the contracting parties on that income which is subject to double taxation.



India has entered into a wide network of tax treaties with various countries all over the world to facilitate the free flow of capital into and from India. India has comprehensive DTAAs with 88 countries. Under the Income Tax Act 1961 of India, there are two provisions, Section 90 and Section 91, which provide specific relief to taxpayers to save them from double taxation. Section 90 is for taxpayers who have paid the tax to a country with which India has signed DTAA, while Section 91 provides relief to taxpayers who have paid tax to a country with which India has not signed a DTAA. Thus, India gives relief to both kinds of taxpayers. One can find the tax-sparing and credit methods for elimination of double taxation in most Indian treaties. A typical DTAA between India and another country covers only residents of India and the other contracting country who has entered into the agreement with India. A person who is not resident either of India or of the other contracting country cannot claim any benefit under the said DTA Agreement. Such agreement generally provides that the laws of the two contracting states will govern the taxation of income in respective states except when an express provision to the contrary is made in the agreement.

In India, Chapter IX of Income Tax Act, 1961 contains a provision relating to double taxation relief. Section 90 empowers the Central government to enter into an agreement (DTAA) with the Government of another country outside India for the specified objects. When such agreement does not exist relief is provided in Section 91.




In India, from the business registration point of view, under profit generating business kind, there are 5 major business entity types.  There are quite a number of agreements that come into play based on entity type; on the other hand, there are agreements that will come to play as your business grows. This blog will enlighten you with the different kind of Corporate Agreements and contracts that the company would require during fundraising scenario.


#1: Shareholders’ Agreement:

Every shareholder, when they trade money for Shares in the company, enters a Shareholder’s agreement.  This contract confers the rights and imposes obligations over and above those provided by company law.

This contract defines rules like:

  • Restrictions on transfer of shares
  • Restrictions on forced transfers of shares
  • Nomination of directors for representation on boards
  • Quorum requirements
  • Veto or supermajority rights

#2: Agreement for underwriting shares of a company:

When the existing shareholders of the company or the public do not subscribe to the securities offered to them, and company decides to allot number of shares to the underwriter who subscribes to the securities.

Underwriting is an agreement, entered into by a company with a financial agency, in order to ensure that the public will subscribe for the entire issue of shares or debentures made by the company. The financial agency is known as the underwriter and it agrees to buy that part of the company issues which are not subscribed to by the public in consideration of a specified underwriting commission.

The underwriting agreement defines rules like:

  • Period during which the agreement is in force
  • The amount of underwriting obligations
  • The period within which the underwriter has to subscribe to the issue after being intimated by the issuer
  • The amount of commission if any


#3: Listing Agreement:

Listing means an admission of securities to dealings on a recognized stock exchange. The securities may be of any public limited company, Central or State Government, quasi-governmental and other financial institutions/corporations, municipalities, etc. Listing Agreement is between the company the listing platform.


The objectives of listing are mainly to:

  • provide liquidity to securities;
  • mobilize savings for economic development;
  • protect interest of investors by ensuring full disclosures.


#4: Share Purchase Agreement:


This Agreement comes into play when an individual (generally the equity investor) buys shares from the company.


This Agreement lays down rules like:

  • Terms and conditions
  • Rights exercisable
  • Disagreements resolutions criteria
  • Criteria under which sale of the Equity Investor’s shares can take place

Wazzeer has developed packages for startups that have plans to raise funds from internal and external sources, to discuss the same -> “Get Started!”



Accounting, Secretarial Compliance, Start up Lessons

We all know startups, except for sole proprietorship firms and partnership firms, are considered separate legal entities, distinct and independent from the members who represent it. So, how can courts punish these startups which commit crimes? Common law has various theories which determine the liability of the corporations and the most prominent one would be the doctrine of vicarious liability which states that corporations can be held liable for the torts committed by its employees. But can corporations be charged with the crimes they have committed? Or more importantly, should they be held liable, especially since a company itself is not capable of thinking or of creating any intention of its own. In this blog, we will figure out answers.


Under the Indian Penal Code (IPC), corporations can be prosecuted for the crimes they have committed. Section 11of the Act defines that the ‘person’ would include “any Company or Association or body of persons, whether incorporated or not”. Incidentally, the IPC also protect companies. For instance, Section 499 (Explanation 2) makes defaming a company a criminal offense.


What does corporate crime involve?

According to R.C. Kramer, the corporate crime involves “criminal acts which are the result of deliberate decision making or culpable negligence by persons who occupy structural positions within the organization as corporate executives or managers. These decisions are organizational in that they are organizationally based – made in accordance with the operative goals (primarily corporate profit), standard operating procedures, and cultural norms of the organization – and are intended to benefit the corporation itself.”


What do theories say on Corporate criminal liability?


  1. Doctrine of Attribution

A corporation can be convicted of a criminal offense involving mens rea by applying the Doctrine of Attribution. According to the doctrine, criminal intention of the “alter ego” of the company, i.e., the person/ group of person in charge of the business/affairs of the company can be attributed to the corporation as well to make it liable. In other words, corporates can be held responsible for offenses committed by the persons in control of its affairs, if such are perpetrated in relation to the business of the corporation.


However, the question then arises whether the reverse will also hold true, i.e., whether the officials of the company can be held responsible for acts of the company? This question was recently answered by the Supreme Court of India in Sunil Bharti Mittal vs. Central Bureau of Investigation. The Apex Court, in no uncertain terms, held that the principle of attribution cannot be applied in the reverse scenario to make the directors liable for offenses committed by the company. However, the Court thereafter observed that in the following circumstances a director/person in charge of the affairs of the company can also be prosecuted, along with the company as an accused:


  • If there is sufficient evidence of his active role coupled with criminal intent;
  • Where the statute specifically imposes liability.



  1. Vicarious Liability


Originally developed in the context of tortious liability, the doctrine of vicarious liability holds a person liable to answer for the acts of another. For instance: In the case of companies, the company may be held liable for the acts of its employees, agents, or any person for whom it is responsible.


The concept of vicarious liability of corporate officials has evolved substantially in the recent times so much so that it has become a trend to implead the officials of the company along with the company to exert pressure on the company to settle. However, it is important to note that there is no vicarious liability unless the statute specifically provides for it. Therefore, when the company is the offender, vicarious liability of the directors cannot be imputed automatically in the absence of any statutory provision to that effect.


Essentials for the doctrine of vicarious liability, therefore, are as follows:

  • There must be a crime committed by the agent of the company.
  • He must commit it within the scope of his employment.
  • The act must be carried out with intent to benefit the company.


  1. Theory of identification


The theory of identification recognizes that the acts and state of mind of certain senior officials in a company are the directing minds of the corporation and thus deemed to be the acts and state of mind of the corporation. The corporation is considered to be directly liable, rather than vicariously liable under this theory. In other words, this theory contemplates an identity between the corporation and the persons who constitute its directing mind. The commission of an offense by such person constitutes an offense by the corporation as well. If a corporate employee is virtually the directing mind and will of the corporation, the employee’s action and intent are the action and intent of the company itself, provided the employee is acting within the scope of his/her authority, either express or implied. Under the doctrine of identification, the company is personally liable. It is not liable vicariously. It is deemed to have committed the offense by itself.


The concept of corporate criminal liability is still in its emerging stage in India. However, attempts have been made in the Companies Act, 2013 to control and reduce corporate crime, and at the same time improve corporate governance practices, making companies more responsible and answerable. With the advent of globalization, imposing criminal liability on corporations makes sense; because they are immensely powerful actors whose conduct often causes very significant harm both individuals and society as a whole. Clearly, a lot is still required to be done in this area but the steps taken so far should not be undermined. How effectively laws and regulations will be able to control corporate behavior, only time will tell.

Let us know if you need any help, we at Wazzeer would be glad that we could help you out -> Get Started!



Majority property buyers get the agreements done by the seller, but there are agreements which the owner (or going to be the owner) of the property has to draft. In this blog, we will be looking into a quick checklist of property related Agreements. Let me know if you need an experienced professional to deliver any of them, Wazzeer can get the property related works delivered seamlessly, in fact, you don’t even have to step out of your house. 

  1. Sale Deed:
    • Acts as a evidence of sale and transfer of ownership of property in favor of the buyer
    • Acts as the main document for further sale by the buyer
    • Things to ensure as a buyer:
      • Title of the seller
      • Check whether there is any charge or encumbrance on the property
      • Ensure that all clearances, approvals, and permissions to transfer or sell the property has been addressed
      • All the pages of the deed to be signed
      • Deed should be witnessed by at least two witnesses
      • Finally, get it registered at the jurisdictional sub-registrar office.
      • Details of the parties

  1. Lease Deed:
    • If the term of lease is exceeding one year or reserving yearly rent has to be registered.
    • This agreement binds both lessor and the lessee for the decided duration
    • Things to ensure:
      • The subject matter of lease must be immovable property
      • Duration of lease should be fixed
      • No interest passes to the lessee before execution
      • Termination clauses can be included based on requirements
      • Details of the parties

  1. Leave and License:
    • There is no transfer of the interest of property as that of Lease
    • Licensee acquires personal right to occupy the property
    • Things to ensure:
      • Duration of the rights
      • Details of the parties involved
      • Details of the property
      • Terms of agreement

  1. Mortgage Deed:
    • The funds lent against which the property is used as security is the mortgage money.
    • The Agreement which instruments the transfer is mortgage Deed
    • Things to ensure:
      • Enforceability and validity depends on the type of mortgage
      • Cross verify the agreed interest rate
      • Tenure of the land should be checked up and mentioned
      • Provision for payment of the amount due in the event of mortgagor failing to pay interest

  1. Development Agreement:
    • Agreement between owners of land/building and the developers to construct.
    • Things to ensure:
      • Terms of allotment of Floor Space Index.
      • Details of the parties involved
      • Registration

  1. Broker Agreement:
    • Contract between a broker and a client
    • Things to ensure:
      • Term of sale for the property
      • Brokerage details
      • Expiration date of contract
      • Terms of services are mentioned
      • Details of the two parties

  1. Partition Deed:
    • Partition is a division of joint right into several rights
    • Things to ensure:
      • Clear specification of intention by the members
      • Division should be impracticable or unreasonable
      • Details of the owners

  1. Gift Deed:
    • Agreement to legally register the transfer of immovable property as a gift
    • Things to ensure:
      • Transfer should be made voluntarily and without consideration
      • The donee must accept the property during the lifetime of the donor
      • All property, real and personal, corporeal, and incorporeal may be the subject of the gift.
      • Details of the parties
      • Register the deed

  1. Exchange Deed:
    • When two persons mutually transfer the ownership, Exchange Deed comes into place.
    • Things to keep in mind:
      • Details of the properties in subjected to exchange
      • Details of the parties
      • There should be at least one witness

We at Wazzeer have helped individuals in getting property related works delivered without hassle. We would be very excited to help you. So let’s connect -> “Get your Wazzeer”



Accounting, RoC Filing

A company being non – compliant, Ooh, that sounds interestingly controversial, doesn’t it? This topic has been among the most sorted topics in debate stages. In fact, there are a number of businesses that have taken the path, and lucky for some doing well.

Did you ever feel – heck with compliance works, the firm will just do a minimum of the essentials? Well, hold on, right there. In this blog, we will look into the scary truth of being a non – compliant firm (stressing on Companies).

The most common reason for such non-compliance that we found in our survey is lack of awareness. Businesses are most vulnerable in the first two-three years of their business. In these years, the majority of businesses do not generate revenue, and in some cases, there are hardly any expenses. This leads to a wrong belief that since there has not been much activity, there is no need for reporting to be done. The reality, however, is far from this. Irrespective of the whether there is any revenue or even there is any transaction businesses are supposed to comply with compliance requirements.


A Game you should avoid playing – Consequence of Noncompliance:


Following are some of the brief consequences in which failing to comply can cost your business.

  1. A roadblock in Funding –

The pre-requisite of any funding exercise is the status of tax and regulatory compliances. Never has a company got funded, even in the seed investment level, whose compliances are not up to date. Non-compliant startups do not even live through the term sheet stage. Further, there is a severe negative marking for compliances done post due date with additional fees.

  1. A roadblock in the availability of Bank loan–

External angel/venture funding is out of the question, next source of funding for any business is the bank loan. However, even banks require compliance documents like audited financials, auditor’s report, auditor’s certificate for the last 3 years or as the case may be. Chances of a non-compliance company availing bank loans are next to zero percent.

  1. A roadblock in the availability of Government Tenders-

The same principle applies to Govt tenders. The pre-requisite of any such tender is a compliant business environment, where all reporting is up to date.

  1. Stamp of a “Dormant” Company-

Companies with a non-filing history of 3 years or more are often categorized by the Ministry as ‘dormant’ companies. These companies can never be eligible for any sort of Govt/institutional assistances/contracts. Apart from that, these companies are vulnerable to RoC demand notices technically at any time.

  1. Liability of Directors-

Now, one may think that simply closing down the inactive company or starting up a totally new company would solve the problem. However, that is not so. A director of a company which has not filed its returns for 3 consecutive years is disqualified to become a director in any other company as per the Companies Act, 2013. In other words, his DIN gets blocked and he would not be able to start a new company.

  1. General Penalties-
  • The penalty for Non- Preparation of Financial Statements – 
It is punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 500,000 or both.
  • The penalty for Non- filing of Income Tax Return Filing–
It will attract interest u/s 234A and i.e. if the assessee fails to file its income tax return within the time prescribed by section 139, then he shall be liable to pay interest @ 1% per month or part of the month from the due date of filing of return to the actual date of filing of its return. A further penalty can be levied up to Rs. 5,000 for non-filing of tax returns us 271F.
  • The penalty for Non-filing of Annual RoC forms– 
Additional fee leviable as per specified MCA slabs, which may extend up to 12 times of original fees. Apart from this, provisions for striking off the company and prosecution are also present.
  • The penalty for Non-filing of Annual RoC forms– 
Additional fee leviable as per specified MCA slabs, which may extend up to 12 times of original fees. Apart from this, provisions for striking off the company and prosecution are also present.


The compliance requirements can be complex, and business owners may not always be fully educated about the least rules and regulations and if you concerned about your company compliance status, consider hiring a human resources experts to protect your business legal and financial standing. After all, when it comes to noncompliance issues, ignorance of the law is no defense. 


We at  Wazzeer are vouched by entrepreneurs as the reliable Legal and Accounting Partner, we would be excited to help you, so Let’s Connect!



Business Formation

The announcement of ‘Zero Fees for Registration of Companies having authorized capital up to INR 10L’ was a ‘Yay!’ moment for many.  Entrepreneurs, swayed by this amendment, little did they know the complete story, were under an impression that Ministry of Corporate Affairs had uprooted the registration expense altogether. With an additional reason to enjoy, entrepreneurs celebrated the implementation of the new rules on 26th of January, 2018. In this blog, we at Wazzeer intend to turn all the stones to help you understand the true meaning of “No Company Registration Fee”


Reviewing the proposed changes:

The main objective behind the proposed amendments to the Companies Act, 2013 was to open a door for entrepreneurs to register their businesses with ease and at a quicker rate. Two major processes or changes that were brought in place were:


  1. Discard the lengthy time taking Name Approval process (e-form INC -1) and get an electronic platform to get this done (RUN facility – Reserve Unique Name)
  2. Reduce the expenses incurred by entrepreneurs to register business – Introduced ‘Zero Fees for incorporation fees for Companies having Authorized Capital up to INR 10L)


Uncovering the actuals:


  • The Ministry has amended the fees payable to the Registrar to incorporate the companies.
  • The Companies claimed the benefit of Zero Fees for incorporation shall maintain the status of small companies till one year. Therefore, the companies could not increase its Authorized Capital above INR 10 lakh within the span of 1 year from its incorporation.
  • The fees payable to States were not reduced or eliminated i.e. the Stamp Duty on MoA and AoA of the companies would stay intact.
  • Charges that remain in place are:
    • Fee for Company Name Application
    • Company Registration Fee (Based on Authorised Capital / Number of Members of the Company on Memorandum – Form No.INC-32-SPICe),
    • Filing Fee for documents such as Memorandum of Association (Form No.INC-33-SPICe) and Articles of Association (Form No.INC-34-SPICe),
    • Stamp duty payable to the state government on registration of Memorandum and Articles of Association based on authorized capital, declarations, affidavits etc.

We at Wazzeer have helped businesses in various sectors start smoothly without hassle. We would be very excited to help you kick your business and thereafter too. So let’s connect ->  “Get Started!”



Business Formation

Bitcoin was the first decentralized digital currency to be introduced on the darknet by an unknown programmer using the pseudo name – ‘Satoshi Nakamoto’ in 2009 as an open-source software. The system works peer to peer & transactions take place among users directly without intermediary or brokers. Now, Bitcoin is one of the most popular virtual currencies in the world. Many countries including Russia, China, Japan, United States, Denmark, Sweden, South Korea, Netherlands, United Kingdom, France and Australia are among Bitcoin-friendly countries. In the last year, its return has been around 300%.

The funny thing about bitcoins is they don’t exist anywhere, even on a hard drive. One cannot even point to a digital file, and say “this is a bitcoin”. Instead, there are only records of transactions between different addresses, with balances that increase and decrease.

For its operation, Bitcoin makes use of the Blockchain Technology, a more or less incorruptible digital ledger that can be programmed to record details of financial and non-financial transactions. Blockchain works on the basis of client-server technology. Transactions are entered through the servers and client accomplishes the task of verifying and updating the records based on inputs from transactions. Blockchain technology ensures security by using encryption technology through public and private keys. It solves two most challenging problems of digital transactions- controlling the information and avoiding duplication.

Global Recognition of Bitcoin:

  • Bitcoin is legal and regulated in the USA.
  • The European Court of Justice has ruled that exchanging bitcoin should be exempt from value-added tax in the same way as traditional money.
  • Japan has officially recognized bitcoin as money or legal tender with effect from April 1, 2017.
  • Inland Revenue Authority of Singapore (IRAS) has issued tax guidelines for Bitcoins stating that businesses that choose to accept virtual currencies such as Bitcoins for their remuneration or revenue are subject to normal income tax rules.
  • In Switzerland, Zug becomes the first town in which you can pay city fees (taxes) in bitcoin. Swiss National Railway SBB sells bitcoins at all its offices.
  • The South Korean Central Bank recognizes Bitcoin as a commodity, making South Korea world’s third-largest market for cryptocurrency trading.
  • Bitcoins are illegal in Afghanistan, Bangladesh, Ecuador, Bolivia & Republic of Macedonia.

Current Use of Bitcoin in India

Despite the Reserve Bank of India’s repeated calls for caution against the use of virtual currencies, a domestic Bitcoin exchange reported in September 2017 that it was adding over 2,500 users a day and had reached five lakh downloads. This highlights the growing acceptance of Bitcoin as one of the most popular emerging asset class. People are buying bitcoins from digital currency exchanges by credit cards. In India, purchase of bitcoin is generally done through Zebpay exchange, which links bank account for quick transfer and requires users to submit their KYC forms. Unocoin is another exchange in India which allows people to trade in bitcoins. Other platforms include Coinsecure, Bitxoxo and Bitcoin India. became the first e-commerce site in India to exclusively accept bitcoins as a payment method. WERWIRED, a Bangalore-based geospatial, security, and entertainment consulting company offered bitcoins as a mode of payment for its customers. Castle Bloom, a salon in Chandigarh, became the first physical outlet to start accepting the digital currency., an online portal dealt in buying and selling of bitcoins in India. However, it was raided by the Enforcement Directorate. The preliminary investigations found it to be in violation of the foreign exchange laws.

Post demonetization, leading Bitcoin exchanges in India witnessed a rise in user base by up-to 250%. Zebpay alone witnessed a 25% surge in its revenue. People are jumping into trading of Bitcoins without clearly understanding its functioning mechanisms and related security risks.

Risks Involved

There are certain risks involved in the use of virtual currency. These are:

  1. Volatility risk: The value of the virtual currency is determined by the public’s interest in it and is based strictly on supply and demand. There is no official organization or mechanism controlling the volatility.
  2. Liquidity risk: It is difficult to trade virtual currency for money, i.e., legal tender. No official regulators or central bank oversees the trading platform.
  3. Technological and operational risk: Virtual currency may be exposed to hacking and theft. The security of digital wallets and virtual currency trading and transaction platforms is not guaranteed. Users may experience a total loss of assets as well. Stored in digital form, virtual currency is prone to losses due to hacking, loss of password, compromise of access credentials, malware attack etc.
  4. Legal risk: Virtual currencies are not regulated. There is also no legal framework to protect consumers who buy goods or services using virtual currency.
  5. Money Laundering & Dubious Crimes: There was a contention that black money hoarders may have restored to virtual currencies and bitcoins to launder their cash, during the demonetization drive in November 2016. A number of reports pointed out a surge in domestic bitcoin trade and moving from black economy to the Dark Internet. Bitcoin is also being used for dubious purposes such as arms, and narco/ drugs trafficking in India. The Supreme Court of India has demanded the government and the RBI to check bitcoin transactions so as to ensure they aren’t used for money laundering or terrorism funding.
  6. Tax Evasion: As awareness and adoption of bitcoins grow in India, the authorities are concerned about the potential for abuse by tax evaders and money launderers. Income tax authorities and the Enforcement Directorate, an economic law enforcement and intelligence agency, are especially looking into significant investments into buying the cryptocurrency.

Legal Status of Bitcoin

Bitcoins cannot be classified as regular financial instruments such as ‘currency’, ‘security’, ‘derivative’ or ‘negotiable instruments’ as these instruments are currently defined under Indian law. Likewise, virtual currency is unlikely to be classified as either a payment system or a pre-paid instrument, unless requisite changes are made by the parliament for this purpose.

However, Bitcoins can be considered to be the following:

  1. A “computer program” as defined under the Indian Copyright Act. The definition states that it is “a set of instructions expressed in words, codes, schemes or in any other form, including a machine-readable medium, capable of causing a computer to perform a particular task or achieve a particular result”.
  2. The General Clauses Act, 1897 defines the term movable property as property of every description, except immovable property. The immovable property has been defined to include land, benefits arising out of land or things attached to the earth or permanently fastened to anything attached to the earth. Therefore clearly, a computer program, and by logical extension, Bitcoins can be considered as movable property.
  3. Furthermore, Bitcoins can also be considered as goods according to the Forward Contracts (Regulation) Act, 1952 which defines goods to mean “every kind of movable property other than actionable claims, money, and securities”.

It is important to note that although Bitcoins can be reasonably classified as movable property and more specifically as computer software, this position has not been tested in a Court of law.

Being classified as ‘Goods’ may give rise to certain direct and indirect tax-related implications, such as the applicability of sales tax on the transfer of virtual currency, the applicability of services tax on mining of virtual currency, is considered a service, and applicability of income tax on income arising on sale of virtual currency. However, the taxability of virtual currency still remains a grey area, rendering the regulatory environment governing virtual currency even more uncertain.

RBI’s Stance

RBI has time and again stated that bitcoin and other cryptocurrencies are not legal tenders. In fact, they contain huge risks without any regulation and support. In this regard, RBI has issued multiple warnings to the public regarding the potential economic, financial, operational, and legal, customer protection and security related risks associated with dealing with them.

For instance, RBI in its Report dated June 27, 2013, stated that that virtual currencies schemes provide a financial incentive for virtual community users to continue to participate, and are able to generate ‘float’ revenue for their owners and also provide a high level of flexibility regarding the business model and business strategy for the virtual community. In view of the observations made in the Report, it was stated that the regulators are studying the impact of online payment options and virtual currencies to determine potential risks associated with them. Similarly, RBI vides its Press Release Dated February 1, 2017, clearly stated that it has not given any license/authorization to any entity/company to operate such schemes or deal with any virtual currencies. Pursuant to the issuance of these advisories, the Enforcement Directorate even conducted raids against operators of trading platforms of virtual currencies in India, creating an atmosphere of regulatory uncertainty for the particular industry.

Virtual currency, as a medium of payment, is not recognized under Indian laws. While RBI has not declared dealing in virtual currency as illegal, it hasn’t introduced any regulatory framework governing it as well. RBI has also stated that it is examining the issues associated with the usage, holding and trading of virtual currencies under the existing legal and regulatory framework of India, including foreign exchange and payment systems laws and during such period, the user, holder, investor, trader, etc. dealing with virtual currency will be doing so at their own risk.

Therefore, while presently virtual currencies are not per se considered ‘illegal’ in India due to lack of any legislation, regulation or guideline prohibiting or governing its use/trading, it appears that dealing in virtual currencies is generally frowned upon by the regulatory authorities. Particularly with the linkage being drawn between cryptocurrency and breach of anti-money laundering laws, it is evident that the Government of India has a cautionary attitude towards dealing with virtual currency, thereby further increasing the risks attached with their operations in India. In fact during the Budget speech, 2018 the Government announced ‘that it would take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.’

Bitcoins may have generated handsome returns but at the same time, it is associated with high risk and an uncertain future. It will be interesting to see whether Bitcoin and other such virtual currencies, will be classified as currency or commodity. If it is classified as a currency, RBI will regulate all its dealings, while if it is a commodity, SEBI will be the leading regulator.

We at Wazzeer have helped businesses in various sectors start smoothly without hassle. We would be very excited to help you kick your business and thereafter too. So let’s connect -> “Get Started!”