Form 10BA: Filling Up Income Tax Form

A declaration has been filed by the Form 10BA taxpayer claiming the deduction under section 80GG of the Income Tax Act for rent paid on rental property. This article focuses on how to file Form 10 BA before claiming deduction under Section 80GG.

About Form 10BA

Form 10BA is a statement documented by the taxpayer, which is required to claim deduction under section 80GG for rent paid on rental property. It is mandatory for taxpayers to meet two requirements to claim deduction under section 80GG.

These requirements are as follows:

The first requirement as per the requirements is that the taxpayer should not obtain a House Rent Allowance (HRA) from any organization.
The second requirement is that HUF should not keep any self-occupied dwelling. In the case of taxpayer, spouse and minor children, or the assessee be a part of HUF (Hindu Undivided Family).

A taxpayer can submit the statement in Form 10BA if both of the above requirements are met, and it will be mandatory to file the form before filing the Income Tax Return.

Section 80GG of the Income Tax Act,1961 talks about the reduction in rent paid on rental property, whether it is furnished or unfounded. The taxpayer should not receive any HRA (House Rent Allowance) from his organization. The above mentioned condition is necessary for the taxpayer to claim deduction under Section.

Conditions For Deduction Under Section 80GG

Following are the conditions for claiming deduction under section 80GG:

A self-governing person can claim deduction only under section.
The person claiming the deduction can be a salaried or self employed person.
In case of a salaried person, one should not get HRA (House Rent Allowance) from his organization.
From 10BA has to be submitted to the Income Tax Department.
The assessee should not in any case have self-occupied property like a house.
Assessment of spouse, minor children or taxpayer, a member of the HUF should not have a comfortable living space where he or she is living under employment or offering occupation or service.

Let’s Understand by examples:

The following are understood through an example of this concept.

One person worked for the initial six months, and after that, he started working as a freelancer. He lived on rented property for the entire year and took HRA, and has no self-owned property. He can claim deduction under Section 80GG and in the present case files Form 10BA for the rent of the last 6 months paid by him.

Purpose of Deduction Under Section 80GG & Filing Form 10BA

For FY 2018-19 and AY 2019-20, the deduction under the section should be at least:

Payment of full rent which is less than 10% of the entire income.
25% annual payroll deduction
Rupee. 5000 monthly (this means it is Rs. 60,000 annually)

Here is a list of requirements for claiming deduction:

The assessee should not in any case have self-occupied property like a house.
A self-governing person can claim deduction only under section.
In case of a salaried person, the person should not obtain HRA (House Rent Allowance) from his organization.
The person claiming the deduction can be a salaried or self employed person.
Assessment of spouse, minor children, or taxpayer, a member of the HUF should not have a comfortable living space where he or she is living under employment or offering occupation or service.
Form 10BA must be submitted to the Income Tax Department.

List of ITR Forms Applicable Under Section 80GG

The list of ITR forms implemented under Section 80GG are as follows:

ITR 1
ITR 2
ITR 3
ITR 4

The expected date for filing ITR has been set as July 31 of the next financial year.

Documents required for filing Form 10BA

Further, to documents including Form 16 and PAN details, file forms are the documents required for filing:

Rent Agreement and Rent Voucher

PAN details of the landlord, if the value of rent is more than Rs. 1 lakh.

Form 10BA is therefore filed which ensures that the landlord is not declaring the benefit of the self-occupied house at the same or any other place.

Procedure for filing Form 10BA

10BA is required to be filed online through an e-filing portal, which is very easy. Following are the online steps to fill the form:

Go to the Income Tax e-filing portal and login through credentials.

Go to the e-file option and choose the income tax form.

Choose Form 10BA from the drop-down menu, and then choose the corresponding assessment year.

Select the submission mode and submit it online.

Then click on Continue.

Enter all the details including the name of the landlord, how much rent has been paid, rent property address etc.

Preview the form and then submit it.

Details required in Form 10BA

The following details are required in Form 10BA:

Taxpayer name

PAN Details

Rental Property Address

Paid the rent

Landlord’s name and address

Conclusion

Form 10BA is a statement that should be filed on the Income Tax website under the e-filing portal. The form is filed to claim deduction under Section 80GG of the Income Tax Act. Thus, it is preferable to file Form 10BA before filing ITR and claim deduction from rent under Section 80GG.

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.

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.

May 16, 2019

Advantages of NBFC Registration in India have over Nidhi Companies?

NBFC and Nidhi Companies are seen to be functioning at larger and smaller platforms respectively. In this blog we will discuss what Nidhi company do not have privilege to perform but NBFCs have.

Below are the privileges of NBFCs over Nidhi Companies-

Minimum capital of Rs. 5 Lakh is required for starting of the business in Nidhi Companies. Where NBFCs are governed by RBI and minimum 2 crore net worth is required in order to start the finance business.

Nidhi Company cannot do any other Business- If you have a Nidhi company you carry out the business of chit funds, hire purchase finance, lease finance etc. therefore, Nidhi companies carries a predefined business and is not allowed to pursue the business of any other type. And in order to do business of chit funds and other separate business, then separate License is required to take for pursuing such business.

Cannot open a Branch before three years- For opening a Nidhi Company in india, then the company must earn profits continuously for 3 years and after that only they are allowed to open a Branch. It is one of the mandatory condition and it cannot be compromised even if you have sought permission from the Registrar of Companies.

No Provision of Preference Share Capital- In Nidhi Company raising funds by way of preference share capital is not allowed.

Dealing with members only- Nidhi Company are not allowed to deal with a person who is not a part of the company.

No advertisement or solicitation- Ndhi Company cannot advertise or solicit any person for deposits.

No Brokerage or Incentive- Nidhi companies cannot pay any brokerage or incentive to any person rather they can hire employees on fixed salary basis as it is not restricted by law.

Cannot open a current account- Nidhi Companies are not allowed to open a current account with members. It is considered as mutual benefit company and hence government does not want these Nidhi companies to commercialize.

No service charge on the membership- While issuing any shares, nidhi Company cannot charge any service charge from its members.

No Partnership is allowed- Nidhi companies are not allowed to enter into a Partnership firm for the purpose of borrowing or lending activities.

Limited within a State- Nidhi companies are not allowed to open a account or branch outside the state of functioning.

Cannot add Body Corporate- Nidhi Companies cannot add any body corporate like Private Limited companies do, because the members of Nidhi companies cannot accept deposit from these Body corporate.

Conclusion

Nidhi Companies have lots of Limitations in india before for its application, therefore it is always advisable to seek permission of an expert to guide for the Application of Nidhi company License. whereas , NBFC in India offers a wide range of financial services such as loans, chit-funds, and these are different from banks. NBFCs plays a very crucial role in a developing country like us. Many economists have explained that NBFCs are very important for our economy to grow. For NBFC Registration or any information regarding NBFC and Nidhi Company Registration please contact BIATConsultant.

May 14, 2019May 14, 2019

Procedure For Mutual Fund Registration in India

For Registration of Mutual Fund Registration in India Form-A is to be submitted.

A mutual Fund is established as a Trust which has sponsors, Trustees, Asset Management Company, and custodian. Sponsors and trustees are there to work as a promoter of a company. And also trustees hold its property for the benefits of the unit holder.

Types of Mutual Funds

Open Ended- It is a collective investment scheme that can issue or redeem shares at any time. An investor will generally purchase share in the Fund directly from the Fund itself, rather than from the existing shareholders.

Close Ended Mutual Funds- It is a collective scheme model based on issuing of fixed number of shares which are not redeemable from the funds. Unlike open ended funds, new shares in a close ended shares are not created by managers to meet demand from investors.

Interval Mutual Funds- It is a Non-Traditional type of closed end mutual funds that periodically offers to buy back a percentage of outstanding shares from the shareholders. Shareholders are not required to sell their shares back to the fund.

Key Points for Mutual Funds Registration

All Mutual Funds should be registered as Trust under Indian trust Act, 1882.
A separate AMC should be registered. The net worth of AMC must be INR 5 Crores.
Investors of Mutual Funds re called as Unit Holders.
Basket of Securities is called as Portfolio.
Managed by Fund Manager.
Value of each unit is called a Net Asset Value (NAV).
An organization that manages the investments is called as Asset Management company.
The sponsor should contribute at least 40% to the Net worth of AMC.
Appointment of custodian in order to secure the securities.
Should be carrying on business in financial services for a period of not less than 5 years and the net worth should be positive.
Applicant has to be fit and proper person with a soundtrack.
The main objects of the MOA of the sponsor company should permit the mutual funds activities.

Prerequisites for investing in Mutual Fund Plan-

Bank Account
Demat Account with Broker
Documents or KYC to be enclosed
Aadhar linkage of the accounts.

Documents required for Mutual Fund Registration

A complete list of all associate companies/ Group Companies/ subsidiaries registered with SEBI in any capacity along with their Registration Numbers.
List of instances of Violation/ non-adherence to any security related regulations enforced by any regulatory agency in India or abroad and whether any measure has been taken by you in this regard.
A Declaration that the sponsor company or the Directors have not been found guilty of fraud/ misconduct etc.
Details of registration of any of the companies with the RBI as NBFC or any other capacity.
Two sets of MOA and AOA of AMC and Trustee Company
A Detailed Business Plan
A detailed note on the infrastructure employed by AMC.
Auditor’s Certificate
RBI/ other Regulators approval for the purpose of sponsoring Mutual Funds
Executed copies of Trust Deed and Investment Management Agreement
Undertaking from sponsor to provide additional capital o AMC, till its operations breakeven in order to protect the interest of Unitholders.

Applicant ha sto provide all the required information within 30 days from a receipt of a communication from SEBI, failing which case may be considered as Closed.