Difference Between Regular GST and Composite GST Schemes

The Regular GST Scheme

This scheme has been designed by the government to cater the needs of the entities who are engaged in the business which handle the turnover which are large in nature and can manage the tax compliance which are more detailed. Under this regular GST scheme, businesses must maintain a detailed records for the transactions which take place, regularly file monthly returns and pay GST on the value of goods and services supplied.

Advantages of the Regular Scheme

• Input Tax Credit: Businesses has the option claim ITC on their purchases, which results in reducing their overall tax liability.
• No Operational Restrictions: This is very much suitable for businesses which are involved in interstate trade and service providers.
• Growth Potential: Businesses can grow without needing to worry about switching schemes every time their turnover increases.

Disadvantages of the Regular Scheme

• Higher Compliance: This scheme involves a lot of compliances such as monthly returns and annual returns are mandatory in nature which in turn increases the compliance burden.
• Complex Tax Calculation: Tax liability must be calculated on each transaction, which can be complex and time-consuming, especially for businesses dealing with a high volume of transactions or intricate tax rules.
• Higher Tax Rates: The tax rates are relatively on a higher side as compared to the Composition Scheme which results in impacting the cash flow.

The Composition GST Scheme

The composition GST scheme is best suited for small business entities that have a turnover of up to 1.5 crores. It aims to simplify tax compliance by allowing these business entities to pay a fixed rate of tax on their annual turnover and file quarterly returns. This scheme, though, aims at reducing the compliance burden, but it also comes with certain types of restrictions, such as the disability to claim input tax credits and the limitations on interstate transactions.

Advantages of the Composition Scheme

• Lower Tax Rates: The tax rates under the Composition Scheme are relatively on a lower side as compared to the Regular Scheme. For example, manufacturers and traders are taxed at 1%, restaurants at 5%, and other service providers at 6%.
• Simplified Compliance: The Composition Scheme requires the filing of quarterly returns and annual returns which in turn aims at reducing the compliance burden.
• Ease of Calculation: Tax liability the Composition Scheme is solely calculated on the basis of the annual turnover which makes it easier to compute and pay taxes.

Cons of the Composition Scheme

• No Input Tax Credit (ITC): As per the Composition Scheme the businesses are not entitled to  claim ITC on their purchases as a result it increases their overall tax liability.
• Limited Operations: The Composition Scheme not suitable for the businesses which are involved in interstate transactions or businesses those provide services (except restaurants).
• Restricted Growth: As the business grows and exceeds, the turnover of such businesses also increases, so it must switch to the Regular Scheme, which could complicate compliance.
• Limited to Domestic Sales: Businesses under this scheme are restricted to carrying out transactions within the state or intra-state sales only. They are not allowed to undertake inter-state sales or exports.
• No Tax Collection: Another restriction is that businesses cannot collect tax from their customers. This means the tax paid under the Composite Scheme is a cost to the business.

Major Points of Difference Between the Regular and Composition GST Schemes

Below is a detailed comparison highlighting the differences between the regular and composition GST schemes:-

Various  Scenarios to understand the Regular and Composition Scheme

To better understand the practical implications of the Regular and Composition Scheme, we can consider the following examples:-

Example 1: Small Retail Shop

Turnover: ₹50 lakhs per annum.

Nature of Business: Selling goods within the state.

Best Scheme: Composition Scheme. The lower tax rate and simplified compliance are beneficial for a small retail shop.

Example 2: Mid-Sized Manufacturing Unit

Turnover: ₹2 crores per annum.

Nature of Business: Manufacturing goods and selling both within and outside the state.

Best Scheme: Regular Scheme. The ability to claim ITC on inputs and the need for interstate transactions make the Regular Scheme more suitable.

Example 3: Service Provider

Turnover: ₹30 lakhs per annum.

Nature of Business: Providing consultancy services across multiple states.

Best Scheme: Regular Scheme. Service providers are generally not eligible for the Composition Scheme (except for specific cases like restaurants), and the ability to claim ITC is crucial for reducing tax liability.

Selection of the Right Scheme by a business entity

The decision of selection between the Regular and Composition GST schemes should align with the business model, operational needs, and long-term objectives of an organization. It’s also important to periodically review the choice from time to time with the growth of the business. The GST framework of India allows businesses to transition between schemes under certain conditions, so a business has the option to switch between different schemes if their situation changes by making sure that they always operate under the most beneficial arrangement. The selection of the scheme which is best suited for the business may depend upon the following factors:-

• Annual Turnover

Regular GST Scheme: If your business can manage compliance requirements, including monthly filings and maintaining detailed transaction records, this scheme offers more flexibility and benefits. Businesses must also ensure accurate online GST filing in India to maintain compliance and avoid penalties.

Composition Scheme: Ideal for small businesses with a turnover below the specified limit seeking to simplify their GST compliance and reduce the frequency of tax filings.

• Input Tax Credit

Regular GST Scheme: Choose this if your business frequently purchases taxable goods and services for production or resale. The ability to claim an Input Tax Credit (ITC) can significantly reduce your net GST liability.

Composition Scheme: If ITC is not a significant factor for your business—either because you have minimal GST on purchases or because your operations are mostly service-oriented with less input tax—this scheme could be more advantageous.

• Interstate Sales and E-commerce Operations

Regular GST Scheme: Required if your business involves interstate sales, exports, or supplies through e-commerce platforms. The Composition Scheme restricts these activities.

Composition Scheme: Suitable for businesses operating within their home state, with local sales only.

• Compliance Burden

Regular GST Scheme: If your business can manage compliance requirements, including monthly filings and maintaining detailed transaction records, this scheme offers more flexibility and benefits.

Composition Scheme: opt for this scheme if simplifying compliance, reducing paperwork, and minimizing filing obligations are priorities for your business.

• Business Growth and Expansion Plans

Regular GST Scheme: Ideal for businesses planning to expand beyond their state or explore e-commerce channels. It offers the flexibility needed for growth and diversification.

Composition Scheme: Best for businesses content with operating at a smaller scale or those aiming for steady-state operations without immediate expansion plans.

Conclusion

The two schemes offer some advantages and disadvantages depending upon the model and style of a business entity. The regular scheme majorly focuses on flexibility and ITC, but it requires the business to follow strict compliance. However, the composition schemes aim to reduce the compliances and taxes that are most required for small businesses, but they have their own limitations, as discussed above. The business entity must identify its own tailored needs and select the right scheme.

Related Services

• GST Registration Online
• GST Return Filing Online
• GST Annual Return Filing

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What is a Bonafide Certificate?

A Bonafide Certificate is a certificate that acts as an important document which acts as a link of authentication between the indivdual who is getting the same issued for himself/herself and the issuing authority.

This certificate is important to ensure transparency and reliability in various scenarios. Whether it is applying for a scholarship, obtaining a student loan, attending a conference or seminar, providing proof of accommodation for students in hostels or rental accommodation, verifying employment records, or processing travel documents for visas or passports, a certificate of bonafide plays a vital role in proving your association.

Who Issues a Certificate of Bonafide?

A certificate of bonafide is an official document issued by an educational institution, organization or body to verify the authenticity of an individual’s identity, status, position, statement or membership. This certificate is usually used for various purposes, such as education, employment or obtaining certain government documents.

Bonafide Certificate Format Online – Download Now in Word Format

Who Should Have a Bonafide Certificate?

Bonafide certificates are most importantly needed by individuals as well as organizations, having different purposes for each of them. Here are some individuals/organizations that commonly seek out certificates of bonafide:

1. Students: Educational purposes such as applying for scholarships, obtaining loans, attending conferences or seminars, pursuing higher education abroad, or taking competitive exams.
2. Educational Institutions: Educational institutions may request certificates of authenticity from students to maintain records, issue official documents such as transcripts or immigration documents, or verify the affiliation of the student and the educational institution.
3. Employers: Employers often request certificates of authenticity from employees to verify employment history and work experience or to perform background verification checks during the process of hiring an individual.
4. Government Agencies: Government agencies may require a Certificate of Authenticity for a variety of purposes, including access to government programs or benefits, obtaining local identification, and proof of residency for official documents.
5. Banks and Financial Institutions: Banks and Financial Institutions may require a Certificate of Authenticity to verify a student or employee’s identity, address, or affiliation with an educational institution or organization when opening a bank account or accessing financial services.
6. Immigration Authorities: Immigration authorities require a Certificate of Authenticity when applying for a visa, passport, or other travel-related documents.

The Certificate establishes a connection between the individual and the educational institution or organization. It is important to understand that the requirements for a Certificate may vary depending on the purpose and the organization making the request. The issuing authority, which may usually be an educational institution or an organization, will provide the guidelines and formats required to obtain the certificate in accordance with their policies.

Purpose of the Certificate of Bonafide

For students

• Educational loans: A certificate of bonafide is required when applying for an educational loan as proof that the student is enrolled in an educational institution.
• Business visits: Students may need a certificate of bonafide when visiting businesses for projects to prove their educational affiliation.
• Attendance at events: A certificate of bonafide is often required to verify student status when attending seminars, conferences, or workshops at other universities.
• Travel benefits: A certificate of bonafide is required for students who wish to receive travel benefits to prove their enrollment status.
• Passport Application: Students are often required to provide a genuine certificate when applying for a passport to establish an educational association.
• Library Access: For the purpose of joining a public library, the certificate of bonafide is used to verify that students are officially enrolled in that library and to prevent the library from any damage and distortions.

• Extension of Visa: Students who are applying for a visa extension might need a genuine certificate to verify that they are currently enrolled in an educational program.

For Employees

• Bank Loans: Employees seeking a bank loan may be required to provide a genuine certificate proving their current employment status.
• Opening a Bank Account: When employees are opening a bank account, a certified certificate is useful to verify their employment status to verify the account.
• Official Events: Employees attending official seminars or conferences may need an actual certificate to prove their affiliation with the organization.

What are the Contents of an Original Bonafide Certificate

An original bonafide certificate may include the following things:-

• Name of the Institution/Organization: An original certificate clearly states the name of the school, college, or company issuing the certificate.

Student Information (for genuine student certificates):

• Name: The student’s full name.
• Login Number or Roll Number: A unique number associated with every student with a different student identifier.
• Grade/Academic Year/Year: Indicates the current academic level or the grade the student is enrolled in.

Employee Information (for employee certificates):

• Name: The employee’s name.
• Contact Information: The address of the employee, including his/her contact information.
• Designation: Indicates the position or title held by the employee within the organization.
• Date of Birth: In some cases, the date of birth may be included on the certificate of authenticity, depending on the nature of the certificate and specific requirements.
• Purpose of the Certificate: Clearly state the reason for issuing the certificate of authenticity, such as a student loan application, visa application, or travel benefit.

Application Process for Bonafide Certificate

The process of applying for this certificate may exhibit slight variations based on the specific procedures of the institution or organization. Nevertheless, the general steps are outlined below:

• Obtain the Application Form
• Visit the administrative office or the relevant department of the institution or organization to acquire the bona fide application form. Some institutions may offer an online application option. Two different categories are:-

1. Bonafide Certificate for Students:- One can communicate with the concerned department of the organization/institute dealing with the matter for basic information regarding issuing. To acquire the certificate, one has to apply in writing to the head of the institute/organization. This is a simple request letter to the person concerned with the institution to apply for a bona fide certificate. In some institutions, students must submit an application to the institute in a prescribed format. A sample copy of the bona fide application is shown here. In the case of first-year & direct second-year students, they need to attach a leaving certificate from an earlier college along with the application form.
2. Bonafide Certificate for Employees: To acquire the certificate, one has to apply in writing to the head of the institute/organization. This is a simple request letter to the concerned person of a company for applying for a certificate.

• Fill in the Required Details: Complete the application form accurately, providing essential information such as personal details, course or employment specifics, the purpose of the certificate, and any additional information stipulated.
• Attach Supporting Documents: Gather the requisite supporting documents, including a copy of a valid ID proof (Aadhaar card, passport, etc.), proof of residence (rent agreement, electricity bill, etc.), and any other documents specified by the institution.
• Submit the Application Submit the duly filled application form and the necessary supporting documents to the designated office or department. Ensure all required documents are attached and the form is appropriately signed.
• Pay the Fee (if applicable): Some institutions may levy a nominal fee to process the certificate. If applicable, make the required payment at the designated payment counter or through the prescribed mode of payment.
• Await Processing: The institution will verify the details and process the bona fide certificate request. The processing time may vary based on the institution’s procedures and workload.
• Collect the Bonafide Certificate: Once the certificate is processed, it can be collected from the administrative office or the designated department. Verify that all details mentioned on the certificate are accurate before completion.

Issue of Bonafide Certificate

The certificate issuing duration will be different for different institutions. It is issued on the printed letterhead of the institution and duly signed/ stamped. A certificate should contain a fee structure for applying for an education loan.

Conclusion

The importance of a bonafide certificate in the present world by corporations and educational institutions has been increased to greater significance. The certificate of bonafide acts as a pivotal source of the genuineness of a person with respect to his/her identity and connection in an educational institution or organization.  The certificate generally aims at simplifying the diverse process and acts as a source of essential authentication for persons who are seeking employment or students or for any other incidental purposes such as confirmation of the residence of an individual or needs related to travel.  The application process of an organization shall be followed by the individual as the same empowers a person to obtain certificate in a tailored dmade format for their specific needs, The bonafide certificate acts a testament with regard to one’s legitimate actions / connections, and helps the organization in smoother and authenticated navigation throughout an individual association with it.

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Eligibility Criteria for Private Limited Company Registration in India

The eligibility criteria for registration of an Indian private limited company are as follows:

1. Number of Directors

Certain qualifications are required to set up a private limited company in India. So the company should have a minimum 2 directors and a maximum of  15 directors.

2. Shareholders

Also, a private limited company must have at least 2 shareholders and a maximum of 200 shareholders. Note that in this case, one person can take on the role of both director and shareholder.

3. Citizenship Requirements 

   To comply with Indian law, a private limited company must have at least one director who is an Indian citizen. While foreign directors can be appointed, this requirement ensures local inclusion in leadership when you incorporate a company in India.

No Minimum Investment

Earlier, the minimum capital required to set up a private limited company in India was Rs 100,000/- (One lakh). However, the Companies (Amendment) Act 2015 has done away with this requirement.  Consequently, entrepreneurs are no longer bound by a prescribed capital threshold, simplifying the process of forming Private Limited Companies and relieving them from any financial burdens associated with meeting a specific capital amount.

Importance of Minimum Paid-up Capital in a Private Limited Company

Capital payment plays an important role in the financial structure and health of a private limited company. The importance of minimum wage for private limited companies can be understood from the following points:

1. Debt dependence and equity

The amount of paid-up capital reflects the extent to which a company relies on equity investment rather than debt. The fact that a private company has a large amount of paid-up capital means that it is less dependent on external borrowing or debt for its operations and growth. This can be beneficial because it reduces the financial risk associated with debt repayment, such as interest and debt repayment.

2. Growth potential

A company that has fully issued all its shares and achieved full paid-up capital has the flexibility to increase capital further. Understanding the steps to increase paid-up share capital — whether through equity issuance or loan conversion — can help businesses plan their growth and expansion more strategically.

3. Market health indicators

In the eyes of investors and stakeholders, the amount of capital on the company’s balance sheet is an important indicator of the financial health of the company. Higher paid-up capital is generally indicative of greater financial stability, which is often reflected during the private limited company annual return filing process where stakeholders evaluate the company’s financial health and benchmarks.

4. Equity vs. Debt

The equity-to-debt ratio in a company’s financial structure is an important indicator in assessing its financial stability. A higher ratio of equity (referred to as paid-up capital) to debt indicates financial strength. It shows how to reduce financial risk, reduce business risk, and maintain a healthy financial position. For example, companies with higher debt-to-equity ratios may face greater financial risk, which can lead to financial instability.

Classification of Investment Companies

To understand the minimum paid-up capital for a private company, it is important to know that capital is divided into 3 types. These categories include:

1. Authorized investment of private limited companies

Authorized capital, also known as authorized shares, refers to the number of shares that a company is legally authorized to issue to its shareholders. At the time of registration, a private limited company must state its authorized capital in its articles of association, and any subsequent changes would require a formal board resolution for increase in authorised share capital. It sets a limit on the total number of shares that a company may issue during its lifetime.

2. Paid-Up Capital for Private Limited Company

The paid-in capital of a private limited company is part of the company’s authorized capital that is issued and sold to shareholders. It represents the amount of capital invested by the shareholders through purchase. For example, if the authorized capital of a company is Rs. 8 Lakh, but it is sold and receives only Rs. 3 Lakh in its shares, then its paid-up capital is Rs. Three Lakh. The minimum paid-up capital and total paid-up capital of a private company can be considered as the actual financial commitment of the shareholders to the company.

3. Subscribed capital

Subscribed capital is that part of the authorized capital which the members agree to purchase or subscribe. This is the number of shares that the owner has undertaken to purchase from the company but may not be fully paid for. Capital gains are a significant part of the profits of the traders and contracts as they represent the money that will be injected into the company at the time of payment.

Various Sources of Capital for Private Limited Companies

As mentioned earlier, the minimum paid-up capital of a private limited company is an important part of the financial structure of a private limited company and can be achieved in a number of ways. The main sources of the minimum capital required by limited companies are:

1. Par value of shares

It refers to the nominal value or face value of the company’s shares specified in the company’s memorandum of association. The share price issued during the capital increase is the basic price determined for each share. The nominal value is determined when the company is established and can be adjusted by changing the MOA

2. .Share premium/discount

The private limited companies of India have the flexibility to raise money by issuing shares at a premium cost or at a discount to their par value. These conditions include:

Good products:

• Premium Shares: Shares at a premium are issued by a company at a price above their par value. For example, if a company issues shares of par value of Rs. 10 at the price of Rs. 18, then these shares, each consisting of 18 shares, are called premium shares. Generally, companies prefer to issue shares at a premium when they are financially healthy, and there is high demand for their shares.

• Discounted Shares: Conversely, a discount share is a share issued by a company at a price less than its par value. For example, if a company is selling shares with a par value of Rs. 10 for Rs. 4 them this share is labelled as a discount share. When a business needs a quick injection or is facing financial problems, it may choose to offer discounted products.

Therefore, the minimum paid-up capital of a private limited company can be obtained by issuing shares at face value and at a premium price or at a discount. These options provide flexibility to companies to raise capital according to their financial profile and market performance.

What is the Minimum Paid-up Capital Required for a Pvt Limited Company?

Initially, the minimum paid-up capital for a private limited company was Rs. 1 lakh as per the provisions of the Companies Act 2013.

The Companies (Amendment) Act 2015 brings significant changes in this regard. As per the amendment, there is no minimum capital requirement for private limited companies in India. This means that investors will now be able to set up private companies that do not meet the minimum investment requirements.

While minimum paid-up capital requirements have been removed, it is important to note that the authorized capital of Rs. 1 Lakh is still required, and companies can follow the formal procedure for increase in authorised share capital as they grow and need to issue more shares.

Therefore, from 2015 onwards, there is no mandatory minimum paid-up capital for private limited companies in India. However, the authorized capital is Rs. Rs 1 lakh is still the prerequisite for setting up a company. This amendment makes it easier for investors to register a private company without being limited to the minimum paid-up capital, without the financial liability of a private company.

Conclusion

Changes in the capital of private sector companies in India indicate a move towards corporate governance. The Companies (Amendment) Act of 2015 eased the financial barriers for entrepreneurs to set up private companies by removing the minimum paid-up capital requirement for private companies. This amendment promotes ease of doing business and encourages innovation and entrepreneurship by removing the need for a major capital investment of Rs 1 lakh. However, it’s essential to distinguish between paid-up capital and authorized capital, as an authorized capital of Rs. 1 lakh is still mandatory. While this authorized capital sets an upper limit on potential capitalization, it doesn’t necessitate immediate full payment.

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Nature and Structure of ITAT

The Central Government of India, under the Income Tax Act of 1961, has established a quasi-judicial body to deal with matters under the Act. The Ministry of Law and Justice supervises the functioning of the ITAT. To meet the jurisdictional requirements, the ITAT has different benches throughout the country. The bench of the ITAT is constituted by the President of the ITAT amongst the members of the ITAT. Each bench shall consist of a technical member who shall be an expert in dealing with the matters of accounts/finance, and a judicial member. However, if required, the President can constitute a bench comprising three or more members to dispose of the appeal, wherein one member shall be from the accounts background, and the other members shall be judicial members. The ITAT acts as the final authority, and its decision regarding factual matters is final.

Functions of the ITA T

Income Tax Appellate Tribunal acts as the second forum where aggrieved parties can take their grievances. The first forum is the Commissioner of Income Tax (Appeals). The ITAT is supervised by jurisdictional high courts, and it is subordinate to the high courts. The ITAT is bound to follow the precedents set by the jurisdictional High Court and Supreme Court, meaning that ITAT is bound to follow the law laid down by the jurisdictional High Court in a matter dealing with an appeal.

Orders against which an Appeal lies to the Income Tax Appellate Tribunal

The appeal shall lie to the ITAT from the following orders:

• Orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)].
• Orders passed by the jurisdictional Commissioner.
• Orders passed by the Assessing Officer as per the directions of the Dispute Resolution Panel.
• Orders passed by the Assessing Officer.
• Penalty order passed by the Commissioner.
• Application for a stay of tax demands.
• Other miscellaneous applications for the recall of orders.

The pecuniary jurisdiction of the Income Tax Appellate Tribunal

The Central Board of Direct Taxes (CBDT) has the power to issue necessary orders, instructions, or directions to the income-tax authorities. The CBDT also has the power to determine the pecuniary jurisdiction of the ITAT to regulate the filing of appeals or applications for references to the ITAT, the jurisdictional High Court, or the Supreme Court. The CBDT has issued certain instructions, such as Instruction No. 17/2019, dated 8 August 2019, which have fixed the pecuniary limits to file appeals by or against the income tax department before the ITAT, High Courts, or Supreme Courts as follows. But the above notifications were revised again in 2025, and now the new  pecuniary jurisdiction of ITAT, High Courts, and Supreme Courts is given below:-

• For Income Tax Appellate Tribunal (ITAT):  ₹60 lakh.
• For High Courts:  ₹2 crore.
• For Supreme Court: ₹5 crore.

These limits are sconcerning to the tax effect in a particular case.  ‘Tax effect’ refers to the difference between the tax on the assessed income and the tax on the income without the assessment adjustments, which is also called the returned income.  The Assessing officer must determine the ‘tax effect’ for a taxpayer for every assessment year. Though the above limits are the pecuniary jurisdiction of ITAT when dealing with an appeal, one should always consider the merits of his/her appeal before filing it before the ITAT.

Procedure to File an Appeal before the ITAT

The appeal before the ITAT should be filed using the prescribed forms as mentioned in the rules. Form No. 36 shall be filed in triplicate. The appeal should be submitted in the form of a paper book, which shall consist of the following:-

• Two copies of the order were appealed against, with one certified copy.
• Two copies of the order of the Assessing Officer.
• Two copies of the grounds of appeal were submitted earlier before the first appellate authority, the CIT(A).
• Two copies of the Statement of Facts were provided before the CIT(A).
• Two copies of the assessment order in a case where the appeal is against a penalty order.
• Two copies of the directions of the Joint Commissioner, where the appeal is against an assessment order passed according to the instructions of the Joint Commissioner.
• Two copies of the original assessment order where the appeal is against a reassessment order passed under section 147.
• A copy of the ITAT fee paid challan.
• Two copies of the submissions, documents, and papers, as submitted earlier during the income-tax proceedings or before the CIT(A).
• Two copies of any other documents or facts the appellant wishes to provide.

Appeal Filing Fees

The appeal filed before the ITAT shall be accompanied by a filing fee. The fee amount is not fixed. Rather, it depends upon the income of the person as assessed by the Assessing Officer. The income does not include the effect of the order passed by the CIT(A). Below is the fee mentioned for filing the Appeal:-

• If the total income assessed < than Rs 1 lakh, the filing fee would be Rs 500
• If the total income estimated is > Rs 1 lakh but < Rs 2 lakh, the filing fee would be Rs 1,500
• Total income assessed > Rs 2 lakh, then hthenthe filing fee would be 1% of the total income assessed, not exceeding Rs.. 10,000

However, if in case the appeal is related to any other matter, then the filing fee shall be Rs. 500. In case an application for a stay of a demand is also filed along with the appeal, then the appeal filing fee would be Rs. 500.  The date of hearing shall be fixed by the ITAT, and it will notify both the parties about such date. The respondent in such an appeal shall also receive a copy of the memorandum of appeal, and the notice of such an appeal may also be received before receiving such memorandum.

Limitations for Filing an Appeal

The limitation period to file an appeal is 60 days from the date of communication of the order to the party, which is the subject matter of the appeal.

Filing Memorandum of Cross-Objections

The limitation period for filing the memorandum of cross-objections by the Respondent is 30 days from the date of receipt of the notice issued by the ITAT. The form prescribed to file the memorandum of cross-objection is Form No. 36A. The law does not require the memorandum of cross-objection to be accompanied by any fees. However, if the memorandum of cross is filed beyond the period of 30 days, the ITAT may condone such delay depending upon the sufficiency of the cause for such delay.

Representation Before the ITAT

The representation before the ITAT on behalf of the appellant and the respondent can be done by any person authorized by them to appear on their behalf. As per Section 28 of the Income Tax Act, 1961, any person can act as the authorized representative of the parties. Section 288 of the IncomeTaxx Act provides a list of the persons who can act as the authorized representative. However, a taxpayer cannot seek representation in cases of a personal examination on oath.

 Presentation of Evidence

The ITAT does not permit any of the party to file an additional evidence before it. In case of requirement of any additional document or affidavit or of a person for cross examination of any witness by the ITAT, ITAT may allow such request.

Orders by the ITAT

The ITAT hears the appeal filed before it and passes the order, deciding the appeal in its finality. In case of the parties’ non-appearance on the dates fixed for the hearing of the appeal, the ITAT may continue the hearing ex parte and decide the matter. In case the matter is decided ex parte and the party appears before the ITAT and provides sufficient cause for non-appearing, the ITAT may set aside the ex parte order.  Generally, the bench, consisting of a technical member and a judicial member,p asses the order. However, if the matter is of importance, the President of the ITAT has the power to constitute a special bench consisting of three or more members, with at least one technical member and one judicial member. In case of a difference of opinion among the members, the majority’s opinion shall prevail, and in case of a bench comprising two members, the difference of opinion shall be settled by the President.

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Agreement for Appointment of Nominee Shareholder

The main prerequisite for the appointment of a nominee shareholder is an agreement to the appointment of the nominee shareholder in the company. The nominee shall file a statement of confidence stating that he/she does not have rights to the assets of the original shareholder until the founding proprietor passes away. The commitment given by the nominee shareholder that he/she shall not have any command over the shares until the original shareholder is alive is known as a custodial contract. The law provides flexibility with regard to the nomination, and even a minor can also be nominated for shares in a firm, and the firm’s shares can be held by an individual or a business organization. When the shares are transferred at the time of the demise of the original shareholder, the nominee shareholders are created. They are vested with all the rights that the original shareholder had with regard to the shares, and the nominee shareholders become trustees for the legal heirs.

Utility of an Agreement

The are multiple genuine reasons as to why a nominee shareholder arrangement shall be made. The most common reason is that such an arrangement would keep one’s identity as the owner of the company confidential and comply with the company requirements of the place where the company is located. The agreement is required to be signed by both parties and shall always include an acknowledgment from the nominee that he/she has no power over the shares of which he/she has been made nominee and is not the legal owner of such shares. All sorts of income and capital gains that may arise from the shares shall only belong to the original shareholder, and the transferring or returning of such shares shall be done upon the original shareholder’s instructions.

Are Nominee Shareholder Agreements Legal?

Yes, they are absolutely legal. If the person who has been authorized to administer the will of such deceased original shareholder and he/she by negligence allows some other person to take away the shares of the original shareholder, then the nominee shareholder has all the right to take the legal ownership back of such shares by just signing his name under the nomination made by the original shareholder.

Requirement of Nominee Shareholder Agreement

The main reasons for the execution of the nominee shareholder agreement are discussed below:-

1. Confidentiality and Privacy:- The primary use of this agreement is that the actual original owner can hide his identity from the public and may not appear on the public records as the shareholder of that company. This can ensure privacy and confidentiality to a great extent.
2. Declaration of Trust:- Any company will not record the details of any trust arrangement on its share register, and so far as the company is concerned, any person who has been named in the company’s share register is regarded as the registered shareholder. The person who is the original shareholder often wants the nominee shareholder to execute a declaration of the trust in order to record the terms and conditions on which the nominee holds the shares of the original owner. A nominee can be an individual or any body corporate.

Pros of Nominee Shareholder Agreements

The nomination of the shareholder eases the difficulty for the company of tracing out and contacting the legal representatives of the deceased original shareholder and also, by way of nomination, the dispute with regard to the legal title of the shares between the legal heirs of the deceased shareholder can be avoided to a great extent. The nomination helps the company quickly and easily find out who is supposed to be contacted by the company after the death of the original shareholder.

Cons of Nominee Shareholder Agreements

The main problem that arises before the company in the case of the nomination of shares of the company is that, at times, the nominee’s authority extends to the rights attached to those shares. However, a company is legally under no obligation to accept the nominee’s shareholdings. The following types of problems arise on different occasions: –

1. The nominee exceeds its rights and refuses to return the shares to the actual beneficiary.
2. The nominee goes beyond its authority and exercises such rights or has the rights associated with those shares without the actual consent or knowledge of the real beneficiary. Mostly, they are used as security and are sold.
3. In the event of the death of the original shareholder or his deregistration, the beneficial owner is not able to obtain the shares that are transferred to him.

 Process of Setting up of Nominee Shareholder Arrangement

The most common method of setting up a nominee-shareholder arrangement is by the nominee declaring the trust over the shares for the benefit of the original shareholder and signing a declaration of trust. Apart from this, another method of setting up a nominee shareholder agreement is This arrangement is called the call option agreement, but this method, as compared to the other methods, is more complex and is generally used in countries that do not recognize the concept of trusts or that prohibit the use of nominee structures.

When a declaration of trust is created, the original shareholder shall typically ensure the following:-

1. That the nominee shall promise to act only upon his instructions.
2. The nominee shall transfer back the shares to him upon a request made by the original shareholders.
3. To keep the original shareholder informed about all the rights and advantages associated with the nominee.

An original shareholder may, as a method of precaution, obtain a signed but non-dated share transfer form in his favor to ensure the share transfer back to him even if the nominee refuses or becomes unable to do so. In addition, if the firm is a private limited company, then the original shareholder may keep the share certificates with him only.

The nominee director needs to sign a properly written document stating that he will abide by the instructions issued by the original shareholder.  Also, the original shareholder may obtain a power of attorney so that in his favour from the company so that he may act on its behalf, enter into contracts and open the bank accounts, etc, for it.

 Major Responsibilities of a Nominee Shareholder

The main objective of a nominee shareholder is to prevent client secrecy by providing a protective shield to the actual owner of the company from being associated with the company in the public domain. In case of a nominee shareholder situation, a confidential legal document (can be of different types such as declaration of trust, deed of transfer, nominee service agreement, or other similar document) would be issued by the nominee shareholder and will be held by the beneficial owner.

Such documents act as evidence in case of disputes between the beneficial owner/original shareholder and nominee shareholder for establishing the fact that the nominee held the shares on behalf of the original shareholder to establish the actual state of affairs, holding of shares by the nominee and that original shareholder has all the rights to dispose of those shares and is entitled to enjoy all the fruits and benefits arising from those shares.

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The use of services provided by the insurance broker as well as insurance aggregator comes with its own pros and cons, making it very important for the person willing to buy insurance to be extra vigilant. The person or party, whether an individual or a company,  who is willing to buy the insurance is referred to as insured. On the other hand, the entity that provides the person seeking insurance with an insurance policy is known as an insurer. However, the contract of insurance is not only limited to the insured and the insurer; there is another party known as a ‘nominee’ who plays an indirect role in the contract of insurance.

1. Insurance Broker

An insurance broker, in simpler language, can be described as an expert consultant who has vast knowledge of the risk management and insurance industry. In short, he/she works for the best interests of his client, i.e., that of the insured, and not for the companies that provide insurance.  Insurance brokers can be depended on to provide professional advice and guidance in the best interest of the client.  Insurance brokers specialise in identifying the specific needs and risks associated with an individual client/ business entity and help them make a firm decision in choosing the best policy that fits their needs and convenience.  Insurance brokers are experts who can help you find the right insurance policy to protect your assets and income. They know the ins and outs of insurance and can spot important details that most people miss. This includes benefits, exclusions, terms and conditions, and the costs of different policies from various companies.

Modus Operandi of Insurance Broker

For last many years, people have relied on old generally followed methods to secure insurance coverage i.e obtaining an insurance policy through an insurance broker. This traditional approach is characterized by its slow pace and cumbersome nature, requiring significant time and effort to navigate the complexities of the insurance market.

However, it has its own benefits as well. For example, in the event of any fraudulent promise or information by the broker, he/she can be easily dragged into a court of law as the broker acts as an agent of the customer. A broker is required to have a valid license and necessary training but with a different mandate. The primary duty of the broker does not lie with the insurer but with his/her clients. Brokers are bound by a fiduciary duty towards their customers. Fiduciary duty means a legal-ethical responsibility of trust and confidence existing among two parties who are connected by the broker. Brokers are required by law to keep the interests of their clients supreme, as to the interests of the insurance company. So before suggesting a particular policy to their client, brokers understand the request of their client, browse through a plethora of insurers and suggest the best-fitted policy to his/her client.

As witnessed earlier, in various cases, it has also been observed that a party can take a broker to a court of law if there is a deficiency of service by the broker. The party is free to approach the Insurance Regulatory and Development Authority of India (IRDAI) regarding the malpractices, if any, by the broker, and the IRDAI has the power to cancel the broker’s license if found guilty. The Insurance broker offers the following advantages:

1. A party can have direct personal contact with the insurance broker of his choice.
2. The regular visits of the clients to the insurance office results in making his/her presence more robust as an investor.
3. Once the finalization of policy is done by the parties, the payment in cash mode ensures quick receipt generation.

2. Web Aggregator

A web aggregator is generally a company that is incorporated under the Companies Act 2013 and is regulated by IRDAI.  The aggregator which owns or maintains a website for insurance policies. The aggregator provides clients with information on multiple insurance products of different insurance companies. In short, a web aggregator for insurance is an online website portal or a search utility that helps the client to avail a huge number of different types of insurance quotes by providing a common platform for various insurers to display their policies and enabling the client to choose the best from it.

The online Insurance Web Aggregators have entered into various agreements with a number of insurance providers available in the market to show a comparative quote/ price of the policy based on a pre-determined list of individual needs as submitted/requested by customers.

Purchase of Policy via Web Aggregator

In recent years, India has become a tech-savvy country rapidly, and over a period of time, e-commerce businesses have acquired a major share in the Indian industries and have taken the country by storm. In the present day, a person can buy anything and everything online just by pressing a button on the computer or mobile device and make swift payments immediately without any hassle, like in older times. This process is not only faster but also less cumbersome as everything happens at the option and call of the customer and is within the control of the customer only and not of any agent or insurance company.

At present, the concept of web aggregator is used for online inquiries or shopping, enabling end consumers to retrieve information and prices on various financial products.  Web aggregator is typically an insurance portal that helps a person compare different products available online and help in purchasing the one that is best suited to the insured by directing the customer to the insurer or insurer to the customer. As per the IRDAI’s list published in July 2018, 29 web aggregators were continuing their operations in the insurance sector.

Various Advantages Offered by Web Aggregator

1. They offer a very prompt payment process through multiple online payment gateways.
2. Policy aggregator and comparison tools helps in efficient comparison and provide an overview of the salient features, benefits, and coverage of the  various insurance policies. This not only helps in selecting and buying the one preferred policy with a qualified online insurance agent but also provides a  with 24 X 7 support access.
3. As the banks have already verified the payment method, the online purchase is genuine and authentic. The transaction made via payment gateways of banks also acts as evidence of purchase of policy by the client via a web aggregator.
4. Online web aggregators have made purchase o the policy very convenient as one can buy from his/her home, office or any other remote location and while even travelling as well.

Other Differences – Insurance Web Aggregator and Insurance Broker

• Premium for Companies

The companies have to pay both the brokers and the web aggregator. For aggregators, the IRDAI has issued a guideline that a company can pay up to Rs. 50000/- annually to display their policy on the website. However, for the insurance brokers, the insurance companies pay nearly 2% to 8% towards the sale of a single policy. The rate of payment depends upon regulations by the government,

• Premium for Customers

Like the insurance companies, the customer are also charged for purchasing of the policy via aggregator platform but the charges for the customers are comparatively lower as compared the companies. Also, they take 30% of the first-year premium for generating a lead for the business. Whereas, insurance brokers can charge fees from the customers for the  insurance claims and for initiating changes.

• Connect with Customers

The purchase of policy on the web aggregator platform solely depends upon the decision of the customer as there is no one there to suggest to the customer what is best for the customer as per his needs. Although the aggregators have representatives who work like brokers, their sole job is to take the customer to the aggregator platform, and from there, the customer only has to make informed choices.  On the other hand, the broker connects with the client personally, suggests the policies that are best suited to the client, and assists them throughout the process.

• Eligibility Criteria

Only a Limited Liability Company is eligible to become a  Web Aggregator. The company shall not be included in any other sort of business except the web aggregator business. To become an insurance broker, the applicant first has to choose the type of broker he/she wants to become, i.e., direct broker, re-insurance broker or composite broker. Brokers have different criteria that they are required to fulfil to become brokers and obtain a license.

The post What is the Difference Between a Web Aggregator and an Insurance Broker? appeared first on Kanakkupillai Learn.

NBFCs majorly  focus on loans and advance services, acquiring of shares, bonds, debentures, government-issued securities, and other similar investments. Their financial offerings include financing, loan distribution, and acquisition of stocks, shares, and bonds.

Sale of a NBFC

The sale of an NBFC basically involves two parties. The NBFC is the first party who is selling and the buyer –  typically the larger entity that acts as the buyer or acquirer. These two entities then engage in a series of transactions among them to merge the two companies. In this process, the buyer would procure the following:

1. The Seller’s equity to gain voting rights, enabling the selection of Board members or;
2. A change in most or all the management structure.

For an NBFC to be sold, its balance sheet must be cleared, and all assets and liabilities must be transferred to the Acquirer. Therefore, a willing buyer or Acquirer Company is essential. The RBI has provided a comprehensive guide to remove any uncertainties related to buying or selling NBFCs.  In order to avoid any misunderstanding between the parties at any fututre date, the experts suggest all such agreements and deals with the acquirer shall as a protective measure be documented.

Also, a key requirement is the signing of the Share Purchase Agreement, which must be executed by both the buyer and the seller after 31 days from the public notice of the sale. The assets of  NBFC will be reflected on the balance sheet, and the liabilities will be settled. The Acquirer Company will receive only a clean bank balance, determined by the net worth as of the sale date. This agreement serves as a contract between two parties, where one agrees to sell a specified number of shares of the NBFC to the Acquirer at an agreed-upon price. It ensures that both parties agree to the terms and conditions of the contract. The agreement outlines the consideration, the number of shares to be sold, and any additional terms and conditions agreed upon by both sides. Share allocation will be based on the terms set in the agreement. If there is any remaining consideration, it will be paid within 31 days of the public notice in the newspaper or as otherwise agreed by all parties.

Process of Sale of a NBFC

Around a time span of 2-3 months are required for the purpose of sale of an NBFC and securing the approval of RBI for the same.  Meanwhile during this time period it is very important to cross verify the credentials of the company which is acquiring the NBFC and to ensure that the agreement between NBFC and the Acquirer remains valid.

1. The first step in selling an NBFC is to obtain Board approval for the sale, with resolutions passed by both the Target and Acquirer companies.
2. After receiving board approval from both sides, business and administrative documents should be shared with the Acquirer Company. Upon confirmation to proceed, an MOU (Memorandum of Understanding) should be signed, and token money provided as a buying commitment.
3. To facilitate the sale, prepare KYC documents, a business plan, and a 3-year projection for the new or replacement directors of the Acquirer.
4. These documents must be submitted to the Regional RBI Office, under whose jurisdiction the NBFC’s registered office falls.
5. Coordinating with RBI and responding to any inquiries they may have regarding the transaction.
6. Once the approval has been granted by the RBI, a public notification is required to be made for inviting any sort of objections from the public or any interested party. As per the RBI guidelines, the notice must appear in one national and one local daily newspaper announcing the change in management, which will come on a future date.
7. On the 31st day after the newspaper notice, both parties can sign the Share Purchase Agreement, or another agreed date for handover can be set. At this point, management and administration will transfer to the Acquirer, and the remaining balance will be paid.
8. Finally, RBI mandates that all assets on the balance sheet be liquidated and liabilities paid, and the Acquirer is to receive a clean bank balance in the NBFC’s name. The net worth of the NBFC should be calculated on the sale date using RBI’s prescribed method.

Requirements of Prior Public Notice about Changes

Once the RBI obtains the approval for the sale, a public notice is required to be issued to in at least one leading daily national newspaper and one leading local newspaper to give the public an opportunity to raise their objections to the transactions if any in the following manner:-

1. A public notice must be provided by all involved parties, jointly or individually, at least 30 days prior to the date of actual sale or transfer of ownership by sale of shares.  This should be done only after securing RBI’s prior approval.
2. The notice should include detailed information about the buyer (transferee) and the reasons for the sale or transfer of ownership/control of the NBFC.
3. This notice must appear in at least one widely circulated national newspaper and another major local daily in the local language where the NBFC’s registered office is located.

RBI Approval to sell NBFC

As previously mentioned, obtaining RBI’s prior approval is mandatory for the purpose of making changes in the Board of Directors or  sale or takeover of an NBFC. All documents submitted to the RBI must be prepared in coordination with the Acquirer Company.

1. An application, accompanied by a cover letter on the Company’s letterhead, must be submitted to the relevant regional RBI office.
2. The application should include details of the proposed Directors/shareholders, along with their KYC documents, ID/address proofs, and educational and qualification certificates.
3. Information on the sources from which the Acquirer is obtaining the funds to purchase the NBFC.
4. A declaration from the proposed Directors/shareholders stating they have no involvement in any unregistered entities that provide loans or accept deposits.
5. A statement from the proposed Directors/shareholders confirming they have not been associated with any company whose Certificate of Registration (CoR) application was denied by the RBI.
6. A declaration from the proposed Directors/shareholders affirming they have no pending or convicted criminal cases, including any offences under Section 138 of the Negotiable Instruments Act.
7. A clean Banker’s Report for the proposed Directors/shareholders.
8. Financial Statements and Annual Reports from either the inception of the NBFC or the past three years, whichever period is longer.
9. Additionally, a public notice is required at least 30 days prior to the finalization of the sale, share transfer, or transfer of control (whether individual or joint) of ownership. This notice must be published in at least one national daily newspaper and one local vernacular daily.

Requirements of prior approval from RBI- Necessary or not?

Before selling your NBFC, it’s vital to confirm whether you need prior approval from the RBI. The approval from RBI is required in the following situations:

1. When there is a change of Ownership: If the NBFC is sold, acquired, or taken over the NBFC, you must secure prior approval, regardless of management changes.
2. When the shareholding structure changes: If there’s a transfer or acquisition of at least 26% of the paid-up equity capital, prior approval is necessary. This holds true even if the changes occur gradually unless a reduction in capital or share buyback has been legally authorized.
3. When the Management Changes: Approval from the RBI is essential if there’s a change in at least 30% of the Directors (excluding Independent Directors). However, if changes arise from the routine rotation of Directors, no approval is required.

The post How to Sell Your Non-Banking Financial Company (NBFC)? appeared first on Kanakkupillai Learn.

For the purpose of filing various government returns online, such as Income tax returns, GST returns, annual returns of the company and other statutory filings, an individual has to get Class 3 DSC. The companies in India can file for their registration on the portal of the Ministry of Corporate Affairs (MCA) online mode and e-file the company documents and other returns with the help of the DSC of the authorised persons.

Thus, all the documents related to company such as e-forms, returns, and other documents which are filed on the MCA portal are required to be digitally signed by affixing the DSC of the persons authorised such as company proprietors or directors or CA or managers of the company.  It is mandatory requirement for the persons authorised to register their DSC on the MCA website in order to make the e-filing feasible.

Authorised Persons to Register the DSC on the MCA Portal

Anyone who, on behalf of the company, is required to file the documents on the MCA portal must register their DSC. The following persons must register the DSC on the MCA portal:-

• Directors of the company
• Managers of the company
• Chartered Accountant (CA)
• Practising professionals, i.e. members of ICAI, ICSI, and ICWAI
• Authorised representatives of the company
• Nodal Officers of the IEPF
• Deputy Nodal Officers of the IEPF

1. Registration of DSC as Director

1. The applicant shall visit the MCA portal and click on the ‘Register DSC’ link.
2. On the next screen, click the ‘Director’ link visible on the left-hand panel and fill out the DIN. Please make sure that the DIN is approved by the concerned authority and typed correctly.
3. After this the system will verify that whether the DIN is valid and approved by the concerned authority. After verification, If it is found that the DIN is filled incorrectly or the same is not approved, then the system will display an error message to that effect.
4. After this the applicant will be required to fill up the rest of the details and ensure that all the detailed filled are in accordance with DIR-3. If the applicant has filed the DIR-6, the all the details shall be submitted as filled in the DIR-6 form.
5. Now, the applicant is required to click on the ‘Next’ button. After this the system would verify all the details.
6. If the details filled in by the applicant do not match with DIR-3/ DIR-6 because of the  reason the applicant  does not have his/her DIN application details, he/she can get the details from the company in which the applicant is a director.
7. If all the details filled are correct, then the system will display a message to select the DSC.
8. Now, the applicant is required click the button displaying as ‘Select Certificate’ to browse and select the certificate. It is required by the applicant to make sure that the DSC selected belongs to the applicant only, whose particulars are being registered.
9. The system shall validate the DSC. If the applicant has already registered the selected  DSC against the given DIN, then an informatorily message will be displayed by the system. If there is an different DSC already registered against the DIN given, then the system will display and message and will ask the applicant that whether the user wants to update the already existing DSC.
10. After this, type the displayed system-generated text for verification in the box provided.
11. After this, the applicant is required to click on the ‘I agree’ button to agree to the declaration displayed that the details furnished by the applicant are correct.
12. Now, the applicant is required to click on the ‘Submit’ button to register his/her DSC.
13. After this, an acknowledgement message will be displayed to the user.
14. The system will give the user an option to print out the acknowledgement.
15. Lastly, the applicant can click on the ‘reset’ button to clear all the details filled in the fields.

2. DSC registration process for Manager/Secretary/CEO/CFO

The Step-by-step process to be followed for registration of Manager/Secretary’s/CEO’s/CFO’s DSC is as follows:

1. The applicant shall visit the MCA portal and click on the ‘Register DSC’ link
2. Then on the next screen, click “Manager/Secretary/CEO/CFO” link visible on the left hand panel and fill-up the particulars. Please make sure that the Income Tax PAN and other details are in accordance with the information filed in DIN-3 form.
3. Now, the applicant is required to click on the ‘Next’ button. After this the system would verify all the details.
4. If all the details filled are correct, then the system will display a message to select the DSC.
5. Now, the applicant is required click the button displaying as ‘Select Certificate’ to browse and select the certificate. It is required by the applicant to make sure that the DSC selected belongs to the applicant only, whose particulars are being registered.
6. The system shall validate the DSC. If the applicant has already registered the selected  DSC against the given PAN, then an informatorily message will be displayed by the system. If there is an different DSC already registered against the PAN given, then the system will display and message and will ask the applicant that whether the user wants to update the already existing DSC.
7. After this, type the displayed system-generated text for verification in the box provided.
8. After this, the applicant is required to click on the ‘I agree’ button to agree to the declaration displayed that the details furnished by the applicant are correct.
9. Now, the applicant is required to click on the ‘Submit’ button to register his/her DSC.
10. After this, an acknowledgement message will be displayed to the user.
11. The system will give the user an option to print out the acknowledgement.
12. Lastly, the applicant can click on the ‘reset’  button to clear all the details filled in the fields.

3. DSC registration process for Practising Professional

The Step-by-step process to be followed for registration of Practising Professional DSC is as follows:

1. The applicant shall visit the MCA portal and click on the ‘Register DSC’ link
2. Then, on the next screen, click the ‘Practicing Professional’ link visible on the left-hand panel and fill in the particulars. Please make sure that the details are in accordance with the information/records filled by the applicant in his/her professional institute.
3. Now, the applicant is required to click on the ‘Next’ button. After this the system would verify all the details from the records provided by the concerned professional institute of the applicant.
4. If the membership or enrolment number provided by the applicant is wrong or the details filled do not match with the records as provided by the professional institute of the applicant, then the system will display an error message. If the applicant is not able to retrieve the details as recorded by his/her institute, the applicant can get them from his/her institute.
5. If all the details filled are correct, then the system will display a message to enter the income tax PAN.
6. After this, the applicant is required to verify and confirm the income tax PAN. Upon successful completion, the system will display a message to select the DSC.
7. Now, the applicant is required click the button displaying as ‘Select Certificate’ to browse and select the certificate. It is required by the applicant to make sure that the DSC selected belongs to the applicant only, whose particulars are being registered.
8. After this, type the displayed system-generated text for verification in the box provided.
9. After this, the applicant is required to click on the ‘I agree’ button to agree to the declaration displayed that the details furnished by the applicant are correct.
10. Now, the applicant is required to click on the ‘Submit’ button to register his/her DSC.
11. After this, an acknowledgement message will be displayed to the user.
12. The system will give the user an option to print out the acknowledgement.
13. Lastly, the applicant can click on the ‘reset’  button to clear all the details filled in the fields.

Validity of DSC (Digital Signature Certificate)

The DSC issued by the Certifying Agencies is valid for two or three years. Thus, the applicant is required to renew the DSC before its actual date of expiration. Once renewed, the authorised signatories are required to register the renewed DSC on the MCA’s web portal by following all the detailed steps of the registration process as discussed above.

The post How to Register DSC on MCA Portal? – Complete Guide appeared first on Kanakkupillai Learn.

Requirements for drafting an effective sale deed

1. Clear and Concise Wordings: The deed of sale should be in such a language that clearly reflects the intention of the parties before entering into the agreement of sale. The language should be clear and concise. The terms used in the deed should be such that both parties can clearly understand the same. Excessive use of technical and legal terms shall be avoided as not every buyer may be familiar with legal words.
2. Clarity of Title: The most important pre-requisite for any sale deed is the clear title. The seller shall make it sure to the buyer that the property into the sale deed is free from all sorts of legal issues and encumbrances. The title shall be clear and unambiguous ensuing that the seller has the right to sell the property and is not barred by any law to do the same nor suffers any legal incompetency.
3. Incorporation of all Details: The deed of the sale shall be inclusive of all the necessary details related to the property. The details shall include all the terms required for the sale of the property for example size of the property, locations, any existing boundaries, the agreed terms of payment between the parties , the final sale consideration and any other incidental conditions required for sale as agreed between the parties.
4. Obtaining of all Necessary Sanctions: The seller shall mention in the sale deed that all the necessary approvals/sanctions with the described property have been obtained by the seller, such as approval of the building plan, municipal approvals and other permits as required. This will ensure that no legal issues arise between the parties in future.
5. Compliance with the Existing Laws: The sale deed shall be in accordance with the existing laws of India, such as the Indian Contract Act, the Transfer of Property Act and any other legislation that governs the sale and purchase of property/agreements. The parties shall ensure compliance with these laws so as to avoid any situation where the deed can become null and void.
6. Transfer of Ownership: The deed must necessarily contain a clause that ownership rights shall be transferred to the buyer after the sale is complete.
7. Advance Payment: If there is an agreement between the buyer and seller regarding the advance payment or payment in instalments by the buyer, then it shall actually be stated in the sale deed. The final settlement to be paid at the time of execution of the sale deed shall also be mentioned in the deed of sale. Payment modes, such as cash, cheque, NEFT, etc., shall also be mentioned in the deed of sale.
8. Payment of all Dues: The deed must contain the clause that all utility bills, such as water and electricity bills and tax related to the property are paid by the seller before the final sale.
9. Presence of Witness: The parties shall ensure that the clauses related to the witness are included in the sale deed. At least two witnesses, one from the buyer side and one from the seller side should be present.
10. STAMP DUTY: The stamp is required to be paid by the buyer to the government at the time of purchase of any immovable property. The stamp duty may differ from one state to different state.
11. Signatures: The deed of sale is required to be executed and signed both by the buyer and seller. Not only this , but the parties are required to put their impression of every finger , The signatures and finger impressions of every witness is also mandatory.
12. Registration Clause: The last step required for the execution of a sale deed is registration at the office of the concerned jurisdictional sub-registrar. The deed must provide the time limit within which the parties shall after the execution of the sale deed, shall appear before the registrar office for getting the registration done of the sale deed.
13. Time Limit for Registration: For ana dditional protection the parties shall mention clearly in the sale deed that, as per the law, the same is required to be registered within four months from the date of execution by the parties; this will create an obligation upon the parties to do all the transactions within the time.

Things to be avoided for an effective sale deed

1. Use of vague or ambiguous language – Use of any such word or meaning that is vague or unclear shall be avoided by the parties as the same leads to disputes in future.
2. Non-inclusion of the necessary clause – The necessary clauses of the sale deed shall not be avoided by the parties, such as the clauses related to possession date, delivery of original documents, the requirement of proper attestation and registration clauses shall be duly given importance.
3. Drafting process shall not be rushed – Rushing the process of drafting of the sale deed can result to errors and omissions in the sale deed. The parties shall give ample amount of time to draft the sale deed and the deed shall be subject to various reviews before finalising the same.
4. The boilerplate language shall be avoided – The use of boilerplate language, i.e. language inclusive of too many legal words, shall be avoided. Parties shall ensure that all the terms and conditions of the sale deed are specific to the transaction and not boilerplate.
5. need should be given importance – The need and requirements of the buyer shall be kept in the mind. The sale deed shall be inclusive of all the terms and conditions agreed by the parties .

Suggestions for Error-Free Sale Deed

1. Legal assistance:- It is advised that the parties shall seek the assistance of a qualified lawyer for an error free sale deed. The presence of lawyer will ensure that the deed is following all the applicable laws.
2. Due diligence:- This will ensure that the property is free from al sort of encumbrance and legal issues. It will further help in identification of any issues that needs consideration and address in the sale deed.
3. Clear communication with Buyer:- The parties shall ensure that communication between them is clear while drafting the sale deed so as to avoid any ambiguity in future.
4. The deed shall be printed on a Non-judicial stamp once everything is finalised. Without the stamp paper, it shall be void.

Documents required for a sales agreement

1. Aadhar Card of buyer and seller
2. Pan card of both parties
3. Passport-size photographs of buyer and seller.
4. Date and place of execution of the agreement
5. Aadhar card of witnesses of buyer and seller.
6. The deal value and all the financial details (including TDS payment) plus receipt of registration charge payment and stamp duty fees.
7. Copy of tax bill by the Municipal Corporation
8. Construction completion certificate by the Municipal Corporation.
9. Building plan authorized by the Statutory Authority under the laws
10. Documents If any loan on the property is taken by the seller.
11. Recorded agreements between the builder and landowner.
12. Allotment letter from the seller/builder
13. All title documents of a landowner

Conclusion

The parties shall pay attention to every detail as mentioned above to avoid any conflict. By following the steps in this blog, we can ensure that the deed is drafted correctly and the possibility of any future legal dispute can be minimised to a great extent. Seeking assistance from a qualified legal professional, due diligence, clear communication between the parties, proper stamping, signatures, registration, and witnesses are some of the most important steps that the parties shall follow. A well-drafted deed is crucial for the parties as it ensures a successful property transaction without any legal disputes.

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