Goods and services tax (GST) is one of the biggest fiscal reforms in India ever since Independence. It is expected that this indirect tax would have a major effect on businesses of all sizes, big as well as small. GST is expected to be levied on all goods and services and will take up the mantle now vacated by the indirect taxes of yore. This includes taxes such as excise tax, value added tax (VAT), and service tax to name a few. It is expected to have several advantages for Indian economy. Look over here, the four benefits of goods and services tax (GST).
Removal of cascading effect of taxes
This is expected to be an important benefit of the GST tax regime. It will significantly do away with the cascading effect that the previous indirect taxes had. In layman’s terms the phrase cascading effect of tax means one tax upon another. In the present regime the service tax that has been paid on the input services cannot be set off with respect to the output VAT. In GST the tax payer would be able to avail input tax credit without any problem whatsoever. This facility will be available across all goods and services. In the end this would reduce the tax burden applicable for the end user.
This will do away with the cascading effect. It is expected that this would really benefit industries where both products and services are involved. Examples of such businesses would be the various restaurants and eateries.
Greater tax breaks for smaller organizations
It is also expected that GST would make registration really easy. The registration limit for excise tax was INR 1.5 crores, and for VAT in most states across India the figure was at least INR 5 lakh. For service tax this figure went up to INR 10 lakh. The registration limit for GST is INR 20 lakh. In the states located in northeastern India this limit has been fixed at INR 10 lakh.
The present VAT structure makes it necessary for any company with an annual turnover of more than INR 5 lakh to pay the tax. The rates are however different across states. As far as service tax is concerned any company with a yearly turnover of at least INR 10 lakh would have to pay the tax. In GST this limit has been taken up to INR 20 lakh. It is expected that this would significantly benefit many small and medium industries.
Small businesses to be benefited by composition scheme
The administrators have also come up with an alternative programme of lower taxes that is expected to benefit the smaller companies that earn between INR 20 lakh and INR 50 lakh a year. This scheme is known as the composition scheme and would benefit these entities by reducing the tax rate applicable to them. It is being proposed that the limit be increased to INR 1 crore as compared to the earlier turnover threshold of INR 75 lakh a year. This is expected to be of significant benefit for a number of small businesses across the country as well.
Online procedure becomes much simpler
The whole process of GST is expected to be much simpler compared to other indirect taxes. This includes processes such as registration, filing of returns, and payment of the tax, all of which have to be done online. Now, there is no longer the need for a startup to do the rounds of a tax office so as to get registered for various taxes. The number of compliances has come down as well. At present, there are other indirect taxes such as excise tax and VAT that have their own compliances and returns. GST is expected to unify all the different compliances and returns and make the entire process much simpler and, thus, easier.
One of the various small businesses that you can start with very little investment is a personalized and customized gift store. In fact, this is a hot business idea right now considering how people want to buy such presents for their near and dear ones as well as others that matter in their lives. If you are thinking to start a choicable business, here you can look over some small business ideas can turn your mind to put a thumb for new initiative.
Gym or fitness centre
You can easily start a gym or fitness centre considering how conscious people are these days about fitness. Almost everyone you see out there wants to be fit. So, in case you had some room you could easily start a fitness centre or gym over there and earn good money in the process.
You could easily start a small event management company that would organize different kinds of events. More than money what you need over here is sufficient manpower and significant amount of expertise in the industry.
These days everyone wishes his home to be decorated by an interior designer or decorator. So, you could easily start that business. However, you need to be trained and certified in order to enjoy a successful career here.
Small grocery shop
Yet another good small business idea with little investment is a grocery store. Here you do not need any special skill as such and you can go on expanding even as you go.
Ice cream parlour
If you have little money then you can do worse than start an ice cream parlour.
Photocopies and book binding
There are plenty of school and college areas that may not have this facility. You can easily fill this gap in those areas and it does have the potential to help you earn.
Mobile food shop
This is the mobile generation. So, it might make sense for you to start a mobile food service such as a food truck.
The price of gold is always increasing and there is great demand for golden jewellery as well. This is why you can undertake a course in this regard and start a small business that could one day grow into something so much bigger.
It is also a good business idea to start a small insurance company of your own or even become the agent of an established insurer.
If you are good at what you do and have sufficient experience and repute in the industry where you work at present you can always consider working as a freelancer.
You can always count on book lovers to buy several books at once and this is why the idea of starting a book store happens to be such an attractive one.
These days, people always look for good catering service for special occasions such as parties and marriage ceremonies. So, if you are skilled in this area then it is one business that you should definitely try.
If you are capable of providing computer training then this is one business that you would enjoy. In any case, in the modern world it is important to know computers.
These days life is rather stressful and a lot of people like to practice yoga to stay fit and de-stress. So, in case you are trained in that regard you can jolly well start a new business.
Baby sitting services
This business idea is meant primarily for women who wish to do some home based work instead of moving outdoors for work. You will find a lot of working couples who would be more than willing to avail your services.
Real estate consultant
Real estate is one business that is always growing and as such you can always start a consultancy in this particular industry. You can guide people how to sell, buy, and rent property.
The financial transactions are the very center of economic activity as investment in assets, goods and productive activity is funded by financial transactions. These transactions take various forms – from equity to loans, to investment in various securities. Besides primary financing transactions there are numerous secondary market transactions – including traders in securities, assignment and securitization of loans, etc.
The introduction of Goods and Services Tax (GST) is admittedly one of the most outstanding tax reforms since Independence and therefore, it is very important to unravel the implication of GST on financial transactions. This article is limited to GST on basic financial transaction excluding insurance, stock broking services, etc.
What about GST on Lending Transactions
One of the primary facts one should note while evaluating the applicability of GST is the nearly-all-pervasive nature of the levy. The charging section [Sec 9 of the CGST Act] imposes the tax on any “supply”. Exclusions are items like non-taxable supplies [for example, alcohol for human consumption], or exempt supplies, or supplies which are zero-rated. Hence, the focus shifts to the ambit of the word “supply”, which consists of all forms of supply of goods and services under Section 7 (1) of CGST Act, 2017. Since the word is intrinsically connected with the words “goods” and “services”, one needs to examine the meaning of those terms.
“Goods” are defined in Section 2 (52) to include any movable property, other than money and securities. “Services” are defined in Section 2 (102) to mean anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.
Mere money is excluded from both goods as well as services. When read with the word “supply”, supply of money is neither a supply of goods, nor a supply of services. However, Section 2 (102) includes, in the definition of “service”, any activity relating to use of money, even though supply of money itself is not a service. Mere supply of money could be settlement of a transaction – for instance, making a payment for goods and services. It could not have been argued that the person making the payment itself is making a supply. Therefore, the intent of the law excluding supply of money, but including any activity pertaining to the use of money becomes intriguing. This conundrum was faced by the Delhi High Court in Delhi Chit Fund Association Vs. Union of India1 while interpreting similar expression used in sec 65B (44) of the Finance Act, 1994 – the High Court expressed its perplexity in the following words: The Explanation, therefore, seems to offer a clue to the problem which appears to us to be a creation of the very confounding manner in which the definition is found to have been drafted. However, we have to make sense of what we have.
Can it, therefore, be argued that lending of money is an activity pertaining to use of money? If the settlement of a supply in form of a monetary payment cannot itself be taken to be a supply, then, what else could be the exclusion of monetary transactions in both the definition of “goods” as well as “services”, except lending or deposit of money?
The list of exempted services [item 8- extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services)]. That is to say, there is a clear exemption for extending of deposits, loans or advances, insofar as the consideration is interest or discount. Therefore, it does not practically matter whether lending of money is a supply of services or not. However, the question becomes crucial from at least 2 viewpoints:
• Lending of money is a supply of service, but an exempt service in terms of Item 8 of Exemption list
• Interest involved in credit cards is not a fully exempt service
The exemption for financial transactions in India is quite narrow – it is only the interest/ discount earned or paid for loans, deposits or advances. Therefore, if the transaction deviates from a plain vanilla structure and therefore, fails the test of being a “loan”, “deposit” or “advance”, or the consideration is not an interest or discount, the exemption is lost. As a result:
• All earnings and charges other than interest or discount will be chargeable to GST. This includes any upfront or regular charges such as processing fees, documentation charges, service charges, collection charges, inspection charges, repossession charges, foreclosure or prepayment charges and so on.
• If the transaction does not fit into the meaning of “loan”, “deposit” or “advance”, even if the transaction is intrinsically a financial transaction, it does not seem that the supply will be exempt from GST. Thus, if an inventory repurchase transaction or a financial lease transaction may have the substance of a financial transaction, but it will be difficult to contend that they avail the exemption given in Item 8 of the Exemption list.
• Nevertheless, if the transaction is a loan transaction, there is no question of GST on the recovery of principal lent as the tax can only be on the consideration and not for principal recovery.
Is Registration Required Under GST Law for Money-Lenders?
Loan transactions are currently originated from banks, but by thousands of non-banking financial entities, thousands of money-lenders and entities occasionally engaged in lending activities. Therefore, a pertinent question is, is registration under GST law relevant for an entity even though the entity may be earning income by way of interest.
Notably, interest on loans is exempt as per the exemption discussed above; however, the registration requirement is based on (a) aggregate turnover in a financial year exceeding Rs 20 lakhs and (b) the supplier making a taxable supply. The term “aggregate turnover” as defined in Section 2 (6) includes value of all exempt supplies as well. Thus, while there is no GST on interest on loans, but the same is still captured in while computing aggregate turnover. Thus:
• If the aggregate amount of turnover (note that this is all – India turnover), including interest, in a year exceeds Rs 20 lakhs and
• The entity has received any consideration other than interest (any amount whatsoever) or made any other taxable supply (for example, even sale of scrap in the office), the entity will require registration.
A company limited by shares can be described as an incorporated business structure and is regarded as a legal person or entity, which is held responsible for its own debts. It is the most popular company structure out there and is normally created by people who wish to earn profits from their business ventures. The biggest advantage of such a company is that it can be started by any business irrespective of its size and this includes startups as well. It can be owned by at least one person or more. These owners are also referred to as member or shareholders. In order to become a shareholder you should have at least one share in that particular company.
In these companies the shareholders enjoy a limited amount of liability. In case the business in question becomes insolvent a shareholder would only need to pay the price of his shares. Beyond that the company itself would be held responsible for all the debts incurred by itself. In these companies the shareholders get shares of the profits made by the business. This is proportionate to the amount of shares held by them or the percentage of the same with respect to the total shares offered by the company.
The owners of the company appoint managers in order to look after the daily activities of the company. In most cases the shareholders employ themselves as the directors of such a company.
Differences with companies limited by guarantee
As far as legal definitions are concerned both the companies are one and the same. However, the ownership pattern of these companies is different in the sense that there are no shareholders. In these companies the owners are also referred to as guarantors. They can be called members as well. Anyone can become a guarantor by assuring to provide a certain sum of money to the company in question.
The money guaranteed is the extent to which someone is held liable towards the business. It needs to be paid when a company goes out of business. Here too, directors are appointed by members in order to take care of the everyday affairs of the company and as is the case with most companies limited by shares here too the guarantors themselves become the directors.
Here you can see a close comparison between companies limited by shares and limited by guarantee:
Basis of Distinction
Limited by Guarantee
Limited by Shares
Definition as per the Companies Act, 2013
“Company Limited by Guarantee” means a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up. [As per Section 2(21)]
“Company Limited by Shares” means a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them. [As per Section 2(22)].
Meaning- Required as to Memorandum
Memorandum states that members shall have limited liability to the extent of the amount that they have guaranteed to pay to the company at the time of its winding up.
Memorandum states that members shall have limited liability to the extent of the amount unpaid, if any, on the shares held by them.
They are formed to provide specific services to the public and are non-profit making business. Therefore, it has specific objects & detailed rules pertaining to which areas they want to work upon.
They are formed for profit-making business and have very general objectives and the clauses which allow them to pursue any legal activity or trade.
May or may not have share capital
Must have share capital
There are no shares – hence there are no shareholders. Instead, the company will have members.
Owners of shares are called shareholders of the company.
Companies limited by guarantee are non-profitable organization. They are specially designed for charitable purposes.
Companies limited by shares are profit making organization
Advanced PCB Technologies Private Limited
Reliance Jio Infocomm Limited (RJIL)
Which one should you choose?
The decision regarding which form of company you should choose depends on the profit sharing model that you wish to follow. This is always going to be the most logical and straightforward approach that needs to be taken in such cases. If it is a profit-making business that you want you should go for a company that is limited by shares. If you want your company to be a non profit-making one your company should be limited by guarantee. In case, it is not that simple then you need to talk to a professional business consultant or adviser and find out what you should do. You should be able to get proper guidance from them. In this context you should also remember that you cannot change your company from one form to another.
As far as overall merchandise exports are concerned India ranks 19th in the world. In terms of overall imports it lies at the 12th spot. The present Indian government is said to be in favour of businesses and as such it is expected to sign a number of deals that would make the trade sector much more liberal than it already is. It is expected that in the days to come these trade liberalization deals would make it easier for more import and export related businesses to start in India. However before you start such a business there are a few things that you need to know really well. Documentation is an important part of this business. As the entrepreneur or business owner it is important that you understand this part really well.
The first step
If you wish to do an import and export business in India you need to get an Import Export Code (also referred to as IE Code). This particular code will be provided by the Directorate General of Foreign Trade. You can get this code by providing your PAN and opening a business bank account. There are plenty of websites in India that can help you get the IE Code. If you need a import export code (IEC) license for your business, we can assist you to obtain the IE Code in Bangalore Karnataka or anywhere in India through online.
Commercial invoices are issued by sellers to the buyers. They have the terms of transaction such as the date when the transaction happened, details pertaining to sellers, details of buyers, value of the transaction, and terms of shipping to name a few. It is on the basis of the commercial invoice raised by the seller that customs duty is imposed on a shipment.
An airway bill can be regarded as the proof that goods and shipment are being sent by the air. These bills also act as proofs of the fact that the air cargo agent has received the goods that are to be shipped. Such a bill acts as an invoice for the air shipment as well as being a certificate of insurance. It also provides guidance to the air cargo agent regarding how it is going to handle, dispatch, and deliver the shipment in question. Typically, an airway bill would contain details such as information on the consignee and the shipper. It will mention the destination airport as well as the departure airport and describe the goods that are being shipped. It would bear the carrier’s sign and seal as well.
Bill of lading
A shipping agency provides bill of lading for the goods that it has shipped. Such a bill normally has information regarding the shipper, the consignee, the vessel that is carrying the goods, the port where the goods are loaded and one where they are discharged, the place of delivery and receipt, the mode of payment, and the carrier’s name.
Some more important documents in this regard are bill of exchange, certificate of origin, packing list, and letter of credit. A bill of exchange is used when an importer decides that it would pay the exporter at a future date or before it. This date is normally arrived upon by mutual agreement.
No matter what kind of shop or establishment you are opening in Karnataka you would have to apply for registration with Department of Labour, Karnataka. These days the Karnataka government has made it easy for you to perform these procedures online by starting the e-Karmika portal. This is the online facility where you can register, as well as renew your establishments. All this is done under the aegis of Karnataka Shops and Commercial Establishments Act, 1961. This particular act just happens to be one of the many State Labour Laws and Rules that the Department of Labour is implementing.
Rules and laws
The department performs a whole range of functions and this includes enforcing a number of laws in the state. As per these laws, the citizens need to interact with the department. All this is part of various enactments of the Indian government as well as the Karnataka government. Karnataka Shops and Commercial Establishments Act, 1961 covers a number of areas where the department is supposed to work. They may be mentioned as below:
Documents to be uploaded
As you would know as a prospective business owner, certain documents always have to be provided at various stages of your existence to relevant authorities. Here too scanned copies of certain documents need to be uploaded at the time of making the application for opening a shop or any other establishment in Karnataka. Those documents may be mentioned as below:
If your company does not have any employee other than yourself you would need to pay a registration fee of INR 250. In case there are between one and nine employees in your establishment you would need to part with INR 500. In case the number is between 10 and 19 you would have to pay INR 3000 as registration fee.
In case you have hired anywhere between 20 and 49 employees you would have to pay INR 8000. The amount would go up to INR 15,000 in case there are 50 to 99 employees in your shop or establishment. If you have 100 to 250 employees you should be paying a registration fee of INR 30,000. If there are between 251 and 500 employees in your unit then the registration fee payable by you would increase to INR 35,000. If the number of employees in your company is between 501 and 1000 the registration fee applicable for you would be INR 45,000. If you have more than 1000 employees you should pay INR 50,000 as registration fee.
There are several areas of difference between a registered and an unregistered trademark. At the very basic level they differ in terms of the protection that they offer to their respective owners. A registered trademark can be described in legal jargon as a statutory remedy and the latter can be regarded as a common legal remedy. In case of registered trademarks it is very important that you are able to establish the fact that an infringing mark is exactly, or at least highly, similar to your trademark as that will help establish the fact that there has been an infringement of sorts.
The thing with unregistered trademarks
The thing with unregistered trademarks is that you may get some protection from them but this is only applicable when the product or service in question enjoys a significant position in the market that it is operating in. It is very important that your common buyers are aware that such a trademark belongs to you. These trademarks also differ from one another in terms of the signs that represent them. A registered trademark is represented by ® and an unregistered trademark is represented by ™, which stands for the trademark symbol.
Laws related to trademarks
The laws related to trademarks tend to differ from one country to another. For example, in India you have Trademarks Act. It may also be that in a particular territory it is not obligatory for you to register your trademark like it happens in India. It needs to be said that in this particular respect India differs significantly from so many other countries of the world. In India an unregistered trademark is also granted protection and it comes with several benefits as well. However, as you would know, the matter of statutory right of infringement is not applicable to an unregistered trademark like it happens with a registered trademark. This is the reason why it is always better to get your trademark registered because of the benefits that come with it and the value that it has.
Advantages of a registered trademark
There are several advantages that you enjoy when you register your trademark. For starters, you have a whole host of exclusive rights. This includes the right to exclusive use of the trademark in question for your products and services. Normally you need to register a trademark for a decade and then keep on renewing it. The process of registration is governed by various laws for such purposes in different countries.
In India this is done by Trademarks Act 1999. There are certain reasons as to why you should get your trademark registered. For starters, it helps your goods and services to be identified and distinguished from those of your competitors. You can also advertise your goods and services in an effective way by using your registered trademark. It also plays a major role in keeping your commercial goodwill safe. The most important thing of all is that if a buyer is aware of your trademark he will not buy any substitute product or service that is nowhere as good as what you offer.
Before you attempt to understand the differences between the concepts known as trademark, copyright, and patent it is very important that you comprehend what they are. A trademark can be filed by product owners as well as business owners. They normally deal with the following components:
If any one of these is trademarked then it acts as the signature of the brand or business that has done the trademark work. Its main function is to differentiate a product or a brand from others of its ilk, ones that can be regarded as its competitors.
Difference with regard to basic nature
A copyright is an intellectual property right that can be sought by any one of the following entities:
It is true that it is impossible to copyright an idea as such but you can always copyright the tangible form of an idea. This can and does include all of the following original works and more:
Patents, on the other hand, are filed for by designers and inventors. With the help of a patent these entities are able to protect inventions that offer new and improved functionality. This can include things such as machines, chemical compositions, and processes, as well as the designs for all of these.
Differences with regards to benefits
As far as a trademark is concerned it improves the rights of the entity that has filed it by way of making available legal evidence. It provides a public notice of ownership as well. It acts as sufficient proof of the fact that the owner has exclusive rights to the product or brand mark in a certain nation. In case someone infringes the copyright the owner has the right to sue that particular entity.
The benefits are similar in case of a copyright as well. Here too the owner has legal proof of ownership apart from the fact that the copyright serves as a public notice of ownership. Provided that the owner has the copyright for the same he can sue a person at a court of law for infringing his copyright.
With the help of a patent an owner is able to prevent any manufacture, sale, usage, and import of the invention that has been protected under the same. He has the exclusive rights in this case.
Difference with regards to tenure
A trademark has to be renewed every 10 years but it does remain valid for a lifetime. The validity period is the same for a copyright as well. However, in case of a patent the validity period expires at the end of 20 years and it cannot be renewed after that. A provisional patent can be availed for a one year period however. The biggest thing about these three is that while they are unique a product can have one or more of them at a time.
You can form a private limited IT company in Bangalore rather easily. All you need is two members. You can have more than this number but it should never exceed 200 members. It is also important that your company has at least a couple of directors and 15 at the most. In most cases there are three kinds of programmes that service providers in this domain have for such clients. The basic plans normally offer the following facilities:
How to form a limited liability partnership (LLP) in Bangalore?
If you wish to form your IT company in Bangalore as an LLP you need at least two designated partners. In these cases however there is no upper limit on the number of partners that may be there. Here too the service providers offer three levels of services – basic, standard, and professional. The basic plans normally offer the following services:
The standard plans give you all the facilities of the basic plans alongwith professional tax enrollment, and commercial and shop establishment. In the standard plans you have facilities such as Registrar of Companies (ROC) yearly filing for the first year alongwith all the facilities of the basic plans.
How to form a one person company in Bangalore?
You can form your IT company in Bangalore as a one person company too. It is a lot like a private limited company but you can operate it just by yourself. After operating it as such for a couple of years you can change it to a private limited company. This can also be done if your company’s annual turnover exceeds INR 2 crore. Here too the services are divided into three categories – basic, standard, and professional. The basic plans offer the following services:
How to form a partnership firm in Bangalore?
You can always form your IT company as a partnership firm in Bangalore. In fact, such a company can be formed by one or more people. A partnership firm can be created when all the interested parties sign on the partnership deed. At the basic level these service providers would provide services such as partnership deed, stamp duty, registration certificate, and PAN and TAN for an LLP. In the standard plans you would get services such as shops and commercial establishment, professional tax enrollment, and all the services provided in the basic plans.
How to form a foreign subsidiary in Bangalore?
If your IT company in Bangalore is actually a subsidiary of an international enterprise then you would need at least a couple of directors as well as shareholders. The same also applies to foreign nationals who wish to set up such a company in the city. However, at least one of your directors should be a resident of India. Both the shareholders can be non resident Indians (NRIs) or foreign nationals. In the basic plans for such work you get the following services:
The standard plans for such incorporations include all the facilities of the basic plans and more such as the following: