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Global Initiatives to Prevent Money Laundering

Money laundering is the unlawful process of presenting “dirty” money as legitimate rather than ill-gotten and there is a die-hearted need to prevent money laundering. Money laundering is explained in Article 1 of the European Communities Directive and Convention on the Laundering, Search, and Confiscation of the Proceeds of Crime as the conversion of property knowing that certain property is derived from serious crime, concealing or disguising the illicit origin of the property, or supporting any person who is engaged in committing such offences. Money laundering may also be defined as the practice of making it appear as though significant sums of money gained through major crimes came from a lawful source. Money laundering is also specified in Section 3 of the Prevention of Money Laundering Act, 2002.

In India, money laundering is carried out via a traditional practice known as ‘Hawala.’ Hawala is an alternate system in which “financial services, historically functioning outside the normal banking sector, where value or assets are transferred from one geographical place to another” are provided. Transactions through Hawala take in effect without any governmental oversight, making it simpler for people to make deposits and withdrawals through ‘hawala dealers’ instead of financial organizations.

Impact of Money Laundering

  1. Throws away international investment
  2. creates financial crisis
  3. The impact on currency and interest rate volatility
  4. Promotes a culture of tax avoidance
  5. Give a boost to illegal activity
  6. Negative effects on the financial markets’ and institution’s image

Global efforts to prevent money laundering and terrorism funding

Money laundering is not a new phenomenon; instead, it is an international one. Many international agreements address money laundering, and various projects have been launched to address this global issue.

  • The United Nations Convention against Illicit Trafficking in Drugs and Psychotropic Substances, 1988 – The Vienna Convention

This event took place in December 1988 and was one of the earliest initiatives aimed to prevent money laundering. The primary goal of this convention is to establish efforts to counter money laundering by requiring member states to criminalise the laundering of money from drug trafficking (Article 6), as well as to promote international cooperation in investigations, prosecutions, and jurisdictions (Article 7) and to make extradition between member states possible (Article 6). Furthermore, it established a concept that local banking secrecy rules should not interfere with international criminal investigations.

  • The Basel Committee on Banking Regulation and Supervisory Practices

In December 1988, the Basel Committee on Banking Regulations and Supervisory Practices declared its intention to promote the banking sector to take a consistent approach to guarantee that banks are not used to hide or launder money obtained via illicit or unlawful activity. However, that statement does not limit itself to any drug-related money laundering; instead, it extends to laundering through financial systems, including deposit, transfer, and any form of concealment of money from drugs, terrorism, fraud, and so on. It also concentrates on the sector wherein the individual will not be permitted to utilise any financial system that is involved in any type of money laundering.

  • The council of Europe Convention

It creates a common policy on the subject of money laundering, provides a common description of money laundering, and provides means for dealing with it. It also establishes certain international collaboration among member nations, which may include governments not affiliated with the Council of Europe. The key objective of this agreement is to improve international cooperation in the areas of investigative assistance, search, seizure, & confiscation of the revenues of all sorts of criminal activity, including drug trafficking, terrorist crimes, and arms trafficking.

  • Financial Action Task Force on Money Laundering

FATF is an intergovernmental organisation was founded in 1989 at the G7 summit in Paris with the notion and goal of establishing high standards and promoting the efficient implementation of any legal, regulatory, and operational measures to combat the evil practise of money laundering and terrorist financing. FATF has acknowledged several suggestions that are recognised by international money laundering standards. In October 2001, 8 special recommendations were announced, and in October 2004, a 9th special suggestion was issued, discussing the improvement of international standards for fighting money laundering and terrorism funding. In 2012, the FATF Recommendations were revised.

  • Interpol

The International Criminal Police Organization was founded in 1923 and now has 194 members. With the mutual assistance of national police authorities worldwide, Interpol works to preserve global security. Interpol plays an essential role in tracking down criminals, conducting cooperative investigations, capacity development and training, and sharing and providing data access to governments. Interpol created the Interpol Money Laundering Automated Search Service (IMLASS) to aid anti-money laundering efforts by building a database and tracking, connecting, and identifying suspects and people from all countries, as well as tracking the flow of unlawful funds.

  • UN Global Program against Money Laundering

It was founded in 1997 with the goal of increasing the efficiency of all international measures to prevent money laundering via technical cooperation services provided to governments. The major objective of this programme is technical cooperation, which includes actions such as raising awareness and training and developing institutions. It also intends to aid in the creation of financial investigative services to ensure the effective operation of the laws.

Indian Legal Framework to prevent Money Laundering

  • Money Laundering Bill – India is a signatory to the United Nations Resolution, 1998, that calls on member states to take strict action against money laundering, the Indian government enacted the Prevention of Money Laundering Bill, 1999, that describes money laundering as the act of acquiring, owning, or possessing any proceeds of crime and intentionally entering into any transaction involving a crime listed in IPC, 1860. The act’s goal is to prohibit and regulate illicit financial operations involving drugs and narcotics, as well as other crimes.
  • Prevention of Money Laundering Act of 2002 – This Act was enacted in 2002 in order to prevent money laundering as well as to penalise those who benefit from it. This statute empowered our government or any other authorised public authority to seize property obtained through illicit earnings and money. In this legislation, the Financial Intelligence Unit examines all records to detect and identify any suspected transactions, and the Enforcement Directorate subsequently conducts an inquiry.
  • Prevention of Terrorism Act of 2002 – This is the Indian government’s first legal effort to combat terrorism and other connected issues. Under Section 8 of this Act, the Central Government is allowed to forfeit proceeds of terrorism regardless of whether or not the person whose possession it is seized or attached is prosecuted under the given act. It also strives to prevent terrorist operations in fact and implement seizure and blocking of cash for terrorism financing.
  • Financial Intelligence Unit – Although it is not a regulatory authority, the major function of this unit is to acquire all financial intelligence in collaboration with regulatory agencies such as the RBI, SEBI, and IRDA, as well as to monitor all suspicious transactions and report them. It is in charge of coordinating and enhancing all national and international intelligence.

Guidelines on Anti-money Laundering

SEBI Guidelines

  1. These regulations apply to SEBI-registered intermediaries.
  2. It imposes specific obligations on SEBI-registered intermediaries to implement policies and processes to support policies.
  3. It also discusses how to prevent money laundering, which will include the dissemination of anti-money laundering and illegal activity regulations, such as terrorism funding.
  4. It is in charge of customer account information, securities transactions, client acceptance policy, customer due diligence procedures, and record keeping.

RBI Guidelines

  1. These standards are applicable to all banking and non-bank financial firms regulated by the RBI.
  2. KYC Implantation (Know Your Customer).
  3. The major goal is to prevent people and businesses from misusing banks and non-bank financial institutions (NBFCs) for money laundering.

Other Initiatives to combat Money Laundering

  1. Bank Obligations – It is the legal responsibility of the banks to keep the details of consumers at the moment of creating a new account confidential as possible and to guarantee that all the details are in safe hands and that no one can misuse that information. It is also the legal duty of banks to make sure that the data sought and gathered from the customer is relevant to the perceived risk and must be sought separately with the consent of the customer.
  2. KYC Policy – The bank must create a KYC policy for each customer that includes certain fundamental aspects such as Customer Acceptance Policy, Customer Identification Procedures, Risk Agreement, and Transaction Monitoring.

Conclusion

Money laundering and terrorism funding represent a major danger to our financial well-being and also any country’s sovereignty. Terrorism funding is another big issue that appears to be nearly difficult to track down and capture because the majority of these transactions are in cash and no institutions are engaged in the process. The Prevention of Money Laundering Act, 2002 (PMLA) has been amended to include financing activities connected to terrorism. The RBI and the SEBI each has their own set of anti-money laundering principles. The FIU prefers to receive as many reports as possible in electronic form. Even though India has this PMLA Act and so many recommendations, it still has numerous high-profile money laundering instances; it just need to execute those rules and regulations appropriately in order to prevent money laundering.

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Brief Description For Online Bihar Business Tax Registration

In India, Professional tax is levied on persons working in the government and non-government sectors, or by the respective state governments in any profession such as chartered accounts, lawyers, doctors, etc. The tax levied in this manner differs from the state: the state due to the difference in tax rates set by the respective state governments. Professional tax collected from a salaried employee is considered a deduction under the Income Tax Act. This article explores various aspects of Bihar commercial tax.

Bihar State Government collects Bihar Professional Tax from persons earning from salary or occupations (e.g. Chartered Accountant, Lawyer etc.) or engaged in business or business, professional tax has to be paid. To pay professional tax, registration has to be done as per the rules laid down by the respective state governments. In this article, we will focus specifically on the registration process for professional tax.

Bihar Professional Tax Act, 2011

The Professional Tax Department, regulated under the Government of Bihar, is responsible for collection of professional tax arrears from professionals in the state. According to the provisions of the Bihar Professional Tax Act, 2011, a provision has been set to impose a business tax of 2500 (as maximum) and a yearly (minimum Rs. 1000) on persons associated with a business or profession.

In India, professional tax is regulated by the respective state governments on persons working in government and non-government sectors or from income from business or business or by profession such as professionals, company secretaries, chartered accountants etc. The professional tax levied on such persons varies. The amount recovered as professional tax from a salaried employee is considered a deduction under the Income Tax Act.

The Professional tax collected by the Bihar State Government is included under the Bihar Professional Tax Act, 2011.The Commercial Tax Department is responsible for collecting professional tax in Bihar. Maximum of Rs. 2500 and a minimum of Rs. 1000 per year can be collected as professional tax. The state government does not charge any application fee for professional tax registration.

Benefits of professional tax registration in Bihar

Benefits for professional tax registration are as follows:

  • It helps to comply with state laws.
  • It protects the interests of the employer and the employee or the person engaged in the business / business, or the practice of any profession.
  • The commercial taxes deducted are in accordance with the slab rates prescribed by the state government in accordance with the applicable regulations and act.

Documents Required for Professional Tax Registration in Bihar

Some essential documents have been prepared for professional tax registration in Bihar, which are as follows:

  • Filled application form
  • Address proof of the applicant (which includes telephone, electricity bill or driving license or copy of passport)
  • Applicant’s ID proof (which includes voter ID card or Aadhaar card or driving license or copy of passport)
  • PAN card copy or PAN of partner or proprietor or doer or PAN card of employer
  • Bank account details (including a passbook or copy of bank account details showing bank name and bank account number.)
  • Two passport size photos

Tax Slab Rate for Bihar Professional Tax

Professional tax slab rates in Bihar are determined according to the Businesses, Trades, Calling and Employees Act, 2011:

S.N.Class of TaxpayerTax Amount Payable
1.Salaried individuals have income between Rs 3 lakh to Rs 3 lakh per year and range between Rs 5 lakh and Rs 5 lakh per annum. Annual income of more than 10 lakh rupees per year1000 rupees per year 2000 rupees per year 2500 rupees per year
2.Dealer registered under Bihar VAT Act, 2005 or registered only under Central Sales Tax Act, 1956: Sales or purchase turnover is up to Rs 10 lakhs, with sales or purchases ranging between Rs 10 lakhs and Rs 20 lakhs. A turnover of Rs 20 lakh per year for sale or purchase, turnover of Rs 20 lakh and annual turnover of sale or purchase is up to Rs 40 lakh. Over 40 lakh rupees per yearNil (Rs. 1000 per year. 2000 per year. Rs. 2500 per year)
3.Holding is permitted for transportation under the Motor Vehicles Act, 1988, which can be used for fire or reward, where any person holds a permit for: Bus or truck like any taxi passenger car or any vehicleRs 1000 per year Rs 1500 per year
4Companies registered under the Companies Act, 1956 and engaged in any profession or business or callingRs 2500 per year

Process For Professional Tax Regulation in Bihar

Some steps have been made for registration of Bihar professional tax, these steps should be followed: 

Step 1: Visit the official website of the Commercial Tax Department of the Government of Bihar. 

Step 2: Under e-Services tab, click on e-registration. 

Step 3: After that the next page will appear, select the Commercial Tax option.

Step 4: Then the applicant has to fill all the required details and upload the related documents and then click on the add button. 

Step 5: Then click on submit.

Step 6: Acknowledgment receipt will be generated and the applicant will need to save the receipt for future reference. 

Once the registration is approved through the concerned authority, the applicant is notified via an SMS or email. The registration process is usually 15 days from the date of application and after filling the verification form. The deputy commissioner, assistant commissioner and commercial tax officer are designated as the authority to grant a professional tax registration certificate.

Track Professional Tax Registration in Bihar

The application registration status can be easily checked by visiting the official website and then selecting the registration type. Then enter the application number on the acknowledgment receipt.

Penalty in the case of Professional Tax in Bihar

If a taxpayer fails to pay the professional tax within the specified time, the assessing authority may impose a penalty of 2% of the tax amount for each month until the default continues.

Conclusion

Bihar Professional Tax is applicable to persons who are receiving salary from their employer or engaged in trade / occupation or practice any business. It is clear from the article above that state governments set the tax slab rate to levy professional tax.

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Registration Requirements for Web Aggregators

Who are Web Aggregators?

Web aggregators are insurance intermediaries who are registered with Insurance Regulatory and Development authority of India (IRDA). Web aggregators have registered websites on which they provide duly compiled information of all the insurance policies provided by different insurance companies. 

Who can be an Applicant?

Following are the persons who can apply for Insurance web aggregator-

  • Any company registered under Companies Act, 2013 or any of its previous versions.
  • Any LLP registered under Limited Liability Partnership Act, 2008. However, the following persons cannot be a partner in that LLP.
  • Non-resident entity.
  • Any LLP registered under Foreign laws
  • Any person resident of outside India as prescribed under Foreign Exchange Management Act, 1999 (FEMA)
  • Any person duly recognized by IRDA as an Insurance web aggregator.

Eligibility criteria for registration as an Insurance web aggregator

Minimum Capital Requirements

To apply for an insurance web aggregator, the applicant is required to meet the minimum capital requirement of Rs. 25 Lakh.

In case of a company, such capital must be issued in the form of subscribed capital

And in case of a Limited Liability Partnership then the contribution must be in the form of cash only.

Minimum Net worth Requirement

The minimum net worth requirement for insurance web aggregators is Rs. 25 Lakh.

For this purpose, they are required to review their Net Worth half yearly on 30th September as well as on 31st March every year. Along with these reviews, web aggregators are also required to submit a certificate from a Chartered Accountant to the Authority every year after the finalization of its accounts.

Application Fee

While submitting an application form for Insurance web aggregator the applicant is required to submit non-refundable application fees of Rs. 10,000/- plus applicable taxes on the same.

Application for Registration

For application form for Insurance web aggregators one has to fill and submit the Form A. format of Form A is provided in schedule I of the regulations. 

Validity of Certificate of registration

Once the certificate is issued to the applicant, it remains valid for a period of 3 years from the date of registration and issue of such certificate.

However, it can be cancelled or suspended by the authorities at any point of time before that in case of any non-compliance of the provisions stated in the regulations.

Conditions for Registration

There are certain conditions whale analysing the application and they are as follows-

  • The applicant is as per the person defined under regulation 2(k)
  • To make sure that the applicant is not registered as any other form of insurance intermediary as per the relevant regulations issued by the authorities. However, if any of its group entities is involved in any other kind of insurance intermediary business, registration can be granted after making sure that there are no conflicting interests.
  • The applicant must not be in kind of referral arrangements with any registered Insurer.
  • The applicant must have a registered website to undertake web aggregator activities.
  • The appointed Principal Officer must have specified academic qualifications as mentioned in Form C of Schedule I and has undergone the specified training and qualified the examination for the same.
  • Along with the principal Officer, the Authorized Verifier must also have completed the relevant training and passed the specified examinations.
  • All the officers of the applicant organization must qualify the fit and proper criteria specified in Form D of schedule I.
  • The Authority must check if in past one year any application for registration as a web aggregator is either rejected by the Authority itself or voluntarily withdrawn by the applicant.
  • The registration granted must be in favour of the policy holders.
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What are the functions of IRDA?

Insurance Regulatory and Development Authority also called as IRDA, is the supreme authority that authorizes the functioning of insurance business in India. It was established by IRDA Act, 1999. The primary purpose of IRDA is to safeguard the interest of policyholders and also to ensure the growth of the insurance company in the country. In this blog we will discuss the various roles and functions of IRDA.

Objectives of IRDA

Following are the objectives of IRDA-

  • To carry forward the interest of policyholders.
  • To uphold the development of the insurance sector.
  • Ensure quick resolution of claims
  • Prevent frauds and malpractices
  • To ensure fair conduct in the financial market when dealing with insurance.

Significance of IRDA Functions

IDA is an apex statutory body that regulates and develops the insurance sector in India. In India general insurance was first built in Kolkata in the year 1850. Since then various players in this market. Each organization rehearsed business on its own rates and rules. It made clients unreliable, which brought into question the validity of the insurance. With time the administration understood this reality and subsequently set up an autonomous administrative body called IRDA. After that new requests came out and the market was rushed and overflowed with he insurance products.

Functions of IRDA

Section 14 of the IRDA Act, 1999 gives the authority to ensure the regulation, development and promotion of the insurance business. Some of the essential functions of IRDA are as follows-

  • To provide applicants with the registration certificate, renewal, modification, withdrawal, suspension or cancellation of such registration.
  • To protect the interest of policyholders in case of assigning and nominating the policyholders, understanding insurance claims, insurable interests, surrender the value of the policy and other terms and conditions of the insurance contract.
  • To mention required qualifications, code of conduct and practical training for intermediary/ insurance intermediaries and agents.
  • To explain the code of conduct applicable to the surveyors as well as to the assessors.
  • To ensure the efficiency and proficiency of the conduct of the insurance business.
  • To levy charges in order to carry out the purpose of the act.
  • To call for information, undertaking, inspection, conducting enquiries and investigations, including the audit of insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business.
  • To regulate and control the rates, benefits, terms and conditions offered to the insurer pertaining to general insurance business not controlled and regulated by the tariff advisory committee under section 64U of the insurance act, 1938.
  • To specify the way in which the books should be maintained and the manner in which the statement of accounts is to be rendered by insurers and other insurance companies.
  • To maintain the investment funds by the insurance companies.
  • Regulation of the maintenance of margin solvency.
  • They decide the dispute among the insurers and the intermediaries of insurance intermediaries.
  • To administer the functioning of the tariff advisory committee.
  • Setting down the percentage premium income of the insurer of the finance scheme to promote and regulate the professional organizations.
  • To safeguard the interest of the policyholder in case of assigning and nomination of policyholders.
  • Setting out the percentage of life insurance business and general insurance business to be taken ahead by the insurer in the rural or social secor.
  • To regulate the insurance industry in a way that ensures financial soundness of the applicable laws and regulations.
  • To periodically frame laws to remove any scope of ambiguity in the insurance sector.
  • To take action where the appropriate standards are inadequate or not enforced effectively.
  • To grant, modify or suspend licenses for insurance companies.
  • To perform such other functions of IRDA as may be prescribed.

Conclusion

There are some roles of IRDA. in an Indian economy there are many insurance companies that are coming in the market. Here IRDA has some special role to play. In order to keep the pace of the development the functions of IRDA should be performed accurately enough to provide every player with a fair deal and also to make sure that the customers also have a variety of plans to choose from.

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Secretarial Audit in India: Process and Benefits

Secretarial Audit is an important method for all organizations. It is a part of total compliance management in an organization. It is an effective tool when it comes to corporate compliance management. In this blog we will discuss in detail about the secretarial audit in India, its process and benefits. 

What is the requirement of secretarial audit in India?

It is a process to check compliance to the provisions of law, rules and regulations, maintenance of books etc. by an independent professional to make sure that the company complies with the legal requirements and procedural needs and also follows the due process. It is a mechanism to monitor compliance with the requirement of stated law.

Objective of secretarial audit 

Following are the objectives of secretarial audit-

  1. To check and report on the competition of compliances according to provision of law.
  2. To point out the non-compliances.
  3. To safeguard the interest of the stakeholder that includes customers, employees etc.
  4. Compliances are to be followed to avoid any unwarranted legal action or penalties.

Applicability of Secretarial audit in India

The mandatory provision regarding applicability of secretarial audit are-

  1. Every listed company
  2. Every public company having a paid up share capital of Rs. 50 crore or more and having turnover of Rs. 250 crore or more.
  3. Company having outstanding loans or borrowing from banks or public financial institutions of Rs. 100 crore or more.

Scope of Secretarial Audit

Scope comprises verification of the compliances under the following-

  1. Companies Act, 2013 and the rules made there under;
  2. Securities Contracts (Regulation) Act, 1956 and the rules made there under;
  3. Depositories Act of 1996 and the rules made there under;
  4. Foreign Exchange Management Act of 1999
  5. Regulations and guidelines provided under the Securities and Exchange Board of India, Act 1992;
  6. Reporting on the compliance of secretarial standards issued by Institute of Company Secretaries of India; and
  7. Other laws are applicable specifically to the company that means all the laws that are applicable to specific industries.

Appointment of Secretarial auditor

Process of appointment of a secretarial auditor are as follows-

  1. Firstly, consent of the secretarial auditor is required.
  2. Thereafter, a certified copy needs to be filed of the resolution passed in the Board meeting with the Registrar of companies in MGT-14.
  3. Make an appointment of such an auditor in the Board meeting and fix the remuneration in the meeting.

Process of secretarial audit in India

The process are as follows-

  • Appointment of secretarial auditor.
  • Communication to earlier incumbent
  • Primary discussion will take place about the company with secretarial auditor
  • After the meeting an audit plan is finalized and the staff is briefed.
  • Testing, interview and analysis
  • The working papers are prepared
  • Audit summary for discussions
  • Finally the secretarial audit will be submitted.

Documents required for secretarial audit

Following are the documents which are required for secretarial auditing-

  1. Charter documents and statutory registers
  2. Birds and general meeting minutes and notices
  3. The audited financial statement as well as last year’s secretarial audit report
  4. Annual performance reports, lease deeds,bonds and return.
  5. Registers maintained under the labour law
  6. Details of remuneration and sitting fees paid to directors
  7. Details of CSR amount
  8. Details of bank account for dividend 
  9. ECB returns details

Benefits of secretarial audit

  1. It’s an effective mechanism to ensure the compliance with the procedural and legal requirements;
  2. It promotes the level of confidence to directors and key managerial personnel etc.
  3. It ensures that legal and procedural requirements are met that in turn allows the directors to concentrate on crucial business dealings;
  4. It strengthens the goodwill of the company for their regulators as well for their stakeholders;
  5. It is also an effective governance and compliance risk management tool;
  6. It, further, helps an investor in analyzing the compliance level of companies thereby increasing the reputation also;
  7. It administers professional discipline and also self-regulation;
  8. It may be an effective due diligence performance for the prospective acquirer of the company or a partner of a joint venture; and
  9. It helps to detect any non-compliance and helps in taking corrective action.

Conclusion

Secretarial audit in India is independent and it is beneficial for the companies who follow it as it improves their operations. It can help an organization in completing their objectives.

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Domestic Transfer Pricing

What is Domestic Transfer Pricing?

Transfer Pricing provisions were earlier restricted to international transactions only but now it has extended to specific domestic transactions also with effect from 13th April, 2013. 

Legal Definition of Domestic Transfer Pricing

Section 32 BA defines domestic transactions which are governed by the TP regulation which states that specified domestic transactions in case of the assessee mean any of the following transaction-

  • Any expenditure to be incurred or to be incurred in connection with a payment made or to be made to a person referred to in section 40A (2)(b).
  • Transactions referred to in section 80A.
  • Any transfer of goods or provision of services as provided in subsection 8 of section 80 – IA.
  • Any business transaction between the assessee and another person as referred to in subsection 8 of section 80 – IA
  • Any transactions which have been mentioned under section under chapter VI-A or section 10AA, o a person to whom provisions of subsection 8 or subsection 10 of section 80 IA is applicable
  • And where the aggregate of such transactions entered into by the assessee in the previous year exceeds 20 crores
  • Any other transactions as may be prescribed.

Threshold Limit

The above provisions will only be applicable if the aggregate value of the turnover of the above mentioned transactions exceeds above 20 crores. 

Applicability of Domestic Transfer Pricing

  1. Taxpayers cannot apply for transfer pricing to a specific domestic transaction to reduce the tax liability.
  2. Monetary threshold limit of Rs. 20 crores will be calculated according to the receipts and on the basis of aggregate payment to which these provisions apply.
  3. Definition of Related party includes expenses disallowed to cover the entities which have common beneficial ownership
  4. Transfer pricing is applicable to international transactions and to specific domestic transactions only. It specifically excludes Advanced pricing agreement provisions.

Concept of Arm’s Length Price (ALP)

The concept of ALP has also extended to specific domestic transactions only. ALP is denied as the price which is applied to the proposed to be applied in a transaction the assessed one and any other unrelated person.

Methods of Computing ALP

Flowing are the methods for computation of ALP-

  1. Comparable uncontrolled Price method- Under the CUP method, a price that is charged in an uncontrolled transaction between the comparable firms is recognized and evaluated with a verified entity price for determining the Arm’s Length Price.
  1. Resale Price method- This means its application looks to transactions between unrelated parties as a means to determine an arm’s length price for the intercompany controlled transaction under review.
  1. Cost plus method- It means it is based on markups observed in third party transactions. While it’s a transaction-based method, it is less direct than other transactional methods and there are some similarities to the profit-based methods.
  1. Profit split method- It evaluates whether the allocation of the combined operating profit or loss attributable to one or more controlled transactions under ALP.
  1. Transactional net margin profit- It compares the net profit margin of a taxpayer arising from a non-arm’s length transaction with the net profit margins realized by arm’s length parties from similar transactions.
  1. Such other methods may be notified as board- These are any other methods which are prescribed by the Board.

Documentation required 

  • Company related documents- 
  1. Profile of the company
  2. Profile of the group companies 
  3. Profile of the unit claiming tax holiday
  4. Profile of all the related parties.
  • Transaction related documents- 
  1. Agreements
  2. Invoices
  3. Pricing related correspondence such as emails, Letters etc.
  • Price Related Documents-
  1. Terms of the Transactions
  2. Functional analysis specifying functions, risks and assets.
  3. Economic analysis containing method, selection and comparable benchmarking.
  4. Budgets and comparable.
  • Other supporting documents cuh as official public reports by the government such as stock exchanges, and financial statements.

For any Transfer Pricing related queries reach us at info@biatconsultant.com.

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BIS Registration in India, its Process and Documents involved

Nowadays it is mandatory for almost every product to have the mark of genuineness and its authenticity in order to get the attention of its target customers. Similarly, BIS registration in India is a way to ensure customers regarding the quality, standard and purity of a product. 

In this blog we will discuss about the concept, process and documents required for BIS registration-

Concept of BIS Registration

BIS registration or Bureau of Indian standards denotes the National standard body of India which ensures the standard and quality of a product, scheme of certification of products, and provides testing and standardization services. This national body comprises 25 members and its office is headquartered in New Delhi. 

It has five regional offices at Kolkata, Chennai, Delhi, Mumbai and Chandigarh.

Objectives of BIS registration in India

The key objectives of BIS registration are as follows-

  1. It aims to protect and safeguard the health of the citizens.
  2. It offers the quality and standard of a product.
  3. It protects consumers from hazardous products.
  4. It boosts consumer confidence.

Regulatory Framework for BIS Registration

In India BIS registration is regulated by Bureau of Indian Standards Act, 1986 and issues BIS registration certificate according to this Act only. Further it was brought into force on 20th November, 1986 and its enforcement has reduced the ambit of the Indian Standards Institution (ISI).

Items covered under BIS Registration

Items that are covered under BIS registration in India are as follows-

  1. Items covered under Scheme 1 or Mark scheme

Items covered under the above category are as follows-

  • Cement
  • Batteries
  • Household electrical goods
  • Oil pressure stoves
  • Food and related products
  • Automobile accessories.
  • Medical equipment
  • Cylinders, valves and Regulators
  • Electrical Motors
  • Steel and Stainless steel products
  • Electrical Transformers
  • Chemicals and Fertilizers
  • Capacitors
  1. Items termed as IT and Electronic Products

 Items covered under the above title are as follows-

  • Electronic Games such as Video Games.
  • Microwave, Oven and OTGs.
  • Laptop, Notebooks, Tablets
  • LCD, Plasma TV, LED Televisions with screen size 32 and above
  • Visual Display Units
  • Optical Disc Players comprising built amplifiers of input power 200w and above.
  • Wireless Keyboards
  • Printers, Plotters
  • Scanners
  • Amplifier with an input power 200W and above
  • Telephone answering machine
  1. Who are eligible to obtain BIS Registration

All the manufacturers or producers notified under compulsory registration scheme need to apply for BIS Registration. However, following are the things which needs to be taken care of-

  • A Separate registration number is required for the products r tems manufactured or produced at different locations.
  • A separate registration number is required for each brand, product or item manufactured or produced at the same place.

Documents Required for BIS Registration in India

Following are the documents required for BIS Registration in India-

  • PCB Layout
  • Schematic diagram
  • User manual
  • Critical components list
  • A copy of Trademark registration
  • Factory’s organizational chart
  • Legal address proof for the factory
  • List of machinery installed
  • List of equipment used
  • All the documents concerning authorized Indian Representative (AIR) when the producer resides is some other country.
  • Test report of the product analysis or examined by the BIS certified lab.
  • Declaration from the CEO of the firm.
  • Invoice concerning sales
  • Packaging list
  • Bills of lading
  • Insurance cover note
  • Certificate declaring the Brand name of the owner
  • Letter of consent (LOC) from the owner of the products
  • Location map
  • Flow chart showcasing the process of manufacture

Procedure for obtaining BIS Registration in India

Following are the steps involved for obtaining BIS Registration in India-

  1. Firstly product samples or batches are to be sent for testing in the BIS recognized laboratory.
  2. After receiving the test report, the applicant requires to enclose some of the basic details such as-
  • Name f the Applicant
  • Name of the Firm
  • Complete Address
  • Signature of the Lab in Charge
  1. Now go to the BIS portal and download form VI and VII
  2. The applicant is required to attach or upload all the documents along with the test reports when applying for the BIS Registration.
  3. After filing an online form, the applicant has to submit a hard copy of the documents and test reports along with the form at the BIS regional office. 
  4. In case of overseas Manufacturers and producers, the applicant needs to hire an AIR, who will be responsible for obtaining certificates on behalf of its producers.
  5. After receiving an application, the comet authities will conduct an examination and scrutiny of all the documents, test reports and application submitted.
  6. If the examiner will be satisfied by the forms and document then only he will issue a BIS registration certificate.

Validity of BIS registration in India

BIS registration in India is valid for a period of two years starting from the date of issuance and after two years applicant is required to renew its registration by filing Form XII.

Conclusion

The Bureau of Indian Standards provides guidelines of quality and standards of a product to every manufacturer or producer. Moreover, BIS acts as an authority to issue BIS registration certificates. However there are chances for new entities to face difficulty in obtaining the BIS registration certificate. 

At BIAT consultants, our experts will provide you end to end assistance with the matter concerning BIS Registration in India.

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PMS V/S AIF: Let’s Understand the Difference between the Two

What are PMS (Portfolio Management Services)?

PMS are the tailored investments portfolio in fixed income of an individual, in equity securities and structured products. It basically caters the investments of high net worth individuals with a minimum ticket size of Rs. 50 Lakh/-.

PMS services are discretionary or non-discretionary. In discretionary portfolio managers manage your portfolio by tracking the market and by keeping your investment criteria in mind whereas in non-discretionary investors can themselves take final decisions.

In PMS, individuals have to actively monitor and track the developments themselves on a regular basis. Since an experienced portfolio manager manages your investment, all you have to do is review the transactions periodically and get performance updates. This also helps in best returns in the investments. 

What are AIF 

AIFs involve higher minimum investment, and it includes higher risk and has probability of higher returns. These are the pooled investments for investing in hedge funds, venture capital, futures, and private equity. 

That is why AIFs are considered to be the best by many of the investors.

PMS or AIF : Which one is better?

ParticularsPMSAIF
RegulationThey are regulated by SEBI (Portfolio Managers Regulations, 1993)They are governed by SEBI (Alternative Investment funds Regulations, 2012)
Pooling of FundsFunds are not pooledPooling funds are the essence of this kind of investment.
Number of InvestorsThere is no threshold limit. Portfolio Managers can have any number of clientsIt should not exceed more than 1000.
FeesApart from the non-refundable fees of Rs 1,00,000/-, registration fees of Rs. 10 Lakh is to be submitted at the time of the grant of the certificate of registration.Apart from the non-refundable fees, registration fees of Rs. 5 Lakh in category of AIF, Rs.10 Lakh in category II and Rs. 15 Lakh in category III of AIF is to be submitted.
Validity of RegistrationIt is valid upto three years, and it should get renewed at least 3 months before the expiry.It is valid until the AIF is wound up.
TypesPMS have two categories-DiscretionaryNon-discretionaryAIF’s are of three types-Category ICategory IICategory III
Segregation of FundsFunds of every client are segregated separately in a DEMAT Account.There is no segregation of funds required
Minimum Investment Limit25,00,000/- (25 Lakh)1 Crore
Corpus RequirementNo Corpus requiredEach scheme is required to have a corpus fund of Rs. 20 crore. In case of angel funds the requirement of Rs. 10 Crore.
ListingNo ListingClose ended units can be listed after the closure of such limits.
Tenure of securitiesNo minimum time limit is prescribed. It is adhered by an agreement between the portfolio manager and clientCategory I and II have tenure of three years which can be extended upto 2 years.

Conclusion

Therefore there are many differences between the PMS and AIFs. There is an increase in the interest investor in these areas SEBI is planning to align the services of PMS and AIFs both. In 2003 SEBI increased the investment requirement from 5 Lakh to 25 Lakh and now they are planning to increase upto 1 Crore as of AIFs.

Since Both the PMS and AIFs are high risks, involves higher returns, it is crucial to have an excellent.

Get our expert services and guidance over investment in PMS or AIFs.

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Practice to Increase the Efficiency of Capital Optimization of Accounts Receivable

Practice to Increase the Efficiency of Capital Optimization of Accounts Receivable

It is important to have a productive accounts receivable strategy to optimize cash, no matter the business structure. No business can function unless it has optimal working capital, and this is possible when the accounts receivable process is in accordance with the company’s position. In this article, we will discuss the best practice to increase the efficiency of Capital Optimization of accounts receivable.

Importance of Working Capital Optimization of Accounts Receivable

Some of the benefits of streamlining accounts receivable can take time, but many other features are immediately apparent. This can be harnessed by looking at increased capital as a way of increasing liquidity by avoiding potential wastage of existing capital. In addition, businesses operate more seamlessly with increased capital and less debt. As far as streamlining the accounts receivable process is concerned, you should start as soon as possible without any delay. This includes sharing payment policies with the customer during the initial phase itself.

Tips to improve receivable accounts and working capital optimization

It can be difficult at first to administer the process well, but it can be done easily by taking advantage of the following strategies:

  • Accurate Management of Customer Data

To establish and maintain the receivable process of productive accounts, centralize the primary data process so that customer accounts and information are accurate. For example, when customer addresses are invalid, it causes delivery of invoices to the wrong address, making the collection process more complicated.

So periodically examine the customer’s account periodically to identify any issues such as abnormal terms of payment, credit limits and discounts. Any change in customer data must be supported by a document for future reference. To reduce data manipulation the firm should pay attention to establishing an effective control.

  • Adopt Customer Friendly Approval Process

It is clear among businesses that they create an unproductive credit protocol to increase sales, resulting in compromised cash flow management. Giving credit is not bad for businesses as long as it does not affect the working capital or cash flow management of the company. The firm should take advantage of a certain process for approving lending.

In this process the entire workflow of the application process, the situation under which the account is placed on hold, as well as the guidelines related to the evaluation and overriding of the credit limit will have to be shown. It should be continuously audited to identify pain points.

  • Include Efficient Billing Process

Each company’s billing process creates a roadmap for productive or inefficient invoice management. The invoicing process must be optimized to achieve high accuracy because an error can adversely affect overall productivity and profitability. Also, it is important to define how to create invoices as well as deliver invoices on time.

Take advantage of the latest technology to digitize invoicing. This can prove to be a great solution. Accounts with errors should be indicated with reports highlighting the primary cause of efficient behavior.

  • Refine the Cash Application Process

When the payment reaches the company, they must be linked to a valid invoice and a valid customer. This can help during future conflicts. Payment must be applied on time to classify current and past accounts.

The process of cash application can be easily streamlined with minimal complications by offering limited payment options to customers. Journal entries regarding cut-off dates should be recorded accordingly and earlier.

  • Reducing Inefficiencies with the Archiving Process

If you want an uninterrupted cash flow management, then optimize the accounts receivable process according to the current conditions. A proactive approach should be employed in this regard to aid in collection efforts.

Additionally, it is necessary to establish a production process to negotiate payment plans to ensure compliance with the company’s purpose. Automation of the entire process should be done with the help of the latest technologies to reduce the possibility of mistakes.

Conclusion

A firm can improve its working capital by converting its current assets into liquidity. For example, if a firm efficiently maintains its accounts receivable and inventory, it can increase cash flow. Similarly, if a firm establishes supplier-friendly loan terms with its vendors, firms will benefit from having increased working capital.

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Essential Factors of Central and State Pollution Control Board

Essential Factors of Central and State Pollution Control Board

The Central Board having the power to acquire, hold and dispose of the corporate body, is considered a corporate body. Section 3(3) of the Water (Prevention and Control of Pollution) Act, 1974 can also enter into a contract with an individual or a party. They can sue or be prosecuted in the name of the Central Board. For the prevention and control of pollution, the Water Act, provided for the formation of Central and State Boards and dealt with the functions of the Pollution Control Board. The Central Board is constituted by the Central Government, and the State Board is constituted by the State Government. In this article, we will discuss the role of the Pollution Control Board.

Necessity for a Pollution Control Board

Pollution needs to be stopped, and its prevention will reduce financial and environmental costs. Preventing pollution protects the environment and also natural resources while strengthening economic development. Thus, the primary reason for the introduction of a pollution control board is to prevent pollution and save the environment.

Role of Central Pollution Control Board

The Central Board is a body corporate with authority to acquire, hold and dispose of. They can enter into a contract and sue or be sued in the name of the Central Board. For the prevention and control of pollution, as per Section 16 of the Water Act 1974, the Central Pollution Control Board has the following role:

  • Advise Central Government

The Central Pollution Control Board, also known as the Central Board, is one of the roles required to advise the Central Government for the prevention and control of water pollution.

  • Coordinating with the Same Board

The Central Board has to coordinate the activities of the State Boards to resolve disputes between both State and Central.

  • Technical Assistance & Guidance to the State Board

The Central Board should provide technical assistance, assistance and guidance to the State Boards, conduct investigations and research related to the issue of water pollution, its prevention, control etc.

  • Function as State Board

The Central Board may perform such role of the State Board, and each State Board shall be bound by such directions.

  •  Training Programs

The Central Board should organize and plan training programs for those engaged in or involved in programs for the prevention, control or abatement of water pollution.

  • Organize Comprehensive Programs

The Central Board should conduct programs through mass media regarding the prevention and control of water pollution.

  • Publication of Technical and Statistical Data

The Central Board has to collect, compile and publish technical and statistical data related to water pollution. In addition, prepare manuals, codes or guides related to the treatment and disposal of sewage and disseminate information related to it.

  • Set the Standard for the Stream / Well

Another role of the Pollution Control Board (Central) is to set, modify or cancel standards for a stream / well.

  • Program Execution at National Level

The Central Board should plan and implement a program for the prevention, control or reduction of water pollution. 

Role of State Pollution Control Board

Like the Central Pollution Control Board, the State Pollution Control Board also plays an important role. Its functions are as follows:

  • Planning Comprehensive Programs

The State Pollution Control Board also known as the State Board should plan a comprehensive program to prevent, control and reduce pollution of rivers and wells in the state.

  • Advisory Role

The State Board advises the State Government on matters related to the prevention, control or reduction of water pollution.

  • Broadcast Information

The state board has to collect and disseminate information related to water pollution and its prevention, control or reduction.

  • Investigation & Discovery

The State Board is to conduct, encourage and participate in investigations and investigations and research related to the prevention, control or abatement of water pollution.

  • Conduct Training Program

The State Board should cooperate with the Central Board and organize training of persons engaged in programs related to water pollution prevention, control or abatement and also organize mass education programs.

  • Sewage Inspection & Trade Waste Plant

The State Board is required to inspect sewage or business waste works and plants for the treatment of sewage. They should review the purification work, plans, specifications or other data related to the plants set up for the treatment of water.

  • Standard for Water Discharge

The state board should set, modify, or revoke waste standards for sewage and business waste, and to classify state water.

  • Economic Methods of Treatment of Sewage

The State Board should develop economical and reliable methods for sewage treatment and trade waste in relation to the peculiar conditions of climate, soil etc. in different regions.

  • Ways to Use Sewage

The State Board should develop ways to use sewage in agriculture and appropriate commercial effluents.

  • Sewage Disposal Methods

Another role of the Pollution Control Board (State) is to develop methods of sewage disposal and trade waste on land.

  • Standard for Sewage Treatment

The state Board should set standards for the treatment of sewage and business waste to be left to the special stream.

Conclusion

The role of the Pollution Control Board is important for the betterment of the environment. The Central as well as the State Board should work together to protect the environment and take steps to prevent, control or reduce pollution.

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