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Saturday, 19 December 2015

FAQs on One Person Company

FAQs on One Person Company

FAQs on One Person Company

1.     How to incorporate an OPC?

Name reservation: Form INC-1 shall be filed for name availability.
Incorporate OPC: After name approval, form INC-2 shall be filed for incorporation of the OPC within 60 days of filing form INC-1.
Form DIR-12 shall be filed along with (linked) form INC-2 except when promoter is the sole director of the OPC.
The company shall file form INC-22 within 30 days once form INC-2 is registered in case the address of correspondence and registered office address are not same.


2.     How to inform RoC about change in membership of OPC?

The company shall file form INC-4 in case of cessation of member of OPC on account of death, incapacity to contract or change in ownership. In the same form, user needs to provide details of the new member of the OPC.


3.     Is there any threshold limits for an OPC to mandatorily get converted into either private or public company?

In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover exceeds during the relevant period exceeds two crore rupees, then the OPC has to mandatorily convert into private or public company.


4.     How to intimate RoC that the OPC has exceeded the threshold limits and require conversion into private or public company?

The OPC shall inform RoC in form INC-5, if the threshold limits is exceeded and is required to be converted into private or public company.


5.     What is the time limit for filing form INC-5?

Form INC-5 shall be filed within sixty days of exceeding threshold limits.


6.     Is there any form that is to be filed for conversion of an OPC into private or public company? Is there any other purpose for filing this form?

Form INC-6 shall be filed by an OPC for conversion of an OPC into private or public company.
Yes, the private company will also file form INC-6 for converting itself into an OPC. The paid up share capital of private company should not be exceeding fifty lakh rupees and should not have average annual turnover more than two crore rupees at the time of such conversion into OPC. The company shall be having one member and shall appoint one nominee to act as member in case of death or incapacity of the member at the time of conversion into OPC.


7.     What is the time limit for filing form INC-6?

Form INC-6 shall be filed within 30 days in case of voluntary conversion and within six months of mandatory conversion.


8.     Who is eligible to act as a member of an OPC?

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.
For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.

9.     A person can be a member in how many OPCs?

A person can be member in only one OPC.


10.                       What if a member of an OPC becomes a member in another OPC by virtue of being a nominee in that other OPC?

Where a natural person, being member in One Person Company becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall meet the eligibility criteria of being a member in only one OPC within a period of one hundred and eighty days, i.e., he/she shall withdraw his membership from either of the OPCs within one hundred and eighty days.


11.                       Which form is to be filed in case of withdrawal of consent by the nominee of an OPC or in case of intimation of change in nominee by the member?

Form INC-4 shall be filed in case of withdrawal of consent by the nominee or in case of intimation of change in nominee by the member.

 Source :MCA
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Sunday, 13 December 2015

Salient Features of GST

Salient Features of GST

The salient features of GST (Goods and Service Tax) are as under: 

(i) GST would be applicable on supply of goods or services as against the present concept of tax on the manufacture of goods or on sale of goods or on provision of services. 

(ii) GST would be a destination based tax as against the present concept of origin based tax. 

(iii) It would be a dual GST with the Centre and the States simultaneously levying it on a common base. The GST to be levied by the Centre would be called Central GST (CGST) and that to be levied by the States would be called State GST (SGST). 

(iv) An Integrated GST (IGST) would be levied on inter-State supply (including stock transfers) of goods or services. This would be collected by the Centre so that the credit chain is not disrupted.

(v) Import of goods or services would be treated as inter-State supplies and would be subject to IGST in addition to the applicable customs duties.

(vi) For an initial period of two years or as further extended on the recommendation of the GST Council, a non-vatable Additional Tax not exceeding 1% on inter-State supply of goods would be levied and collected by the Centre and assigned to the originating State. The Select Committee of the Rajya Sabha has recommended that this tax should be levied only when the supply is made for a consideration.  

(vii) CGST, SGST & IGST would be levied at rates to be mutually agreed upon by the Centre and the States under the aegis of the GST Council. 

(viii) GST would replace the following taxes currently levied and collected by the Centre: 

a) Central Excise duty

b) Duties of Excise (Medicinal and Toilet Preparations)

c) Additional Duties of Excise (Goods of Special Importance)

d) Additional Duties of Excise (Textiles and Textile Products)

e) Additional Duties of Customs (commonly known as CVD)

f) Special Additional Duty of Customs (SAD)

g) Service Tax

h) Cesses and surcharges insofar as far as they relate to supply of goods or services

(ix) State taxes that would be subsumed within the GST are:

a) State VAT

b) Central Sales Tax

c) Purchase Tax

d) Luxury Tax

e) Entry Tax (All forms)

f) Entertainment Tax (not levied by the local bodies)

g) Taxes on advertisements

h) Taxes on lotteries, betting and gambling

i) State cesses and surcharges insofar as far as they relate to supply of goods or services

(x) GST would apply to all goods and services except Alcohol for human consumption, Electricity and Real Estate.

(xi) GST on petroleum products would be applicable from a date to be recommended by the Goods & Services Tax Council.

(xii) Tobacco and tobacco products would be subject to GST. In addition, the Centre would continue to levy Central Excise duty.

(xiii) A common threshold exemption would apply to both CGST and SGST. Taxpayers with a turnover below it would be exempt from GST. A compounding option ( pay tax at a flat rate without credits) would be available to small taxpayers below a certain threshold. The threshold exemption and compounding scheme would be optional. 

(xiv) The list of exempted goods and services would be kept to a minimum and it would be harmonized for the Centre and the States as far as possible.

(xv) Exports would be zero-rated.

(xvi) Credit of CGST paid on inputs may be used only for paying CGST on the output and the credit of SGST paid on inputs may be used only for paying SGST. In other words, the two streams of input tax credit (ITC) cannot be cross utilized, except in specified circumstances of inter-State supplies, for payment of IGST. The credit would be permitted to be utilized in the following manner:

a) ITC of CGST allowed for payment of CGST;

b) ITC of SGST allowed for payment of SGST;

c) ITC of CGST allowed for payment of CGST & IGST in that order;

d) ITC of SGST allowed for payment of SGST & IGST in that order;

e) ITC of IGST allowed for payment of IGST, CGST & SGST in that order.

(xvii) ITC of Additional Tax would not be permitted.

(xviii) Accounts would be settled periodically between the Centre and the State to ensure that the credit of SGST used for payment of IGST is transferred by the Exporting State to the Centre. Similarly the IGST used for payment of SGST would be transferred by the Centre to the Importing State.

(xix) The laws, regulations and procedures for levy and collection of CGST and SGST would be harmonized to the extent possible.

Tuesday, 1 December 2015

Fifth Bi-monthly Monetary Policy Statement, 2015-16

Date : Dec 01, 2015

Fifth Bi-monthly Monetary Policy Statement, 2015-16

By Dr. Raghuram G. Rajan, Governor

Monetary and Liquidity Measures

On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:
  • keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.75 per cent;
  • keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL);
  • continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions; and
  • continue with daily variable rate repos and reverse repos to smooth liquidity.

Consequently, the reverse repo rate under the LAF will remain unchanged at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 7.75 per cent.


2. Since the fourth bi-monthly statement of September 2015, global growth continues to be weak. Global trade has slowed further with waning demand and oversupply in several primary commodities and industrial materials. In the United States, inventory accumulation is likely to hold down growth in Q4 of 2015. Industrial production slumped in October on cutbacks in oil drilling, while exports were undermined by the strengthening US dollar. Consumer confidence was, however, supported by the diminishing slack in the labour market. In the Euro area, high frequency indicators such as retail sales, purchasing managers’ indices and unemployment point to an uptick in a still anaemic recovery, with monetary policy expected to be increasingly supportive as risks of undershooting the inflation target persist. In China, slowing nominal GDP growth and high debt continue to raise concerns, especially given the overcapacity in certain sectors. Other emerging market economies (EMEs) continue to face headwinds from domestic structural constraints, shrinking trade volumes and depressed commodity prices.

3. Global financial markets began Q4 on a calmer note after the Federal Open Market Committee stayed on hold in September. Stock markets recorded modest gains in October; major currencies recouped some ground against the US dollar and crude oil traded briefly above US $ 50 per barrel for the first time since July. Markets were also boosted by the easing of monetary policy in China and indications of further stimulus in the Euro area and Japan. Following the early November release of robust US jobs data which increased the likelihood of US monetary policy starting to normalise in December, the US dollar has appreciated significantly, and US yields have hardened. Bond markets in EMEs have generally been tracking the hardening of US yields. Currency markets in EMEs have experienced selling pressures as portfolio investors continue to exit them as an asset class. Unease in investor sentiment is likely to increase ahead of the imminent divergence in advanced economy monetary policy stances.

4. On the domestic front, provisional estimates of gross value added (GVA) at basic prices for Q2 of 2015-16 rose on the back of acceleration in industrial activity. Other indicators suggest the economy is in the early stages of a recovery, though with some areas of continued weakness.

5. Value added in agriculture and allied activities picked up on the modest increase in kharif output and timely policy interventions to stem the effects of the deficient south-west monsoon. Turning to Q3, the north-east monsoon commenced on a listless note, but the subsequent cyclonic weather has improved precipitation and raised the probability of a normal monsoon as predicted by the Indian Meteorological Department. Nevertheless, the exceptionally dry start to the season affected sowing in all major rabi crops, while the excessive rains that followed may have reduced the prospects of coffee and paddy. Overall, the current outlook for agricultural growth in 2015-16 appears moderate at best at this juncture.

6. The Index of Industrial Production picked up in the second quarter. Early results of the Reserve Bank’s order books, inventories and capacity utilisation survey indicate that there was robust growth in new manufacturing orders in the second quarter, and finished goods inventories declined while raw materials inventories increased. Not all indicators, however, are positive. While urban consumption is showing signs of a pick-up in some areas such as passenger vehicles sales, rural demand has been weakened by two consecutive deficient monsoons and slowing construction activity. Nevertheless, new project announcements as measured by the Centre for Monitoring Indian Economy grew more strongly in the second quarter. It remains to be seen whether growing public investment can crowd in private investment on a sustained basis, despite the still-low capacity utilisation.

7. Lead indicators of services sector are mixed. The services purchasing managers’ index increased in October 2015 on account of improvement in new business orders. Commercial vehicle sales (reflecting transportation demand) and domestic civil aviation passenger traffic accelerated year-on-year. On the other hand, tourist arrivals, cargo handled at major ports, railway freight traffic, domestic and international air cargo traffic, and measures of construction such as steel consumption slowed. Recent policy initiatives relating to rail, port and road projects are likely to improve construction activity, as will the Reserve Bank’s countercyclical reduction of capital charges on low income housing loans, albeit with gestation lags.

8. As anticipated in our previous policy, retail inflation measured by the consumer price index (CPI) increased for the third successive month in October 2015, pushed up by a surge in the monthly momentum. Food inflation rose sharply in October, driven especially by pulses.

9. CPI inflation excluding food, fuel, petrol and diesel also rose for three consecutive months on account of price increases in respect of housing, recreation and amusement, and personal care and effects. Within this broad category, education and health services contributed most to headline inflation. Households’ inflation expectations remain elevated although they have edged lower recently, perhaps in response to lower prices of petrol and diesel. Rural wage growth, as also corporate staff costs, remain subdued.

10. Underlying liquidity conditions tightened in October-November with the festival season draining currency from the system and some slowdown in government expenditure. In response, the Reserve Bank conducted variable rate repo and reverse repo auctions of various tenors in addition to regular 14-day variable rate repo. As a result, average net daily liquidity absorptions of ₹ 119 billion in Q2 gave way to average daily net injection of ₹ 372 billion in October, which scaled up to ₹ 856 billion in November. Money market rates remained around the policy repo rate – only rising slightly in the second week of November at the height of festival currency demand. Bank credit in the form of personal loans grew strongly as did non-bank financing flows particularly through commercial paper, public equity issues and housing finance.

11. In the external sector, exports contracted for the eleventh month in a row to October, indicative of the persisting weakness in global trade. Excluding petroleum products (PoL), however, the decline in exports was more moderate and early signs of a turnaround are visible in respect of readymade garments, drugs and pharmaceuticals and electronics. With global commodity prices, especially those of crude, softening further, both PoL and non-PoL exports continued to contract, with the latter shrinking for the fourth consecutive month. The decline in bullion imports despite the festival season helped narrow the trade deficit in October as well as over the financial year so far, moderating the current account deficit further. Net foreign direct investment (FDI), external commercial borrowings and accretions to non-resident deposits have risen in relation to last year; however, portfolio outflows from both debt and equity segments rose in November. During 2015-16 (up to November 20), there has been an accretion of US$ 10.8 billion to the foreign exchange reserves.

Policy Stance and Rationale

12. In the bi-monthly monetary policy statement of September, the Reserve Bank assessed that the inflation target for January 2016 at 6 per cent was within reach. Accordingly, it front-loaded its policy action in response to weak domestic and global demand that were holding back investment, while noting that structural reforms and productivity improvements would continue to provide the main impetus for sustainable growth.

13. Since then, inflation has turned up as anticipated, and is expected to rise further until December before plateauing. Although the seasonal moderation in prices of vegetables and fruits is expected to provide some respite, the El Nino induced shortening of winter may limit this effect. The early indications of rabi sowing together with low reservoir levels suggest that astute supply management by the central government, including close coordination with State governments, is necessary to minimize any shortfall in the rabi crop. While oil prices, barring geopolitical shocks, are expected to remain benign for a few quarters more, the uptick of CPI inflation excluding food and fuel for two months in succession warrants vigilance. Taking all this into consideration, inflation is expected to broadly follow the path set out in the September review with risks slightly to the downside (Chart 1).
Chart 1.jpg

14. The outlook for agriculture is subdued, in view of both rabi and kharif prospects being hit by monsoon vagaries. While there are areas of robust growth in manufacturing such as capital goods and passenger cars, weak rural and external demand holds back stronger overall growth. Similarly, while prospects for a revival in service sector activity have been boosted by optimism on new business, pockets of lacklustre activity such as construction weigh on the overall outlook. The step-up in public capital spending and the easing stance of monetary policy provide the enabling environment for a revival in private investment demand, supported by easing input prices and improving conditions for doing business. The growth projection for 2015-16 has accordingly been kept unchanged at 7.4 per cent with a mild downside bias (Chart 2).
Policy Charts.jpg

15. The Reserve Bank will follow developments on commodity prices, especially food and oil, even while tracking inflationary expectations and external developments. The implementation of the Pay Commission proposals, and its effect on wages and rents, will also be a factor in the Reserve Bank’s future deliberations, though its direct effect on aggregate demand is likely to be offset by appropriate budgetary tightening as the Government stays on the fiscal consolidation path. In the meantime, since the rate reduction cycle that commenced in January, less than half of the cumulative policy repo rate reduction of 125 bps has been transmitted by banks. The median base lending rate has declined only by 60 bps. The Reserve Bank will shortly finalise the methodology for determining the base rate based on the marginal cost of funds, which all banks will move to. The Government is examining linking small savings interest rates to market interest rates. These moves should further help transmission of policy rates into lending rates. In addition, the on-going clean-up of bank balance sheets will help create room for fresh lending. The Reserve Bank will use the space for further accommodation, when available, while keeping the economy anchored to the projected disinflation path that should take inflation down to 5 per cent by March 2017.

16. The sixth bi-monthly monetary policy statement will be announced on Tuesday, February 2, 2016.

Alpana Killawala
Principal Chief General Manager

Press Release : 2015-2016/1278

Revised Framework for ECB Policy announced

Date : Nov 30, 2015

Revised Framework for ECB Policy announced

Keeping in view the macro-economic developments and the experience gained in administering the External Commercial Borrowing (ECB) regime over the last 10 years, the Reserve Bank of India, in consultation with the Government of India, has reviewed the extant ECB framework. Accordingly, a circular containing the revised ECB framework has been released today. The overarching principles of the revised framework are:
  1. A more liberal approach, with fewer restrictions on end uses, higher all-in-cost ceiling, etc., for long term foreign currency borrowings as the extended term makes repayments more sustainable and minimises roll-over risks for the borrower;
  2. Similarly, a more liberal approach for Indian Rupee (INR) denominated ECBs where the currency risk is borne by the lender;
  3. Expansion of the list of overseas lenders to include long term lenders like Sovereign Wealth Funds, Pension Funds, insurance companies;
  4. Only a small negative list of end-use requirements applicable to long-term ECBs & INR denominated ECBs;
  5. Raising of limit for small value ECBs with Minimum Average Maturity (MAM) of 3 years to USD 50 million from the existing USD 20 million; and
  6. Alignment of the list of infrastructure entities eligible for ECB with the Harmonised List of the Government of India.
The framework for ECB as a means to attract flow of funds from abroad will continue to be a major tool to calibrate the policy towards capital account management in response to evolving macro-economic situation. The guidelines will be reviewed after one year based on the experience and evolving macro-economic situation.
The revised ECB framework will comprise the following three tracks:
Track I:Medium term foreign currency denominated ECB with MAM of 3/5 years
Track II:Long term foreign currency denominated ECB with MAM of 10 years
Track III:Indian Rupee denominated ECB with MAM of 3/5 years
The Reserve Bank of India has issued the operational guidelines for the revised framework which will come into force with effect from the date of publication of the relative Regulation framed under FEMA, 1999 in the official gazette.
A transitional period upto March 31, 2016 has been allowed to ECBs contracted till commencement of the revised framework and in respect of special schemes which are to end by March 31, 2016.
It may be recalled that a draft of the proposed ECB framework was placed in the public domain for wider consultation in September 2015.

Alpana Killawala
Principal Chief General Manager

Press Release : 2015-2016/1275