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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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DGFT Launches E-Tariff Rate Quota System for Importers

DGFT Launches E-Tariff Rate Quota System for Importers

Recently,the Director General of Foreign Trade has decided to announce the launch of an online e-tariff rate quota system for interested applicants for imports. Applicants seeking tariff rate quota for imports are available in the import management system, the process of applying online under the e-tariff rate quota. In this article, we will discuss all these features in detail step by step process. 

DGFT Trade Information

DGFT announced the following information in its trade notice:

  • With effect from 8 February 2021, an easy format has been created for applicants seeking import tariff rate quota to apply online through the import tax dashboard on the DGFT web portal.
  • For applications that have already been submitted for the financial year 2021-22 and are yet to be processed, they will be transferred to the new system.
  • As to any amended request for a TRQ license issued on or after February 8, 2021, it was electronically mandated to be produced by the TRQ system.
  • Licenses for all TRQs have been submitted electronically, and such license data was mainly decided to transmit electronically to customs officers.
  • Since 8 February 2021, no paper copies of the TRQ import license issued by the Director General of Foreign Trade have been made.

Tariff Rate Quota

Tariff Rate Quota is a mechanism that allows a specified quantity of specific products to be imported. These items are as per the special custom notification attached to it. Tariff quotas are used on many products, most of which are in the agricultural sector.

TRQ is allocated to the importer by DGFT after paragraph 2.62 of the procedures manual, 2015-20. The TRQ authority will include the importer’s name and address, IEC code, customs notification number, sub-title or tariff item applicable, quantity and certificate validity period. The TRQ authority was issued electronically by the DGFT and a process for transmitting the ICES system was made. Import against TRQ will be allowed only if the TRQ quantity is electronically debited in the ICES system.

Benefit from Tariff Rate Quota Scheme

The following people will be benefited from the tariff rate quota scheme:

  1. Manufacturer exporters with or without support manufacturer
  1. Merchant exporters associated with subsidiary exporters
  1. Service provider.

Prerequisites for applying for TRQ authorization

To apply for authorization, the following are based on the following prerequisites:

  1. DGFT user profile must be combined with IEC code.
  1. A valid digital signature certificate must be registered in the system.
  1. GSTN details are required as per IEC branches.

Fee for Tariff Rate Quota Application

For issuing the authorization, a registration fee of Rs 1 thousand for each application will have to be paid for a minimum of Rs 500 and a maximum of Rs 1 lakh on the CIF amount of the authority through the electronic mode in the online system. It is worth noting that the TRQ authorization, the authorization will be considered valid for imports for 1 year from the date of release.

Application Procedure for Tariff Rate Quota

The procedure to apply for e-tariff rate quota in the import management system through the importer’s dashboard on the DGFT website is given below.

  • New User Registration

Open the DGFT website, access the main page and follow the further process along with the registration process. Enter the registration details and select Register user as importer / exporter. Enter one time password received on email and mobile number. On successful OTP verification, you will receive a notification containing a temporary password, which must be changed at first login.

  • Apply for Tariff Rate Quota Application
  1. After logging into the DGFT web portal navigate to Services and select Import Management System, and click on TRQ option.
  2. Apply for TRQ on tile, click on explore link.
  3. On the Application Type screen, enter the value on the screen and select Save and Next proceed.
  4. On the firm details screen, enter all the required input values ​​and select Save and select Next option.
  5. On the import details screen, import item details, introduce the required input values ​​in the import details and save and choose the next option.
  6. Once you enter the details on the Import Details tab, the user will be directed to the Port Details tab.
  7. The ribbon will be displayed on the Other Details screen, based on the value selected for the purpose of the import dropdown on the Port Details screen. The user has to fill the input value on the other details screen and select Save and Next option.
  • Declaration Section

In this section, click on the checkbox, accept the terms and conditions and provide all the necessary details and save and choose the next option. On the Application Summary screen, tick the Approval of Declaration checkbox and click on the Sign button to sign the application through digital token.

  • Payment

On clicking the sign option, payment will be displayed to apply option-TRQ. Proceed to pay.

Conclusion

It may be noted that help manuals and FAQs have also been set up on the website of the Director General of Foreign Trade to facilitate changes in the e-tariff rate quota system.

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Foreign Direct Investment: Overview, Types, Advantages & Disadvantages of FDI

Foreign Direct Investment: Overview, Types, Advantages & Disadvantages of FDI

Foreign direct investment or FDI is one of the most important sources of direct investment in countries. Unlike foreign portfolio investment, an investor in a country holds control of any business or organization in foreign lands receiving investment. FDI also indicates the political and socio-economic stability of a country. In this article, we will discuss about the types of FDI and foreign direct investment.

Overview of FDI

Foreign investment can be either organic or inorganic. In the case of organic investment, a foreign investor pumps in money to accelerate expansion and growth in established businesses. In the case of inorganic investment, an investment institution buys a business in its target country.

Foreign direct investment in a developing economy in India and parts of South East Asia gives a lot of boost to businesses that are in poor financial condition. The Government of India employed various measures to ensure that large-scale investment in sectors such as defense, telecom sector, PSUs and IT sector came into the country.

FDI is a non-debt financial resource, it has the potential to become a major driver for economic development in the country. With globalization and internationalization, FDI has become a reality. Whereas, according to scholarly opinion, foreign investment has been released keeping in mind the following factors: 

  • It aims to control companies in a foreign land.
  • It has helped businesses overthrow monopoly practices.
  • Considering market imperfections, such investments help companies make an impact in case of a sharp and unpredictable drop in business activity.

Types of Foreign Direct Investment

There are various types of foreign direct investment. Let us discuss its types in this segment.

  • Horizontal FDI

Horizontal FDI is the first of its kind. It is checked when a business enters a foreign country through the FDI route without changing its original activities or for any other reason for its expansion. It is also one of the most common sort of FDI. An example of this type of FDI is McDonald’s investing in an Asian country to increase the number of stores in the region.

  • Vertical FDI

Vertical FDI is another form of FDI. This FDI occurs when an investment is made in a company within a specific supply chain and which may or may not be related to the same industry. When vertical FDI occurs, a business invests in a foreign firm that supplies or sells products. An example of vertical FDI is if McDonald’s purchases a large-scale meat processing plant in the European country, to boost its meat supply chain in the target country.

  • Conglomerate FDI

When the investment is made in two different companies of different industries, the transaction is called Conglomerate FDI. As such, FDI is not directly linked to investor business. An example would be in this case when American retailer Walmart invests in Indian automobile manufacturer Tata Motors.

  • Platform FDI

Among the types of FDI, platform FDI means expansion of business in a foreign country, but everything manufactured there is exported to a third country. This form of FDI is seen in the trade-free zones of FDI-starved countries. For example- French perfume brand Chanel set up a manufacturing plant in the US and exported products to other parts of Asia and Europe.

If you want to invest through FDI, it is important to know about various types of FDI, including examples. With FDI, the money invested can be used to start a new business in a foreign land or to invest in an existing business in a foreign land.

Advantages & Disadvantages of these types of Foreign Direct Investment

FDI has its advantages as well as disadvantages. Let’s take a look at these two sides of FDI.

Advantages

  • With the increase in FDI, businesses benefit through tax breaks or incentives and the ability to further diversify.
  • For the country receiving FDI, benefits such as more excellent employment opportunities, access to latest technologies and modern management methods etc. can be enjoyed.
  • FDI can help create a level of dependency between countries that will maintain a peaceful environment.

Disadvantages

  • Large corporations take over the market, and this hurts local businesses. One of the examples is walmart.
  • There is a risk of profit repatriation which means that the profit generated in India will not enter the domestic economy.
  • FDI can affect a country’s exchange rates.

Conclusion

FDI has been an important driver of economic growth and also an important source of non-debt finance for India’s economic development. Therefore, there should be a robust and easily accessible FDI system. Once the epidemic ends and the economy opens up completely, analysts predict various types of foreign direct investment to flood.

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Awareness of the Environmental Challenges in the International Business

Awareness of the Environmental Challenges in the International Business

Globalization has reduced the boundaries of operations or businesses worldwide. With the rapid growth in trade enterprises, there has been a significant increase in global trade in goods and services which has reached 25% of the entire GDP. International trade in manufacturing has also increased since 1995. Increasing globalization Businesses wishing to work abroad are facing some major challenges.

International trade is not easy to do due to challenges in the international business environment. It faces challenges such as various uncertainties and different political environments, taxation and other legal constraints. In this article, we will cover some of the major challenges faced in the international business environment.

International Business Environment

International Business environment, refers to trade worldwide. In other words, it means selling and buying goods and services worldwide. Keeping international trade management in one country connects transactions across borders.

The scope of international trade is expanded as it focuses on the opportunities and challenges in a globally operating business environment. The differentiating factor of this business from domestic trade is that international trade is subject to rapid change in an uncertain environment with the possibility of a fully increased income and customer base.

Types of International Business Environment

Some of the major types of international business environments are:

  • Technical Environment

The technical environment is related to technological upgrading as well as technological adoption and advances in manufacturing and production methods. The success level of a business depends on the acceptance level and utility of technological innovation in different countries. With technological advancement, businesses gain competitive advantages and remain competitive on global terms.

  • Political Environment

The political environment includes a government that operates in the economy, its laws, policies, etc. Business owners while doing business in other countries deeply considers the political risks prevailing in the country and the government’s relationship with political risk.

  •  Cultural Environment

Culture in any country means the establishment of trust and values in the country. It depends on the main factors like language, history, level of education, resistance to change, lifestyle of people, etc. And these factors act as an alliance to maintain the cultural environment in the country.

  • Economic Environment

In this, all factors are considered when doing business in a country. Each country may differ in terms of its economic environment depending on the category of the country, whether it is a developed, developing or underdeveloped country. The economic environment is cut after taking factors such as national and per capita income, taxation aspects, availability of raw materials, infrastructure facilities, etc.

Biggest Environmental Challenges in the International Business 

Businesses today are diversifying and diversifying more than ever before to reach new customers, grow their customer base, and increase their overall profits. As yesterers in global markets become more accessible by becoming more interconnected, international trade involves risks and challenges that must be dealt with. Some of the major challenges in the international business environment are as follows:

  • Corporate Structure

If the working structure of the company is not pre-decided then the structure of the company can challenge your business. There should be a qualified team if the company wants to be globally competitive, for which it will consider the organization structure and location from where the team operates.

  • Foreign Law

A clear understanding of foreign laws is not a challenge for international businesses. Therefore it is considered mandatory to gain a comprehensive understanding of laws and regulations. There have been instances where businesses had to face the heat due to lack of understanding of foreign laws. This is a major challenge that needs to be attended.

  • Accounting

This is an important concept when it comes to multinational trade which is responsible for paying corporate tax in the countries they operate. Various tax implications, tax rates and compliance requirements pose a challenge in international operations.

  • Liability to pay Taxes

A company is responsible for paying taxes in the country of its operations. Paying multiple taxes proves a challenge for companies with double taxation to reduce their overall revenue. Tax liabilities challenge companies because of lack of understanding of tax concepts, lack of understanding of tax treaties between countries etc. Companies should get advice and knowledge in tax concepts that can help the company.

  • Payment method

Payment methods become one of the most hunger challenges in the international business environment. This is because the payment methods applied in the home country may not be acceptable abroad. Hence it becomes a challenge for any business as payment is the key to running. However, to deal with this, businesses may decide to have different ways of accepting payments.

  • Currency Rate Fluctuations

The fluctuation in currency rates is one of the challenges in the international business environment that needs to be considered by a business operating abroad. Major volatility can affect spending and profits.

  • Cultural differences

Communication is a skilled skill for businesses, whether working at home or abroad. However, differences in cultures and languages ​​in countries constitute a significant challenge. Given that effective communication is critical to international business success, companies are looking to adopt means to bridge cultural differences.

  • Political Risk & Terrorism

International businesses have to deal with cases of political instability, and political risk in the form of uncertainties is a major challenge and threat. Regulations and policies that are not pro-business may adversely affect the functioning of the business.

Terrorism has also been another large-scale issue that needs to be distributed as global trade is not easy with terrorism.

Conclusion

There are many challenges in the international business environment that must be actively overhauled. We may also see new forms of challenges in the future but are we ready.

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