Frequently asked
question

As per Section 2(41) of the CA, 2013, the “financial year” for any company or body corporate means the period ending on the 31st day of March every year. If a company is incorporated on or after the 1st of January of a year, the financial year ends on the 31st day of March of the following year.

For example:
- If a company is incorporated before 1st January of a year, the financial year shall start from the date of incorporation and end on the 31st day of March of the same year.
- If a company is incorporated after 1st January of a year, the financial year shall start from the date of incorporation and end on the 31st of March of the following year.

As per Section 96 of the Companies Act, 2013, the first AGM of a company should be held within 9 months from the end of the close of the financial year. For example, if a company’s financial year commences on 1st April and ends on 31st March, the first AGM must be held latest by 31st December of that year.

DIN stands for Director Identification Number, which is a unique identification number issued by the Ministry of Corporate Affairs (MCA) to an intending director. An individual must hold a valid DIN before being appointed as a director in any company.

SPICe refers to “Simplified Proforma for Incorporating Company Electronically”. It is an integrated process for incorporating a company using Form No. INC-32 along with the e-Memorandum of Association in Form No. INC-33 and e-Articles of Association in Form No. INC-34. This process has been introduced by the Ministry of Corporate Affairs (MCA).

As per Companies (Incorporation) Fifth Amendment Rules, 2016, all companies except Part I companies and companies with more than 7 subscribers/promoters are required to follow the SPICe process for incorporation. This rule has been effective from 1st January 2017.

As per Section 152 of the Companies Act, 2013, an individual holding a valid DIN (Director Identification Number) and not disqualified from being appointed as a director under Section 164 is eligible to be appointed as a director. The individual must give written consent to act as a director, along with a declaration that they are not disqualified from being a director under the Companies Act, 2013.

As per Section 139 of the Companies Act, 2013, the first auditors must be appointed by the Board of Directors within 30 days of the registration of the company. If the Board fails to appoint the auditors within this period, the members in a general meeting will appoint the auditors. The first auditor will hold office until the conclusion of the first Annual General Meeting (AGM).

A Chartered Accountant, Cost Accountant, or any other professional as decided by the Board of Directors may be appointed as the internal auditor of the company. The internal auditor may or may not be an employee of the company.

As per Section 139(6) of the Companies Act, 2013, the first auditor of the company is appointed by the Board of Directors within 30 days of incorporation.

As per Section 139(8) of the Companies Act, 2013, if a casual vacancy arises due to resignation of the auditor, the Board of Directors must fill the vacancy within 30 days. However, approval of the members through a general meeting is required within 3 months from the date of intimation to shareholders. The auditor appointed will hold office until the conclusion of the next AGM.

As per Section 140(1) of the Companies Act, 2013, a company may remove its auditor before the expiry of their term by obtaining prior approval of the Central Government and passing a special resolution in a general meeting.

As per Section 22 of the CGST/SGST Act 2017, every supplier (including his agent) who makes a taxable supply of goods or services under GST law, and whose aggregate turnover exceeds the threshold limit of twenty lakh rupees in a financial year, must register under GST in the State or Union territory from where the taxable supply is made.

For eleven special category states, the threshold limit is ten lakh rupees.

GST Composition Scheme is a scheme that allows small taxpayers to pay tax at a reduced rate on their turnover, simplifying the compliance process. A registered taxpayer needs to inform the tax authorities of their intention to register under the scheme. If the taxpayer fails to do so, they will be treated as a normal taxpayer.

The threshold limit for opting the Composition Scheme is Rs. 150 Lakhs of aggregate turnover in the preceding financial year. The benefit of the scheme can be availed up to Rs. 150 Lakhs turnover in the current financial year.

Input Tax Credit (ITC) is the credit of the tax paid on the purchase of goods or services. A registered taxable person can claim ITC under the following conditions:

• He is in possession of a tax invoice or debit note (or any other valid tax-paying document).
• He has received the goods or services.
• The supplier has actually paid the tax charged to the government.
• He has filed the return under Section 39 of the CGST Act.

For example, if Sowmya receives goods and services and has the tax invoice but the supplier has not paid the tax or filed the return, then ITC cannot be claimed.

Every person registered under GST is required to file returns in some form.

• Normal suppliers file returns monthly, while those opting for the composition scheme file quarterly returns.
• Input Service Distributors (ISD) file monthly returns showing the details of credit distributed.
• Persons required to deduct tax (TDS) and collect tax (TCS) must file monthly returns showing the amounts deducted/collected.
• Non-resident taxable persons must file returns for the period of their activity.

Section 14 of the Income-tax Act has classified the income of a taxpayer under five different heads of income, viz:

• Salaries.
• Income from house property.
• Profits and gains of business or profession.
• Capital gains.
• Income from other sources.

Section 14 of the Income-tax Act has classified the income of a taxpayer under five different heads of income, viz:

• Normal suppliers file returns monthly, while those opting for the composition scheme file quarterly returns.
• Input Service Distributors (ISD) file monthly returns showing the details of credit distributed.
• Persons required to deduct tax (TDS) and collect tax (TCS) must file monthly returns showing the amounts deducted/collected.
• Non-resident taxable persons must file returns for the period of their activity.

Income Tax Return is the form in which assessee files information about his/her Income and tax thereon to Income Tax Department.

Benefit of filing ITR -

Filing of return is your duty and earns for you the dignity of consciously contributing to the development of the nation. Apart from this, your income-tax returns validate your credit worthiness before financial institutions and make it possible for you to access many financial benefits such as bank credits, etc.

The exact taxes payable on income can be finalized only on completion of the previous year. However, to enable a regular flow of funds and for easing the process of collection of taxes, Income-Tax Act has provisions for payment of taxes in advance during the year of earning itself or before completion of previous year. It is also known as “pay as you earn concept”. The balance taxes after taxes paid during the previous year, can be paid on or before filing of return of income.

Taxes are collected by the Government through the following means:

• Voluntary payment by taxpayers such as Advance tax, Self-Assessment tax, etc.
• Taxes deducted at source.
• Taxes collected at source.
• Equalization Levy.