doing business in india –india information technology
TRANSCRIPT
DOING BUSINESS IN INDIA – INDIA INFORMATION TECHNOLOGY ENABLED SERVICES SECTOR
Legal & Accounting/Compliance update
June 01, 2020
© R
ödl &
Par
tner
©
Röd
l & P
artn
er
AGENDA1 Legal update
2 Introduction- Accounting and Compliance
3 Questions?
2
© R
ödl &
Par
tner
©
Röd
l & P
artn
er
OUR TEAM TODAY
https://www.roedl.com/about-us/locations/india/For our latest India tax and regulatory updates : please visit our website or click on the link provided below :
Ritika AroraSr. Associate – Legal
Martin WörleinHead of India and South Asia Advisory
Sushant MehtaSr. Associate - FTS
3
© R
ödl &
Par
tner
©
Röd
l & P
artn
er
OVERVIEW OF ENTRY OPTIONS IN INDIA
1. LEGAL UPDATE
For any legal or compliance queries, please write to [email protected]
Investment
Incorporated Entity
Joint-VentureSubsidiary
Presence of theforeign entity
Branch OfficeProject OfficeLiaison Office
PrivateLimited
Ltd. Liability PartnershipPermission for
representative officeNo business allowed
Standard Form of Business
Full business scope
Non-Standard Form ofBusiness
Full business scopeRestrictions on
lending money fromabroad
Permission forrendering (only) assigned project,
Permission for trading/ marketing / servicing
officeNo manufacturing
allowed
4
© R
ödl &
Par
tner
©
Röd
l & P
artn
er
1. LEGAL UPDATE
5
ü Legally definedtimelines for completionof the resolutionprocess
ü Thresholds to initiatethe process
ü Electronic Informationsystem about thecompanies in insolvency process
ü Continuing legal processes and furtherdevelopments
ü Standardization andstreamlining of laborlaws and regulations
ü Codification in 4 categories (Industrial Relations, Wages, Safety and SocialSecurity)
ü Introduction of Model laws and regulations(Shop andEstablishment Act)
ü Ease of Compliance (Portal, LIN)
ü Centralised anddigital process
ü Fast companyformation
ü Required taxregistrations aredone now parallel with theincorporationprocess
ü Practical Problems ü Opening a bank
accountü Specific
registrations forsetting up businessin IT sector.
SETTING UP
ü 100% FDI underautomatic route insoftware/ IT industry/data processing etc.
ü Activities of BusinessProcess Outsourcingrequire specificlicences fromDepartment ofTelecommunication.
ü Information TechnologyAct, 2000 read withrelevant rules
ü Draft Personal DataProtection Bill modelledafter General DataProtection Regulationsof the EU (GDPR)
SECTOR SPECIFIC INSOLVENCY &BANKRUPTCY LAW
LABOUR LAWSLAWENFORCEMENTü Recognition of foreign
judgments only after filing executionproceedings/ civil suit
ü Choice of law and placeof jurisdiction
ü Arbitration andConciliation Act, modern arbitration lawand institutionsavailable
ü Contract drafting underCommon Law
ü Transparent andcomprehensiblejudgments
For any legal or compliance queries, please write to [email protected]
© R
ödl &
Par
tner
©
Röd
l & P
artn
er
2. ACCOUNTING STANDARDS
Ø EVOLVING INDIAN GAAP:v Accounting Standards have a significant role to play in establishment of sound financial reporting system in the country.
Implementation of the Accounting Standards in letter and spirit is an inherent requisite for establishment of sound financial reporting system inthe country.
v The Ministry of Corporate Affairs notified in 2006 the Accounting Standards and related amendments prescribed by the Accounting StandardBoard (ASB) formed by Institute of Chartered Accountants of India (‘ICAI’).
v These are the initial set of Accounting Standards (‘AS’) notified and required to be mandatorily complied by the Small and Medium sizedCompanies while preparing their financial statements, to whom Indian Accounting Standards (Ind-AS) are not applicable. As on date there are31 mandatory AS. These AS describe the Indian GAAP (‘Generally Accepted Accounting Principles) similar to the accounting standards issuedby The Swiss Foundation for Accounting and Reporting ('Swiss GAAP').
v The Financial Statements prepared using the AS were not in line with the standards and principles applicable globally (IFRS-InternationalFinancial Reporting Standards). Due to this investors were not able to assess and compare the financial position of Indian companies with otherglobal companies. In order to make the financial statements uniform, Ind-AS were introduced which are converged form of IFRS.
v The Ind AS, was notified by the Ministry of Corporate Affairs in February, 2015, and as amended from time to time have been applicable to thespecified class of companies in phased manner from 01 April 2016 onwards. As on date there are 41 Ind AS notified by the Ministry ofCorporate Affairs.
v Accordingly a Company in India is mandatorily required to publish its local Financial statements complying with AS or Ind-AS for every financialyear (‘FY’) beginning 01 April of a year to 31 March of the next year. The audited financial statements complying the national Indian standardsare required to be submitted with regulatory body.
v In addition to the above a Company can also opt for publishing of financial statements under IFRS/US GAAP or its local GAAP like Swiss GAAP,basis requirements of the Group.
For any accounting/ compliance or audit query, please feel free to write to [email protected] 6
© R
ödl &
Par
tner
©
Röd
l & P
artn
er
2. BASIC COMPLIANCES
For any accounting/ compliance or audit query, please feel free to write to [email protected] 7
COMPLIANCES
COMPANY SECRETARIAL
-Statutory Registers
-Secretarial data -Regulatory reporting
DIRECT TAX-Withholding Tax
-Advance Tax-Transfer Pricing
INDIRECT TAX-Goods and Service Tax
-Custom Duty
AUDITS-Discussed in
subsequent slide
LABOUR LAWS-Minimum wages
-Security contributions
ACCOUNTING STANDARDS-Discussed in previous slide
© R
ödl &
Par
tner
©
Röd
l & P
artn
er
3. AUDITS
For any accounting/ compliance or audit query, please feel free to write to [email protected] 8
• Required under Companies Act 2013. It is mandatorily required for all Companies incorporated in India irrespective of the size of operations.
Statutory Audit (HBI)
• Required under Income Tax Act 1961. Applicable in case gross receipts or turnover exceeds INR 10 million ( CHF 130,000) ; Vide Finance Act, 2020threshold is increased to INR 50 million ( CHF 650,000) if cash payment or cash receipt is less than 5% of total payment or receipts.
Tax Audit
• Required under Income Tax Act 1961. Applicable when an enterprise is engaged in any of the international transaction and certain specified domestic transactions with any associate enterprise.
Transfer Pricing Audit
• Required under Central Goods and Service Tax Act 2017. Applicable when annual turnover exceeds INR 50 million ( CHF 650,000).
Goods And Service Tax Audit
• Required under Companies (Cost Records and Audit) Rules, 2014. Applicable in case of turnover limits INR 500 million ( CHF 6,500,000) /INR 1,000 million ( CHF 13,000,000) and production of specified goods/services.
Cost Audit
• Not required by any Regulation. It is more driven basis the requirements of the Groups.
HB II Audit
© R
ödl &
Par
tner
©
Röd
l & P
artn
er
THANK YOU!
9
This document contains general information that may have been sourced from publicly available information and / or from any third party sources. This document should not be construed as a professional advice. No representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this documents. It is advisable to contact a professional advisor before making any decision or taking any action based on the information contained in this document. For detailed discussion, please reach out to us.