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Mandatory Internal Audit Guidelines under Companies Act

As per Section 138 of the Companies Act, 2013 the following set of companies are required to comply with the requirement of mandatory Internal Audit: –

(a) every listed company;

(b) every unlisted public company having-

  1. paid up share capital of Rs. 50 Crores or more during the preceding financial year; or
  2. turnover of Rs. 200 Crores or more during the preceding financial year; or
  3. outstanding loans or borrowings from banks or public financial institutions exceeding Rs. 100 Crore or more at any point of time during the preceding financial year; or
  4. outstanding deposits of Rs. 25 Crore or more at any point of time during the preceding financial year;

(c) every private company having-

  1. turnover of Rs. 200 Crore or more during the preceding financial year; or
  2. outstanding loans or borrowings from banks or public financial institutions exceeding Rs. 100 Crore or more at any point of time during the preceding financial year:

The above set of companies are required to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company. The Internal Auditor may be either an individual or a partnership firm or a body corporate.

The Audit Committee of the company or the Board shall, in consultation with the Internal Auditor, formulate the scope, functioning, periodicity and methodology for conducting the internal audit.

EQUALISATION LEVY

CHAPTER VIII of Finance Act 2016

EQUALISATION LEVY

 (1) This Chapter extends to the whole of India except the State of Jammu and Kashmir.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

(3) It shall apply to consideration received or receivable for specified services provided on or after the commencement of this Chapter.

  1. In this Chapter, unless the context otherwise requires,—

(a) “Appellate Tribunal” means the Appellate Tribunal constituted under section 252 of the Income-tax Act;

(b) “Assessing Officer” means the Income-tax Officer or Assistant Commissioner of Income-tax or Deputy Commissioner of Income-tax or Joint Commissioner of Income-tax or Additional Commissioner of Income-tax who is authorised by the Board to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Chapter;

(c) “Board” means the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963;

(d) “equalisation levy” means the tax leviable on consideration received or receivable for any specified service under the provisions of this Chapter;

(e) “Income-tax Act” means the Income-tax Act, 1961;

(f) “online” means a facility or service or right or benefit or access that is obtained through the internet or any other form of digital or telecommunication network;

(g) “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on;

(h) “prescribed” means prescribed by rules made under this Chapter;

(i) “specified service” means

  • online advertisement,
  • any provision for digital advertising space or any other facility or service for the purpose of online advertisement and includes any other service as may be notified by the Central Government in this behalf;

(j) words and expressions used but not defined in this Chapter and defined in the Income-tax Act, or the rules made thereunder, shall have the meanings respectively assigned to them in that Act.

  1. (1) On and from the date of commencement of this Chapter, there shall be charged an equalisation levy at the rate of six per cent. of the amount of consideration for any specified service received or receivable by a person, being a non-resident from–– (i) a person resident in India and carrying on business or profession; or (ii) a non-resident having a permanent establishment in India. (2) The equalisation levy under sub-section (1) shall not be charged, where––

(a) the non-resident providing the specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment;

(b) the aggregate amount of consideration for specified service received or receivable in a previous year by the non-resident from a person resident in India and carrying on business or profession, or from a non-resident having a permanent establishment in India, does not exceed one lakh rupees; or (c) where the payment for the specified service by the person resident in India, or the permanent establishment in India is not for the purposes of carrying out business or profession.

  1. (1) Every person, being a resident and carrying on business or profession or a non-resident having a permanent establishment in India (hereafter in this Chapter referred to as assessee) shall deduct the equalisation levy from the amount paid or payable to a non-resident in respect of the specified service at the rate specified in section 165, if the aggregate amount of consideration for specified service in a previous year exceeds one lakh rupees.

(2) The equalisation levy so deducted during any calendar month in accordance with the provisions of sub-section (1) shall be paid by every assessee to the credit of the Central Government by the seventh day of the month immediately following the said calendar month.

(3) Any assessee who fails to deduct the levy in accordance with the provisions of sub-section (1) shall, notwithstanding such failure, be liable to pay the levy to the credit of the Central Government in accordance with the provisions of sub-section (2).

  1. (1) Every assessee shall, within the prescribed time after the end of each financial year, prepare and deliver or cause to be delivered to the Assessing Officer or to any other authority or agency authorised by the Board in this behalf, a statement in such form, verified in such manner and setting forth such particulars as may be prescribed, in respect of all specified services during such financial year.

(2) An assessee who has not furnished the statement within the time prescribed under sub-section (1) or having furnished a statement under sub-section (1), notices any omission or wrong particular therein, may furnish a statement or a revised statement, as the case may be, at any time before the expiry of two years from the end of the financial year in which the specified service was provided.

(3) Where any assessee fails to furnish the statement under sub-section (1) within the prescribed time, the Assessing Officer may serve a notice upon such assessee requiring him to furnish the statement in the prescribed form, verified in the prescribed manner and setting forth such particulars, within such time, as may be prescribed.

  1. (1) Where a statement has been made under section 167 by the assessee, such statement shall be processed in the following manner, namely:––

(a) the equalisation levy shall be computed after making the adjustment for any arithmetical error in the statement;

(b) the interest, if any, shall be computed on the basis of sum deductible as computed in the statement; (c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the amount computed under clause (b) against any amount paid under sub-section (2) of section 166 or section 170 and any amount paid otherwise by way of tax or interest

(d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, him under clause (c); and

(e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to him: Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is furnished.

(2) For the purposes of processing of statements under sub-section (1), the Board may make a scheme for centralised processing of such statements to expeditiously determine the tax payable by, or the refund due to, the assessee as required under that sub-section.

  1. (1) With a view to rectifying any mistake apparent from the record, the Assessing Officer may amend any intimation issued under section 168, within one year from the end of the financial year in which the intimation sought to be amended was issued.

(2) The Assessing Officer may make an amendment to any intimation under sub-section (1), either suo motu or on any mistake brought to his notice by the assessee.

(3) An amendment to any intimation, which has the effect of increasing the liability of the assessee or reducing a refund, shall not be made under this section unless the Assessing Officer has given notice to the assessee of his intention so to do and has given the assessee a reasonable opportunity of being heard.

(4) Where any such amendment to any intimation has the effect of enhancing the sum payable or reducing the refund already made, the Assessing Officer shall make an order specifying the sum payable by the assessee and the provisions of this Chapter shall apply accordingly.

  1. Every assessee, who fails to credit the equalisation levy or any part thereof as required under section 166 to the account of the Central Government within the period specified in that section, shall pay simple interest at the rate of one per cent. of such levy for every month or part of a month by which such crediting of the tax or any part thereof is delayed.
  2. Any assessee who––

(a) fails to deduct the whole or any part of the equalisation levy as required under section 166; or

(b) having deducted the equalisation levy, fails to pay such levy to the credit of the Central Government in accordance with the provisions of sub-section (2) of that section, shall be liable to pay,—

(i) in the case referred to in clause (a), in addition to paying the levy in accordance with the provisions of sub-section (3) of that section, or interest, if any, in accordance with the provisions of section 170, a penalty equal to the amount of equalisation levy that he failed to deduct; and

(ii) in the case referred to in clause (b), in addition to paying the levy in accordance with the provisions of sub-section (2) of that section and interest in accordance with the provisions of section 170, a penalty of one thousand rupees for every day during which the failure continues, so, however, that the penalty under this clause shall not exceed the amount of equalisation levy that he failed to pay.

  1. Where an assessee fails to furnish the statement within the time prescribed under sub-section (1) or sub-section (3) of section 167, he shall be liable to pay a penalty of one hundred rupees for each day during which the failure continues.

 

  1. (1) Notwithstanding anything contained in section 171 or section 172, no penalty shall be imposable for any failure referred to in the said sections, if the assessee proves to the satisfaction of the Assessing Officer that there was reasonable cause for the said failure.

(2) No order imposing a penalty under this Chapter shall be made unless the assessee has been given a reasonable opportunity of being heard.

  1. (1) An assessee aggrieved by an order imposing penalty under this Chapter, may appeal to the Commissioner of Income-tax (Appeals) within a period of thirty days from the date of receipt of the order of the Assessing Officer.

(2) An appeal under sub-section (1) shall be in such form and verified in such manner as may be prescribed and shall be accompanied by a fee of one thousand rupees.

(3) Where an appeal has been filed under sub-section (1), the provisions of sections 249 to 251 of the Income-tax Act shall, as far as may be, apply to such appeal.

  1. (1) An assessee aggrieved by an order made by the Commissioner of Income-tax (Appeals) under section 174 may appeal to the Appellate Tribunal against such order.

(2) The Commissioner of Income-tax may, if he objects to any order passed by the Commissioner of Income-tax (Appeals) under section 174, direct the Assessing Officer to appeal to the Appellate Tribunal against such order.

(3) An appeal under sub-section (1) or sub-section (2) shall be filed within sixty days from the date on which the order sought to be appealed against is received by the assessee or by the Commissioner of Income-tax, as the case may be.

(4) An appeal under sub-section (1) or sub-section (2) shall be in such form and verified in such manner as may be prescribed and, in the case of an appeal filed under sub-section (1), it shall be accompanied by a fee of one thousand rupees.

(5) Where an appeal has been filed before the Appellate Tribunal under sub-section (1) or sub-section (2), the provisions of sections 253 to 255 of the Income-tax Act shall, as far as may be, apply to such appeal.

EQUALISATION LEVY RULES, 2016

(CBDT Notification No. 38/2016 dated 27th May 2016)

Effective Date 01/06/2016

 In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 179 of the Finance Act, 2016 (28 of 2016), the Central Government made the rules for carrying out the provisions of Chapter VIII of the said Act relating to Equalisation levy, namely: –

 

  1. Rounding off of consideration for specified services, equalisation levy, etc. to the nearest multiple of ten rupees.

 

  1. Payment of Equalisation levy. Every assessee, who is required to deduct and pay equalisation levy, shall pay the amount of such levy to the credit of the Central Government by remitting it into the Reserve Bank of India or in any branch of the State Bank of India or of any authorised Bank accompanied by an equalisation levy challan.

 

  1. Statement of specified services. (1) The statement of specified services required to be furnished under sub-section (1) of section 167 of the Act shall be in Form No. 1, duly verified in the manner indicated therein, and may be furnished by the assessee electronically under digital signature; or electronically through electronic verification code.

 

  1. The statement in Form No.1 in respect of all the specified services chargeable to equalisation levy during any financial year shall be furnished on or before the 30th June immediately following that financial year.

 

  1. Where an assessee fails to furnish the statement within the time specified in sub-rule (2) of rule 5, the Assessing Officer may issue a notice to such person requiring him to furnish, within thirty days from the date of service of the notice, the statement in the Form prescribed in rule 5 and verified in the manner indicated therein.

 

  1. Notice of demand in Form No. 2 specifying the sum so payable. Where any sum is determined to be payable by the assessee under sub-section (1) of section 168 of the Act, the intimation under the said section shall be deemed to be a notice of demand.

 

  1. Form of appeal to Commissioner of Income-tax (Appeals) shall be made in Form No. 3 electronically under digital signature; or electronically through electronic verification code. The form of appeal, shall be verified by the person who is authorised to verify the statement of specified services under rule 5, as applicable to the assessee.

 

  1. Form of appeal to Appellate Tribunal.– An appeal under sub-section (1) or sub-section (2) of section 175 of the Act to the Appellate Tribunal shall be made in Form No.4, and where the appeal is made by the assessee, the form of appeal, the grounds of appeal and the form of verification appended thereto shall be signed by the person specified in Form No.4, as applicable to the assessee.

Notification dated 28th October, 2020 Equalisation Levy (Amendment) Rules, 2020

Short title and commencement. ─

(1) These rules may be called the Equalisation levy (Amendment) Rules,2020.

  1. In the Equalisation levy Rules, 2016 (hereinafter referred to as the said rules), in rule 2, after clause (a), the following clause shall be inserted, namely:-

‘(aa) “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the statement of specified services as per the data structure and standards laid down by the Principal Director- General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be;’.

  1. In the said rules, in rule 3,- (a) in the heading, the words “for specified services” shall be omitted; (b) for the words “The amount of consideration, for specified services and”, the words, “The amount of consideration” shall be substituted.

 

  1. In the said rules, for rules 4 and 5, the following shall be substituted, namely:-

“4. Payment of Equalisation levy. ─ The assessee or e-commerce operator, as the case may be, who are required to deduct and pay equalisation levy, shall pay the amount of such levy, by remitting it into the Reserve Bank of India or in any branch of the State Bank of India or of any authorised Bank accompanied by an equalisation levy challan.

  1. Statement of specified services or e-commerce supply or services. ─

(1) The statement required to be furnished under sub-section (1) or sub-section (2) of section 167 of the Act shall be in Form No. 1, duly verified in the manner indicated therein, and may be furnished by the assessee or e-commerce operator, as the case may be, in the following manner, namely:- (i) electronically under digital signature; or (ii) electronically through electronic verification code.

(2) The statement in Form No. 1 required to be furnished under sub-section (1) of section 167 of the Act shall be furnished on or before the 30th day of June immediately following that financial year.

(3) The Principal Director-General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be, for the purpose of ensuring secure capture and transmission of data, shall-

(i) lay down the procedure for electronic filing of Form No.1;

(ii) lay down the data structure, standards and manner of generation of electronic verification code, referred to in sub rule (2), for the purpose of verification of the person furnishing the said form;

(iii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said form so furnished; and

(iv) specify the manner of furnishing the revised statement required to be furnished under sub-section (2) of section 167 of the Act.” 5. In the said rules, in rule 6,-

(a) in the heading, after the words “specified services” the words “or e-commerce supply or services” shall be inserted;

(b) for the words “Where an assessee fails”, the words, “Where an assessee or e-commerce operator, as the case may be, fails” shall be substituted.

  1. In the said rules, in rule 7, in the proviso, for the word “assessee”, the words “assessee or e-commerce operator, as the case may be,” shall be substituted;

 

  1. In the said rules, in rule 8, for sub-rules (2), (3) and (4), the following shall be substituted, namely:- “(2) The form of appeal referred to in sub-rule (1), shall be verified by the person who is authorised to verify the statement under rule 5, as applicable to the assessee or e-commerce operator, as the case may be.

(3) Any document accompanying Form No. 3 shall be furnished in the same manner in which the Form No. 3 is furnished.

(4) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be, for the purpose of ensuring secure capture and transmission of data, shall-

(i) lay down the procedure for electronic filing of Form No.3;

(ii) lay down the data structure, standards and manner of generation of electronic verification code, referred to in sub rule (2), for the purpose of verification of the person furnishing the said form; and (iii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said form so furnished.”.

  1. In the said rules, in rule 9, for the word “assessee” at both the places where they occur, the words “assessee or e-commerce operator, as the case may be” shall be substituted.

No need to deduct tax at source on software imports

The Supreme Court has ruled that payments made by resident Indian end users or distributors (such as technology companies) to overseas suppliers on import of ‘shrink-wrapped’ software generally known as off-the-shelf software- is not a royalty’ payment. Thus, no withholding tax obligation arise in India against such payments.

 During assessments payments made for import of shrink-wrapped software to overseas suppliers were held assessable to tax as ‘royalty’ under section 9(1)(vi) of the Income Tax Act and Article 12 of the respective tax treaties. This classification as ‘royalty’ required tax to be deducted at source (TDS) when making payment to the overseas suppliers.

The contention of companies was that the use of software by the Indian importer was limited to making a backup copy and /or redistribution. They did not have the right to modify the shrink-wrapped software that was imported. So, the payment made to overseas supplier could only be treated as business income in the hands of the entity – instead of as ‘royalty’ – and no tax withholding obligation arose.

e-invoicing for turnover exceeding 100 Cr Notification 88/2020

In pursuance of the Notification No. 88/2020 – Central Tax dated 10th November, 2020, the Central Government has made further amendment to the Notification No. 13/2020 dated 21st March, 2020 whereby with effect from 1st day of January, 2021, for the words five hundred crore rupees the word one hundred crore rupees shall be substituted.

In the Notification  No. 13/2020 – Central Tax dated 21st March, 2020 it was notified that registered person, other than those referred in sub-rules (2), (3), (4) and (4A) of rule 54 of the said rules, whose aggregate turnover in a financial year exceeds one hundred crore rupees, as a class of registered person who shall prepare invoice and other prescribed documents, in terms of sub-rule(4) of rule 48 of the said rules in respect of supply of goods or services or both to a registered person.

As per Rule 54 of the Central Goods and Service Tax (CGST) Rules, 2017 sub-rules (2), (3), (4) and (4A) covers: –

(2) Where the supplier of taxable service is an insurer or a banking company or a financial institution, including a non-banking financial company,

(3) Where the supplier of taxable service is a goods transport agency supplying services in relation to transportation of goods by road in a goods carriage

(4) Where the supplier of taxable service is supplying passenger transportation service

(4A) A registered person supplying services by way of admission to exhibition of cinematograph films in multiplex screens

(5) The provisions of sub-rule (2) or sub-rule (4) shall apply, mutatis mutandis, to the documents issued under rule 49 or rule 50 or rule 51 or rule 52 or rule 53.

As per Rule 48 on Manner of issuing invoices: –

(4) The invoice shall be prepared by such class of registered persons as may be notified by the Government, on the recommendations of the Council, by including such particulars contained in FORM GST INV-01 after obtaining an Invoice Reference Number by uploading information contained therein on the Common Goods and Services Tax Electronic Portal in such manner and subject to such conditions and restrictions as may be specified in the notification.

(5) Every invoice issued by a person to whom sub-rule (4) applies in any manner other than the manner specified in the said sub-rule shall not be treated as an invoice.

(6) The provisions of sub-rules (1) and (2) shall not apply to an invoice prepared in the manner specified in sub-rule (4).]

FAQ’s on Section 206C(1H) of the Income-tax Act, 1961

1. Please advise system to be followed from step one to the end.

Ans. As per Circular no. 17 of 2020 dt. 29th September, 2020, point no. 4.4.2 (iii) – Since the threshold of fifty lakh rupees is with respect to the previous year, calculation of receipt of sale consideration for triggering TCS under sub-section (1H) of section 206C shall be computed from 1st April, 2020. Hence, if a person being seller has already received fifty lakh rupees or more up to 30th September 2020 from a buyer, the TCS under sub-section (1H) of section 206C shall apply on all receipt of sale consideration during the previous year, on or after 1st October 2020, from such buyer.

Following entries to be passed in books of accounts:-

Entry on Sales booking:-

Debtor …………………Dr.       1,18,000

TCS Receivable ……….Dr.            88.50

To Sales                                                           1,00,000

To GST Payable                                                   18,000 (assumed to be @ 18%)

To TCS Payable                                                    88.50  (@ 0.075% of (Sales value including GST) considering abatement of 25% prescribed by Press Release of Central Board of Direct Tax dated 13th May, 2020 which is applicable upto 31/03/2021.)

(As per Circular no. 17 of 2020 dt. 29th September, 2020, point no. 4.6.1 – It is requested to clarify that whether adjustment is required to be made for sales return, discount or indirect taxes including GST for the purpose of collection of tax under sub-section (lH) of section 206C of the Act. It is hereby clarified that no adjustment on account of sale return or discount or indirect taxes including GST is required to be made for collection of tax under sub-section (IH) of section 206C of the Act since the collection is made with reference to receipt of amount of sale consideration.)

Entry on Payment received from debtor

Bank ……………Dr.          1,18,088.50

To Debtor                                                         1,18,000

To TCS Receivable                                                 88.50

(As per Circular no. 17 of 2020 dt. 29th September, 2020, point no. 2 – a seller receiving an amount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year to collect tax from the buyer a sum equal to 0.1 per cent (subject to the provisions of proposed sub-section (10A) of the section 206C of the Act) of the sale consideration exceeding fifty lakh rupees as income-tax. The collection is required to be made at the time of receipt of amount of sales consideration.)

Entry on Payment of TCS Liability

TCS Payable ……………..Dr.           88.50

To Bank                                                                    88.50

(As per Rule 37CA(2) All sums collected in accordance with the provisions of section 206C by collectors other than an office of the Government shall be paid to the credit of the Central Government within one week from the last day of the month in which the collection is made.)

  1. Do we charge TCS in our Invoicing.

Ans. We have two options.

  1. Either we charge TCS on the invoice or;
  2. Raise a debit note for this amount

We need to make sure that the invoice/ Debit note are GST Compliant. It will be less complex if we charge TCS on invoice on the assumption that the amount received, from the buyer is inclusive of TCS and do the reverse calculation for the TCS amount and credit the same to government.

  1. Is TCS charged on the billing amount before GST or on amount including GST.

Ans. TCS is required to be charged on invoicing amount including GST. Please refer to the clarification in Point no. 4.6.1 of Circular no. 17 of 2020 dated 29th September, 2020.

  1. Do we deposit TCS based on billing date or after receipt of payment from your customer.

Ans. TCS is to be deposited on receipt of payment from the buyer irrespective whether it is an advance or against an invoice.

(As per Circular no. 17 of 2020 dt. 29th September, 2020, point no. 4.4.2 – Since sub-section (1H) of section 206C of the Act applies on receipt of sale consideration, the provision of this sub-section shall not apply on any sale consideration received before 1st October 2020. Consequently, it would apply on all sale consideration (including advance received for sale) received on or after 1st October 2020 even if the sale was carried out before 1st October 2020.

  1. If TCS have to be deposited on payment basis, do we deposit TCS on all payments receipt after 01/10/2020 i.e. even including supplies made prior 01/10/2020 and payment received after 01/10/2020.

Ans. Yes, you need to deposit TCS on all payments received after 01/10/2020, even if it relates to supplies before 01/10/2020. This is clarified in circular no. 17 of 2020 dated 29th September, 2020. Please refer to clarification in point no. 4.4.2 of Circular no. 17 of 2020 dated 29th September, 2020 above.

6. We have division of our Company located at different states near customer premises. Do we charge TCS on supply made to our own division. In the Balance Sheet the sale is consider as Stock Transfer and not sale despite the fact that GST bill are raised for movement of goods.

Ans. As per explanation to sub section (1H) of Section 206C (a) “buyer” means a person who purchases any goods, but does not include,: —

(A) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or (B) a local authority as defined in the Explanation to clause (20) of section 10; or (C) a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein;

(b) “seller” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the sale of goods is carried out, not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

 As per Section 2(31) of Income tax act, 1961 “person” includes—

  • an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses.

Accordingly, the provision of TCS under section 206C(1H) is not applicable in case of Stock Transfers.

Disclaimer: – Khurana Khurana & Associates LLP shall not be liable for any direct, indirect, incidental, consequential damages, or any loss of profit or revenue whether incurred directly or indirectly. Laws may change with passage of time. 

Investment in Plant and Machinery for Micro, Small and Medium Enterprises Development Act, 2006

Ministry of Small Scale Industries vide notification dated 5th October, 2006 specified the items, the cost of which shall be excluded while calculating the investment in plant and machinery: –

  1. Equipment such as tools, jigs, dies, moulds, and spare parts for maintenance and the cost of consumable stores;
  2. Installation of plant and machinery;
  3. Research and development equipment and population control equipment;
  4. Power generator set and extra transformer installed by the enterprise as per the regulations of the state electricity board;
  5. Bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation;
  6. Procurement or installation of cables, wires, bus bars, electrical control panels (not mounted on individual machines), oil circuit breakers or miniature circuit breaker which are necessarily to be used for providing electrical power to the plant and machinery or for safety measures;
  7. Gas producer plant;
  8. Transportation charges (excluding sales-tax or value added tax and excise duty) for indigenous machinery from the place of their manufacture to the site of the enterprise;
  9. Charge paid for technical know-how for erection of plant and machinery;
  10. Such storage tanks which stores raw materials and finished products only and are not linked with the manufacturing process; and
  11. Fire fighting equipment

While calculating the investment in plant and machinery, the original price thereof, irrespective of whether the plant and machinery are new or second hand, shall be taken into account provided that in case of imported machinery, the following shall be included in calculating the value, namely:

  1. Import duty (excluding miscellaneous expenses such as transportation from the port to the site of the factory, demurrage paid at the port);
  2. Shipping charges
  3. Customs clearance charges; and
  4. Sales tax and value added tax

Source:- Investment under MSMED Act 2006

Activities which may be included by companies in their Corporate Social Responsibility Policies Activities

SCHEDULE VII

(See Section 135)

Activities which may be included by companies in their Corporate Social Responsibility Policies Activities relating to: —

(i) Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water.

(ii) Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.

(iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.

(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga.

(v) protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts;

(vi) measures for the benefit of armed forces veterans, war widows and their dependents;

(vii) training to promote rural sports, nationally recognised sports, paralympic sports and olympic sports

(viii) contribution to the prime minister’s national relief fund or Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)] or any other fund set up by the central govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women;

(ix) Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities, Indian Institute of Technology (IITs), National Laboratories and Autonomous Bodies (established under the auspices of Indian Council of Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE), Defence Research and Development Organisation (DRDO), Department of Biotechnology (DBT), Department of Science and Technology (DST), Ministry of Electronics and Information Technology engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs).

(x) rural development projects

(xi) slum area development. The term `slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.

(xii) disaster management, including relief, rehabilitation and reconstruction activities.

Key Input details required to be filed in the startup recognition form

  1. Entity Details:-
    1. Name of the entity
    2. Industry
    3. Sector
    4. Categories
    5. Company Identification Number
    6. Name of the Entity
    7. Incorporation/Registration Date
    8. PAN
  2. Full Address (Office)
  3. Authorised Representative Details
    1. Name
    2. Designation
    3. Mobile No.
    4. Email Id
  4. Directors/Partners Details
    1. Name of the Director
    2. Mobile No.
    3. Postal Address
    4. Email ID
  5. Information Required
    1. Has your startup applied for any IPR – Patent, Trademark, Copyright, Design, and Plant Variety along with the application no.
    2. Is the startup creating an innovative product/service/process or improving an existing product/service/process – Innovation/Improvement
    3. Brief note supporting the options chosen above for innovation, improvement and scalability.
  6. Startup Activities
    1. Any awards/recognition received – Upload Award Document
    2. What is the problem the startup is solving?
    3. How does your startup propose to solve this problem?
    4. What is the uniqueness of your solution?
    5. How does your startup generate revenue?
  7. Incorporation/Registration Certificate
    1. Web Link
    2. Other supporting presentations
  8. Certification as to:-
    1. The startup has not been incorporated for more than 10 years.
    2. Turnover of the entity of any of the financial years since incorporation has not exceeded one hundred crore rupees.
    3. The entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation; and
    4. Has not formed the entity by splitting up or reconstruction of a business already in existence.
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