The unsaid side of INC-29 Single Form for #CompanyRegistration #CompanyIncorporation #INC29

The integrated form for company incorporation, INC-29, has been in discussions for quite sometimes now. This has also led to some rumours about certain aspects of the INC-29 that are required to be clarified. Here is Munim.in attempt to clear some common misconceptions about the form.

Rumor 1: PAN and TAN can be registered through INC-29
The form INC-29 does not give you a PAN or TAN. These are required to be applied separately just as before. Although, INC-29 form asks for ‘Additional Information for applying Permanent Account Number (PAN) and Tax Account Number (TAN)’, however, if further read, the form clearly states that ‘this facility is available at the e-Biz portal only as per separate procedure prescribed by e-Biz portal’. If you then go to the e-Biz portal, you’ll find the procedure is still to be completed offline. 

Rumor 2: ESIC can also be registered through INC-29
INC-29 also asks for details for an Employee State Insurance Corporation (ESIC) application, and thus, many seem to believe that submission of the form will provide you with ESIC registration. This is not the case at all. To actually get registered, a separate application is to be submitted at the regional office of ESIC. 

Rumors 3: INC-29 Form charges are lower
Many reports suggest that the new procedure is more expensive, but the cost of the incorporation procedure is, in fact, lower under INC-29. Under INC-29, you need to pay Rs. 2000 for filing the form, which includes up to three DINs and the cost of name reservation. And only one DSC is required. If you don’t opt for INC-29, you must pay Rs. 1,000 for INC-1, Rs. 500 per DIN and Rs. 300 each for INC-7 , DIR-12 and INC-22. 

Rumor 4: If not approved the form may be resubmitted any number of time

The INC-29 form allows only one, not many, resubmissions for name approval. So in case the name is rejected on the first attempt, the next one must be approved. If it is rejected, the complete form needs to be submitted again as a fresh procedure alongwith form fees. Under the old process, applicants may suggest six names, but the Registrar still often rejects them on multiple occasions. 

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Confused about VAT and CST, here is the solution #SalesTax #CompanyIncorporation

Sales Tax

Sales tax is the tax paid to the government for the sale of goods. This is generally a fixed percentage and varies from place to place as well as product to product. Sales tax is levied on each transaction whether it is from Manufacturer to Wholesaler, Wholesaler to Retailer or Retailer to Customer.

Sales Tax are of two types:

•  State Sales Tax (VAT, Value Added Tax) - Collected by State Government
• Central Sales Tax (CST) - Collected by Central Government

When the trading is done in the same state i.e. both the parties, buyer and seller are from the same state then the tax applied is VAT but when the parties are from different states then the tax applied is CST

Intrastate Trading – VAT

Interstate Trading – CST

Let us understand this in more detail with certain scenarios:

Scenario 1:

Suppose the Manufacturer of certain goods has manufacturing unit in state A and selling his product to the wholesaler in State A itself.

Suppose Cost + Margin for the product at Manufacturer’s end is Rs 100. If the VAT for state A is 10 % then the total VAT amount for this transaction will be Rs 10, the responsibility to pay this amount to the authority will rest with the manufacturer.

Now if the retailer also belongs to State A, keeping Rs 10 as margin for himself, the wholesaler will sell the product to retailer at Rs 110 so the tax for the wholesaler will be Rs 11 but he has to pay only Rs 1 as tax because the Manufacturer has already paid Rs 10 as tax to the Government. Now the wholesaler will provide tax certificate of Rs 10 and Rs 1 to the retailer.

If the retailer again keeps a margin of Rs 10 then the cost of the product for the customer will be Rs 120. So the VAT amount for this will be Rs 12. Now again as tax of Rs 11 has already been paid to the Government and retailer carries tax certificate of Rs 10 and Rs 1 both he has to pay only Rs 1 as VAT.

This is termed as the Input Credit Scheme where the amount of tax is not continuously added for each end user. The final amount of tax levied for this product is Rs 12 only.  

	Value	Margin	VAT@10%	CST@8%	VAT Paid	Responsibilty
Manufacturer	Rs 100	inclusive	Rs 10	NA	Rs 10	Manufacturer
Wholesaler	Rs 100	Rs 10	Rs 11	NA	Rs 1	Wholesaler
Retailer	Rs 110	Rs 10	Rs 12	NA	Rs 1	Retailer
Total TAX Paid					Rs 12

Scenario 2:

Suppose the Manufacturer of certain goods has manufacturing in State A and selling his product to the wholesaler in State B where there is a branch of manufacturer i.e. Manufacturer has a branch in State B.

In this scenario, the manufacturer in State A may stock transfer the goods to its branch in State B to cater to the wholesaler in Sate B i.e. Tax invoice made in State B. Now, this would be considered as intrastate trading and the tax applied will be VAT of State B. The Calculation of the VAT would be similar to that in Scenario 1.

Applicability of VAT and CST would be determined by the State of Tax invoice. If, in this scenario, the tax invoice is being raised by the manufacturer in State A, then CST would be applicable.

Scenario 3:

Suppose the Manufacturer of certain goods has manufacturing in state A and selling his product to the wholesaler in State B. Manufacturer does not have any branch in State B.

In this scenario, when manufacturer doesn’t have any facility to raise tax invoice from the wholesaler invoice, CST would be applicable.

If the Cost + Margin at the Manufacturer’s end is Rs 100 and the CST is 8 % then the amount of tax is Rs 8. It is important to note here that the input credit on CST cannot be claimed. Thus effectively (or practically) the value of product for the Wholesaler will be Rs 108 as input credit would not be available.

If the Wholesaler keeps margin of Rs 2 with himself then Cost + Margin at Wholesaler’s end will be Rs 110 and selling to the Retailer in State B. Adding 10 % VAT for the transaction the amount of tax for the Wholesaler will be Rs 11. Again if the Retailer keeps a margin of Rs 10 then Cost + Margin at Customer end will be Rs 120. VAT for this transaction @10% will be Rs 12 but as the Wholesaler has already paid Rs 11 as tax to the Government, Retailer will have to pay only Re 1 as tax.

	Value	Margin	VAT@10%	CST@8%	VAT Paid	Responsibilty
Manufacturer	Rs 100	inclusive	NA	Rs 8	-	Manufacturer
Wholesaler	Rs 108	Rs 2	Rs 11	NA	Rs 11	Wholesaler
Retailer	Rs 110	Rs 10	Rs 12	NA	Rs 1	Retailer
Total TAX Paid				Rs 8	Rs 12

For VAT/CST registration, please visit Munim.in.

In case of any query, please feel free to contact us at www.munim.in 

Munim Team

Your Personal Munim

www.munim.in

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How to Name your Company or LLP for Incorporation (Naming Rules)?

 

NAMING GUIDELINES FOR INCORPORATION

• The availability of the proposed name may be checked at Munim.in here
• NAME MUST CONTAIN THE FOLLOWING:
  
  

- NOUN/COINED WORD AND

- ACTIVITY OF THE BUSINESS

(Followed by Private Limited/ Limited Liability Partnership)

Eg:- 1. MUNIM SERVICES LLP

2.TATA INDUSTRIES  PRIVATE LIMITED

3. RADIANCE MANUFACTURING PRIVATE LIMITED

4. FLIPKART ONLINE SERVICES PRIVATE LIMITED

5.RELIANCE MEDIA CONSULTANT PRIVATE LIMITED

• SIGNIFICANCE OF NAME

1. MUNIM IS A HINDI WORD WHERE CLIENTS GET SERVICES ( LEGAL/E-COMMERCE/CONSULTATION) FROM THE PROPOSED COMPANY

2. TATA IS THE NAME OF THE PROMOTER AND THE PROPOSED COMPANY IS INTO DIFFERENT ACTIVITIES, HENCE THE NAME

3. RADIANCE MEANS BRIGHTNESS, AND QUALITY OF BEING BRIGHT. WE WOULD LIKE TO DO THE BUSINESS IN HANDICRAFT SECTOR AND WE WANT TO SHINE IN THAT SECTOR.

4. FLIPKART COINED WORD. WE ARE INTO THE ONLINE SERVICES BUSINESS. HENCE THE NAME.

5. RELIANCE MEANS TRUST. WE WANT TO DO BUSINESS IN MEDIA SEGMENT WITH TRUST WITH ALL STAKE HOLDERS.

• CHANCES OF REJECTION

- WHERE NAME DOES NOT CONTAIN NOUN/COINED WORD AND ACTIVITY

- WHERE ACTIVITY IN THE NAME DOES NOT MATCH WITH THE BUSINESS

• OTHER IMPORTANT POINTS

- ACTIVITIES OR BUSINESS GIVEN IN THE NAME OF THE COMPANY MUST MATCH WITH THE MAIN OBJECTS

- THE NAME SHOULD BE UNIQUE IN THE INDUSTRY

- ABBREVIATED NAMES NOT ALLOWED.

- CARP LIFESTYLE PRIVATE LIMITED

   - GFBAY INDIA PRIVATE LIMITED

SUBSIDIARY OF FOREIGN COMPANIES

- IF THE PARENT COMPANY WOULD LIKE TO USE THE SAME PARENT COMPANY NAME IN INDIAN COMPANY - PLEASE ADD INDIA OR NAME OF ANY INDIAN STATE / CITY

NGO’S - SECTION 8 COMPANIES:

The name shall include the words Foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and like that etc.

NEW INCORPORATION RULES

Undesirable names.-

(1) In determining whether a proposed name is identical with another, the differences on account of the following shall be disregarded-

(a) the words like Private, Pvt, Pvt., (P), Limited, Ltd, Ltd., LLP, Limited Liability Partnership;

(b) words appearing at the end of the names – company, and company, co., co, corporation, corp, corpn, corp.;

(c) plural version of any of the words appearing in the name;

(d) type and case of letters, spacing between letters and punctuation marks;

(e) joining words together or separating the words does not make a name distinguishable from a name that uses the similar, separated or joined words;

(f) use of a different tense or number of the same word does not distinguish one name from another;

(g) using different phonetic spellings or spelling variations shall not be considered as distinguishing one name from another. Illustration (For example, P.Q. Industries limited is existing then P and Q Industries or Pee Que Industries or P n Q Industries or P & Q Industries shall not be allowed and similarly if a name contains numeric character like 3, resemblance shall be checked with ‘Three’ also;)

(h) misspelled words, whether intentionally misspelled or not, do not conflict with the similar, properly spelled words;

(i) the addition of an internet related designation, such as .com, .net, .edu, .gov, .org, .in does not make a name distinguishable from another, even where (.) is written as ‘dot’;

(j) the addition of words like New, Modern, Nav, Shri, Sri, Shree, Sree, Om, Jai, Sai, The, etc. does not make a name distinguishable from an existing name and similarly, if it is different from the name of the existing company only to the extent of adding the name of the place, the same shall not be allowed; such names may be allowed only if no objection from the existing company by way of Board resolution is submitted;

(k) different combination of the same words does not make a name distinguishable from an existing name, e.g., if there is a company in existence by the name of “Builders and Contractors Limited”, the name “Contractors and Builders Limited” shall not be allowed unless it is change of name of existing company;

(l) if the proposed name is the Hindi or English translation or transliteration of the name of an existing company or limited liability partnership in English or Hindi, as the case may be.

(2) (a) The name shall be considered undesirable, if-

(i) it attracts the provisions of section 3 of the Emblems and Names (Prevention and Improper Use) Act, 1950 (12 of 1950);

(ii) it includes the name of a registered trade mark or a trade mark which is subject of an application for registration, unless the consent of the owner or applicant for registration, of the trade mark, as the case may be, has been obtained and produced by the promoters;

(iii) it includes any word or words which are offensive to any section of the people;

(2)(b) The name shall also be considered undesirable, if-

(i) the proposed name is identical with or too nearly resembles the name of a limited liability partnership;

(ii) it is not in consonance with the principal objects of the company as set out in the memorandum of association; Provided that every name need not be necessarily indicative of the objects of the company, but when there is some indication of objects in the name, then it shall be in conformity with the objects mentioned in the memorandum;

(iii) the company’s main business is financing, leasing, chit fund, investments, securities or combination thereof, such name shall not be allowed unless the name is indicative of such related financial activities, viz., Chit Fund or Investment or Loan, etc.;

(iv) it resembles closely the popular or abbreviated description of an existing company or limited liability partnership;

(v) the proposed name is identical with or too nearly resembles the name of a company or limited liability partnership incorporated outside India and reserved by such company or limited liability partnership with the Registrar: Provided that if a foreign company is incorporating its subsidiary company in India, then the original name of the holding company as it is may be allowed with the addition of word India or name of any Indian state or city, if otherwise available;

(vi) any part of the proposed name includes the words indicative of a separate type of business constitution or legal person or any connotation thereof e.g. co-operative, sehkari, trust, LLP, partnership, society, proprietor, HUF, firm, Inc., PLC, GmbH, SA, PTE, Sdn, AG etc.;

Explanation.- For the purposes of this sub-clause, it is hereby clarified that the name including phrase ‘Electoral Trust’ may be allowed for Registration of companies to be formed under section 8 of the Act, in accordance with the Electoral Trusts Scheme, 2013 notified by the Central Board of Direct Taxes (CBDT):

Provided that name application is accompanied with an affidavit to the effect that the name to be obtained shall be only for the purpose of registration of companies under Electoral Trust Scheme as notified by the Central Board of Direct Taxes;

(vii) the proposed name contains the words ‘British India’;

(viii) the proposed name implies association or connection with embassy or consulate or a foreign government;

(ix) the proposed name includes or implies association or connection with or patronage of a national hero or any person held in high esteem or important personages who occupied or are occupying important positions in Government;

(x) the proposed name is vague or an abbreviated name such as ‘ABC limited’ or ‘23K limited’ or ‘DJMO’ Ltd: abbreviated name based on the name of the promoters will not be allowed. For example:- BMCD Limited representing first alphabet of the name of the promoter like Bharat, Mahesh, Chandan and David provided that existing company may use its abbreviated name as part of the name for formation of new company as subsidiary or joint venture or associate company but such JV or associate company shall not have an abbreviated name only. e.g. Delhi Paper Mill Limited get a JV as DPM Papers Limited and not as DPM Limited. 

Moreover provided further that the companies well known in their respective field by abbreviated names are allowed to change their names to abbreviation of their existing name after following the requirements of the Act;

(xi) the proposed name is identical to the name of a company dissolved as a result of liquidation proceeding and a period of two years have not elapsed from the date of such dissolution:

Provided that if the proposed name is identical with the name of a company which is struck off in pursuance of action under section 248 of the Act, then the same shall not be allowed before the expiry of twenty years from the publication in the Official Gazette being so struck off;

(xii) it is identical with or too nearly resembles the name of a limited liability partnership in liquidation or the name of a limited liability partnership which is struck off up to a period of five years;

(xiii) the proposed name include words such as ‘Insurance’, ‘Bank’, ‘Stock Exchange’, ‘Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual fund’ etc., unless a declaration is submitted by the applicant that the requirements mandated by the respective regulator, such as IRDA, RBI, SEBI, MCA etc. have been complied with by the applicant;

(xiv) the proposed name includes the word “State”, the same shall be allowed only in case the company is a government company;

(xv) the proposed name is containing only the name of a continent, country, state, city such as Asia limited, Germany Limited, Haryana Limited, Mysore Limited;

(xvi) the name is only a general one, like Cotton Textile Mills Ltd. or Silk Manufacturing Ltd., and not Lakshmi Silk Manufacturing Co. Ltd;

(xvii) it is intended or likely to produce a misleading impression regarding the scope or scale of its activities which would be beyond the resources at its disposal:

(xviii) the proposed name includes name of any foreign country or any city in a foreign country, the same shall be allowed if the applicant produces any proof of significance of business relations with such foreign country like Memorandum Of Understanding with a company of such country:

Provided that the name combining the name of a foreign country with the use of India like India Japan or Japan India shall be allowed if, there is a government to government participation or patronage and no company shall be incorporated using the name of an enemy country. Explanation.- For the purposes of this clause, enemy country means so declared by the Central Government from time to time.

(3) If any company has changed its activities which are not reflected in its name, it shall change its name in line with its activities within a period of six months from the change of activities after complying with all the provisions as applicable to change of name.

(4) In case the key word used in the name proposed is the name of a person other than the name(s) of the promoters or their close blood relatives, No objection from such other person(s) shall be attached with the application for name. In case the name includes the name of relatives, the proof of relation shall be attached and it shall be mandatory to furnish the significance and proof thereof for use of coined words made out of the name of the promoters or their relatives.

(5) The applicant shall declare in affirmative or negative ( to affirm or deny ) whether they are using or have been using in the last five years , the name applied for incorporation of company or LLP in any other business constitution like Sole proprietor or Partnership or any other incorporated or unincorporated entity and if, yes details thereof and No Objection Certificate from other partners and associates for use of such name by the proposed Company or LLP, as the case may be, and also a declaration as to whether such other business shall be taken over by the proposed company or LLP or not .

(6) The following words and combinations thereof shall not be used in the name of a company in English or any of the languages depicting the same meaning unless the previous approval of the Central Government has been obtained for the use of any such word or expression- (a) Board; (b) Commission; (c) Authority; (d) Undertaking; (e) National; (f) Union; (g) Central; (h) Federal; (i) Republic; (j) President; (k) Rashtrapati; (l) Small Scale Industries; (m) Khadi and Village Industries Corporation; (n) Financial, Corporation and the like; (o) Municipal; (p) Panchayat; (q) Development Authority; (r) Prime Minister or Chief Minister; (s) Minister; (t) Nation; (u) Forest corporation; (v) Development Scheme; (w) Statute or Statutory; (x) Court or Judiciary; (y) Governor; (z) the use of word Scheme with the name of Government (s) , State , India, Bharat or any government authority or in any manner resembling with the schemes launched by Central, state or local Governments and authorities; and (za) Bureau

(7) For the Companies under section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like etc. Every company incorporated as a “Nidhi” shall have the last word ‘Nidhi Limited’ as part of its name.

(8) The names released on change of name by any company shall remain in data base and shall not be allowed to be taken by any other company including the group company of the company who has changed the name for a period of three years from the date of change subject to specific direction from the competent authority in the course of compromise, arrangement and amalgamation.

For Further guidance and clarification please contact Munim.in

For Company Registration please visit: Munim

Munim Team

Your Personal Munim

www.munim.in

Reach us @ +91 8800681678 | contact@munim.in

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