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Partnership Deed– Steps

Monthly Archives: February 2024

Partnership Deed– Steps

Partnership Deed : Things to remember in documentation

Sirs,
Use a proper template of Partnership Deed
Try to incorporate the stamp paper in the document itself
1. Please print Two Original Sets
2. Stamp of Company on each page… at bottom, and last page only on upper part, noted for signatures
3. sign of one partner as director with the above stamp
4. sign of second partner at relevant places
5. your sign as witness
6. Anybody’s sign as 2nd witness
6A. Put date manually by hand on top page… after all signatures…  .. usually same date as Notarise date
7. Notarise
8. give one original to partner
9. Keep second original set in your office
10. Send scanned copy for PAN and GST etc to us
11. after PAN, apply to bank for bank account
Partnership Deed Printing and Signatures points to remember

Zoom Webinar – MLG Associates- MSME 43B Disallowance – What to do ?

Webinar on Zoom. – Important MSME : 43B(h) : New income tax provisions …

Powerpoint and study material of the webinar … at the bottom of this page

What to do ? How much tax provision to make ? Pay additional tax ? Pay vendors in Time ? What to communicate ? How ? Future expectation ?
Finsys zoom meeting webinar
MLG Associates zoom meeting webinar

Thanks to all attendees.

It was a Successful Zoom Session Date 17-Feb-2024 (Saturday) 3.00 pm onwards upto 4.40 pm.

Please below attached the Zoom Meeting Link

Agenda :- 43B Amendment on Disallowance of Expenses on Unpaid Bills to MSEs. What Businesses should do?

Meeting ID: 622 750 8445
Passcode: 123456


Thanks for Joining us on Zoom Meeting that date/time
https://us02web.zoom.us/j/6227508445?pwd=V2d5cU1wNXV1a1NRc1N6Vm1Ja29Gdz09&omn=88220331465

Must be watched by :  MD, All Directors, Promoter Family member, GM – Finance, Accounts & Taxation Dept Team members,

Also your Purchase Department, who interact with Suppliers.

 

AGENDA

What is the Law ? How it will affect you ?

Provision for Additional Taxes this year ? Plan for Retention Money ? Plan for Disputed money’s ?

Evidence of Communication with the Suppliers ?

Traders as MSME ?

How to reply to your Customer yourself ?

Annual update of the MSME number / website ?

Any Queries .. Contact us at contact us page

MLG Zoom webinar MSME Act . How this affects you, How to manage the situation ? Be Ready. Solutions – How Good and How Bad ?

Try to Watch this session jointly with your team, in your own conference room... since joint discussion may continue after this IMPORTANT Zoom session.

 

What to do ? How much tax provision to make ? Pay additional tax ? Pay vendors in Time ? What to communicate ? How ? Future expectation ?

Google Drive link for the Powerpoint presentation of the Session by Mr Sangeet Kr Gupta.

 

keywords : MLG Zoom Seminar MSME Act 43B(h) income tax disallowance and solutions,

What to do ? How much tax provision to make ? Pay additional tax ? Pay vendors in Time ? What to communicate ? How ? Future expectation ?

GST on Corporate Guarantee , GST on personal Guarantee


Advisory to MLG Clients : GST on Corporate Guarantee , GST on personal Guarantee

What is the final position on Corporate Guarantee Fee or Directors Personal Guarantee Fee ? GST to be charged or not ? What to do ?

Short Summary

Actually, NIL / Zero commission taken for giving Personal Guarantee  

  • If you are not paying any amount to the Director for such service … Normally it is like this only. No MSME Director takes this fee from his own company.
  • Infact, bank sanction letter also usually says so, that you shall give Guarantee… and you shall not charge any commission or fee for the same.
  • Then Value of this service for GST will be mandatory taken as ZERO. And thus, the GST on this will be ZERO

Corporate Guarantee to Group companies

  • If your 1 company is giving Corporate Guarantee to your group company, associate company or subsidiary company.
  • Then, even if you are not paying any amount to the second company for such service …
  • Then Value of this service for GST will be mandatory taken as 1%. And thus, the GST on this will be 18% of that 1%.

Example : Calculations for Corporate Guarantee  Fees to Group companies

  • Main company : ABC Pvt Ltd. Has a standing of 20 years with large profits and large turnover
  • New company is DEF Pvt Ltd, It is formed in 2022. Just a new entity. It has applied for Loan of Rs 10 crores with the State Bank of India.
  • SBI wants Corporate Guarantee
  • so, ABC gives Corporate Guarantees to Bank for DEF for this loan of Rs 10 crores
  • So, what is the GST payable ?
  • Value of this service for GST will be mandatory taken as 1%. That is 1% of 10 cr = Rs 10 lakh
  • And thus, the GST on this will be 18% of that 10 lakhs = Rs 1.80 lakhs.
  • Best will be ABC should (a) tell the bankers that you are doing as per this government circular (b) issue a tax invoice for Rs 10  lakhs. Charge GST of 18% on that
  • and DEF should book the invoice and take ITC on the same.
  • DEF should also deduct TDS as per law.
  • there is no net cost, since both get credit of ITC and TDS as applicable.

Source : The Law says as such

ii) Clarifications regarding taxability of personal guarantee offered by directors to the bank against the credit limits/loans being sanctioned to the company and regarding taxability of corporate guarantee provided for related persons including corporate guarantee provided by holding company to its subsidiary company: The Council has inter alia recommended to:

(a) issue a circular clarifying that when no consideration is paid by the company to the director in any form, directly or indirectly, for providing personal guarantee to the bank/ financial institutes on their behalf, the open market value of the said transaction/supply may be treated as zero and hence, no tax to be payable in respect of such supply of services.

(b) to insert sub-rule (2) in Rule 28 of CGST Rules, 2017, to provide for taxable value of supply of corporate guarantee provided between related parties as one per cent of the amount of such guarantee offered, or the actual consideration, whichever is higher.

(c) to clarify through the circular that after the insertion of the said sub-rule, the value of such supply of services of corporate guarantee provided between related parties would be governed by the proposed sub-rule (2) of rule 28 of CGST Rules, 2017, irrespective of whether full ITC is available to the recipient of services or not.

other sources

link 1 : https://www.caclubindia.com/articles/gst-on-personal-corporate-guarantee-50598.asp#:~:text=Changes%20recommended%20in%2052nd%20GST%20council%20meeting%3A&text=It%20is%20also%20clarified%20that,CGST%20dtd%2027th%20October%202023.

Note: Safe Harbor Rules issued by CBDT provides that commission or fee would be considered at 1% of amount guaranteed in case of Corporate Guarantee given to wholly owned subsidiary. Similar valuation principle being considered for GST purpose as well.

Link 2 : https://www.caclubindia.com/articles/analysis-of-taxability-of-personal-guarantee-and-corporate-guarantee-under-gst-from-october-2023-50499.asp

FAQ1. Going forward what would be the value of taxable supplies of service of provision of corporate guarantee by a company to the bank/financial institutions for providing credit facilities to the other company?

Comments – In case of supply between unrelated parties, the value of supply would be as determined in the invoice, in case raised. However, in case of related persons the value of supply would be 1% of the amount of such guarantee offered, or the actual consideration, whichever is higher.

FAQ2. Would the value as per transfer pricing norms in Income Tax affect GST on provision of corporate guarantees?

Comments – Generally as Transfer pricing norms, the value of corporate guarantees is taken as 0.5%. The same may be treated as ‘open market value’ for periods before Rule 28(2). However, post Rule 28(2), the value determined herein i.e. 1% may be considered for transfer pricing regulations.

6. Since director is also a ‘related person’, is the personal guarantee provided by him/her to the company liable to also be taxed as per Rule 28(2)?

Comments – No. Rule 28(2) shall not apply in respect of the activity of providing personal guarantee by the Director to the banks/ financial institutions for securing credit facilities for their companies and no GST would be chargeable on the said transaction.

7. Whether Personal guarantees provided by directors to the banks/ financial institutions for securing credit facilities for their company is taxable under GST?

Comments – The activity of providing personal guarantee by the Director to the banks/ financial institutions for securing credit facilities for their companies is to be treated as a supply of service, even when made without consideration as per Section 7 and read with Schedule I Entry 2 of The CGST Act 2017. In terms of Rule 28 of CGST Rules, the taxable value of such supply of service shall be the open market value of such supply.

 

 

However, as per RBI guidelines, the no consideration by way of commission, brokerage fees or any other form, can be paid to the director by the company, directly or indirectly, in lieu of providing personal guarantee to the bank for borrowing credit limits. As such, when no consideration can be paid for the said transaction by the company to the director in any form, directly or indirectly, as per RBI mandate, there is no question of such supply/ transaction having any open market value. Accordingly, the open market value of the said transaction/ supply may be treated as zero and therefore, taxable value of such supply may be treated as zero. In such a scenario, no tax is payable on such supply of service by the director to the company.

8. Generally banks take the corporate or personal guarantees of a value much higher than the value of the loan. What would be the value of supply for GST purposes in such cases?

Comments – For personal guarantees, the value of supply would be NIL in case they are issued in compliance with RBI guidelines. However, for corporate guarantee cases, the value of supply would be 1% of the amount of such guarantee offered.

9. What about Personal guarantees provided by ex-directors/ KMP to the banks/ financial institutions for securing credit facilities for their companies. Is it taxable under GST?

Comments – In case where the director, who had provided the guarantee, is no longer connected with the management but continuance of his guarantee is considered essential because the new management’s guarantee is either not available or is found inadequate, or there may be other exceptional cases where the promoters, existing directors, other managerial personnel, and shareholders of borrowing concerns are paid remuneration/ consideration in any manner, directly or indirectly.

In all these cases, the taxable value of such supply of service shall be the remuneration/ consideration provided to such a person/ guarantor by the company, directly or indirectly.

However, again to be noted that in case ‘no consideration’ is paid then, even in these circumstances no GST is leviable as they are then not related.

10. What about Personal guarantees provided by director’s relatives to the banks/ financial institutions for securing credit facilities for the companies. Is it taxable under GST?

Comments – In case such person is to be considered as a ‘related party’ as explanation to Section 15 of The CGST Act 2017 and as per mandate provided by RBI in terms of Circular No. RBI/2021-22/121 dated 9th November, 2021, or other regulations, no consideration can be paid to the said persons, directly or indirectly, in lieu of providing personal guarantee to the bank for borrowing credit limits; As such, when no consideration can be paid for the said transaction by the company to the person in any form, directly or indirectly, as per RBI mandate, there is no question of such supply/ transaction having any open market value. Accordingly, the open market value of the said transaction/ supply may be treated as zero and therefore, taxable value of such supply may be treated as zero. In such a scenario, no tax is payable on such supply of service by the director to the company. However, incase there is no such mandate by the RBI, then Rule 28(2) may be applicable depending upon the facts of the case.

 

Details can be seen Vide Notification 52/2023

link : https://blog.saginfotech.com/cbic-central-tax-notification-52-2023-gst-reg-01-opc#:~:text=52%2F2023%20Related%20to%20GST%20REG%2D01%20For%20OPC,-October%2028%2C%202023&text=The%20Central%20Board%20of%20Indirect,a%20%27One%20Person%20Company%27.

How to make such invoice in your Finsys ERP Software :

Make Service bill as usual

(a) Open SAC code, (b) Open 59 series item as a service item (c) Book a Sales order in 41series as a service order, Approve it (d) Make invoice. And make E invoice as applicable.

Helpline contact us page

 

in the service of the Profession and the Indian Industry.

Budget 2024 — Union Budget to continue towards a Great India without any more taxes

Budget 2024 — Union Budget to continue towards a Great India, without any more taxes

Interim Budget 2024:

andFM proposes Corpus of One Lakh Crore for R&D Investments with Fifty Year Interest Free Loan

Tripling of Direct Tax Collections:

Over the last 10 years, direct tax collections have witnessed an impressive surge, more than tripling in magnitude.

No New Taxes &

No increase in taxes

 

Top 75 Highlights of Budget FY 2024-25 by Finance Minister Nirmala Sitharaman

1. No Changes in Income Tax Slabs

2. No Change in Tax rates for Company, LLP or any other person

3. Some Exemption to Srartups and Extend some concession – extension of tax sops for soverign wealth funds and startups to March 2025
4. Tax payers service – Withdrawal of direct tax demands of period upto ₹25000 for period upto 2009-10 and ₹10000 for period upto 2014-15, 1 Crore people will benefit
5. 40,000 normal railway bogies will be converted to vande Bharat standards

International Print And Electronic Media
6. 1-lakh crore corpus will be made available with 50 year interest free (long-term financing or refinancing) to encourage the private sector to scale up R&D. Corpus of 1 Lakh Crore for Reduced Rate Loans to Private Sector for Research in Sunrise Domains
7. Rooftop solarisation and free electricity Through rooftop solarisation, 1 crore households will be enabled to obtain up to 300 units of free electricity every month
8. This scheme follows resolve of Prime Minister, on the historic day of consecration of Ram Mandir in Ayodhya
9. Garib, Mahila, Annadata and Yuva will be focus groups
10. SithramanWorking to make India a Vikasit Bharat by 2047
11. Worries about food have been eliminated with free rations for 80 crore people
12. 25 crores Indians were pulled out of multi dimensional poverty by the govt over past 10 yrs

International Print And Electronic Media
13. Govt could save 2.7-lakh crore through avoidance of leakages
14. Electronic agri Mandi has connected 1051 mandis, transacting ₹2-lakh crore
15. Minimum support prices for ‘Annadata’ (farmers) increased periodically
16. Direct financial assistance was extended to 11.8 crore farmers
17. For our government, social justice is an effective and necessary model
18. Female enrolment in higher education has gone up by 28 per cent in 10 year
19. Avg real income has increased by 50 per cent
20. Every year under PM Kisan Samman Yojana, Direct financial assistance is provided to 11.8 crore farmers, including marginal and small farmers
21. PM SVANIDHI has provided credit assistance to 78 lakh street vendors, from that total, 2.3 lakh have received credit for the third time


22. PM JANMAN Yojana reaches out Particularly Vulnerable Tribal Groups
23. PM Vishakarma Yojana provides end to end support to artisans and craftspeople
24. Scheme for empowerment of Divyang and transgender people reflects our resolve to leave no one behind
25. PM Mudra Yojana has sanctioned 43 crore loans amounting to Rs. 22.5 lakh crore for entrepreneurial aspirations of your youth
26. Fund of Funds, Startup India and Startup Credit Guarantee Schemes are assisting our youth
27. The National Education Policy 2020 is ushering transformational reforms


28. PM Shri is delivering quality teaching
29. Skill India Mission has trained 1.4 crore youth, upskilled and reskillled 54 lakh youth and established 3,000 new ITIs
30. Large no. of institutions of higher learning namely 7 IITs, 16 IIITs, 7 IIMs, 15 AIIMSs and 390 universities have been set up
31. The country received its highest ever medal tally in Asian Games and Asian Para Games in 2023
32. Chess prodigy and our No. 1 ranked player Praggnanandhaa put up a stiff fight against world champion Magnus Carlsen in 2023, today, India has over 80 chess grandmasters compared to little over 20 in 2010


33. The earlier approach of tackling poverty resulted in very modest outcomes When the poor became empowered partners in development process, government’s power to assist them increases manifold. In the last 10 years, the government has assisted 25 crore people to get freedom from multidimensional poverty
34. 2cr more houses will be built under PM Awas Yojana Gramin 1cr houses will be taken to rooftop solar units to generate free electricity


35. Housing for Middle Class, Govt will launch a new scheme to buy and build their own houses
36. Making Triple Talaq illegal, one third women’s reservation in Lok Sabha and state assemblies, giving over 70% houses under PM Awas Yojana in rural areas to women as sole or joint owners have enhanced their dignity
37. Empowerment of Women through entrepreneurship, ease of living and dignity has gained momentum in last 10 years
38. 30 crore MUDRA Yojana loans have been given to woman entrepreneurs
39. Female enrollment in higher education has gone up by 28% in 10 years

turnover sales
40. In STEM courses, girls and women constitute 43% of enrollment, one of the highest in the world
41. All these are getting reflected in increasing participation of women in workforce
42. Making Triple Talaq illegal, one third women’s reservation in Lok Sabha and state assemblies, giving over 70% houses under PM Awas Yojana in rural areas to women as sole or joint owners have enhanced their dignity
43. Besides delivering on high growth, the government is equally focussed on a more comprehensive GDP – I.e., Governance, Development and Performance


44. Ayushman Bharat scheme cover will be extended to all Asha, Anganwari worker and helpers
45. To ensure housing for middle class, the government will launch a scheme for middle classThis is to help them to buy or build their own houses for those living in slums, chawls or rented houses, she added.
46. A committee to set up more medical colleges, free cervical Cancer vaccines for girls from 9-14 years
47. Nano DAP on various crops will be expanded in all agro-climatic zones


48. GST has enabled One Nation One Market One Tax
49. GIFT IFSC and Unified Regulatory Authority IFSCA are creatin a robust gateway for global capital and financial resources
50. Proactive inflation management has helped keep inflation within the policy band
51. Matsya Sampada Yojana to be expanded to generate more employment, increase earnings
52. Despite the challenges due to COVID, implementation of PM Awas Yojana Rural continued and we are close to achieving the target of 3 crore houses. 2 crore more houses will be taken up in the next 5 years


53. India U.S. Europe sponsored Middle East- europe corridor: potential gateway for world trade for 100s of years.

54. India assumed G20 Presidency during very difficult times, global economy was going through high inflation, low growth, high interest rates, very high public debt, low trade growth and climate changes
55. Pandemic has led to a crisis of food, fertilizer, fuel and finances while India successfully navigated its way and showed the world the way forward


56. India built consensus on global problems, the recently announced India Middle East Europe Economic Corridor is a strategic and economic game changer for India and others
57. Our government is ready to assist states in faster development of aspirational districts and blocks Government will pay utmost attention to make eastern region and its people a powerful driver of India’s growth


58. Social Justice was largely a political slogan. For our government, social justice is an effective and necessary governance model !! The saturation approach of covering all eligible people is the true and comprehensive achievement of social justice, this is secularism in action, reduces corruption, prevents nepotism There is transparency and assurance that benefits are received to all eligible people, all regardless of their social standing get access to opportunities We are addressing systemic inequalities which have plagued our society, our focus is on outcomes and not on outlays so that socioeconomic transformation is achieved
59. Charging of electric vehicles Entrepreneurship opportunities to a large number of vendors for supply and installation, employment opportunities for youth with technical skills in manufacturing, installation and maintenance
60. Rooftop solarisation and free electricity


61. Through rooftop solarisation, 1 crore households will be enabled to obtain up to 300 units of free electricity every month
62. FDI inflows stand at $596 billion, twice more than 2014-15

 


63. The govt will form a high powered committee to address the concerns of fast population growth and demographic change


64. Fisheries scheme to help reach the target of INR 1 lakh crore exports
65. 2 Crore More Houses To Be Built Under PMAY-Gramin

66. Fiscal deficit for FY 24 revised at 5.8%. lower than earlier estimate of 5.9% in BE

67. FDI is ‘First Develop India. FDI inflow during 2014 to 2023 was Rs 596 billion US dollars, marking a golden era. This was twice the FDI inflow between 2005 to 2014. For sustained FDI, we are negotiating bilateral investment treaties with foreign partners.

68. PM Mudra Yojana has sanctioned 43 crore loans amounting to Rs. 22.5 lakh crore for entrepreneurial aspirations of our youth
69. Revised fiscal deficit estimated for FY24 has been pegged at 5.8% of GDP and the deficit for FY25 is pegged at 5.1%
70. To address fervour for domestic tourism, projects for port connectivity, tourism infra & amenities will be taken on our islands including Lakshadweep
71. Government will further promote private and public investment in post harvest activities including aggregation, modern storage, supply chains, primary and secondary processing, marketing and branding
72. After successful adoption of nano urea, Nano DAP application on various crops will be expanded in all agroclimatic zones
73. Electronic National Agricultural Market has integrated 1,361 mandis and is providing services to 1.8 crore farmers with trading volume of 3 lakh crores of rupees. The sector is poised for inclusive, balanced and higher growth and productivity.
74. I propose to retain the same tax rates for direct and indirect taxes including import duties
75. Govt will lay a white paper in house on mismanagement of the economy before 2014
Regards

Taxes no change. Old problems written off… upto Rs 25000 for around 1 crore people. Budget 2024 — Union Budget Lovely Brand India

Link to Govt site : https://www.indiabudget.gov.in/

and contact us on link

Taxation and Interim Budget 2024: Achievements and Proposals [Read Finance Bill]

 

Problem at PAY-TM …. a Pioneer but now a Chinese JV Bank in India

PAYTM was a Success story

But now in a Problem .  PAY-TM …. a Pioneer but now a Chinese JV Bank in India

No New Deposits or Credit Transactions Allowed after Feb 29, 2024

MAIN NEWS  –

  • RBI Imposes Restrictions on Paytm By Navasree A.M – On January 31, 2024 6:31 pm .

 

  • The Reserve Bank of India ( RBI ) has imposed huge restrictions on the Paytm Payment Bank Ltd.
  • According to the press release issued by the apex bank, it stated that the paytm shall not accept any new deposits or credit transactions or top ups to the customer accounts, wallets, FASTags, NCMC cards, etc after February 29, 2024.
  • However, the interest, cashback or refunds which may be credited anytime.

CONTEXT  –  

  • In 2022, the apex bank instructed Paytm to stop onboarding new customers.
  • It also directed it to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system.
  • Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing reports of the IT auditors, stated the press release issued in 2022.
  • The Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action.
  • Accordingly, in exercise of its powers under section 35A of Banking Regulation Act, 1949 and all other powers enabling it on that behalf, the Reserve Bank of India, on 31st January 2024 has issued few directions to Paytm.
  • The paytm bank was DIRECTED NOT TO TAKE any further deposits or credit    transactions or   top up in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime.

 

  • The customer is ALLOWED to withdraw or utilize balances by its customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags.

SIGN OF RELIEF –

  • National Common Mobility Cards, etc. are to be permitted without any restrictions, up to their available balance.
  • The RBI’s decision did not affect the customers because the directions clearly clarified that the customers’ interest, refund or cashbacks can be credited to their account.
  • Also, the customers can withdraw or utilize their balances up to their available balance.
  • It is also clarified that the fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility will be provided by the paytm bank even after February 29, 2024.

RESTRICTIONS –

  • No other banking services, other than those referred above, like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after February 29, 2024.
  • The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are to be terminated at the earliest, in any case not later than February 29, 2024. Fifthly, the settlement of all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024 and no further transactions shall be permitted thereafter.

PAYTM Chinese JV Bank… now in problem RBI New Rules for PAYTM. PAYTM is in big problem. Hope things sort out soon. the people are getting their funds out… and things are in a mess.

Authored by Ms Sreoshee,  Proud MLG Team member,

A company set up with global perspective in mind. Started by entrepreneurs with a vision to excel beyond horizons of the virtual information technology world, MLG is a young and ambitious team.

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