100% FDI via Automatic Route
Upto 100% FDI via Automatic Route is permitted in the following fields. In Agriculture, 100% FDI is permitted in Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Pisciculture, Aquaculture and Cultivation of Vegetables & Mushrooms under controlled conditions and services related to agro and allied sectors. It is important to observe that this list wherein FDI is permitted in Agriculture is exhaustive and the other areas of Agriculture are completely prohibited for FDI. For instance there can be no FDI in cultivation of basic cereals like wheat, maize and sugarcane.
In Mining Industry, 100% FDI is permitted via Automatic Route in two sector. Mining covering exploration and mining of diamonds & precious stones; gold, silver and minerals. However, this FDI is subject to exception as laid down in the Mines & Mineral(Development & Regulation) Act, 1957. However, Press Note 18(1998) and Press Note1(2005) are not applicable for setting up 100% owned subsidiary for mining sector, subject to the condition that the applicant shall make a declaration that he has no existing joint venture for the same area and/or for the particular mineral.
Coal & Lignite mining for captive consumption by power projects and iron & steel, cement production and other eligible activities permitted under the Coal Mines (Nationalisation) Act, 1973 too can have 100% FDI via the automatic route, however, they are subject to provisions as laid down in the referred Act.
In Manufacturing, 100% Automatic FDI is permitted in Alcohol- Distillation & Brewing, subject to license by appropriate authority; Coffee & Rubber processing & warehounsing; Drugs & Pharamaceuticals including those involving use of recombitant DNA technology. As for Hazardous chemicals viz hydrocyanic acid and its derivatives; phosgene and its derivatives; and iscocyanates and diisocynates of hydrocarbon, 100% Automatic FDI is permitted, however, subjected to sectoral regulations including industrial license under the Industries(Development & Regulation) Act, 1951. Likewise, manufacturing of Industrial Explosives is subject to industrial license under Industrial(Development & Regulation) Act,1951 and regulations as stipulated under Explosives Act, 1898.
In the Power Sector including generation(except Atomic Energy); transmission, distribution and Power Trading, 100% FDI via automatic route is permitted subject to the provisions of the Electricity Act, 2003. At this point, it would be relevant to mention that industry specially International Companies have raised a demand to do away with the cap on Power Generation using Atomic Energy in the light of Indo-US Nuclear Pact. The major reason for Government prohibition so far is apart from strategic and sovereign reasons, atomic Energy generation is a highly intricate and dangerous process and a minor negligence can lead to Chernobyl –like disaster which can be far worse in its magnitude then the Bhopal Gas Tragedy back home.
In the Services sector, the Government has distinguished between Greenfield Projects and Existing Projects in the Civil Aviation Sector, while permitting FDI. In the Greenfield projects, upto 100% FDI via the Automatic Route is permitted subject to sectoral regulations notified by the Ministry of Civil Aviation. And as for Air Transport Services, 100% FDI via the Automatic Route is permitted in Helicopter Services, seaplane services; they however are subject to DGCA Approval and sectoral regulations. Amongst the other Services in Aviation, 100% Automatic route is permitted in Maintenance and Repair organizations; flying training institutes; and technical training institutes.
Other sectors are: Construction development projects, including housing, commercial premises, resorts, educational institutions, recreational facilities, city and regional level infrastructure, townships, which are subject to the conditions notified vide PN2(2005 Series) including:
Minimum Capitalization of USD 10 million for wholly owned subsidiaries and USD 5 million for Joint Ventures. The funds have to be brought within six months of the commencement of the business operation.
Minimum area to be developed under each project- 10 hectares in case of development of serviced housing plots; and built-up area of 50,000 sq. mts. In case of construction development project; and any of the above in case of a combination project.
However, the conditions stipulated in PN2(2005 series) are not applicable to NRIs and for investments in SEZs, Hotels and Hospitals.
At this point, it would be relevant to note that till date no investment is permitted in the Real Estate Business.
FDI upto 100% via the Automatic Route are allowed in Industrial Parks both setting up and in established Industrial Parks.
Conditions stipulated in PN2(2005) applicable for construction development projects do not apply in case the Industrial Parks meet the following stipulated conditions:
it would comprise of minimum of 10 units and no single unit shall occupy more than 50% of the allocable area;
minimum percentage of area to be allocated for industrial activity shall not be less than 66% of the total allocable area.
While investing in Non-Banking Finance Companies, 100% FDI Automatic Route, following are covered:
(i) Merchant Banking
(ii) Underwriting
(iii) Portfolio Management Services
(iv) Investment Advisory Services
(v) Financial Consultancy
(vi) Stock Broking
(vii)Asset Management
(viii) Venture Capital
(ix) Custodial Services
(x) Factoring
(xi) Credit Rating Agencies
(xii)Leasing & Finance
(xiii) Housing Finance
(xiv) Forex Broking
(xv) Credit Card Business
(xvi) Money Changing Business
(xvii) Micro Credit
(xviii) Rural Credit
However, this is subject to the following norms:
Minimum Capitalization norms for funds-based NBFCs- a. USD 0.5 million to be brought upfront for FDI upto 51%;
USD 5 million to be brought upfront for FDI above 51% and upto 75%;
And USD 50 million out of which USD 7.5 million to be brought upfront and the balance in 24 months for FDI beyond 75% and upto 100%.
Minimum Capitalization norms for non-fund based NBFC activities has been capped at USD .5 million
Foreign Investors can set-up 100% operating subsidiaries without the condition to disinvest a minimum of 25% of its equity to Indian entities subject to bringing in USD50 million without any restriction on number of operating subsidiaries without bringing additional capital.
Joint Venture operating NBFC’s that have 75% or less than 75% Foreign Investment will also be allowed to set-up subsidiaries for undertaking other than NBFC activities subject to the subsidiaries also complying with applicable minimum capital inflow.
Apart from these, compliance with the RBI guidelines as issued from time to time, have to be made.
Even in Petroleum & Natural Gas Sector, 100% FDI via the automatic route has been approved for areas other than refining and including market study and formulation; investment/ financing; setting up infrastructure for marketing in Petroleum & Natural Gas Sector subject to sectoral regulations issued by the Ministry of Petroleum & Natural Gas.
In Telecommunications, Manufacture of telecom equipments subject to sectoral requirements; in Trading, wholesale/ cash & carry trading and trading for exports and in Special Economic Zones and Free Trade Warehousing Zones covering setting up of these Zones and setting up units in the Zones subject to Special Economic Zones Act, 2005 and the Foreign Trade Policy, 100% FDI via the Automatic Route is permitted.
In the following blog, we talk in multiple languages (English, French and German) about competition and strategy from an inter-disciplinary perspective by taking inputs from business strategy, law and economics. I am particularly interested in ICT, telecommunications, Industry 4.0 and the impact of convergence in ICT with other sectors such as pharmaceuticals and energy.
Wednesday, September 2, 2009
Legal-Business Aspects
Following are the steps involved for starting a business in Mumbai, India:
Obtain Director Identification Number (DIN) online
(1) Fill Form DIN-1 online on www.mca.gov.in. Provisional Form issued immediately.
Post the following to the Ministry of Corporate Affairs: 1. Provisional Form issued
Identity Proof: PAN card, Driving License, Passport, Voter Id (Any one)
Residence Proof: Driving License, Passport, Voter Id
MCA will verify the above-documents and upon approval issue a Permanent DIN. The entire process takes about 4weeks and it costs Rs 100/-.
2. Obtain Digital Signature Certificate on-line
To avail, the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate.
Procedure to obtain Class-II Digital Signature Certificate: 1. Prescribed application form; 2. Proof of Identity and 3. Proof of Residence to be submitted to one of the six private agencies authorized by MCA21.
The procedure takes 1-6 days and costs between Rs 400 to 2650, depending upon the chosen agency.
Reserve Company Name with the Registrar of Companies on-line
E-filing: Check the availability of the desired company name on the MCA21 website and submit the same online.
Personally, submit a maximum of 6 names to the RoC, Mumbai. Once the junior officer clears the name, the same are sent to senior officer for approval.
To avoid delay, ensure that the proposed name is available, by making it unique and checking availability online and it conforms to the naming standards established by the Company Act.
The procedure costs about Rs 500 and takes on an average 2-3 days to complete.
Stamp the Company Documents either at the Superintendent or an authorized bank
Submit the following to the Superintendent of Banks for stamping:
Request for Stamping
Unsigned copies of the MOA & AOA and
Payment Receipt.
Form-1 (Declaration of Compliance)
Stamp Duty payable, in Mumbai (Maharashtra) as per Article 10 and Article 39 of the Indian Stamp Act, 1899:
AoA: Rs 1000/- for every Rs 500,000/- of share capital (or part thereof), subject to a maximum of Rs. 50,000,000/-
MoA: Rs 200/-
Form-1 Rs 100/-.
Once the MoA and AoA have been stamped, they must be signed and dated by the Company Promoters. Following information must be mentioned by every promoter in hand writing and it should be duly witnessed:
Company Name
Description of its activities and purpose
Father’s Name
Address
Occupation
Number of Shares subscribed.
Obtain Certificate of Incorporation from the Registrar of Companies
Fill in the following forms electronically on the MCA21 website: 1. E-form 1; 2. E-form 18 and 3. E-form 32.
Attach the following with E-form 1, while submitting it online:
Consent of the Initial Directors
Signed & Stamped form of the MoA and AoA.
Payment of fee can be done online using a credit card. The documents are then accepted immediately.
Or by payment in cash at certain authorized banks or by making a demand draft against the Challan generated online in favour of “Pay & Accounts Office, Ministry of Corporate Affairs, New Delhi”, payable at Mumbai. This takes about a week to clear after the receipt and only after that RoC accepts the documents for verification and approval.
Also submit the following physically before the ROC:
MoA; 2. AoA; 3. Form 1; 4. Form 32; 5. Form 18; 6. Original name approval letter; 7. Consent of Directors and 8. Stamped PoA.
- Certificate of Incorporation sent automatically to the registered office of the company by Registered or Speed Post.
Registration Fees to be paid:
When Authorized Capital Registration Fee
Upto Rs 100,000/- Rs 4,000
Over Rs 100,000/- Rs 4,000/ + For every Rs 10,000/- of nominal share capital or part of Rs 10,000/- after first Rs 100,000/- upto Rs 500,000/- - Rs 300/-.
For every Rs 10,000/- of nominal share capital or part of Rs 10,000/- after first Rs 500,000/- upto Rs 5,000,000/- - Rs. 200/-
For every Rs 10,000/- of nominal share capital or part of Rs 10,000/- after first Rs 5,000,000/- upto Rs 10,000,000/- - Rs. 100/-
For every Rs 10,000/- of nominal share capital or part of Rs 10,000/- after first Rs 10,000,000/- - Rs50.
Note: RoC, Mumbai requests for pre-scrutiny of documents for any correction thereon, before uploading them, so that once the documents have been uploaded, they can be approved without any further correction.
Online filing mechanism requires only one copy of scanned documents to be filed (including tamped MoA, AoA and PoA).
Schedule of Registrar filing fees for the Articles and other Forms (I, 18 and 32):
Nominal Share Capital Fees
Rs500, 000 Rs 200
Rs 2,500,000 Rs 300
Rs 2,500,000 and more Rs 500
This entire procedure may take anywhere between 3-10 days to complete.
Making a Seal
Making a seal though not legally mandatory, it is advisable, since it would be require to issue share certificate and other documents.
It can be made in a matter of hours and may take anywhere between Rs 300-600/-.
Obtain Permanent Account Number (PAN)
PAN Form can be obtained from IT PAN Service Centres or TIN Facilitation Centres at a nominal cost of Rs 5/- or may be downloaded for free.
PAN application can be made through National Securities Depository Services Limited (NSDL) and Unit Trust of India (UTI) Investors Services Ltd. on Form 49A, with the following documents:
Certified Copy of Certificate of Registration
Proof of Company Address
Personal Liability
Application may be made online; however, the documents have to be dropped off physically for verification. A fee of Rs 66/- has to be submitted for processing of the form.
The IT PAN Service Centres or TIN Facilitation Centres, after obtaining the PAN from IT Department, print the PAN Card and deliver it to the applicant.
Obtain Tax Account Number
Section 203A of the IT Act, 1961 makes it mandatory for persons who deduct or collect tax at source to apply for TAN. Further, the Section makes it mandatory for the TAN to be quoted in all tax-deducted-at-source (TDS) and tax-collected-at-source (TCS) returns, all TDS/TCS payment Challan, and all TDS/ TCS certificates issued.
Failure to comply with the provisions of the section, invites a penalty of Rs 10,000/-.
Application must be filled using Form 49B and submitted at any TIN Facilitation Center authorized to receive e-TDS returns. Application may be made online or offline. However, when payment made online, hard copy of the application is required to be physically filed with NSDL.
Upon verification, the same is sent to the IT Department and upon satisfaction IT Department issues TAN to the applicant.
It costs about Rs 55/- and takes over a week to get the TAN.
Register with Mumbai Shops and Establishment Act, 1948
Procedure 7 & 8 & 9 can be followed simultaneously.
A statement containing the employer’s, manager’s and establishment name must be sent to the local shop inspector alongwith the applicable fees.
Section 7 of the Bombay Shops and Registration Act, 1948, lays down the procedure as follows:
7(1) states that the establishment must submit to the local shop inspector, Form A and prescribed fees for registering the establishment.
7(2) After the statement in Form A and prescribed fees for registering the establishment is received and the correctness of the statement is satisfactorily audited, the certificate for registration of establishment is issued in Form D according to the provisions of Rule 6 of Maharashtra Shops and Establishment Rules, 1961.
7(4) Employer must register the establishment in the prescribed manner within 30 days of the date on which the establishment commences its work.
Maharashtra Shops and Establishment Rules, 1961 was amended in 2003 and the fees for registration and renewal of registration, as per Rule 5 is as follows:
No. of Employees Fees
0 Rs 100
1-5 300
6-10 600
11-20 1000
21-50 2000
51-100 3500
101 and above 4500
Additionally, an annual fee, that is three times the registration and renewal fee is charged as trade refuse charges(TRC), under the Mumbai Municipal Corporation Act, 1888.
Registration for VAT
It takes about 12 days to register for VAT and the procedure can be followed simultaneously while registering under the Mumbai Shops and Establishment Act, 1948.
It costs about Rs 5100 including Rs 5000 as the Registration Fee and Rs 100 as Stamp Duty to register.
Fill in Form 101 and the authorized representative submits the same at Sales Tax Office, alongwith the following documents:
Certified copy of the Memorandum and Articles of Association of the Company
Proof of Permanent Residential Address. Atleast two of the following copy of proof of residential address are to be submitted: a. Passport; b. Driving license; c. election photo I-card; d. Property card; e. latest receipt of property tax of Municipal Corporation; f. latest paid electricity bill in the name of the applicant
Proof place of business(for an owner, the place of Doing Business): Proof of ownership of premises viz. copy of property card or ownership deed or agreement with the builder or any other relevant document.
One recent passport size photograph of the applicant
Copy of Income Tax Assessment Order having PAN or copy of PAN Card
Challan in Form No. 2010(original) showing payment of registration fee at Rs 5000 in case of voluntary RC and in other cases Rs 500.
The form alongwith the documents are verified on the appointed day and the information is entered into the system.
Alternatively, Form 101 can also be filled online and the Authorized Officer may visit the office on the appointed day only to verify the documents.
Registration for Profession Tax
It takes about two days. There are no costs to be paid for registration for Profession Tax.
Apply in Form I to the Registration Authority for the Mumbai Area situated at Vikarikar Bhawan, Mazgaon, Mumbai, along with the following documents:
Details of Company registration no. under the Indian Companies Act(1956)
Head Office(if the company is a branch of company registered outside the State)
Company Deed
Certificates under any other Act
Section 5 of the Profession Tax Act, puts an obligation of every employer(not being an officer of the Government), a liability to pay tax and obtain a certificate of registration from the prescribed authority.
Registration with EPF
It takes about 12 days to register with the EPF Organization.
It does not cost anything to register with the EPF organization.
If an organization employs 20 or more persons and is engaged in any of the 183 industries and Classes of business establishments and is bases-out of anywhere in India, except the State of J&K, then the provisions of Employees Provident Fund & Miscellaneous Provisions Act,1952 apply to the establishment. The employer has to provide necessary information to the concerned regional Provident Fund Organization(EPFO) in prescribed format for allotment of Establishment Code Number. No separate registration is required for the employees.
However, if the employees so want, they can become members of the EPFO and individual allotment number is then allotted by the employer in prescribed manner. Theoretically, as per the internal circular, an allocation should be made within 3 days, if the application is complete in all respects. However, practically speaking it takes anywhere between 12-15 days to receive the code number.
The applicant fills in an application and is allocated a Social-security number.
The PF registration focuses on delinquent reporting, under-reporting or non-reporting of workforce size.
13. Register for Medical Insurance(ESIC)
Registration for Medical Insurance, Registration with EPF, Registration for Profession Tax, can be performed simultaneously while pursuing Registration for VAT. As of now, there is no online facility available for making an application.
No costs are incurred while registering for Medical Insurance.
Employees’ State Insurance(General), states that Form01 is to be submitted by the Employer for registration. It takes about 3 days to a week for the Employer Code number to be issued. The “intimation letter” containing the Code number is sent by post.
Once the Employer is registered, process for Employee’s Registration is started. The Employee must provide the Employer with the correct information. Employee Temporary Cards(ESI Cards) are issued on the spot by the local offices in many places. It takes about 4-5 weeks to issue a permanent ESI card. Temporary cards are valid for 13 weeks from the date of issue and therefore, can be used in the meanwhile till permanent ESI Cards are issued.
Obtain Director Identification Number (DIN) online
(1) Fill Form DIN-1 online on www.mca.gov.in. Provisional Form issued immediately.
Post the following to the Ministry of Corporate Affairs: 1. Provisional Form issued
Identity Proof: PAN card, Driving License, Passport, Voter Id (Any one)
Residence Proof: Driving License, Passport, Voter Id
MCA will verify the above-documents and upon approval issue a Permanent DIN. The entire process takes about 4weeks and it costs Rs 100/-.
2. Obtain Digital Signature Certificate on-line
To avail, the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate.
Procedure to obtain Class-II Digital Signature Certificate: 1. Prescribed application form; 2. Proof of Identity and 3. Proof of Residence to be submitted to one of the six private agencies authorized by MCA21.
The procedure takes 1-6 days and costs between Rs 400 to 2650, depending upon the chosen agency.
Reserve Company Name with the Registrar of Companies on-line
E-filing: Check the availability of the desired company name on the MCA21 website and submit the same online.
Personally, submit a maximum of 6 names to the RoC, Mumbai. Once the junior officer clears the name, the same are sent to senior officer for approval.
To avoid delay, ensure that the proposed name is available, by making it unique and checking availability online and it conforms to the naming standards established by the Company Act.
The procedure costs about Rs 500 and takes on an average 2-3 days to complete.
Stamp the Company Documents either at the Superintendent or an authorized bank
Submit the following to the Superintendent of Banks for stamping:
Request for Stamping
Unsigned copies of the MOA & AOA and
Payment Receipt.
Form-1 (Declaration of Compliance)
Stamp Duty payable, in Mumbai (Maharashtra) as per Article 10 and Article 39 of the Indian Stamp Act, 1899:
AoA: Rs 1000/- for every Rs 500,000/- of share capital (or part thereof), subject to a maximum of Rs. 50,000,000/-
MoA: Rs 200/-
Form-1 Rs 100/-.
Once the MoA and AoA have been stamped, they must be signed and dated by the Company Promoters. Following information must be mentioned by every promoter in hand writing and it should be duly witnessed:
Company Name
Description of its activities and purpose
Father’s Name
Address
Occupation
Number of Shares subscribed.
Obtain Certificate of Incorporation from the Registrar of Companies
Fill in the following forms electronically on the MCA21 website: 1. E-form 1; 2. E-form 18 and 3. E-form 32.
Attach the following with E-form 1, while submitting it online:
Consent of the Initial Directors
Signed & Stamped form of the MoA and AoA.
Payment of fee can be done online using a credit card. The documents are then accepted immediately.
Or by payment in cash at certain authorized banks or by making a demand draft against the Challan generated online in favour of “Pay & Accounts Office, Ministry of Corporate Affairs, New Delhi”, payable at Mumbai. This takes about a week to clear after the receipt and only after that RoC accepts the documents for verification and approval.
Also submit the following physically before the ROC:
MoA; 2. AoA; 3. Form 1; 4. Form 32; 5. Form 18; 6. Original name approval letter; 7. Consent of Directors and 8. Stamped PoA.
- Certificate of Incorporation sent automatically to the registered office of the company by Registered or Speed Post.
Registration Fees to be paid:
When Authorized Capital Registration Fee
Upto Rs 100,000/- Rs 4,000
Over Rs 100,000/- Rs 4,000/ + For every Rs 10,000/- of nominal share capital or part of Rs 10,000/- after first Rs 100,000/- upto Rs 500,000/- - Rs 300/-.
For every Rs 10,000/- of nominal share capital or part of Rs 10,000/- after first Rs 500,000/- upto Rs 5,000,000/- - Rs. 200/-
For every Rs 10,000/- of nominal share capital or part of Rs 10,000/- after first Rs 5,000,000/- upto Rs 10,000,000/- - Rs. 100/-
For every Rs 10,000/- of nominal share capital or part of Rs 10,000/- after first Rs 10,000,000/- - Rs50.
Note: RoC, Mumbai requests for pre-scrutiny of documents for any correction thereon, before uploading them, so that once the documents have been uploaded, they can be approved without any further correction.
Online filing mechanism requires only one copy of scanned documents to be filed (including tamped MoA, AoA and PoA).
Schedule of Registrar filing fees for the Articles and other Forms (I, 18 and 32):
Nominal Share Capital Fees
Rs 2,500,000 and more Rs 500
This entire procedure may take anywhere between 3-10 days to complete.
Making a Seal
Making a seal though not legally mandatory, it is advisable, since it would be require to issue share certificate and other documents.
It can be made in a matter of hours and may take anywhere between Rs 300-600/-.
Obtain Permanent Account Number (PAN)
PAN Form can be obtained from IT PAN Service Centres or TIN Facilitation Centres at a nominal cost of Rs 5/- or may be downloaded for free.
PAN application can be made through National Securities Depository Services Limited (NSDL) and Unit Trust of India (UTI) Investors Services Ltd. on Form 49A, with the following documents:
Certified Copy of Certificate of Registration
Proof of Company Address
Personal Liability
Application may be made online; however, the documents have to be dropped off physically for verification. A fee of Rs 66/- has to be submitted for processing of the form.
The IT PAN Service Centres or TIN Facilitation Centres, after obtaining the PAN from IT Department, print the PAN Card and deliver it to the applicant.
Obtain Tax Account Number
Section 203A of the IT Act, 1961 makes it mandatory for persons who deduct or collect tax at source to apply for TAN. Further, the Section makes it mandatory for the TAN to be quoted in all tax-deducted-at-source (TDS) and tax-collected-at-source (TCS) returns, all TDS/TCS payment Challan, and all TDS/ TCS certificates issued.
Failure to comply with the provisions of the section, invites a penalty of Rs 10,000/-.
Application must be filled using Form 49B and submitted at any TIN Facilitation Center authorized to receive e-TDS returns. Application may be made online or offline. However, when payment made online, hard copy of the application is required to be physically filed with NSDL.
Upon verification, the same is sent to the IT Department and upon satisfaction IT Department issues TAN to the applicant.
It costs about Rs 55/- and takes over a week to get the TAN.
Register with Mumbai Shops and Establishment Act, 1948
Procedure 7 & 8 & 9 can be followed simultaneously.
A statement containing the employer’s, manager’s and establishment name must be sent to the local shop inspector alongwith the applicable fees.
Section 7 of the Bombay Shops and Registration Act, 1948, lays down the procedure as follows:
7(1) states that the establishment must submit to the local shop inspector, Form A and prescribed fees for registering the establishment.
7(2) After the statement in Form A and prescribed fees for registering the establishment is received and the correctness of the statement is satisfactorily audited, the certificate for registration of establishment is issued in Form D according to the provisions of Rule 6 of Maharashtra Shops and Establishment Rules, 1961.
7(4) Employer must register the establishment in the prescribed manner within 30 days of the date on which the establishment commences its work.
Maharashtra Shops and Establishment Rules, 1961 was amended in 2003 and the fees for registration and renewal of registration, as per Rule 5 is as follows:
No. of Employees Fees
0 Rs 100
1-5 300
6-10 600
11-20 1000
21-50 2000
51-100 3500
101 and above 4500
Additionally, an annual fee, that is three times the registration and renewal fee is charged as trade refuse charges(TRC), under the Mumbai Municipal Corporation Act, 1888.
Registration for VAT
It takes about 12 days to register for VAT and the procedure can be followed simultaneously while registering under the Mumbai Shops and Establishment Act, 1948.
It costs about Rs 5100 including Rs 5000 as the Registration Fee and Rs 100 as Stamp Duty to register.
Fill in Form 101 and the authorized representative submits the same at Sales Tax Office, alongwith the following documents:
Certified copy of the Memorandum and Articles of Association of the Company
Proof of Permanent Residential Address. Atleast two of the following copy of proof of residential address are to be submitted: a. Passport; b. Driving license; c. election photo I-card; d. Property card; e. latest receipt of property tax of Municipal Corporation; f. latest paid electricity bill in the name of the applicant
Proof place of business(for an owner, the place of Doing Business): Proof of ownership of premises viz. copy of property card or ownership deed or agreement with the builder or any other relevant document.
One recent passport size photograph of the applicant
Copy of Income Tax Assessment Order having PAN or copy of PAN Card
Challan in Form No. 2010(original) showing payment of registration fee at Rs 5000 in case of voluntary RC and in other cases Rs 500.
The form alongwith the documents are verified on the appointed day and the information is entered into the system.
Alternatively, Form 101 can also be filled online and the Authorized Officer may visit the office on the appointed day only to verify the documents.
Registration for Profession Tax
It takes about two days. There are no costs to be paid for registration for Profession Tax.
Apply in Form I to the Registration Authority for the Mumbai Area situated at Vikarikar Bhawan, Mazgaon, Mumbai, along with the following documents:
Details of Company registration no. under the Indian Companies Act(1956)
Head Office(if the company is a branch of company registered outside the State)
Company Deed
Certificates under any other Act
Section 5 of the Profession Tax Act, puts an obligation of every employer(not being an officer of the Government), a liability to pay tax and obtain a certificate of registration from the prescribed authority.
Registration with EPF
It takes about 12 days to register with the EPF Organization.
It does not cost anything to register with the EPF organization.
If an organization employs 20 or more persons and is engaged in any of the 183 industries and Classes of business establishments and is bases-out of anywhere in India, except the State of J&K, then the provisions of Employees Provident Fund & Miscellaneous Provisions Act,1952 apply to the establishment. The employer has to provide necessary information to the concerned regional Provident Fund Organization(EPFO) in prescribed format for allotment of Establishment Code Number. No separate registration is required for the employees.
However, if the employees so want, they can become members of the EPFO and individual allotment number is then allotted by the employer in prescribed manner. Theoretically, as per the internal circular, an allocation should be made within 3 days, if the application is complete in all respects. However, practically speaking it takes anywhere between 12-15 days to receive the code number.
The applicant fills in an application and is allocated a Social-security number.
The PF registration focuses on delinquent reporting, under-reporting or non-reporting of workforce size.
13. Register for Medical Insurance(ESIC)
Registration for Medical Insurance, Registration with EPF, Registration for Profession Tax, can be performed simultaneously while pursuing Registration for VAT. As of now, there is no online facility available for making an application.
No costs are incurred while registering for Medical Insurance.
Employees’ State Insurance(General), states that Form01 is to be submitted by the Employer for registration. It takes about 3 days to a week for the Employer Code number to be issued. The “intimation letter” containing the Code number is sent by post.
Once the Employer is registered, process for Employee’s Registration is started. The Employee must provide the Employer with the correct information. Employee Temporary Cards(ESI Cards) are issued on the spot by the local offices in many places. It takes about 4-5 weeks to issue a permanent ESI card. Temporary cards are valid for 13 weeks from the date of issue and therefore, can be used in the meanwhile till permanent ESI Cards are issued.
Tuesday, September 1, 2009
Investing in India
Goldman Sachs in its report “Dreaming with BRICs” created ripples across the globe. The report predicted India amongst the rising BRIC economies growing at average rate of over 5% per year until 2050. United Council for Trade and Development in its 2007 World Investment Report, rated India as the second most-attractive destination for FDI by Transnational Corporations. According to AT Kearney’s 2007 Global Services Location Index, India is the second most attractive destination for FDI in the world. According to Statistics by the DIPP, Federal Ministry of Commerce & Industry, Government of India, Cumulative FDI inflows from April 2000 to January 2009 is an estimated Rs 375,772 crore(USD 86,394 million). Of these, Rs105,673 crore(USD 23,885 million) alone were pumped into the Indian economy from April 2008 to January 2009. It is interesting to observe that at a time when the investor confidence was at an all time low and the world was fearing one of the worst recessions since the Great Depression of the 1930’s, Foreign Investors continued to pump money into the Indian economy in the form of FDI. And the reasons are not to difficult to appreciate. India, the second most populated Nation in the world and still counting, has one of the most promising FDI policies in the world. FDI is permitted in almost all the sectors either under the automatic or through prior permission from the Government.
Procedure
In sectors, wherein FDI is permitted under the automatic route, there are no special procedures to be followed or no prior permission from the Government or RBI is required. The investor just has to inform the regional office of the RBI within 30 days of receipt of such inward remittances and file the required documents with the referred office within 30 days of issue of shares to foreign investors.
As for industries that are subject to Government approval, an application has to be moved before the Foreign Investment Promotion Board(FIPB) or Department of Industrial Policy and Promotion(DIPP) depending upon the sector and the investor.
If the investor is an NRI(Non Resident Indian) or the investment is to be made in an EOU(Export Oriented Unit) or for FDI in Retail Trading(Single branded product), then the application has to be submitted to the SIA in DIPP. An NRI may also submit the application to the Indian Mission in his/her country, which can then forward it to the DIPP. For instance, an NRI based-out of Brussels, Belgium need not make an application in person the DIPP; he may refer it to the DIPP and submit it to the Indian Consulate in Brussels, who can then forward it to the DIPP.
In all the other cases, except for the aforementioned three categories, an application is to be made to the FIPB, Department of Economic Affairs, Ministry of Finance.
As for the format of applications, they can be made either on a plain paper or preferably on Form FC-IL, which can be downloaded from the website free of cost.
Sector-wise Policy
FDI prohibited
As per the policy there are sectors that totally prohibit FDI; FDI that is permitted subject to sectoral cap and permitted either via the automatic route or from prior permission from the FIPB. Over a period of years, the Government policy has been one of successive opening up on sectors and reducing complete prohibition of FDI to certain core sectors. As of August 2009, there are only eight sectors in which FDI is prohibited completely. These are Retail Trading(except single brand retail trading), Atomic Energy, Lottery Business, Gambling and Betting, Business of chit fund, Nidhi Company, Trading on Transferable Developmental Rights(TDRs) and activity/ sectors that are not open to private sector investment.
Procedure
In sectors, wherein FDI is permitted under the automatic route, there are no special procedures to be followed or no prior permission from the Government or RBI is required. The investor just has to inform the regional office of the RBI within 30 days of receipt of such inward remittances and file the required documents with the referred office within 30 days of issue of shares to foreign investors.
As for industries that are subject to Government approval, an application has to be moved before the Foreign Investment Promotion Board(FIPB) or Department of Industrial Policy and Promotion(DIPP) depending upon the sector and the investor.
If the investor is an NRI(Non Resident Indian) or the investment is to be made in an EOU(Export Oriented Unit) or for FDI in Retail Trading(Single branded product), then the application has to be submitted to the SIA in DIPP. An NRI may also submit the application to the Indian Mission in his/her country, which can then forward it to the DIPP. For instance, an NRI based-out of Brussels, Belgium need not make an application in person the DIPP; he may refer it to the DIPP and submit it to the Indian Consulate in Brussels, who can then forward it to the DIPP.
In all the other cases, except for the aforementioned three categories, an application is to be made to the FIPB, Department of Economic Affairs, Ministry of Finance.
As for the format of applications, they can be made either on a plain paper or preferably on Form FC-IL, which can be downloaded from the website free of cost.
Sector-wise Policy
FDI prohibited
As per the policy there are sectors that totally prohibit FDI; FDI that is permitted subject to sectoral cap and permitted either via the automatic route or from prior permission from the FIPB. Over a period of years, the Government policy has been one of successive opening up on sectors and reducing complete prohibition of FDI to certain core sectors. As of August 2009, there are only eight sectors in which FDI is prohibited completely. These are Retail Trading(except single brand retail trading), Atomic Energy, Lottery Business, Gambling and Betting, Business of chit fund, Nidhi Company, Trading on Transferable Developmental Rights(TDRs) and activity/ sectors that are not open to private sector investment.
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