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Related Party transactions

Related Party transactions

A related party is a party related to a body corporate /company in any other way other than by the companies own transactions. It means that a special relationship persists between the parties even before the transaction takes place. Section 2(76) of the Companies Act, 2013 (“the Act”), defines a related party with reference to a company

  • director or a key managerial person or their relatives or,
  • a firm, private company in which the partner, director / manager or his relative is a partner or,
  • a private company or a public company in which a director or manager is a
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Labor Laws in India

In India, we have numerous laws which regulate the labor in the country and ensure to provide high degree of workers protection and manage the rules relating to the same. This blog describes the basic introduction and applicability of two most common and important funds to various organizations in order to ensure proper working of the system. These are Employee State Insurance (ESI) and Employee Provident Fund (EPF) schemes. ESI is a contributory fund whereby the employees in India are benefited through self-financing and healthcare insurance fund contributed by them and their employer. This scheme is administered and regulated as Read more

Latest norms of differential voting rights

Latest norms of differential voting rights

In a fillip to startups, the Ministry of Corporate Affairs (MCA) recently amended the Companies (Share Capital and Debentures) Rules, 2014 (SCAD Rules) which are relaxed norms for shares with Differential Voting Rights (DVR) that will help such companies to retain control while raising equity capital. A differential voting right share is one with higher or lower voting rights but the same economic interest as ordinary shares. Shares with higher voting rights have been used by entrepreneurs around the world to retain control of their companies even while selling ordinary equity to investors to raise capital. The MCA move was … Read more

Union Budget of India (2019-20)

Union Budget of India (2019-20)

Ms. Nirmala Sitharaman, Minister for Finance and Corporate Affairs, Government of India announced the Union Budget for 2019-20, in Parliament on July 05, 2019. The budget aimed at boosting infrastructure and foreign investment, the first since the Bharatiya Janata Party led by Prime Minister Narendra Modi returned for a second term in power. The main focus of this budget is reducing red tape, making best use of technology, building social infrastructure, digital India, pollution free India, make in India, job creation in Micro, Small and Medium Enterprises (MSMEs) and investing heavily in infrastructure making India, a US$ 3 trillion economy … Read more

RBI reporting for Foreign Direct Investment

RBI reporting for Foreign Direct Investment

Foreign Direct Investment (FDI) means investment through capital instruments (equity shares, debentures, preference shares and share warrants) by a person resident outside India in an unlisted Indian company or in 10% or more of the post issue paid-up capital on a fully diluted basis of a listed Indian company.

FDI under various sectors is permitted either by an Automatic route or Government route. Under Automatic route, the non-resident or Indian company does not require any approval from Government of India. Whereas, under the Government route the approval from the Government is required prior to investment. Proposals are considered by the … Read more

RBI eases External Commercial Borrowings

RBI eases External Commercial Borrowings

India has always encouraged capital inflows as a part of the development policy. Deficient domestic capital and reduction in the current account compelled the government historically to go after foreign capital. Foreign capital is money obtained from foreign countries to make investment domestically. The major category is foreign investment including FDI (Foreign Direct Investment) and FPI (Foreign Portfolio Investment). Likewise, there are other types of foreign capital like trade credit, NRI Deposits and the most important one for India – the External Commercial Borrowings (ECB).

ECB is a loan which is being availed by an Indian entity from a non- … Read more

Payroll processing services

Illuminating facts of payroll processing

For any organization, one of the most crucial tasks is payroll processing with complications paving way as tax regulations as well as compliances. Also, incorrect computation of worker benefits can wreck the timing and accuracy of one’s payroll system. Payroll is a list of particulars of employees of the company including the amount they are to be paid. Human resource, for any organization, is the paramount resource and paying them for the work performed by them is not a choice but an obligation for the organization.

Nonetheless, it is paradoxical not to encounter any challenges when an in-house payroll system … Read more

Concept of permanent establishment (PE)

Concept of permanent establishment (PE)

In this contemporary world, initiation of globalization has lubricated great technological advancement. All this has facilitated easy access as well as real-time communication among various countries notwithstanding the physical distance. Currently, the world is a ‘global hub’ where no destination is secluded. Subsequently, corporates around the world have become global in their operations and have been expanding their businesses beyond the boundaries of their countries into new markets in their quest to achieve growth and economies of scale.

Over time, two type of cross border transactions have emerged

  • Conducting business activities with a country – Residents of a country transacting
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highlights of Amendment

Highlights of Companies (Amendment) Ordinance, 2019

The ever-changing environment demands frequent adjustments to be made in the laws of land for efficient and effective management of both business as well as non-business activities. Government has just introduced the Companies (Amendment) Ordinance, 2019 thereby, bringing relevant alterations in Companies Act, 2013 (”Act”). This action has provided an affirmative action that any violation in complying with the set standards will lead to stringent repercussions for both the company and its management.

With the objective of promoting ease of doing business and improving corporate compliances, President has disseminated the Companies (Amendment) Ordinance, 2019 which came into effect in November … Read more

Overseas Direct Investment (ODI)

Overseas Direct Investment (ODI)

Foreign direct investments are investments made in Indian organizations for improved returns by foreigner nationals. Any Indian person or organization can invest funds in foreign countries via direct means. These are however, subject to Indian Taxation laws.

These ODI opportunities are great avenues for Indian entities to diversify and grow their companies in foreign countries. They can take the form of joint ventures (JV), wholly owned subsidiaries (WOS), share acquisitions, etc. Portfolio investments however, do not fall under the ODI umbrella.

Rules regarding ODI
The complete set of guidelines for ODI is provided by Reserve Bank of India (RBI) and … Read more

Highlights of interim budget 2019

Highlights of interim budget 2019

  • Individual taxpayers with annual income up to INR 5 lakhs to get full tax rebate.
  • Individuals with gross income up to INR 6.5 lakhs will not need to pay any tax if they make investments in provident funds and prescribed equities.
  • Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to 2 crores; can be exercised once in a lifetime.
  • Benefits under section 80(i)BA being extended for one more year for all housing projects approved till the end of 2019-20.
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filing on financial statement

Filing of financial statement

Financial statements of a company are necessarily required to be filed with Ministry of Corporate Affairs (MCA) annually. The form for filing such financial statements with MCA is AOC – 4. All the companies fall under this category and are compulsorily required to file form AOC – 4. However, few Companies are covered under Extensible Business Reporting Language (XBRL) and are required to upload the financial statements on MCA portal in XBRL format as per the Companies (Filing of documents & Forms in Extensible Business Reporting Language) Rules, 2015. In this case the requirement of signing under hand is not … Read more

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Extensible Business Reporting Language (XBRL)

Developed by XBRL International Inc. (XII), XBRL is defined in Rule 2 of Companies (Filing of documents and forms in XBRL) Rules, 2015 as a standardized language for communication in electronic form to express, report or file financial information by the companies under the Act. It is a language for communicating electronically, financial and business data for business reporting. It has facilitated the process of creating, transmitting, using or analyzing such information.

Companies filing financial statements in AOC-4
With reference to Companies (Filing of documents and forms in XBRL) Rules, 2015 following companies are required to file their financial statements … Read more

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Buybacks: acing the pace?

Defining buy-back
When a company procures its own outstanding shares i.e. quantum of stock in the open market along with shares held by institutional investors and restricted shares held by insiders and company officers, to reduce the number of shares available for General Public.

Reasons for buy back
Buy back of shares is undertaken for numerous reasons, like to strengthen the value of remaining shares available by cutting the supply or preventing other stakeholders from taking a controlling share. Few reasons for companies buying back their shares are discussed as follows:

  • Preserving stock price: Company operates with the intention of
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Rupee sliding: Reasons & Forecast

What is value of currency for an economy?
An economy is often represented by the people who live there and the value its currency has, further the value of a currency depends on factors that affect the economy like imports and exports, performance of equity markets, foreign exchange reserves, macroeconomic policies, inflation, employment, interest rates, growth rate, trade deficit, foreign investment inflows, banking capital, commodity prices and geopolitical conditions. Currencies are often influenced by income levels through consumer splurge. When income increases, people tend to expend more. Demand for imported goods increases demand for foreign currencies, thus, weakening the local … Read more

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New compliance for directors – DIR-3 KYC

The Central Government of India decided to conduct KYC drive to bring down the shell companies. Ministry would be conducting KYC of all the directors of the companies as a part of updating its registry.

MCA (Ministry of Corporate Affairs) has amended and inserted a new rule, Rule 12A (Directors KYC) vide the Companies (Appointment and Qualification of Director) Rules, Fourth Amendment Rules, 2018 . The rule came into effect on July 10, 2018.

In a registered company or new company registration, every director who has been allotted Director Identification Number (DIN) on or before 31st March, 2018 and … Read more

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Periodic routine compliances of a company

With an Ease of doing business, starting a business in India is way easy, but running it in this competitive world is complex. In such complex environment maintaining data, records and managing compliances is the biggest task that every company have to deal with.

What are Periodic and Routine Compliances?

Generally, compliance means keeping up with the set rules, policies, law or standard. Periodic means timely or on a regular interval, like monthly, quarterly and so on. Thus, periodic compliances mainly refers to recording, maintaining, filing or submitting the necessary documents and informative data timely or in … Read more

Tax Filing 15

Foreign citizen – a resident Indian

In the Constitution of India, as per Income Tax Act 1961, Central Government has the power to levy tax on any income other than agricultural income. The government imposes a tax on taxable income of all persons who are individuals, Hindu Undivided Families (HUF’s), companies, firms, LLP, association of persons, body of individuals, local authority and any other artificial juridical person. Levy of tax on a person depends upon his residential status.

For tax purposes under Indian income tax law, an Individual can be: Resident or Non-Resident. Further the Resident category is classified into two parts i.e. Ordinary Resident and … Read more

Telecom Companies Under Debt-Restructuring

IBA requests dot for relief for telecom companies under debt-restructuring

The Indian Banks Association (IBA) has requested the Department of Telecommunications (DoT) to provide relief measures for telecom companies undergoing debt restructuring. This includes refunding payments related to airwaves surrendered by the telecom companies as well as cancellation of future deferred payments for this spectrum.

In the letter submitted to the DoT, IBA said “This money will be used for repaying the banks which in turn prevent loans from turning into NPA (non-performing asset)”. “We understand the government had allowed a similar facility to BSNL and MTNL in the past” it further added.

IBA has also requested speeding up of … Read more