Sunday, 8 March 2015

Notice u/s 245 of Income Tax Act - How to deal with it?

What is Notice u/s 245 of Income Tax Act?

With rising number of assessees filing their income tax returns online for the sake of better correspondence and transparency still they face some hardships. Once such hardship is notice u/s 245 of Income tax Act.

Now the question is what to do if you receive a notice u/s 245 of Income tax Act?

 First and foremost thing to do in case of any correspondence from Income tax department is to put a date of receipt of notice first. Now read the notice carefully. You will it says that there was some previous outstanding demand that is pending for payment by the assessee and now since in the year under process there is refund due to assessee, the tax department is going to adjust the current year’s refund against the previous outstanding demand.

Options available to Assessee in response to above notice:
The assessee can either accept the demand or reject the demand based on the facts and documents available with him/her.

Case 1: In case Assessee is of an opinion that the demand is correct
Login to your Income tax efiling account, Click on my pending cases on the home screen and proceed. When you click show outstanding demand the system will show the demand figure. In this window you can accept or reject the demand. If the assessee accepts the demand then the current year’s ITR against which the previous outstanding demand is proposed to be adjusted will get adjusted.  Then the ITR will be processed and refund due to assessee will get adjusted against the previous outstanding demand and balance if any payable or refundable will be worked accordingly and a separate of same will be sent to assessee.

Case 2: In case Assessee is of opinion that demand is incorrect

In this case assessee will simply reject the demand and then the assessee will have to approach his/her local AO. Since the notice u/s 245 is being issue for adjustment of outstanding demands for the ITR’s filed manually. Now assessee will have to file rectification application to his local AO and get the mistake or error rectified from the AO. Once the AO uploads the rectification at the online income tax system, the demand won’t show again at the online efiling portal and ITR will get processed and the refund amount due to assessee will be paid accordingly in full.

Thursday, 7 November 2013

Requirements for Incorporation of Private Ltd Co.
Through this blog, I have put in my sincere efforts for making the people familiarize with the procedure and requirements for incorporation of a Private Limited Co.
Here is a step by step checklist of all the documents that you need to arrange for company incorporation before and during the company incorporation process.
Step 1:
Apply for Director Identification of the proposed directors of the Company.

Information required for application of DIN (Director’s Identification Number)

  1. Name
  2. Father's Name
  3. Address (Permanent and Present Address)
  4. DOB
  5. PAN
  6. Passport Number
  7. Voter Identity card number
  8. Driving license number (If you don’t have any of above four except PAN then ignore that)
  9. Educational Qualification of the proposed directors
  10. Current Occupation
  11. Place of Birth of the proposed Directors
  12. E mail ID of Directors
  13. Phone number of Directors

Documents required for application of DIN (Director’s Identification Number

  1. A self-attested scanned copy of PAN card in .pdf format.
  2. A self-attested scanned copy in PDF format, of either of driving license, Passport, voter ID card.
  3. One recent passport size color photograph in jpeg format.
  4. A notary attested Affidavit signed by applicant on Rs. 10/- stamp paper. Refer the following link to download the affidavit.               
  5. In case of a Non Resident Indian or a Foreign National, a copy of password is required to be submitted along with notarized copies of identity proof and address proof from Indian Consulate (representative of Indian Embassy) of home country.

The DIN 1 application form properly filled in using the above information and attaching the required documents required to be digitally signed and submitted by a practicing CA/CS/CWA. The DIN is issued instantly as soon as the application is submitted online subject to condition that if information supplied is found false at any moment thereafter then necessary action will be taken against the concerned persons and it would amount to professional misconduct on part of practicing professional who had digitally signed and submitted the DIN 1 form. An approval letter is also sent by MCA at the provided E – mail address. There is Government fee Rs. 100/- for application of DIN in form DIN 1. The receipt of same is provided instantly by way of GAR 7 payment challan.

Step 2:
After acquiring DIN, apply for Digital Signatures and then fill form 1A for Name Approval
One of the proposed Directors will have to get a Class-II digital signature certificate issued in his/her name. The following information will have to be supplied to the issuing authority.

  • Name
  • Father's Name 
  • Address
  • DOB
  • PAN
One recent color passport size photograph of proposed director, in jpeg format. It usually takes three days now for the issue of digital signatures.
A properly filled in and signed application form along with proof of identity and proof of address needed to be supplied to the issuing authority for issue of digital signatures.

Step 3:
Application for availability of Proposed Name of the Company

For approval of proposed name one need to finalize six names and then check for the availability of the same by using the search facilities provided at Ministry of corporate affairs web portal. Please select those names with which no company is already registered and no company has got that word or sentence registered as their logo, trademark etc. Also don’t select any name which is similar to national emblem etc. Also we need to mention the meaning/significance of the proposed names. Also we need to mention the main objects for which the company is to be incorporated.

Like, for example the last one that I got registered is a software development company. I mentioned.

The main objective of the company is to provide software solutions varying from software development, consultancy, maintenance and support for web, mobile and desktop information technology systems & other ancillary tasks required for providing the above services. Apart from this providing training Courses in the related programming languages and issuing training certificates for the same.

Please note that in form 1A, you need to provide a summarized objective. The Object Clause of the Memorandum of Association of the Company contains the detailed objective and can include any other object under ancillary and secondary objective list.

The Government fee for Name Approval is Rs. 1,000/- to be paid online at the time of submission of the form. There is requirement to attach digital signature of one of the directors who will be the first subscribers to Memorandum.

One can take help of a practicing professional (CA/CS) who will give a declaration using his digital signatures that he has himself checked the name availability by making proper use of search facilities provided at MCA portal for inquiring as to availability of the proposed name and has not come across any already registered trademark/logo and companies name similar to proposed company name. In case you take help of a practicing professional then you need not mention six proposed names. Only one proposed name will be provided for the consideration of MCA personnel but there are chances of rejection and declaration by practicing professional is not a certification. Then in case of rejection you will have to intimate other proposed name within 60 days of date of intimation of receipt of rejection. After name approval you need to complete the company registration process within 60 days.

You can check the following link for the rates of stamp duty applicable in your state

Step 4:
Once the proposed name is approved then we will draft Memorandum of Association and Articles of Association and file Forms 1, 18 and 32 simultaneously with Registrar of Companies online through MCA portal.

FORM 1 (Application or declaration for incorporation of a Company)
Memorandum of Association is the document that governs the relationship between the company and its outside world. No person can make binding a contract on the company which is outside the scope of the provisions of MOA.

This document is comprised of the following clauses:

  1. Name clause
  2. Registered office clause (The name of the state in which the registered office of the  company will be situated)
  3. Objective Clause comprised of: Main Objects, Ancillary Objects, Other ancillary objects.
  4. Authorized Share Capital (one can start the company by only meeting the minimum Capital requirement i.e. Rs. 1,00,000/-)
  5. Liability Clause (This clause mentions that the liability of the directors will be limited)
The other document to be drafted is the Articles of Association of the Company. These are basically the rules of the company.

The MOA and AOA are accompanied with a detail of first directors/subscribers handwritten by respective first directors/subscribers to memorandum which will then be signed by a practicing CA/CS/CWA and then a scanned copy is attached along with Memorandum and Articles of Association of the company.

The following format or some other acceptable format for subscribers to memorandum is required to be attached to MOA and AOA:

We, the several persons whose names and addresses are hereunto subscribed, are desirous of being formed into a Company in pursuance to this Memorandum of Association and we respectively agree to take the number of shares in the capital of the company set opposite to our respective names.

Names , Address, Descriptions, Occupation and
Signature of the subscribers(in own handwriting of each individual director)

Number of Equity Shares taken by each Subscriber
Names , Address, Description, Occupation and Signature of the Witness(CA/CS/CWA along with membership number)


We, the several persons whose names and addresses are hereunto subscribed, are desirous of being formed into a Company in pursuance to this Articles of Association.

Names , Address, Descriptions, Occupation and Signature of the subscribers(Own handwriting)
Names , Address, Description, Occupation and Signature of the Witness


FORM 18 (For notice of situation of Registered Office)

  • Proof of address of the registered office to be attached to e-form 18.
  • For address proof of the company we will require rent/lease deed and either of NOC from owner for use of building or office space for the company purposes or a copy of telephone or electricity bill.
  •  If the proposed registered office space is in the name of the director then a No Objection Certificate from Director is required to be attached along with e-for 18.
Please visit the following link for draft format of No Objection Certificate from landlord/director as the case may be:
Registered Office - NOC

Other Information to be supplied in e-form 18

  • The name and address of jurisdictional police station (means the nearby police station)
  • Email id of the proposed company.

FORM 32 (Particulars as to Managing Director, Director, Secretary, Manager)
In this form one has to enter information as to managing director, director, secretary, manager. There is no mandatory requirement for appointment of a Secretary or a manager if there is a Director who is appointed as Managing Director. A director can be appointed as managing director if he/she is full time director in the company and looking after the routine working of the company. This doesn't mean that he/she cannot take part is the professional services being provided or to be provided by the company. Also one needs to have a basic understanding of Executive and Non-Executive director before filling this form. An executive director is one who takes part in routine activities of the company and a non-executive director is more like a sleeping partner. People in private jobs or in MNC’s can be appointed as Non-executive directors. Non-executive directors are added to make the required count for incorporation of a company. The positions can be changed later by way of board resolutions and then making proper intimations at time of annual filings with ROC.

Power of ROC to obtain declaration/Affidavit from subscribers/first directors at the time of incorporation
This is a new requirement as per a recent circular and is to be provided on demand. It is a simple declaration by promoter directors in affidavit form they will not accept any deposits without obtain prior proper consent under applicable provisions of the Companies Act 1956, RBI provisions and SEBI Act. The said declaration is to be signed by promoter directors properly notarized on Rs. 100/- stamp paper.

Payment of Government fee for Registration and Stamp duty
ROC accepts online payment of fee. The fee depends on amount of Authorized Share capital fee and Stamp duty. Please note that stamp duty varies from state to state. Please refer the below link for checking the stamp duty in your state
The authorized share capital fee for Rs. one lack of authorized capital is Rs. 4,400/- approx.
Please refer this link and select option Company Incorporation and then Form 1 and fill in the amount of authorized capital. You will get to know the fee.

Step 5:
Verification of documents/forms submitted at MCA portal by concerned ROC.
The submitted Forms and Documents are properly scrutinized and in case of any objections/queries, re submission of the same is called for. In case everything is alright and acceptable, CERTIFICATE OF INCORPORATION is issued. Same can be checked using SRN ‘Service Request Number’ by using Track your Transaction status option at MCA portal. A certificate of Incorporation will also be sent at mail.

Issue of Certificate of Incorporation
A digitally signed certificate of Incorporation of company is issued in Form 1 in .pdf format, mentioning the Corporate Identity Number allotted to Company thereon to the Directors on acceptance of submitted forms by Registrar and Deputy Registrar.

Post Incorporation Activities 
Company Seal
After the incorporation process is complete, get a company stamp and seal manufactured and preserve it from unauthorized use. The same should be used for any entering into any legal contract in name of the company, while operating bank account, issuance of share certificate etc.

Application for permanent Account Number in name of the Company
Subsequent to obtaining Certificate of incorporation, apply for PAN of the Company by filling form 49A visiting any PAN faciliitation centre of UTI or NSDL. Attach a copy of certificate of incorporation. This form is to be stamped using company Seal and signed by any one of the directors of the Company. IT takes almost 20-25 days for issue of PAN card.

Opening a Bank Account in the Company name
After getting Certificate of registration, Stamp and Seal, PAN. Visit any Bank branch as per convenience along with a copy of Certificate of Incorporation, PAN and MOA and AOA and stamp and seal of company.

Apply for other statutory requirements
Apply for other legal requirements based on objectives for which company is incorporated.

  • VAT Registration for trading and manufacturing entities.
  • Shop Act registration for Trading entities & Factory licence for manufacturing Entities.
  • Issuance of share certificate with a reasonable time span.
  • Share certificate is to be issued within 180 days in case there is a foreign director.
  • Appointment of Statutory Auditor within 30 days of date of incorporation.
  • Professional tax.
  • EPF/ESIC etc.
  • Import Export code if applicable. 
  • Service Tax Registration except for services mentioned in negative list.
            Hope this information helps you in your professional endeavor and reaching new heights of profession.

PS: The information shared over here is based solely on my professional experience, knowledge and legal guidelines provided at Ministry of Corporate Affairs web portal. These are subject to amendments in Law and other updates. This does not constitute any legal advice. Please share your thoughts and comments to motivate me in putting more efforts and help provide best information by way of this blog.