Our dilemma as an Entrepreneur






Are we meeting our statutory compliance on time
Are we having following a correct and fair
accounting practices
What are the neccesary statutory compliances for
Proprietorship, Partnership, Ltd Co
What if I have skipped or miss the deadline of
meeting our compliances on time?
What if there is a notice from a statutory body
relating to my compliances?
And many more
Objective






Importance of Accounting and Compliance
Management
Implementing fair and correct Accounting and
Compliance Practice
Timelines of Statutory Compliance
Use of correct method of Accounting Practices
Transition phase from Proprietorship to Partnership to
Pvt or Pub Ltd Co
How can a fair accounting practice increase the
valuation of the Company
FOREIGN DIRECT
INVESTMNT IN
RETAIL
What Is FDI?



FDI or Foreign Investment refers to the net inflows of
investment to acquire a lasting management interest
(10% or more) in an enterprise operating in an
economy
other than that of the investor .
It usually involves participation in management , joint
venture , transfer of technology and expertise.
FDI can be used as one measure of growing economic
globalization.
Indian Retail Sector -FDI In
Retailing

The key routes that Cos. are taking are:





5
Joint Venture
Local manufacturing (such as McDonald’s)
Franchising and Licensing Route
Sourcing from Small scale sector
Cash and carry operations (such as Metro, Shoprite South Africa)
SINGLE AND MULTI BRAND
RETAIL




SINGLE BRAND RETAIL :
It implies that a retail store with foreign investment can only
sell one brand.
Eg. Nokia , Reebok and Adidas.
MULTI BRAND RETAIL :
Retail store can sell multiple brands under one roof.
Global retailers like Wal – Mart , Carrefour and Tesco can
open stores offering a wide range of household items and
grocery directly to consumers in the same way as the “
Kirana” stores..
PRESENT SHAPE OF FDI

Retail industry – Second largest
employer ( with an
estimated 35 million people
engaged by the industry).
FDI in multi brand to 51%. New
policy will allow multi brand foreign
retailers to set
up shop only in
cities with a population of more than
10
lakhs as per the 2011 census.(
there are 53 such cities)




Foreign retailers will be required to put up 50% of
total FDI in back-end infrastructure excluding that
on front end expenditures ( land cost and rent will
not be counted ).
Big retailers will need to source atleast 30% of
manufactured or
processed products from small retailers OR
MANUFACTURERS .
According to the newspaper Indo – Asian News
Service , Washington US has said that FDI in retail
tradewould be beneficial to both India and U.S.
In Jan 2012 SINGLE BRAND FDI hiked to 100 %
from 51%.
FAVOuRABLES





INDIAN FARMERS : Farmers will be the biggest
beneficiary of FDI in retail who will be able to improve
their productivity.
INDIAN CONSUMERS : Indian consumers will get access
to quality goods at a low cost, that too at home.
PROPER TAX SYSTEM :Tax revenue will increase like
VAT and service tax.
PARTERNSHIP OPPORTUNITY : Indian Retailers have
reason
to be happy as it involves a lot of learning that could
take them to higher profitability.
HIGH AVAILABILITY OF JOBS





DISTRIBUTION SYSTEM : 30-35% of India’s total
production of fruits and vegetables is wasted
every year due to inadequate cold storage and
transport facilities. Giant retailers will help
India to have strong storage system with
highly developed transportation.
INDIAN MIDDLE CLASS
KNOWLEDGE ENHANCEMENT : FDI in retail will
make way for inflow of knowledge from
international experts.
MANAGEMENT EDUCATIONAL INSTITUTE BOOM
: Growth of organized retail in India will be a “
sunrise” for the management educational
institute.
INFLATION CONTROL :Inflation will be curbed.
UN-FAVOURABLES


The new system will displace the traditional shops
and petty retail shops in markets and mohallahs.
Around 38% people in rural areas and around 47%
in urban areas depend on retail trade for their
livelihood , which will be affected. Around 14 crore
people are directly or indirectly earning from the
retail sector. So this may in turn render the people
engaged there jobless and non business oriented.
Proprietorship



Singly owned or managed company
Mandatory Requirements
 Pan Card of Proprietor
 Service Tax Number if providing services covered under service tax
 TIN number if engaged in trading of goods covered under the Sales
Tax Act
 Current Account with any Bank
 TAN Number for TDS deduction
Statutory Compliance
 Income Tax Return ( ITR 4 )
 Maintenance of Books ( If Tax Audit is compulsory )
 Service Tax Return ( if service tax number taken )
 Sales Tax Return ( if TIN number taken )
 Filing of TDS Return if Tax Deducted at Source
 Tax Audit – If applicable as per Income Tax Act ( i.e if turnover
exceeds the statutory limit)
Partner Ship



Various Individuals creates a partnership concern
Mandatory Requirements
 Pan Card of Partnership
 Partnership Deed
 Service Tax Number if providing services covered under service tax
 TIN number if engaged in trading of goods covered under the Sales
Tax Act
 Current Account with any Bank – Can have various signatories
 TAN Number for TDS deduction
Statutory Compliance
 Income Tax Return ( ITR 5 – Partnership concern )
 Income Tax Return ( ITR 3 – for individuals who are partners )
 Maintenance of Books of Accounts
 Service Tax Return ( if service tax number taken )
 Sales Tax Return ( if TIN number taken )
 Filing of TDS Return if Tax Deducted at Source
 Tax Audit – If applicable as per Income Tax Act ( i.e if turnover
Private or Public Ltd Co



Various Individuals are Directors or Promoters
Privately held or Publicly held shares
Mandatory Requirements
 Registration of Company with ROC
 Memorandum of Association and Articles of Association
 Pan of the company.
 Service Tax Number if providing services covered under service tax
 TIN number if engaged in trading of goods covered under the Sales
Tax Act
 Current Account with any Bank – Can have various signatories
 TAN Number for TDS deduction
 DIN required for all Directors ( ROC purpose )
 Digital Signatures required for Director who is authorized signatory
Private or Public Ltd Co

Statutory Compliance
 Audit and Tax Audit – If applicable as per Income Tax Act
 Income Tax Return ( ITR 6 – Partnership concern
 Maintenance of Books of Accounts
 Service Tax Return ( if service tax number taken )
 Sales Tax Return ( if TIN number taken )
 Filing of TDS Return if Tax Deducted at Source
 Registrar of Companies – Annual Return with ROC form 20B, 66 for
compliance certificate, 23AC and ACA
 Tax Audit – If applicable as per Income Tax Act ( i.e if turnover
exceeds the statutory limit)
Income Tax



Income Tax Site – http://www.incometaxindiaefiling.gov.in
Different forms for different concerns
 ITR 4 – Proprietorship
 ITR 5 – Partnership
 ITR 6 – Limited Companies
 Due Dates
st
 31 July for whom tax audit is not required.
 For Individuals/Partnership who requires tax audit u/s
44AB – 30th September
 For Companies – 30th September
Rates of Income Tax
 Individuals – As per the Tax Slab
 Partnership and Corporate – 30% of the Profit and
Surcharge
Tax Deducted at Source







Income Tax Site – http://tin-nsdl.com
TAN number is compulsory
TDS deducted should be deposited on or before 7th of every month (April
to February) and
TDS deducted in March should be deposited on or before 30th April
Different TDS certificates issued for different deductees
 Form 16 for salaried employees
 Form 16A for professionals and other deductees
Due Dates for filing TDS Returns
 1st Quarter April to June – 15th July
 2nd Quarter July to Sep – 15th Oct
 3rd Quarter Oct – December – 15th Jan
th
th
 4 Quarter Jan – March – 15 May
Rates of TDS
 Depends upon the deductor and deductee and type of transaction
Sales Tax




TIN Number has to be obtained compulsorily if
Sales Tax is applicable i.e once sales transaction is
done, covered under the Sales Tax Act.
Due date for remittance of VAT and CST returns –
for Financial Year 2010 - 2011 – 20th of the
following month.
Sales Tax need to be deposited
monthly/quarterly/annually depending upon the
turnover and quantum of Tax Payable.
Returns can be filed monthly or quarterly /annually
depending upon the turnover and quantum of Tax
Payable
Service Tax







Service tax is mandatory if services provided covered under
the service tax.
Mandatory for all types of concern
Rate of Service Tax 10.3% on the services rendered
To apply – ST 1 form is required
To file service tax return ST 3 form is required
Service Tax Site - http://www.servicetax.gov.in/
Due dates for depositing service tax is



Incase of Companies – April to Feb (5th of every following month) and
March – 31st March
Incase of Non Companies – April to June – 5th July, July to Sep – 5th
Oct, Oct – Dec – 5th Jan and Jan – March – 31st March
Due date for filing service tax returns –


Half yearly – April to Sep – 25th Oct
Half yearly – Oct to March – 25th April
ROC Management










ROC Tax Site – http://www.mca.gov.in
DIN number to be obtained for every director of the company
To be registered under Companies Act 1956 to attain the status of
the company
Annual Return and other compliances has to be filed through ROC
site
Digital signature required for authorized director
Due Date of filing the Compliance Certificate/Final Accounts is 31st
October and Annual return is 30th November of the subsequent
financial year
Annual return forms 20B, 23 AC & ACA, Form 66 for compliance
certificate
Compulsory for all registered companies
Filing charges as per the authorized capital and AGM dates
Maintenance of Books of Accounts, Books of Minutes of General
meeting and Board of Directors Meeting
Accounting Management






Method of Accounting – Accrual or Receipt Basis ( Cash
Basis )
Accounting Standard – ICAI – Indian GAAP – General
Accounting and Auditing Practices
Types of Accounts – Balance Sheet, Profit and Loss, Cash
Flow, Ratio Analysis, Bank Reconciliation,
Types of Books – Cash Book, Bank Book, Ledger – Journal
Vouching, Debtors and Creditors
Types of Vouchers – Cash, Bank, JV
U/s 44AA – Compulsory maintenance of books of account if
the turn over exceeds Rs 60 lakhs.
Accounting Management – Important Figures






Balance Sheet – Assets should match the Liabilities
Profit and Loss Account - Gross and Net Profit
Earnings before Interest, Tax and Depreciation
Ratio Analysis – Stock Turnover, Debtors Turnover, Net
Profit, Current Ratio etc.
Cash Flow and Fund Flow in positive and negative
Valuation of the Company.
Fair accounting and compliance practice




If accounting and compliance practice followed properly and
on time you come in good books of the regulatory body
Increase in credit worthiness and easy to obtain credit
Checks on creditors and debtors – Helps in to reduce the credit
period and bad debts
Increase in valuation of the company as following correct
accounting principals may give correct gross and net profit
figures along with other relevant figures.
Advantages of converting the Partnership
Firm/Proprietorship into Private limited
company:
Other Advantages
 Separate legal entity.
Perpetual succession
 Easy transferability of shares
 Distribution of profits by way of dividends
 Remuneration to directors.
 Limited liability of members
 Raising of capital through Issue of equity/ preference shares and debentures
 Favourable attitude of financial Institutions while granting various facilities.
Precautions
 Interest on capital cannot be paid.
 Deposits can be accepted only from Members, Directors and their relatives
 All legal proceedings by and against the company remain continued even after
the conversion.