Are you planning to start your business in Kolkata? If yes, and then for this you need to have a clear picture of some legal terms and some legal obligations which needs to be fulfilled from your end. Lets us start from the basics.
For starting a business you need to incorporate a entity. When it comes to selecting the right business entity there are many options. You need to select the one which is best suitable for your business. Types of entity are mentioned below.
Company – A company is a legal entity which is formed to carry on a commercial or a industrial a business. Company is a separate legal entity. It can be structured in different ways.
1) Private Company– It’s a type of company having minimum 2 directors and no such requirement for minimum capital. A minimum of 2 and maximum of 200 members are required in private limited company. A private company is most suitable for the startups.
2) Public Company– A public company is not suitable for the startups it must have minimum 3 directors. To start a public company it must have minimum 7 members.
3) One Person Company– It is popularly known as OPC. It can be incorporated by only One Person as the owner of the company. It is mandatory to declare a nominee of the owner of the one person company.
Sole Proprietorship– A sole proprietorship means your own business. It is owned managed and controlled by a single person. This makes the Sole proprietorships suitable for unorganized and small businesses.
Partnership firm– A form of business organization where two or more persons join together to undertake some form of business activity. The persons who own the partnership firms are called the partners.
Limited Liability Partnership– It is popularly known as LLP. A LLP combines the advantages of both the Company and Partnership into a single form of organization and one partner is not responsible or accountable for another partner’s wrongdoing or negligence. Therefore, all partners have a form of limited liability for each individual’s protection within the partnership, similar to that of the shareholders of a corporation
Further to start and operate a business in Kolkata there are certain list of registrations which needs to be done they are as follows.
- Trade License -The first and foremost step is to obtain a Trade license. It is basically a permit issued by government that allows the Individual and the companies to operate their business. Procedure for obtaining a Trade license is as follows.
- An application needs to be filed u/s 199.
- r.t the place of business Rent bill/ Lease-deed / tax bill must be produced.
- Companies, Private limited companies must produce – MOA, Certificate of Incorporation, PAN, and Declaration in Form DIR 12 & INC 22.
- In case of Partnership Firm, the partnership deed is to be produced.
Trade license needs to be renewed periodically by the person who has already obtained the trade license. It needs to be renewed yearly to ensure the continuous conduct of the business. For further details you can refer www.kmc.gov.in
- Professional Tax – Every person being an Individual, HUF, firm, company or other corporate body engaged in any Profession/trade / employment in Westbengal is liable to pay Professional tax. Any person who is liable to pay professional tax needs to register for the same. However it must be noted that Professional tax registration is of two types in Kolkata, as explained below:
A person liable to pay Professional Tax (PT) needs to obtain a Certificate of Enrollment (EC). PT should be paid by 31st July of the same year for which the tax is due. The amount of PT to be paid by a person in Kolkata is up to a maximum of Rs 2500. However it must be noted that if any Employer hires any Employee then the employer must mandatorily deduct the Professional Tax from employee’s salary or wage on monthly Basis. For this employer needs to obtain Registration Certificate. The amount of PT to be deducted varies from State to State and the each State has a different tax rate. The PT to be deducted in Kolkata is as follows.
Monthly Salary Professional tax
Rs. 10,000- Rs 15,000 Rs. 110
Rs. 15,001- Rs 25,000 Rs. 130
Rs. 25,002- Rs 40,000 Rs. 150
above Rs 40,001 Rs. 200
- Service Tax– In case of an assessee providing services if the value of service provided during a financial year exceeds Rs 9 lakhs year then the assessee has to mandatorily apply for service tax registration . However it’s optional and depends upon the assessee to take the registration if the turnover doesn’t exceed Rs 9 lakhs during a financial year. Application for registration shall be made in form ST-1. It is done in ACES website i.e. aces.gov.in. Details such as PAN, Name, and address are too provided by the applicant. The registration certificate (ST-2) for single premises is issued within 2 working days from the date of online registration. In case of more than one premises registration certificate is granted by Superintendent of Central excise within 7 days of making application in form ST-2.
If registration certificate is not granted within such period, the applicant is deemed to be registered. However for the purpose of verification the self attested copy of some documents by speed post/ registered post shall be sent to concerned division within 7 days of filing the form ST-1 online. The documents are as follows
i) Copy of PAN Card of the proprietor or the legal entity
ii)Photograph and proof of identity of the person
iii)Details of Bank account
v)Authorization by the board for the person filing the application.
However it must be noted that the where the need of physical verification of premises occurs the same can be conducted by a person not below the rank of Additional or Joint Commissioner. Service tax registration no is a 15 digit alphanumeric code. First 10digits PAN NO; Next 2 digits ST; Last 3 digits 001,002(Serial no) .
Provident Fund-The registration of Provident fund is mandatory for organisations employing more than 20 employees. The application for registration has to be filed electronically with the use of digital signature. Once the act becomes applicable it is life long applicable even if the no of employees fall below 20. The employees of an organisation drawing wages up to Rs 15000/- are eligible to the Employee’s Provident Funds & Miscellaneous provisions act ,1952. However in case the number of employee in an establishment is less than 20 and it wishes to extend the benefit then it can apply with the consent of all the existing employees.
The documents which are required at the time of registration are as follows:
1.Certificate of Incorporation in case of a company or a Limited liability partnership , partnership deed or registration certificate issued by the registrar of firms must be submitted as proof of setup.
2.Copy of PAN Card.
3.Address Proof of the establishment
4.Bank account proof (Cancelled Cheque)
Digital Signature as the application for coverage is filled electronically.
Value Added Tax (VAT) and Central Sales Tax (CST)- VAT is a state act and it is collected by the state government. Under the VAT act the tax paid at each and every stage is allowed as set off in the next stage. In Kolkata where the turnover of the entity exceeds Rs 10 Lakhs it is mandatory to take VAT registration.
CST registration is required for “Inter-state sales” CST is similar to VAT but the difference is CST is levied by Sate Government and VAT by Central Government
VATand CST registration is done online. The assessee must have a Trade license to proceed with the filing of VAT registration .In case of a Private company Annexure-B and in case of a Partnership firm/Proprietorship Annexure –A is mandatory to be filed along with the application form. A security deposit of Rs 25000 has to be deposited. Once the application form is filed an Acknowledgement slip is generated which is required to submitted along with the necessary documents mentioned in acknowlegement.
The list of documents which are required to be submited are mentioned in the website http://wbcomtax.nic.in/.
Employee State Insurance Act (ESI) – The ESI law mandates the ESI registration if the establishment has 10 or more person employed during a year (Including Regular, Contractual or Part-time) .ESI contributions must be made for all employees having a salary of less than Rs.21,000 per month. In this scheme employer’s contribution is 4.75% and an employee must contribute 1.75% for ESI.
The documents required for ESIC registration are as follows:
1.Memorandum and Articles of Association or Partnership Deed or Trust Deed,depending upon the constitution of the ownership of the establishment.
2.Registration Certificate or License issued under Shops and Establishment Act or Factories Act, if available.
3.Copy of Bank Statement
4.PAN Card and Address proof of the factory
Once the application is made by submiting Form -1 a 17 digit Unique Identification number will be received by the Organization. Companies under ESIC coverage must file the annual return. They must show the changes if any during the preceding year. Return of contributions enclosing copy of all ESI contributions paid must be submitted once every six months.
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