Our dilemma as an EntrepreneurOur dilemma as an Entrepreneur

Are we meeting our statutory compliance on timeAre we meeting our statutory compliance on time Are we having following a correct and fair Are we having following a correct and fair

accounting practicesaccounting practices What are the neccesary statutory compliances for What are the neccesary statutory compliances for

Proprietorship, Partnership, Ltd CoProprietorship, Partnership, Ltd Co What if I have skipped or miss the deadline of What if I have skipped or miss the deadline of

meeting our compliances on time?meeting our compliances on time? What if there is a notice from a statutory body What if there is a notice from a statutory body

relating to my compliances?relating to my compliances? And many moreAnd many more

Objective Objective

Importance of Accounting and Compliance Importance of Accounting and Compliance ManagementManagement

Implementing fair and correct Accounting and Implementing fair and correct Accounting and Compliance PracticeCompliance Practice

Timelines of Statutory ComplianceTimelines of Statutory Compliance Use of correct method of Accounting PracticesUse of correct method of Accounting Practices Transition phase from Proprietorship to Partnership Transition phase from Proprietorship to Partnership

to Pvt or Pub Ltd Coto Pvt or Pub Ltd Co How can a fair accounting practice increase the How can a fair accounting practice increase the

valuation of the Companyvaluation of the Company

FOREIGN FOREIGN DIRECT DIRECT

INVESTMNT IN INVESTMNT IN RETAILRETAIL

What Is FDI?What Is FDI? FDI or Foreign Investment refers to the net inflows FDI or Foreign Investment refers to the net inflows

ofof

investment to acquire a lasting management interest investment to acquire a lasting management interest

(10% or more) in an enterprise operating in an (10% or more) in an enterprise operating in an economy economy

other than that of the investor .other than that of the investor . It usually involves participation in management , It usually involves participation in management ,

jointjoint

venture , transfer of technology and expertise.venture , transfer of technology and expertise. FDI can be used as one measure of growing FDI can be used as one measure of growing

economic economic

globalization.globalization.

55

Indian Retail Sector -FDI In Indian Retail Sector -FDI In Retailing Retailing

  The key routes that Cos. are taking are:The key routes that Cos. are taking are:

Joint VentureJoint Venture Local manufacturing (such as McDonald’s) Local manufacturing (such as McDonald’s) Franchising and Licensing Route Franchising and Licensing Route Sourcing from Small scale sector Sourcing from Small scale sector Cash and carry operations (such as Metro, Shoprite South Africa) Cash and carry operations (such as Metro, Shoprite South Africa)

  

SINGLE AND MULTI BRAND SINGLE AND MULTI BRAND RETAILRETAIL

SINGLE BRAND RETAIL : SINGLE BRAND RETAIL : It implies that a retail store with foreign It implies that a retail store with foreign investment can only sell one brand.investment can only sell one brand.Eg. Nokia , Reebok and Adidas.Eg. Nokia , Reebok and Adidas.

MULTI BRAND RETAIL MULTI BRAND RETAIL ::Retail store can sell multiple brands under one Retail store can sell multiple brands under one roof.roof.Global retailers like Wal – Mart , Carrefour and Global retailers like Wal – Mart , Carrefour and Tesco can open stores offering a wide range of Tesco can open stores offering a wide range of household items and grocery directly to household items and grocery directly to consumers in the same way as the “ consumers in the same way as the “ Kirana” Kirana” stores..stores..

PRESENT SHAPE OF PRESENT SHAPE OF FDI FDI Retail industry – Second Retail industry – Second

largest employer ( with an largest employer ( with an estimated 35 million people estimated 35 million people

engaged by the industry).engaged by the industry). FDI in multi brand to 51%. FDI in multi brand to 51%.

New policy will allow multi New policy will allow multi brand foreign retailers to set brand foreign retailers to set up shop only in cities with a up shop only in cities with a population of more than 10 population of more than 10 lakhs as per the 2011 census.lakhs as per the 2011 census.( there are 53 such cities)( there are 53 such cities)

Foreign retailers will be required to put up Foreign retailers will be required to put up 50% of total FDI in back-end 50% of total FDI in back-end infrastructure excluding that on front end infrastructure excluding that on front end expenditures ( land cost and rent will not expenditures ( land cost and rent will not be counted ).be counted ).

Big retailers will need to source atleast Big retailers will need to source atleast 30% of manufactured or30% of manufactured or

processed products from small retailers processed products from small retailers OR MANUFACTURERS .OR MANUFACTURERS .

According to the newspaper Indo – Asian According to the newspaper Indo – Asian News Service , Washington US has said News Service , Washington US has said that FDI in retail tradewould be beneficial that FDI in retail tradewould be beneficial to both India and U.S.to both India and U.S.

In Jan 2012 SINGLE BRAND FDI hiked to In Jan 2012 SINGLE BRAND FDI hiked to 100 % from 51%.100 % from 51%.

FAVOuRABLESFAVOuRABLES INDIAN FARMERS INDIAN FARMERS : : Farmers will be the biggest Farmers will be the biggest

beneficiary of FDI in retail who will be able to beneficiary of FDI in retail who will be able to improve their productivity.improve their productivity.

INDIAN CONSUMERS INDIAN CONSUMERS : Indian consumers will : Indian consumers will get access to quality goods at a low cost, get access to quality goods at a low cost, that too at home.that too at home.

PROPER TAX SYSTEM PROPER TAX SYSTEM :Tax revenue will :Tax revenue will increase like VAT and service tax.increase like VAT and service tax.

PARTERNSHIP OPPORTUNITY PARTERNSHIP OPPORTUNITY : Indian Retailers : Indian Retailers have reasonhave reason

to be happy as it involves a lot of learning to be happy as it involves a lot of learning that could take them to higher profitability.that could take them to higher profitability.

HIGH AVAILABILITY OF JOBSHIGH AVAILABILITY OF JOBS

DISTRIBUTION SYSTEM : DISTRIBUTION SYSTEM : 30-35% of India’s 30-35% of India’s total production of fruits and vegetables total production of fruits and vegetables is wasted every year due to inadequate is wasted every year due to inadequate cold storage and transport facilities. cold storage and transport facilities. Giant retailers will help India to have Giant retailers will help India to have strong storage system with highly strong storage system with highly developed transportation.developed transportation.

INDIAN MIDDLE CLASS INDIAN MIDDLE CLASS KNOWLEDGE ENHANCEMENT : KNOWLEDGE ENHANCEMENT : FDI in retail FDI in retail

will make way for inflow of knowledge will make way for inflow of knowledge from international expertsfrom international experts..

MANAGEMENT EDUCATIONAL INSTITUTE MANAGEMENT EDUCATIONAL INSTITUTE BOOM BOOM : : Growth of organized retail in Growth of organized retail in India will be a “ sunrise” for the India will be a “ sunrise” for the management educational institute.management educational institute.

INFLATION CONTROL INFLATION CONTROL ::Inflation will be Inflation will be curbedcurbed..

UN-FAVOURABLESUN-FAVOURABLES The new system will displace the traditional The new system will displace the traditional

shops and petty retail shops in markets and shops and petty retail shops in markets and mohallahs.mohallahs.

Around 38% people in rural areas and Around 38% people in rural areas and around 47% in urban areas depend on retail around 47% in urban areas depend on retail trade for their livelihood , which will be trade for their livelihood , which will be affected. Around 14 crore people are affected. Around 14 crore people are directly or indirectly earning from the retail directly or indirectly earning from the retail sector. So this may in turn render the sector. So this may in turn render the people engaged there jobless and non people engaged there jobless and non business oriented.business oriented.

ProprietorshipProprietorship

Singly owned or managed companySingly owned or managed company Mandatory RequirementsMandatory Requirements

Pan Card of ProprietorPan Card of Proprietor Service Tax Number if providing services covered under service taxService Tax Number if providing services covered under service tax TIN number if engaged in trading of goods covered under the Sales Tax TIN number if engaged in trading of goods covered under the Sales Tax

ActAct Current Account with any BankCurrent Account with any Bank TAN Number for TDS deductionTAN Number for TDS deduction

Statutory ComplianceStatutory Compliance Income Tax Return ( ITR 4 )Income Tax Return ( ITR 4 ) Maintenance of Books ( If Tax Audit is compulsory )Maintenance of Books ( If Tax Audit is compulsory ) Service Tax Return ( if service tax number taken )Service Tax Return ( if service tax number taken ) Sales Tax Return ( if TIN number taken )Sales Tax Return ( if TIN number taken ) Filing of TDS Return if Tax Deducted at SourceFiling of TDS Return if Tax Deducted at Source Tax Audit – If applicable as per Income Tax Act ( i.e if turnover exceeds Tax Audit – If applicable as per Income Tax Act ( i.e if turnover exceeds

the statutory limit)the statutory limit)

Partner ShipPartner Ship

Various Individuals creates a partnership concernVarious Individuals creates a partnership concern Mandatory RequirementsMandatory Requirements

Pan Card of PartnershipPan Card of Partnership Partnership DeedPartnership Deed Service Tax Number if providing services covered under service taxService Tax Number if providing services covered under service tax TIN number if engaged in trading of goods covered under the Sales Tax ActTIN number if engaged in trading of goods covered under the Sales Tax Act Current Account with any Bank – Can have various signatoriesCurrent Account with any Bank – Can have various signatories TAN Number for TDS deductionTAN Number for TDS deduction

Statutory ComplianceStatutory Compliance Income Tax Return ( ITR 5 – Partnership concern )Income Tax Return ( ITR 5 – Partnership concern ) Income Tax Return ( ITR 3 – for individuals who are partners )Income Tax Return ( ITR 3 – for individuals who are partners ) Maintenance of Books of AccountsMaintenance of Books of Accounts Service Tax Return ( if service tax number taken )Service Tax Return ( if service tax number taken ) Sales Tax Return ( if TIN number taken )Sales Tax Return ( if TIN number taken ) Filing of TDS Return if Tax Deducted at SourceFiling of TDS Return if Tax Deducted at Source Tax Audit – If applicable as per Income Tax Act ( i.e if turnover exceeds the Tax Audit – If applicable as per Income Tax Act ( i.e if turnover exceeds the

statutory limit)statutory limit)

Private or Public Ltd CoPrivate or Public Ltd Co

Various Individuals are Directors or PromotersVarious Individuals are Directors or Promoters Privately held or Publicly held sharesPrivately held or Publicly held shares Mandatory RequirementsMandatory Requirements

Registration of Company with ROCRegistration of Company with ROC Memorandum of Association and Articles of AssociationMemorandum of Association and Articles of Association Pan of the company.Pan of the company. Service Tax Number if providing services covered under service taxService Tax Number if providing services covered under service tax TIN number if engaged in trading of goods covered under the Sales TIN number if engaged in trading of goods covered under the Sales

Tax ActTax Act Current Account with any Bank – Can have various signatoriesCurrent Account with any Bank – Can have various signatories TAN Number for TDS deductionTAN Number for TDS deduction DIN required for all Directors ( ROC purpose )DIN required for all Directors ( ROC purpose ) Digital Signatures required for Director who is authorized signatoryDigital Signatures required for Director who is authorized signatory

Private or Public Ltd CoPrivate or Public Ltd Co

Statutory ComplianceStatutory Compliance Audit and Tax Audit – If applicable as per Income Tax ActAudit and Tax Audit – If applicable as per Income Tax Act Income Tax Return ( ITR 6 – Partnership concern Income Tax Return ( ITR 6 – Partnership concern Maintenance of Books of AccountsMaintenance of Books of Accounts Service Tax Return ( if service tax number taken )Service Tax Return ( if service tax number taken ) Sales Tax Return ( if TIN number taken )Sales Tax Return ( if TIN number taken ) Filing of TDS Return if Tax Deducted at SourceFiling of TDS Return if Tax Deducted at Source Registrar of Companies – Annual Return with ROC form 20B, 66 for Registrar of Companies – Annual Return with ROC form 20B, 66 for

compliance certificate, 23AC and ACAcompliance certificate, 23AC and ACA Tax Audit – If applicable as per Income Tax Act ( i.e if turnover Tax Audit – If applicable as per Income Tax Act ( i.e if turnover

exceeds the statutory limit)exceeds the statutory limit)

Income Tax Income Tax

Income Tax Site – http://www.incometaxindiaefiling.gov.inIncome Tax Site – http://www.incometaxindiaefiling.gov.in Different forms for different concernsDifferent forms for different concerns

ITR 4 – ProprietorshipITR 4 – Proprietorship ITR 5 – PartnershipITR 5 – Partnership ITR 6 – Limited CompaniesITR 6 – Limited Companies Due DatesDue Dates

3131stst July for whom tax audit is not required. July for whom tax audit is not required. For Individuals/Partnership who requires tax audit u/s For Individuals/Partnership who requires tax audit u/s

44AB – 3044AB – 30thth September September For Companies – 30For Companies – 30thth September September

Rates of Income TaxRates of Income Tax Individuals – As per the Tax SlabIndividuals – As per the Tax Slab Partnership and Corporate – 30% of the Profit and SurchargePartnership and Corporate – 30% of the Profit and Surcharge

Tax Deducted at Source Tax Deducted at Source

Income Tax Site – http://tin-nsdl.comIncome Tax Site – http://tin-nsdl.com TAN number is compulsoryTAN number is compulsory TDS deducted should be deposited on or before 7TDS deducted should be deposited on or before 7 thth of every month (April of every month (April

to February) and to February) and TDS deducted in March should be deposited on or before 30TDS deducted in March should be deposited on or before 30 thth April April Different TDS certificates issued for different deducteesDifferent TDS certificates issued for different deductees

Form 16 for salaried employeesForm 16 for salaried employees Form 16A for professionals and other deducteesForm 16A for professionals and other deductees

Due Dates for filing TDS ReturnsDue Dates for filing TDS Returns 11stst Quarter April to June – 15 Quarter April to June – 15thth July July 22ndnd Quarter July to Sep – 15 Quarter July to Sep – 15thth Oct Oct 33rdrd Quarter Oct – December – 15 Quarter Oct – December – 15thth Jan Jan 44thth Quarter Jan – March – 15 Quarter Jan – March – 15thth May May

Rates of TDSRates of TDS Depends upon the deductor and deductee and type of transactionDepends upon the deductor and deductee and type of transaction

Sales Tax Sales Tax

TIN Number has to be obtained compulsorily if TIN Number has to be obtained compulsorily if Sales Tax is applicable i.e once sales transaction is Sales Tax is applicable i.e once sales transaction is done, covered under the Sales Tax Act.done, covered under the Sales Tax Act.

Due date for remittance of VAT and CST returns – Due date for remittance of VAT and CST returns – for Financial Year 2010 - 2011 – 20th of the for Financial Year 2010 - 2011 – 20th of the following month.following month.

Sales Tax need to be deposited Sales Tax need to be deposited monthly/quarterly/annually depending upon the monthly/quarterly/annually depending upon the turnover and quantum of Tax Payable. turnover and quantum of Tax Payable.

Returns can be filed monthly or quarterly /annually Returns can be filed monthly or quarterly /annually depending upon the turnover and quantum of Tax depending upon the turnover and quantum of Tax PayablePayable

Service Tax Service Tax

Service tax is mandatory if services provided covered under the Service tax is mandatory if services provided covered under the service tax.service tax.

Mandatory for all types of concernMandatory for all types of concern Rate of Service Tax 10.3% on the services renderedRate of Service Tax 10.3% on the services rendered To apply – ST 1 form is requiredTo apply – ST 1 form is required To file service tax return ST 3 form is requiredTo file service tax return ST 3 form is required Service Tax Site - http://www.servicetax.gov.in/ Service Tax Site - http://www.servicetax.gov.in/ Due dates for depositing service tax isDue dates for depositing service tax is

Incase of Companies – April to Feb (5Incase of Companies – April to Feb (5 thth of every following month) and of every following month) and March – 31March – 31stst March March

Incase of Non Companies – April to June – 5Incase of Non Companies – April to June – 5 thth July, July to Sep – 5 July, July to Sep – 5thth Oct, Oct Oct, Oct – Dec – 5– Dec – 5thth Jan and Jan – March – 31 Jan and Jan – March – 31stst March March

Due date for filing service tax returns –Due date for filing service tax returns – Half yearly – April to Sep – 25Half yearly – April to Sep – 25 thth Oct Oct Half yearly – Oct to March – 25Half yearly – Oct to March – 25 thth April April

ROC Management ROC Management

ROC Tax Site – http://www.mca.gov.inROC Tax Site – http://www.mca.gov.in DIN number to be obtained for every director of the companyDIN number to be obtained for every director of the company To be registered under Companies Act 1956 to attain the status of the To be registered under Companies Act 1956 to attain the status of the

companycompany Annual Return and other compliances has to be filed through ROC siteAnnual Return and other compliances has to be filed through ROC site Digital signature required for authorized directorDigital signature required for authorized director Due Date of filing the Compliance Certificate/Final Accounts is 31st Due Date of filing the Compliance Certificate/Final Accounts is 31st

October and Annual return is 30th November of the subsequent October and Annual return is 30th November of the subsequent financial yearfinancial year

Annual return forms 20B, 23 AC & ACA, Form 66 for compliance Annual return forms 20B, 23 AC & ACA, Form 66 for compliance certificatecertificate

Compulsory for all registered companiesCompulsory for all registered companies Filing charges as per the authorized capital and AGM datesFiling charges as per the authorized capital and AGM dates Maintenance of Books of Accounts, Books of Minutes of General Maintenance of Books of Accounts, Books of Minutes of General

meeting and Board of Directors Meetingmeeting and Board of Directors Meeting

Accounting Management Accounting Management

Method of Accounting – Accrual or Receipt Basis ( Cash Method of Accounting – Accrual or Receipt Basis ( Cash Basis )Basis )

Accounting Standard – ICAI – Indian GAAP – General Accounting Standard – ICAI – Indian GAAP – General Accounting and Auditing PracticesAccounting and Auditing Practices

Types of Accounts – Balance Sheet, Profit and Loss, Cash Types of Accounts – Balance Sheet, Profit and Loss, Cash Flow, Ratio Analysis, Bank Reconciliation, Flow, Ratio Analysis, Bank Reconciliation,

Types of Books – Cash Book, Bank Book, Ledger – Journal Types of Books – Cash Book, Bank Book, Ledger – Journal Vouching, Debtors and CreditorsVouching, Debtors and Creditors

Types of Vouchers – Cash, Bank, JVTypes of Vouchers – Cash, Bank, JV U/s 44AA – Compulsory maintenance of books of account if U/s 44AA – Compulsory maintenance of books of account if

the turn over exceeds Rs 60 lakhs.the turn over exceeds Rs 60 lakhs.

Accounting Management – Important FiguresAccounting Management – Important Figures

Balance Sheet – Assets should match the LiabilitiesBalance Sheet – Assets should match the Liabilities Profit and Loss Account - Gross and Net ProfitProfit and Loss Account - Gross and Net Profit Earnings before Interest, Tax and DepreciationEarnings before Interest, Tax and Depreciation Ratio Analysis – Stock Turnover, Debtors Turnover, Net Ratio Analysis – Stock Turnover, Debtors Turnover, Net

Profit, Current Ratio etc.Profit, Current Ratio etc. Cash Flow and Fund Flow in positive and negative Cash Flow and Fund Flow in positive and negative Valuation of the Company.Valuation of the Company.

Fair accounting and compliance practice Fair accounting and compliance practice

If accounting and compliance practice followed properly and If accounting and compliance practice followed properly and on time you come in good books of the regulatory bodyon time you come in good books of the regulatory body

Increase in credit worthiness and easy to obtain creditIncrease in credit worthiness and easy to obtain credit Checks on creditors and debtors – Helps in to reduce the credit Checks on creditors and debtors – Helps in to reduce the credit

period and bad debtsperiod and bad debts Increase in valuation of the company as following correct Increase in valuation of the company as following correct

accounting principals may give correct gross and net profit accounting principals may give correct gross and net profit figures along with other relevant figures.figures along with other relevant figures.

Advantages of converting the Partnership Advantages of converting the Partnership Firm/Proprietorship into Private limited Firm/Proprietorship into Private limited

companycompany:

Other Advantages Other Advantages Separate legal entity. Separate legal entity.

Perpetual succession Perpetual succession Easy transferability of shares Easy transferability of shares Distribution of profits by way of dividends Distribution of profits by way of dividends Remuneration to directors. Remuneration to directors. Limited liability of members Limited liability of members Raising of capital through Issue of equity/ preference shares and debentures Raising of capital through Issue of equity/ preference shares and debentures Favourable attitude of financial Institutions while granting various facilities. Favourable attitude of financial Institutions while granting various facilities.

Precautions Precautions Interest on capital cannot be paid. Interest on capital cannot be paid. Deposits can be accepted only from Members, Directors and their relatives Deposits can be accepted only from Members, Directors and their relatives All legal proceedings by and against the company remain continued even after All legal proceedings by and against the company remain continued even after

the conversion. the conversion.