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  • Is there a time period to issue share certificate to the shareholders?

    The company should issue and deliver the share certificates within a period of two months from the date of incorporation of the proposed company.

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  • What should be the first financial year of the newly incorporated company?

    The first financial year of a company means a period beginning from the date of incorporation and ending on 31 March of the following year.  However, if the company is incorporated on or after 1 January of the year, the financial year will be from the date of incorporation till 31 March of the following financial year.  For example, if a company is incorporate on 1 February 2019, the first financial year will be 1 February 2019 to 31 March 2020.

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  • Within what time should the first board meeting be held?

    The first board meeting should be held within 30 days from the date of incorporation.

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  • When should the first auditors be appointed for a newly incorporated entity?

    The first auditors should be appointed by the board within 30 days of incorporation of the company.  In case of failure by the board to appoint auditors, the auditors shall be appointed by the shareholders in general meeting within 90 days from the expiry of the 30 days period

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  • What should be the quorum for board meetings?

    Quorum for the board meeting for an Indian subsidiary is two directors. In case of physical board meeting, two directors should be present in person.

    Board meeting may also be held through an audio-visual means (for example, video conference) subject to compliance with conditions such as recording of the meeting, roll call, minutes of the meeting capturing the VC details, etc.  There are restrictions with respect to matters which can be approved in a meeting held through this mode.

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  • What is an Annual General Meeting (AGM)? When should a company convene its first AGM?

    Every company shall in each year hold in addition to any other meetings, a general meeting of its shareholders as its annual general meeting for adoption of audited financial statements, declaration of final dividend, etc

    The first AGM of a company should be held within a period nine-month from the date of close of first financial year.

    In any other case, within a period of six months from the date of closing of the financial year.

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  • Can AGM (Annual General Meeting) be held at a place situated outside the limit of city, town or village in which the registered office is situated?

    AGM of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance. However, AGM cannot be held outside India.

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  • What should be the quorum of an AGM (Annual General Meeting) of Indian subsidiary?

    Quorum for the AGM of an Indian subsidiary is two members personally present. In case of corporate shareholders, the respective shareholders would be required to authorize two different individuals to represent them in the AGM. Representation letters supported by the board resolutions would be required to be maintained in this regard

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  • Can a company maintain books of account in any place other than registered office?

    A company may maintain books of account and other relevant papers at any place in India as the board of directors may decide and the company should make a filing with the RoC (Registrar of Companies) in the prescribed form giving the full address of that other place. However, there are certain documents which are mandatorily required to be maintained at the registered office such as minutes of the meeting.

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  • Can one person simultaneously provide accounting and auditing services?

    The statutory auditor of a company cannot provide following services to the company or its holding company or subsidiary company:

    • Accounting or book keeping services
    • Internal audit
    • Design and implementation of any financial information system
    • Actuarial services
    • Investment advisory services
    • Investment banking services
    • Outsourced financial services
    • Management services
    • Other services prescribed under the rules

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  • What is Input Tax Credit (ITC)?

    Input Tax Credit means the credit of input tax on the supplies of goods or services or both received by a registered person and used in furtherance of business.

    There are certain provisions under GST law mentioning specific items for which ITC is not available while discharging the output tax liability. Input tax credit for inputs, input services and capital goods other than the said ineligible ITC is called eligible ITC.

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  • What is an e-way bill?

    An e-way bill is an electronic document generated on common portal evidencing movement of goods of consignment value more than INR 50,000.

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  • Who is required to furnish the report under section 92E of the Income-tax Act?

    Any person who has been involved in an international and/or specified domestic transactions (if aggregate value exceeds INR 200 million) in the previous year shall submit the report in Form 3CEB through a Chartered Accountant, duly verified and certified by him, on or before the date (i.e., 30th November of every year) prescribed by the authority, furnishing all the required details.

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  • What is the applicability of statutory audit?

    Applicability of Statutory Audit for different types of entities is as follows:

    • Private/ Public company: Statutory audit is mandatory irrespective of turnover, profit, etc. Even if the company is incurring losses, it must get the audit done
    • LLP: Statutory audit is mandatory only if it’s turnover in a financial year exceed INR 4 million or contribution exceeds INR 2.5 million

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  • What are the types of audit required under company law in India?

    Following types of audits are contemplated under company law:

    • Statutory audit: Conducted in order to report the state of a company’s finances and accounts to the Indian government. Such audits are performed by qualified Chartered Accountants who are working as external and independent parties
    • Internal audit: Conducted at the bequest of internal management in order to check the health of a company’s finances and analyze the operational efficiency of the organization. However, internal audit is also mandatory for company satisfying the prescribed threshold

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  • Are there any withholding tax (WHT) obligations in relation to salary payments to expats that has been casted upon the employer under the domestic tax laws?

    Yes, employer is required to withhold taxes on the salary income by applying an average rate and deposit the same by seventh of the following month. For the month of March, the same is required to be deposited by 30 April.

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  • Where the taxes on the salary is borne by the employer, what are the implications where the WHT (Withholding tax) is not deposited to the government treasury?

    In case where the income tax of the employee is borne by the employer, the WHT is deemed to be deducted on the date of payment of salary to the employee. Hence, any delay in depositing WHT to the government treasury may be considered as “tax deducted but not deposited”. In such a scenario, in addition to the interest and the penalty consequences, the employer may also be liable for prosecution, i.e., a rigorous imprisonment for a term of three months to years and a fine.

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  • What are the consequential tax implications where an assignee attains an ordinary resident tax status in India during the relevant tax year?

    The global income of such ordinary resident would become taxable in India. Additionally, such resident would be required to report moveable and immoveable assets held overseas along with any other financial interest or signing authority abroad and trusteeship in offshore trusts in his/her tax return.

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  • What is transitional relaxation on tax on buybacks by listed companies?

    The Finance (No.2) Act 2019 has been extended to listed companies with effect from 5 July 2019. This created hardships for listed companies who had publicly announced buy-backs before 5 July 2019 but not completed it by that date. The Ordinance relaxes the applicability in respect of buy-backs by listed companies in reference of which public announcement of buyback as per regulatory norms has been made before 5 July 2019. Thus, the buy-back tax will apply in case of listed companies where public announcement of buyback is made on or after 5 July 2019.

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  • What are the recent changes in Corporate Income Tax (CIT) for domestic companies?

    With effect from tax year 2019-20, domestic companies shall have an option to pay income tax at the rate of 22% plus 10% surcharge and 4% cess taking the effective tax rate (ETR) to 25.17%, subject to the condition that they will not avail specified tax exemptions or incentives under the Income Tax Act. New domestic manufacturing companies, incorporated on or after 1 October 2019 and commencing manufacturing on or before 31 March 2023, making fresh investments in manufacturing, will have an option to avail an even lower tax rate of 15% plus 10% surcharge and 4% cess taking the ETR to 17.16%

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