admin, Author at Business , Financial & Legal Consultant In India

November 23, 2020November 23, 2020

Govt must lower 1% TDS on e-commerce deals to reduce cash liquidity impact for MSME sellers

E-commerce, a rising industry in India, has provided humongous investments in infrastructure and logistics in the last 10 years. It has even generated innumerable number of direct and indirect jobs, and assisted money generation in the entire country, with chief effects witnessed in Tier II and Tier III cities. Evolving at a quicker rate, the e-commerce has attracted unwanted attention of regulators and led to imposition of more taxes and compliance burden. The sector has seen a large number of regulations being thrust into the earlier stage itself. This has to be stopped as there is a requirement to liberalize policy-making for e-commerce and internet companies to back the sector’s growth as it has generated a lot of jobs.

The Finance Act 2020 has included a fresh section 194-O in the Income Tax (IT) Act regarding payment by an e-commerce operator (or operator) to an e-commerce participant (or online seller(s)). This warrants the e-commerce operators to reduce income tax (TDS) at the rate of 1 per cent from the cumulative amount of sale of goods/ services/ both, during credit of the amount of sale in the account of the e-commerce participant.

Online retail (or e-commerce) in terms of percentage of entire retail in India comes to around 3 per cent, meaning a minor online seller base. Section 194-O also exempts online sellers from gross merchandise sale of less than Rs 5 lakh from the last year. This leads to a minority seller base (as a percentage of overall retail) that would give the concerned TDS and thereby defeat the whole objectives. Implementation in the present manner can be looked into by reducing the concerned TDS rate (to say 0.25 per cent) to cut down cash flow impact for MSME. This will aid in bringing down the amount of working capital that gets blocked and critically in these pandemic times, it will do a world of good.

The government can look towards changing the base for TDS calculation from Gross to Net Sales Consideration which is exclusive of GST and fees to operators. The proposed calculation of TDS on Gross Sale Amount, which includes GST, is a case of enforcing a tax-on-a-tax. Along with TCS, the combined impact on blocked working capital would be greater than two percentage points. This would put online sellers working under a high-volume, low-margin model under immense pressure.

TCS collection as the GST law is computed at 1 per cent of the total value of taxable supplies, which even factor in returns (which happened to be roughly 30 per cent for e-commerce companies). In a bid to have consistency in provisions, the Government of India might go for the same Net Sale Consideration (excluding GST and fees/ charges payable to operators) after returns. Together with the consideration in (2) this would also assist in reducing the amount of working capital of online sellers getting blocked while following the no tax-on-tax principle.

The Finance Act 2020 has even included a new clause 1h in Section 206-C of the Income Tax (IT) Act which mandates that all sellers getting sale consideration for goods beyond Rs 50 lakh in any preceding years shall take it from the buyer TCS of 0.1 per cent of the sale consideration going above Rs 50 lakh. This multiplication in taxation will result in strict compliance and blocking of working capital. This can lead to a super hike in the cost of doing business across the whole supply chain of supplier, wholesaler/trader and seller.

The data gathered on sellers via TCS collected by operators, together with data on sellers (offline and online) as per the extended scope of Section 206-C will be an adequate measure for the income tax authorities to curb tax avoidance across majority sellers. So, the Government of India has to reassess the implementation of 206-C (1h) in a bid to reduce the amount of taxable transactions to improve the Ease of Doing Business.

The government has to understand the importance of these e-commerce platforms as they happen to be the distribution medium of India’s biggest job provider- the MSME sector. Therefore, it should look at offering and developing an ecosystem having convenient Tax Regulations. E-commerce sector has to be accommodated the way the IT Sector has been in India.

November 23, 2020November 23, 2020

How Companies are dissolved legally?

What do you mean by Winding-Up?

Winding-up happens to be a circumstance where the life of a company has ended and property is administered so as to benefit the shareholders & creditors.

Form of Winding-Up

By court ( NCLT)/ mandatory Winding-up

Voluntary Winding-up (provisions regarding voluntary winding-up have been abrogated and has now been moved to Insolvency & Bankruptcy code).

Voluntary Winding-Up: The Insolvency and Bankruptcy Code, 2016 regarding re-organization and insolvency resolution of companies, partnership firms and individuals in a timely way.

The Insolvency and Bankruptcy Code, 2016 pertains to substances regarding the insolvency and dissolving of a company where the least amount of the defaulting is Rupees one lakh at present but it might be hiked up to Rupees one crore by the Government, via notification).

Compulsory (Tribunal) winding up

The winding up procedure is carried out by the tribunal. Also called tribunal winding up, this procedure is single-handedly performed by the tribunal and the company has minor or zilch say in the process. Hence, a company will be reduced to a mere spectator and will not follow any directions.

Conditions regarding voluntary wind up:

If the Company is not able to pay back its debts.
A special resolution will be passed by the company for closure.
If a company acts contrary to the principles/interests/sovereignty of the nation.
If the company has jeopardized ties with other nations.
If financial statements or annual returns for the last 5 years has not been filed.
If the tribunal deems it fit and fine to dissolve the company.
If the company has been involved in illegal business or illicit practices.
Any member, part of the founding committee of the firm, is found guilty of wrongdoing.

Manners of Dissolution

Liquidation of an enterprise could be executed in any of the following ways:

By transfer of a company’s undertaking to some other as per a scheme of reconstruction or amalgamation, in such a scenario, the transfer or entity will be dissolved by an order of the Tribunal without wind up; and

With the liquidation of the company, whereby assets of the company are liquidated and given for paying its liabilities. The rest, if any, is distributed among the members of the company, in line with their rights.

November 18, 2020November 18, 2020

NRIs get no relaxation regarding IT return filing date

Despite Coronavirus providing extension to the residing taxpayers of India, the Non-Resident Indians have not enjoyed similar privilege. In a surprising step, NRIs were not offered any grace period with regard to their Income Tax return filing date. Hence, no relaxation has been given for NRIs in the income tax filing date.

Last day for NRIs to file Income Tax

For NRIs, it’s generally July 31st, after the conclusion of the last fiscal year. Finding out that the date provides sufficient enough relaxation for the Non resident Indians, it is easy to understand why no relaxation was offered to NRIs.

Is it common for NRIs to file Income Tax Returns?

Most people are in doubt regarding NRIs filing Income Tax returns. Well, their doubt is justifiable, as there are only real conditions under which an NRI is needed to file Income tax returns. The Income Tax conditions for an NRI are:

In case the net (taxable) income of the NRI is over INR 2.5 lakhs, then the NRI is legally bound to file the Income tax return.
In case the NRI has put a sum that happens to be over INR 1 Crore in one or more accounts with a bank or cooperative bank of India during the fiscal year, then the NRI in question needs to file the Income tax return.
In case the NRI has coughed up personally or with someone, an amount of over INR 2 lakh for traveling overseas, then the person is legally bound to file Income tax returns.
In case the NRI has consumed over INR 1 lakh via electricity utilization, then during that financial year, the concerned NRI needs to file an Income tax return.

Concluding Thoughts

If you happen to be an NRI (Non-resident Indian) who comes under the categories mentioned above then you don’t have to panic. The income tax filing experts at our disposal will assist you in filing your ITR returns in the prescribed time limit. In case you require any other help, then reach out to our team at any given time without any hesitation.

November 18, 2020November 18, 2020

A Holistic Take on Prepaid Payment Wallet License in India

Introduction

The prepaid payment wallets are also known as PPIs and they happen to be the instruments having fiscal worth against which the goods and services can be bought and funds can also be transferred. The monetary worth injected into the prepaid payment wallets turns out to be the sum that the holder has paid towards it either via cash or debit to a bank account or credit card. The prepaid payment wallets have become very well-known for the last few years as they can be used with ease in other manners for transactions. The transactions performed by them are clear, responsible, and easy to use. The prepaid payment wallets can also be called e-wallets. For the assessing and the permitting the transactions between the various prepaid payment instruments, the Reserve Bank of India has given certain recommendations.

The prepaid mechanisms can be issued in these forms:

Smart Cards

Internet Accounts

Internet Wallets

Wallet Accounts

Magnetic Strip Cards

Paper Vouchers

And any other thing that can be utilized to obtain the prepaid amount

TYPES OF PREPAID PAYMENT INSTRUMENTS

Closed Wallet or Closed Prepaid Payment Instrument –

These are the types of PPIs that are issued to its consumers by a company specifically for the purpose of purchasing goods solely of that company. This kind of PPI can be utilized for buying goods and services of that particular company which has issued it. For example – Reliance Supermarkets, etc.

Semi Closed wallet or Semi Closed Prepaid Payment Instrument –

With regard to this type of the prepaid payment instruments in which the holder

Semi Open Wallet or Semi Open Prepaid Payment Instrument –

These instruments are to be used by the holders for purchasing goods and services at merchant spots accepting cards. Cash withdrawal and redemption are not possible with such kinds of instruments.

Open Wallets –

These happen to be the prepaid payment mechanisms used to obtain goods and services at anywhere and the holders have the rights to withdraw cash from ATMs.

Cross Border Transactions –

As per the guidelines of the RBI the prepaid payment wallets do not apply to individuals who have the approval to issue the Foreign Exchange denominated prepaid payment instruments, in sync with the provisions of Foreign Exchange and Management Act. The transaction limit for cross border transactions is kept at INR 5,000.

ADVANTAGES OF E-PAYMENT WALLET

1. It is a secure mode of payment.

2. It can save time as all the bills regarding telephone, electricity, mobile etc. can be paid online.

3. It gives access for online deals from anywhere and any time.

4. These are fiscal transactions that are transparent and responsible to the issuer of e-wallet.

SUITABILITY ASPECTS FOR ISSUING PREPAID PAYMENT INSTRUMENTS

The Banks and the NBFCs can issue prepaid payment instruments only once after getting approval from the Reserve Bank of India

The entities apart from banks or NBFCs should have at least confirmed total worth of Rs. Fifteen crores, according to its last audited balance sheet.

For seeking approval, these entities need to make an application to the Reserve Bank of India.

A newly incorporated company has to submit a certificate regarding the present net worth along with its temporary balance sheet from its Chartered Accountant.

if any entity other than Banks and NBFCs is having the license for providing prepaid payment instrument prior to the Reserve Bank of India making it essential to have total worth of INR fifteen crores, such entity will have no option but to hike its net-worth legitimately to this limit before the end of September, 2020.

It is essential for the entity to be registered under the Company Act, 2013 or the Companies Act, 1956 to obtain the license from the RBI.

It is pertinent that the activity to function as a prepaid payment instrument the issuer is specified in the Object Clause of the Memorandum of Association of the company.

FACTORS SURROUNDING CAPITAL FOR ISSUE OF PREPAID PAYMENT INSTRUMENTS

While calculating the net worth of a company, the following things have to be a part of the net worth:

The Paid-up equity share capital

The Free Reserves

The Preference shares

The Share Premium Account

The Capital Reserves representing surplus

DOCUMENTS REQUIRED FOR GETTING THE PREPAID WALLET LICENSE

The Name of the entity

The Address Proof of entity’s registered office

The Constitution of the entity

The Entity’s certificate of incorporation

The chief business of the entity

The Information of the management

The Particular of Statutory Auditor of the entity

The latest authorized balance sheet of the company

The Names and Addresses of the Bankers of the Company

Any other crucial documents that may be required from time to time.

THE APPROVAL METHOD FOR APPLICATIONS GIVEN BY NON-BANKING ENTITIES

Step 1: A non-banking entity wanting the approval of RBI has to make an application in Form A according to the Regulation 3(2) of the Payment and Settlement System Regulations, 2008.

Step 2: The RBI will consider the suitability of the entity during the screening process.

Step 3: Post the eligibility, it is evaluated whether the company is sound financially and the assessment of the management of the company is performed for which opinion from regulators, government authorities, etc. is taken.

Step 4: Following this the applicant is examined on other factors that includes the potency of its customer service, overall capability, technical proficiency and other related requirements.

Step 5: If the company fails the suitability criteria, then the application will be rejected. The fee given by the company during the making of application shall not be refunded.

Step 6: If every essential condition is met by the company, it will be given the in-principle nod by the Reserve Bank of India, which shall be important for six months.

During the six months of the in-principle approval, the entity has to submit a proper System Audit Report. If the company is unable to furnish this report, its in-principle nod will automatically fade away.

Step 7: Post the approval, the company gets a Certificate of Authorization, which would remain in force for five years from the day it has been given a nod.

If the certificate of authorization has to be renewed, an application needs to be put in to the RBI three months before the expiry of the certificate. If there happens to be a problem in giving the application promptly, then the RBI reserves the rights to accept or reject the application of renewal.

Step 8: If an entity obtains the final approval, then it has to initiate its business operations within six months of obtaining the nod. If it cannot, then the approval will peter out.

However, a one time extra duration of six months is availed from the RBI by giving a written request beforehand mentioning a convincing reason obstructing the launch of business operations. The RBI has the right to accept or reject such requests for providing additional time.

Step 9: Those issuing prepaid payment instruments must document all the dealings undertaken via Prepaid Payment Instruments for a minimum of ten years. According to the suggestion of the RBI, this data has to be given either to the RBI or any other agencies, as required. The issuers of prepaid payment instruments also need to file Suspicious Transaction Reports (STRs) to FIU-IND (Financial Intelligence Unit-India).

EXTRA CONSENT REQUIRED BY THE NON-BANKING COMPANIES

If a non-banking company is given the Certificate of Authorization for providing prepaid payment instruments, then a written approval is needed of the RBI in following conditions:

If there has been any takeover or acquirement of authority of the company and the same has effected any change in management or not;

If due to an alteration in the management there has been a change in thirty percent directors of the company, excluding the independent directors. But beforehand written consent of the RBI will not be required for those directors re-elected on retirement via alternation.

LEGALITY OF THE PREPAID WALLET LICENSE

The prepaid payment instruments license is valid for at least one year from the day it is issued to the concerned holder. The PPI issuer is duty-bound to inform the holders regarding the expiry of the PPIs through either SMS or e-mail or post or any other means inside a reasonable time duration. The intimation pertaining to the expiry of the PPI has to be made in the holder’s chosen language as specified by him or her at the time of obtaining the PPI. In case the PPI lapses and the holder does not provide a renewal application for a new PPI, he or she can get a grace period of sixty days.

November 2, 2020November 2, 2020

.The Methods Involved in Song Copyright in India

Merely composing a song will not suffice as it has to be secured from violation as well. To safeguard your song from being used by your competitors or rivals is also quite critical. Copyright registration is an ideal tool to safeguard your creative work. In this write up, we will strive to provide detail regarding the procedures revolving around song copyright in India.

What do you mean by copyright registration?

Copyright Registration in India happens to be an intellectual property right provided by the law to authors of literary works. Also to, music, drama, other creative works, producers of cinematograph movies, and sound recordings. Having a copyright registration for your works comes with a lot of benefits such as the rights of copying, information to the public, modification, and interpretation of the work. The chief objective of the registration is to reward the creator or author for their work by offering better safeguards against infringement. Further, as a good news for every song author or producer at present they can even protect their song’s lyrics and music.

Merits regarding Copyrights

Nobody will be able to violate your work in any way, be it a company or any other business.

The copyright registration certificate comes across a genuine piece of document and remains active for the lifetime of the owner plus sixty years.

Infringing upon someone’s work is an offense liable for punishment and a police complaint can put an end to it.

If violated, a civil suit can be filed at the location of the owner of the copyright.

Also, anybody is allowed to copy any material report like the filing of it in any medium including automated or electronic means.

To create any cinematograph film or sound recording regarding the work. This pertains to the arrangement of your work.

If it is with regard to a computer application or program, the rights also include to sell or give on hire, any depiction of the computer program.

Documents needed to Copyright a Song

In order to furnish an application pertaining to songs copyright, the NOC of the publisher/producer/author/composer and the others linked with the creation of a song should present them.

Two original and similar samples or copies of the work.

The Methods Pertaining to Songs Copyright in India

Application filing

The first step involved in the procedure of copyright registration is to apply online via the portal of a copyright attorney. The application can be registered by the candidate or any other person authorized by him or her. As for the application record, the characteristics of the copyright and its information will be documented properly together with the number of fees. Also, post successfully submitting the application, a diary number will be created.

Unsuccessful Formality check

After the acceptance of an application to the department, it has to go through an examination or check as a formality. The examination is performed to assure the important requirements of 2 copies of work. Further, if the statement fails to qualify in the formality check, a letter seeking to meet the requirements will be given to the applicant at his/her delivery address.

Period of Waiting

In case the application or request moves from the second stage devoid of any problem, it will be free or can take any kind of objection from the person. Also, this is particularly for those who claim or have any kind of inclination in the matter regarding the copyright for 30 days. Also, if no objection has its allowance, then the application will have another preparation according to first come first serve basis.

Hearing process

If there is an objection regarding the copyright, a report will be given to both the people. Post receiving the reply, a hearing will be documented by the registrar. Also, in the hearing, both parties get an opportunity to raise their view points. If the form is received, it will again be transferred to the auditor for checking.

Registration Given/ Denied

In the end, the application will go to the registrar. If he is dissatisfied, the application can be rejected. Also, the notice will be given to the applicant. However, if the registrar is happy with the application, he gives his ascent for the same and dispatches extracts of the same to the applicant. After this, you will have exclusive rights over your songs.

Copyright with Vakilsearch

Vakilsearch assists you to copyright your songs in 3 simple steps –

A good check of the files that you sent us will be done

An application is made and then filed

Our experts update you constantly throughout the processing of your copyright application.

Finally

So, to protect your work from violations or infringements, copyright registration is a must. Don’t waste your time just do it immediately.

October 28, 2020October 28, 2020

Dissecting Farmers Agreement of price assurance bill 2020

The Farmers Agreement on Price Assurance and Farm Services Act, 2020 was brought in with the purpose of offering a national structure to an agreement that strengthens and safeguards the farmers who deal with wholesalers, processors, agri-business firms, exporters or any large retailers. A level of transparency and trading off agricultural products on the basis of an agreement are very critical. The agreement needs to encompass everything regarding the price, parties, delivery procedure, product and the dispute resolution method.

What’s this Farmers agreement all about?

The terms and conditions pertaining to the distribution of the agricultural products such as statutory price, class, quality, time of supply and rest of the relevant matters.

Conditions and assistance regarding the farm service supply.

As per the agreement, an oral agreement is futile. It ought to be in writing in a local language and also, the terms have to be devised in a modest way and an easy lingo for the convenience of all concerned parties. Unless there happens to be a shift, the farming agreement has to meet all the criteria given under the contract law. Therefore, the parties involved in the contract should get into the same freely and satisfy all important things mentioned in the contract.

Length of Farmers Agreement

The least duration of a farming agreement happens to be one crop season, or 1 production cycle of the livestock and the maximum is five years. In circumstances where the production cycle exceeds 5 years, the maximum duration of the farming agreement will be decided mutually between the sponsor and the farmer.

Inputs regarding the sponsor in the Agreement

The sponsor has to supply the inputs to the farmers and the commitments of the sponsor has to be specified in the agreement. Also, the sponsors has to share the mandated inputs like delivery and provide farmers with technical guidance either free of cost or on cost sharing basis. He need to give the inputs at a specific place and time as given in the agreement.

Inputs’ Usage by farmers

The inputs provided by the sponsor have to be validated and examined to determine their quality and quantity by the farmer. In case of any woes experienced by the farmers, they should inform the sponsor in writing. The inputs have to be in line with the instruction specified in the farming agreement and there should not be any deviation from the chief purpose. Further, if there is any kind of loss post delivery, then the entire onus will be on the farmers input. The farmer might return any underutilized inputs by the completion of the production cycle or according to the agreement.

Exemption provided in farmers agreement

In the farming agreement, the agricultural produces are exempted from the legislation aimed at managing the sale and purchase of farm produce. Moreover, these products will also be kept away from the provisions of the Essential Commodities Act, 1955 and confined to the stock limit obligation.

Pricing under farmers agreement

The amount of the farm produce has to be given as per the Farming agreement between sponsor and farmer.

In cases where the price of the produces is variable, the agreement provides the following:

A specific price needs be paid for such produce.
Any extra amount beyond the above the guaranteed price such as premium and bonus to justify the ideal value to the farmers and such quoting of the price may be linked to an existing price mentioned in the APMC market or the transaction platform or electronic trading and finally any other apt standard price.
The method regarding ascertaining the mentioned price shall be in line with the agreement.

Dispute redressal in the Agreement

The agreement regarding the farming needs to make provision for a conciliation board and the conciliation method for addressing the disputes. The board has to make sure that both the parties to the agreement get equal and fair representation. The beginning of any dispute is to refer the same to the resolution board. In case the dispute is not resolved by the conciliation board within 30 days, the either party could seek a resolution from the Sub-Divisional Magistrate. Also, parties reserve the right to appeal against the decision of the Sub Divisional Magistrate. The Appellate Authority and the magistrate have to conclude the dispute in question within 30 days. Further, the appellate authority and the magistrate have got the writ to slap penalties suitable in their view on the party. But, no act or order shall be passed for recovering dues against the agricultural land of the farmer.

Merits pertaining to the farmers’ agreement

This legislation can be beneficial for the farmers as it enables them to deal with the wholesalers, large retailers, exporters etc minus any concerns regarding exploitation. It even works in the favor of the farmers by putting the risk of market uncertainty on the sponsor and also enables the farmer to partake in excellent inputs and contemporary technology. It even aids in enhancing the revenue of the farmer and brings down marketing expenditure.

Also, the farmers will be involved in direct marketing and thereby eliminates the intermediaries and avail the best price available. Farmers are also offered appropriate safeguard from sales, mortgage, and lease of their lands and secured against any kind of recovery.

Conclusion

The government’s intention behind the act is to offer a national and consistent framework on the farming agreement that strengthens and safeguards the farmers and makes them deal directly with exporters, wholesalers, processors and Agribusiness firms. This also cut down the prospects of exploitation as they can sell their products to anyone. This will be beneficial for farmers in enhancing their income and reducing the marketing expenditure. In case of any dispute between the parties, then there is a provision to resolve the same in this act.

October 23, 2020October 23, 2020

Chief attributes regarding the amended Essential Commodities Act

The Essential Commodities Act got amended by the Government of India in September 2020. The amendment in question took down the Essential Commodities Ordinance, 2020 (EC Ordinance) enacted in June 2020. The EC ordinance was initiated for the purpose of effecting certain changes in the Essential Commodities Act, 1955. The amendment pertaining to September 2020 has done away with the EC ordinance brought out in June. This write up strives to highlight crucial attributes regarding this amendment.

What is the meaning of Essential Commodities?

According to the dictionary, an essential commodity happens to be a need that is vital for any kind of a living being. This would be normal food grains and other kinds of supplements which can be an essential aspect of the lives of individuals.

As per the Essential Commodities Act, 1955, a clear definition for Essential Commodity is missing. But, Section 2(A) of the Act explains essential commodities as “a kind of item included under the list of the Schedule which is mentioned under the Act”. This is merely a usual meaning of essential commodity.

Also, the government wields the authority to enhance or reduce the list of essential commodities under this Act.

Items in the list of essential commodities

Any kind of medical equipment or drugs.

Food items for day to day intake like any kind of edible oil.

Fertilizers (both liquid and solid) – These could be organic or inorganic.

Cotton Yarn or any other hank yarn.

Petroleum-Based Products.

Textiles such as Raw Jute and Other Products.

Cattle Food.

Seeds of Fruits, Vegetables and other forms of edible plants.

Face Masks.

Hand- Sanitizers.

The afore-mentioned list contains several forms of essential commodities. Face Masks and Sanitizers also got added in the list from 13 March 2020, due to the surge of Coronavirus across the country. In the above list, the government has got the right to control and regulate the supply of all the items. Control implies that the government can also add or exclude any items in the list of EC.

The bill repealed by the Amendment?

Big modifications were made in the September amendment in the EC bill pertaining to the essential commodities act. It took down the Essential Commodities Ordinance 2020 brought on in June. Diverse views are circulating regarding the changes effected by the amendment.

Features of the Amendment to the Bill

The present amendment transformed the function of the Essential Communities Act 1955. This has a wholesome backing as it benefits farmer’s right to livelihood. This apart, farmers can also sell directly to private companies.

The government reserves the right to cap stock holding on essential commodities. The stock-Holding limit pertains to the extent of control the government has over the commodities. According to the amendment, stock holding ceiling on essential commodities is possible only during extreme circumstances. These circumstances are the Act of God, natural calamities, war, external aggression, famine, and other circumstances.

The government has the right to regulate commodities such as pulses, cereals, potatoes, and onion and edible items during the above-mentioned circumstances. This amendment exists under section 1A of the amendment bill.

The government has the right to implement any kind of ceiling only if the following obligations are met:

In case of a 100% price surge in agricultural or horticulture produce. This price rise has to be in the retail price of the agricultural or horticulture produce.

In case of a 50% spike in the retail rate of non-perishable agricultural produces.

This kind of imposition will be arrived at on the basis of the price of the agriculture or horticulture produces in the existing 12 months or the average retail price being charged. The lower of the above value will be considered.

The ordinance is not valid for any processor, or any kind of value chain participant of the agriculture or horticulture produce. For this, the stock held by a person or a company should not be over:

The entire processing ability of the installed system; or

Demand for the exporter in the event of any kind of exports.

Value chain participant happens to be any kind of individual or entity involved in enhancing value to the agricultural production chain. This participant could be in any level of the process, including storage, production, packaging, transport, and distribution to the agricultural produce.

The features of this ordinance are not applicable to any kind of government order pertaining to the public distribution system or any form of the target public distribution systems. Under these systems, the government disburses pulses and food grains at subsidized rates to certain people.

Does this amendment hold any merits?

Several experts have clarified that his amendment can be good going forward.
Farmers can deal with companies and other private organizations devoid of any intermediaries for the purpose of selling agricultural produce.
The livelihood of farmers would go up in the future.
Farmers do not require any middlemen for using this system.
Overall farmer’s income will intensify as the products created by farmers can be sold anywhere. This will not just be applicable in any local mandi or Kirana stores.
Large organizations would put in money in villages by dealing with farmers directly, thus augmenting their revenue.

Demerits pertaining to the Amendment

Many have hailed the amendment, but there have been many criticisms as well.

With private organizations dealing with produce, hoarding will intensify. Prior to the amendment, hoarding wasn’t permitted. But, this amendment can result in indirect hoarding also. These amendments take away the states’ rights to create rules on Essential Commodities, because this amendment was enacted across the nation.

Goods’ prices under the Essential Commodities act may go up if large procurement orders are performed by various organizations. This will permit the government to control the products under the amendment via the ‘exceptional circumstances’ clause in the bill.

Hoarding can also hike the rates of essential commodities such as onion and potato, which is quite common in the kitchens of Indian households.

Conclusion

The government effected a change in the essential commodities act, 1955. The amendment regarding the bill abandoned the EC (Ordinance), 2020 brought out by the government to control commodities. Having said that, the amendment permitted the government only to regulate the stock holding limit regarding essential commodities under extreme circumstances. Yet, this amendment can benefit the farmers. Farmers would be able to transact with organisations directly. This can boost their revenues from agricultural produce. But, the amendment could increase the prospect of hoarding. So, it can be safely surmised that the amendment has both positive and negative aspects.

September 25, 2020September 25, 2020

Start a business instantly with your Aadhaar Card

It is no child’s play to start a business. You are always in a dilemma whether to take the legal way or not. But, the Modi government has come up with a fresh proposal after which, you will run out of excuses to begin a business. This initiative is known as Udyam registration.

“All you need is the Aadhaar card” goes the new slogan for entrepreneurs seeking to start a business. This write up will focus on the new initiative and reason for government to take this step.

The new declaration

Come July 1, the MSME registration method will be totally paperless and on the basis of self-declaration. According to the MSME notification, sole document needed to register your company would be Aadhar number. As part of the minimalist process, the government wants a sole window system across India.

Reason to initiate the process

MSMEs encountered a lot of issues while uploading documents. “The requisite documents are too many and the time required is less. I could hardly find time to receive Udyog Aadhar registration” – said Rahul Bharagava, partner at a small tech-firm.

According to the government, Udyam registration is purely paperless and it could be a boon for those grappling with bureaucratic Red-tapism.

Other objectives of starting the move:

Spotting the beneficiaries of several schemes launched by the government due to COVID-19 pandemic.

Saving time and money for small businesses.

What to expect from Udyam registration?

Udyam registration will give you the following:

An Udyam registration certificate.

An embedded QR code with which info about the new enterprises can be obtained.

For MSMEs with Udyog Aadhar registration, they should get Udyam registration so as to be governed by a unified code of conduct. In case an MSME is occupied with several or manufacturing services, they need to put them under one MSME but there will be no multiple registrations.

Conclusion

At present when everyone is going digital, it’s time to abolish paper work. In case you have an MSME or need to register as one, Udyam registration facilitates a paperless environment. If you need more info about Udyam registration, then get in touch with our experts.

September 24, 2020September 24, 2020

How Payment Gateways function? What are the advantages?

For the last few years, the usage of digital payment methods has touched a new high. Things have perked up further for digital payment during the Covid-19 pandemic as well. But, how many of you are aware of the functioning of the payment mechanism? Through this write up we strive to provide a good account of the same.

What do you mean by a Payment Gateway?

It happens to be a merchant service that approves and evaluates debit or credit card or PayPal payments for online traders and old-fashioned businesses. In simple terms, it acts as a mediator between your web store and the payment processor who gets paid by your customer. The digital transactions are enabled by coding sensitive data and shifting it between a payment portal and back/front end processor.

Digital payment process

Gathers info on the credit/debit card;

Encrypts the transaction information;

Sends it to the credit/debit card processor; and

Dispatches an approval or a rejection.

Is the process safe?

Payment Gateway (PG) can easily be merged with the majority of websites and virtual shopping carts to facilitate online credit card processing. This shopping cart is frequently utilized prior to the PG. It enables your customers to select the items they want to purchase, and post checkout, the shopping cart adds the purchased stuff and tax and then gathers the customer’s shipping and billing info.

Once the shopping cart process finishes, the PG encrypts and records sensitive data such as credit or debit card numbers, CVV, and CVV2 information. These are very crucial data and need to be secured from nefarious activities. Security is a critical part of these procedures. The card associations have drafted rules and regulations which should be followed by the person who obtains the card information. These rules are known as Payment Card Industry- Data Security Standard.

To add more layers of protection, online order is concluded with an HTTPS protocol that conveys personal information safely via the parties involved in the transaction.

The Functioning of Payment Gateway

It enables interaction between your website or brick and mortar store, the payment processor, and the bank whose credit or the debit card is used to finish the purchase.

Working Processes

The process starts as a customer places an order on a product from a PG-compliant merchant. The customer then clicks buy or any other similar option via keying in the card particulars on the app or merchant website.

If the order happens through a website, the customer’s web browser codes the information to be sent to the merchant’s web server. In other scenarios, similar action is performed via the Secure Socket Layer.

Following this the information is passed on from Merchant’s site to the PG.

PG dispatches transaction details to the payment processor of the concerned bank of the merchant.

A clearance request goes to the card association, which post examining the request, responds back to the processor. It signals whether the transaction was successful or failure, in the latter case it even provides reason for rejection.

Then the payment processor passes on this info to the PG.

Then PG sends it to the Merchant website. This is known as authorization and it takes 2 to 3 seconds. The merchant then finishes the order, and the above process can be repeated.

Finally, the PG indulges in a procedure called settling. In this it clubs all your transactions and dispatches them to the concerned bank of the merchant in a single batch vis the settlement processor.

It even stores your transactions and permits you to see those via the PG report facilities. This is how the PG process happens.

Advantages of opting for a Payment Gateway (PG)

Utmost Safety

The best part of using PG is the safety it offers to your e-commerce store, which makes sure customers are happy shopping. It efficiently handles all the safety aspects of the transaction and makes sure that the money reaches the destination without any issues.

Smooth integration

PGs can be easily integrated with well-known e-commerce platforms. For example, Shopify has integrations with over 100 PGs. They also possess a unique box payment system, which spares you the process of sign up.

Round-the-clock availability

The other benefit of selling online is that there is no need to be glued to the computer while sales are happening. It operates on autopilot mode. Hence, make purchases anytime you want to.

Several options on offer

The PG is receptive to both debit and credit card transactions at a basic level, however if you require more advanced options that assist PayPal payments and gift vouchers then those can also be availed.

Insightful reporting

It even gives instant reporting, which makes you aware of the health of your business. This is a huge advantage in case you want to learn how to boost sales or something similar.

Conclusion

These apart, there are several functions performed by Payment gateways such as clarifying the limit of merchant’s transactional ability, dispatching payment records, assuring encryption, and safety. These are only the tip of the iceberg; there are many more fascinating aspects of PG.

September 14, 2020September 14, 2020

Tips to remember while applying for loan

These days there are several types of business loans and lending options. Therefore, small business owners can easily avail these facilities in comparison to others. Despite having myriad options, becoming eligible for a business loan can be a bit challenging. So prior to taking a final call regarding a business loan, it is advisable to gauge your eligibility to ensure that you are not walking down the wrong path. To secure cent percent loan approval necessary documents together with proper timing and a good CIBIL are required.

Answer properly on loan application form

Business loan application forms differ from one lender to another, however they have similar questions for which you should have appropriate answers. If the answer is found unsatisfactory then it can lead to the rejection of your loan application. The information normally sought by lenders are:

Reason for availing the loan
The way you are going to utilize the loan amount, in case it is permitted
The net revenue of your business
The inventories/machinery you are supposed to buy, and your suppliers
Your clientele
Any other business debt incurred by you
Staff information
Personal history

Sound business Planning

Lenders need a superior and successful strategy to be presented along with the loan application. The strategy has to have anticipated budget reports such as advantage and disadvantage, revenue, and fiscal record. The lenders will also require a credit report from every three important customer CIBIL score offices prior to accepting your loan application. Any negativity on your credit report can seriously affect the prospect of availing loan. So, prior to applying for a loan, just examine your CIBIL score yourself and rectify the problems (if any) before going ahead with the application.

Lucidity of cash inflow

A business with poor cash flow is normally construed as a risky proposition by the banks. This is due to the fact that the bank would think the business would give more priority to your professional expenses than repaying the credit. They would also evaluate bank statements of the business and personal accounts to understand your monetary position thoroughly.

It is possible to better your cash flow (if it is on the lower side) by performing a cash flow evaluation of your business, devising goals, and drawing a clear cut payment plan for your business.

Offering guarantee against loan

In order to be in the safe zone, banks will seek a collateral against money being lent. This is a good option to reduce risk factor. The collateral being offered has to a perfect cover for the money borrowed so as to convince them that their money won’t sink.

The collateral could be anything from a real estate property to expensive equipment or machinery related to your business.

Furnish right documents

You are required to give a few documents to showcase the strength of your business and your ability to pay back the loan. Documents to be provided again varies from lender to lender. The documents needed comprise certain legal and personal documents.

The legal documents needed are:

Business licenses and registrations critical to operating business
Articles of Incorporation
Copies of contracts entered with third parties
Franchise license/ agreement
Commercial Leases
Documents from the local body confirming the permit (in case of industry)
The application forms can be perfect to state your projected financial statements
Bank Statements
Balance Sheet
Income Statement
Cash Flow
Last year ITR documents

Compare your lending alternatives

Upon convincing yourself to go for a business loan, you are required to perform in depth research regarding the borrowing alternatives before you. There are nationalised banks to NBFCs and DSAs for the purpose of business loans. To take the first step, prepare a list of banks and lending institutions giving the type of loans you require. Then juxtapose these options with factors such as loan amount given, interest rate, flexible principle for approval and easy and convenient terms & conditions. In case you are still in a dilemma take the help of an expert.