Starting up a business looks a easy task but it is not so easy. There are lots of hurdles which an entrepreneur needs to overcome. In every State of India before starting a business there are some legal obligations which are needed to be fulfilled. An entrepreneur at first has to decide the type of legal entity he/she needs to start-up with. The Indian Law has divided the entity type into various categories. An entrepreneur needs to select the type of entity which helps to peruse the business goals. The various types of entities have been enumerated in our previous article – How to Start a business in Kolkata? We, at Taxmantra.com, have been assisting startups to register their businesses all over India. In this article, we would be explaining the various registrations and/or licenses required for starting up a business in Bengaluru, Karnataka.

To start and operate a business in Bengaluru there are certain list of registrations which needs to be done, apart from registering a company or an LLP or a firm. 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.  The fees for license differ based on the nature of business.

Trade license needs to be renewed periodically by the person who has already obtained the trade license. Each license shall expire at the end of a period of 5 years. Further details can be obtained from- http://bbmp.gov.in/trade-license

• Professional Tax – Every person being an Individual, HUF, firm, company or other corporate body engaged in any Profession/trade / employment in Bengaluru is liable to pay Professional tax. Any person who is liable to pay professional tax needs to register for the same. Process to register under Karnataka PT act is simple. It can be done online through http://pt.kar.nic.in/.  A person liable to pay Professional Tax (PT) needs to obtain a Certificate of Enrollment (EC) .Documents required for PT registration in Bengaluru are:    
  
      1.Address Proof of establishment
      2.Address proof of Partners, Proprietor or Directors as applicable
      3.PAN
      4.Photo of Proprietor, Partner or Directors as applicable
      5.Salary details of employees need to be provided.

Professional tax by an employer shall be paid every year before 30^th April. For this employer needs to obtain Registration Certificate.  PT to be paid by employer depends on number of employees. PT payable by employer is listed below.

       No of employees                                                      PT to be paid
      Nil                                                                                 Nil.
   More than 5                                                                  Rs. 1000/annum
   More than 5 but up to 10                                              Rs. 1500/annum
   More than 10                                                                 Rs. 2500/annum.

It is the liability of employer to deduct Professional tax from employee’s Salary. Professional Tax Karnataka Slab 2016-17 rates are available below.

  Monthly Salary                                                      Professional Tax (P.M)
Up to Rs.15,000/-                                                                  NIL.
Rs. 15,001/- or Above                                                      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 mandatory 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:

  1.Copy of PAN Card of the proprietor or the legal entity
  2.Photograph and proof of identity of the person
  3.Details of Bank account
  4. MOA/AOA
 5.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 organizations 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 lifelong applicable even if the no of employees fall below 20. The employees of an organization 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 Bengaluru where the turnover of the entity exceeds Rs 7.5 lakhs it is mandatory to take VAT registration. CST registration is required for “Inter-state sales”.

VAT and 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 submit along with the necessary documents mentioned in acknowledgement.

The lists of documents which are required to be submitted are mentioned in the website.

• 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 submitting 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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