Government Loan Schemes For Small Scale Businesses

THE CREDIT GUARANTEE FUND SCHEME FOR MICRO AND SMALL ENTERPRISES

• It is launched by the Government of India to provide collateral free finance to the micro and small enterprise sector.
• The Amount is contributed by Government and SIDBI is 4:1 in ratio.
• It also provides credit facilities in the form of term loans and working capital facility of up to Rs.100lakh per borrowing unit.
• Rehabilitation assistance is also made available to sick units.

CREDIT LINK CAPITAL SUBSIDY SCHEME FOR TECHNOLOGY UPGRADATION

• Its main intention is to create an impact in the international trade.
• It is launched to facilitate technology up gradations by extending an upfront capital subsidy of 15% (max INR 15lakhs).
• The corresponding plant and machinery is important
• It is available to machinery to Sole Proprietorship, Partnership firms, Cooperative, Private and Public Limited Companies.

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA

• SIDBI is one of the most illustrious names among the government financial institutions.
• It played an active role in the promotion and development of the small business industry.

Schemes provided by SIDBI

• Direct Assistance Scheme
• Indirect Assistance Scheme
• Promotional and Development Activities
• National Equity Fund, scheme
• Technology Development and Modernization Fund scheme
• Single window scheme
• Mahila Udyami Nidhi (MUN)
• Scheme and Equipment Finance Scheme

NATIONAL SMALL INDUSTRIES CORPORATION LIMITED (NSIC)

• The main feature is to import machines on hire-purchase terms.
• It promotes awareness about advancements in the small scale industries sector of the country.
• It highlight on supply and distribution of both indigenous and imported raw materials as well as exporting the products of the small business units.

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT

• NABARD mainly came into existence to promote agriculture based rural business enterprises.
• It mostly offers financial assistance to small scale industries viz,. Cottage and village industry.

MARKET DEVELOPMENT ASSISTANCE SCHEME FOR MSMEs

• It offers funding for participation in international trade fairs and exhibitions under MSME India stall.
• It also offers financing for sector specific market studies by industry association, export promotion councils and FIEO.
• This scheme offers reimbursement of 75% of a one-time registration fee and 75% of annual fees paid to GSI by SMEs for the first 3 years for the bar code.

TECHNOLOGY AND QUALITY UPGRADATION SUPPORT TO MSMEs

• It aims to improve the production quality of MSMEs to encourage them to adopt global manufacturing standards.
• The main aim of this scheme is to sensitize the manufacturing MSME sector to make use of energy sufficient technologies
• And also the manufacturing processes to reduce manufacturing cost and emissions of harmful gasses that can hamper the environment
• The Indian government provides financial support to the extent of 75% of the actual expenditure to assist manufacturing sector purchase energy efficient technologies for production.

MINI TOOLS ROOM AND TRAINING CENTRE SCHEME

• The mission of this scheme is to develop more tool room facilities to provide technological support to the MSMEs
• The training in tool manufacturing and tool design to create a skilled workforce of workers, supervisors, engineers/designers.
• 90% of the cost of machinery/equipment in case a new Mini tool room is to be created.
• In case an existing room to be upgraded – 75% of the cost is funded.

MUDRA LOAN (Micro Units Development and Refinance Agency Ltd.)

• The vision of Funding the Unfunded.
• It is established by Government of India for development and refinancing activities relating to micro units.
• It provides low cost funding for MFI (Micro Finance Institutes)
• It also supporting to the institutions , societies, trusts section 8 companies, co-operative societies, small Banks, Scheduled commercial Banks and Rural Banks which are in the business of lending to micro or small business etc.

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Business Registrations For Foreign Companies And Foreign Nationals

• Indian Private Limited Company must have Minimum two share holders and two Directors
• One of the directors must be an Indian Resident i.e. (Must be stayed in India for 182 days or more in the preceding year.)
• There is no requirement for the Indian Citizen to be a shareholder in the company. (100% FDI is allowed in automatic mode)

BASIC DOCUMENTS AND INFORMATIONS REQUIRED FOR COMPANY INCORPORATION
CASE 1 : Foreign national is residing in native country
If native country is a signatory of Hague convention
Attested & Apostatized Original Copy of

• Address Proof Copy
• Passport copy
• Authorization letter, Attesting Officer Proof
• Authorized Signatory Proof (In case of Foreign Company)

If native country is not a signatory of Hague convention
Attested Original Copy of

• Address Proof Copy
• Passport Copy
• Authorized Signatory Proof (In case of Foreign Company)

CASE 2 : Foreign national residing in India
Certified documents by Individual Embassy

• Resident Permit certificate issued by Assistant Foreigner Regional Registration Officer an officer of Bureau of Immigration India.
• Passport Copy
• Address Proof in INDIA
• Business Visa (Compulsory)

STEPS FOR THE INCORPORATION OF THE COMPANY
STEP 1 : Digital Signature For Foreign Nationals & Indian Nationals
DSC must be obtained for all the Subscribers of the company for their DIN issuance as well as for signing INC- 33 & INC-34.

STEP 2 : Obtaining Director Identification Number and Name Approval
Once DSC is issued, DIN needs to be applied for all the Directors and it is required for every individual intending to become a Director of a company in India.
After the issuance of DIN Number we can now apply for the company Name for its Approval from the Ministry of Corporate Affairs OR we can directly apply for the incorporation of the Company with direct method.

STEP 3 : Receiving the documents from the Foreign Nationals which are Subscribers
Once the Name gets approved we need some specific documents for the Foreign Nationals which need to be uploaded for the Final Incorporation.
CASE 1 : Foreign national is residing in native country

• DIR- 2 (In case he is also a Director)
• INC -9
• Declaration for not obtaining the PAN (If Applicable)
• MOA & AOA Subscribers Sheet

If the native country is a party to the Hague Apostille Convention then we need all above mentioned documents Notarized and Apostatized (BOTH)
If the native country is a Commonwealth Nation then we need all above mentioned documents Notarized Only.

If the native country is neither a Commonwealth Nation nor a party to the Hague Convention then we need all above mentioned documents Notarized and need to get attested by a Diplomatic or Consular Officer.
CASE 2 : Foreign national residing in India

We need certified documents by Individual Embassy

• DIR- 2 (In case he is also a Director)
• INC -9
• Declaration for not obtaining the PAN (If Applicable)
• Address Proof in INDIA
• Business Visa (Compulsory) (Only not applicable if the Foreigner is having a POI or OCI)

Rest other Documents of the India Subscribers and Registered Office will be as usual as per the Normal case.
In case a foreign company is a subscriber to the MOA & AOA of the proposed Indian Company:
The Foreign entity subscribing to the shares of the Indian company the following documents must be submitted.

• Board Resolution of The Foreign Entity authorizing Investment in shares of the Indian company.
• Copy of the Certificate of Incorporation of the Foreign entity
• Copy of address proof for the foreign company.

After accepting the documents with application, the Registrar would issue a Certificate of Incorporation PAN & TAN for the Indian Private Limited company.
Once the incorporation certificate is obtained, the Indian company can apply for a bank account for the company in India.

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Tax Benefit On Home Loan

A very important criterion to be kept in mind while taking a home loan is the Tax benefit on home loan. To explain the tax benefit on home loan, we would be dividing the repayment of home loan into 2 components.

Repayment of the Principal Amount

Repayment of the interest on Home loan
SECTION 80C -Under section 80c of the income tax act, one can avail tax benefits on principal amount of the home loan. Maximum deduction allowed is Rs.1,50,000. The tax deduction is on the payment basis irrespective of the year for which the payment has been made. The amount paid towards stamp duty charges and registration fees is allowed for deduction under section 80C. Tax benefit for repayment of principal loan amount is allowed after the construction of the house is complete.

SECTION 24 - Tax is available on the interest that is paid towards the home loan under section 24. The tax is deducted on an accrual basis. Maximum tax deduction allowed under section 24 is Rs.2lakh. This can be claimed on yearly basis even if no payments have been made during that year. If  the house is not constructed within 3 years from the end of the financial year that loan was taken  and allowed to claim only Rs.30000 as deduction.

If loan is taken to repair, reconstruct or renew your house, then you won't get any tax deductions on the interest paid. If the interest for the loan taken to purchase or construct the house has been paid before the house has been completed, then the aggregate of the amount is allowed for deduction in 5 equal instalments for 5 successive financial years.

Section 80EE tax benefit on interest paid on home loan for first time buyers. This deduction would be allowed only if the value of the property purchased is less than Rs.50lakhs and the value of loan taken is less than Rs.35lakhs. The loan should be sanctioned between 1st April 2016 and 31st March 2017. The benefit of this deduction would be available till the time the repayment of the loan continues. This deduction would be available till the time the repayment of loan continues. This deduction would be available from Financial year 2016 - 2017 onwards.

TO CLAIM TAX BENEFITS

The tax benefits have to be claimed at the time of filing your return if you have not informed. Deduction under section 80C. Here the taxpayer has to enter the contribution he has made towards PPF, EPF, LIC Premiums paid and the principal repayment made towards the home loan. Please note that if you are selling the property before 5 years from the date of getting possession, then the deductions claimed under section 80 C for principal repayment will be added back to your income.

Deduction under section 24, this deduction is for those who are buying a house for the very first time.

Deduction for interest earned on SB account under section 80TTA.
Deduction under section 80G that includes donations made to charitable organizations.
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GOODS AND SERVICE TAX - GST

The Goods and Service tax council decided to exempt  agriculturist and small traders with a turn over of less than 20 lakh from registering under GST regime. The council also agreed to provide a composition scheme to Dhabas and Small Restaurants, with less than 50 lakhs turn over. The GST council fixed a 5% tax rate on small hotels and restaurants. This  new indirect tax regime from july 1.
The all powerful council approved the final draft of central GST(CGST) and integrated GST (IGST) and will take up for approval the State GST had Union Territory GST (UT GST) Laws at its next meeting. Some of the features are

A State wise single registration for a tax payer for filing  returns, paying taxes and to fulfill other compliance requirements.

A tax payer has to file one single return state wise to report all his supplies, whether made within or outside the state or exported out of the country and pay the applicable taxes on them.
A business entity with an annual turnover of uo to Rs.20 lakhs would be required to take registration in the GST regime.

Most of the compliance requirements  would be fulfilled online, thus  leaving very little room for physical interface between the taxpayer and the tax official.
Taxes which need to be paid by the assessee under GST regime can be Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST) , Union Territory Goods and Services Tax (UTGST) and integrated goods and services Tax (IGST).

A business entity with turnover up to Rs.50 lakhs can avail the benefits of a composition scheme under which it has to pay a much lower rate of  tax and has to fulfill very minimal compliance requirements.

The composition scheme is available for all traders, select manufacturing sectors and for restaurants in the services sector.

I n order to prevent cascading of taxes, ITC would be admissible on all goods and services used in the course  or furtherance of business, except on a few items listed in the law.
In service sector, the existing mechanism of input service Distributor (ISD) under the service tax law has been retained to allow the flow of ITC in respect of input services within a legal entity.
An agriculturist, to the extent of supply of produce out of cultivation of land, would not be liable to take registration in the GST regime.

To provide certainty in tax matter, a provision has been made for an Advance Ruling  Authority.
Detailed transitional provisions have been provided to ensure migration of existing taxpayers and seamless transfer of unutilized ITC in the GST regime.
In order to mitigate any financial hardship being suffered by a taxpayer, commissioner has been empowered  to allow payment of taxes in installments.

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VAT REGISTRATION

VALUE ADDED TAX   is an indirect tax, which is imposed on goods and service at each stage of production, starting from raw materials to final products. It avoids the double taxation   of a direct tax. Any trading or manufacturing business, whether a sole proprietorship or a partnership firm or a private limited company, that sells its products is liable to be registered for VAT.
PROCEDURE

Submit an application for VAT in form 1 along with the following documents
•    Central Sales Tax Certificate (form A).
•    Professional tax registration certificate.(form 2)
•    Copy of important documents such as the address proof , ID proof of the proprietorship/partner/director
•    Four PP size photographs of the proprietorship/partner/Director
•    PAN NO. & Bank Account no. of the proprietorship/partner/Director
•    Copy of  rental agreement of the business place
•    Details of  business activities
•    Partnership deed (in case of partnership firm)
•    Memorandum of Association and Article of Association (in case of a private limited company)

The authorities from the local VAT office will inspect the premises of where you conduct business within a prescribed time.
Once the inspection is over, you will have to pay a specified fee to the local office for VAT   registration.
On payment of the fee, a TIN number will be allotted to you for your business and you will also be given the VAT registration  certificate.

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PRADHAN MANTRI GRAMIN DIGITAL SAKSHARTA ABHIYAN

Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDSA)  is a new upcoming  scheme which has been  approved  by the  union cabinet on 8th February 2017.Rs.2,351,38 crore aims to make 6 crore rural households digitally literate by March 2019. The union cabinet chaired by the Prime Minister approved  the scheme with an outlay of Rs.2,351,38 for implementation till march 2019 under the Digital India Initiative.

In last few months we have seen Indian government working real hard towards promoting use of digital technologies all across the country. Government has clearly shown its plan towards upcoming trends.

           The scheme would be launched very soon because the government  aims to train about 25 lakh candidates within the current financial year. Out of six crore targeted 2.75 crore will be trained in FY 2017-18 and rest 3 crore in FY 2018-19. It is expected to be the world’s largest digital literacy program launched. It is implemented under the overall supervision of Ministry of Electronics and government is going to use the IT to accomplish this program with states and union territories through their designated  state implementing Agencies, District e-governance Society etc.

IMPLEMENTATION

It would be implemented across the country and to ensure the equitable geographical reach the government would encourage  registration of about 200-300 candidates by each of the 2.5 lakh  gram  panchayats.

TRAINING

Sending and receiving e-mails, Browse internet

Making digital payments, Searching  information  on internet

Accessing  Government information

Basic IT application

Digital access  devices such as Smartphone and tablets

The main aim is to create literacy in rural area. So every year they will took 200-300 lakh people from Gram Panchayats to literate them. It is all about making rural area literate about digital transactions. It mainly target the rural houses that don’t have a internet connection or anyone among the family haven’t used computer services yet. Only about 1.8 crore rural households have a computer out of the total 16.85 crore as per the 71st NSSO Survey on Education  2014, thus a significant number of rest  15 crore households are likely to be digitally illiterate.

The literate people would be able to use  the mobile banking  or net banking  for cashless transactions thus contributing to  the  cashless India initiative of Central government.

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ONE PERSON COMPANY

One Person Company was recently introduced as a strong improvement over the sole proprietorship. It gives a single promoter full control over the company. This person will be the only director and shareholder (there is a nominee) holds 100 percent shareholding. The company incorporation Rules provide that only a natural person who is a resident of India and citizen of India can form a one person company. It means that other legal entities like companies or societies or other corporate entities (foreign citizens) cannot  form a one person company. A person cannot have two different one person companies in his name. The sole shareholder shall also be the sole director in the one person company.

               The person forming the one person company has to nominate   with his written consent who, in the event of  death or inability to contract of the owner of the one person company, shall come forward and take over the reins of the one person company. If the nominated person is already a member of another one person company , at the same time by virtue of rules has to decide within 6 months which one person company he/she  has to continue.
It gets freedom from complying with many requirements as normally applicable to other private limited companies. Annual returns can be signed by the Director himself instead of a company secretary.

INCORPORATION
DIN – Director Identification Number, DSC - Digital Signature Certificate
Name approval from MCA and Consent of the nominee
Memorandum and Articles and other required documents.
Final  incorporation certificate.

When the company reaches a paid up capital of 50 lakh rupees or more when the average turnover of the company which is Rs.2 crore or more  for a period of 3 years then the company shall be converted into a private limited company after making the changes in the memorandum of association and article of association.

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