Significance of Management Tax, Compliance & Company Secretarial for Foreign Business in India
India, being an economic hub, offers many opportunities for foreign firms to invest in various business sectors. However, to establish an uninterrupted operation, a company needs to understand the current management tax and its compliances. Moreover, to invest in the Indian market, it must abide by its company secretarial policy. A few good global business management consulting firms have emerged to ease this complex act of keeping track of tax updates and paperwork. They aim to provide professional assistance in tax planning for foreign companies and joint ventures in India. Corporate income tax has a significant impact on the business and the overall capital structure of the industry. Some companies tend to avoid management tax to generate more profit. This act leads to economic stagnation, which affects businesses and customers. So it is quintessential to follow all the legal guidelines to maintain equilibrium in the money market.
Important Policies by Government of India to Boost Foreign Direct Investment (FDI)
Effective tax planning can noticeably reduce the tax liability on foreign investment. The Indian Government has promoted some noticeable policies to attract multinational companies. Special Economic Zones (SEZs) and the Double Taxation Avoidance Agreement (DTAA) are set to encourage investment opportunities.
The global business management consulting firm takes the job to simplify the taxation brackets for overseas firms. In India, management consultants perform tax planning to make it effortless for companies to be up-to-date with their filing. Also, advance tax filing leads to tax subsidies or rebates, which puts companies in a beneficial position.
How does Management Tax for Foreign Businesses in India Works?
There entails a lot of process and paperwork behind understanding how management tax works. However, there are a few simple key steps to achieve favorable management tax practices. Let us look at them one by one:
- GST Registration And Filing
As per GST( Goods and Services Tax) Act, 2017, every foreign company selling goods and services must register under the Act. A company must make the application through Form GST-REG 9 at least five days before the commencement with a self-attested passport copy. Other necessary details are bank account information, credit card details, residential proof of the business, etc.
Corporate firms, foreign businesses, and joint ventures in India must file taxes into respective forms after registration. The multinational companies operating in India have to file the monthly return via Form GSTR- 5. The process must be completed by the 20th of the following month or within seven days after GST registration (whichever is earlier).
- Filling Business Tax Returns
Timely submission of the tax return is essential for any venture to run smoothly in the long run. A foreign company has to file the return electronically under a digital signature. The forms for filing returns are ITR6 and ITR7, with a due date of 31st October.
For filing ROC (Registrar of Companies), a foreign organization has to submit the following documents in Form AOC-4, MGT 7, and Form CRA 4, respectively-
- Balance sheet,
- Profit & loss account,
- Annual return,
- The cost audit report in.
- Filing TDS Return
Foreign businesses operating as joint ventures in India must file TDS (tax deducted at source) from salary or exclusive allowances paid to employees working in India in Form 27Q.
- Maintaining Books Of Accounts
Maintaining books of accounts is critical compliance that every company needs to abide by. Under Section 128 of the Companies Act, 2013, a foreign company must maintain its books of accounts concerning funds sent and received, revenue generated, profit and loss, assets, and liabilities account for the business done in India.
Importance of Company Secretarial Guidance
Under Company Secretarial guidance, authentication of the statutory documents is carried out thoroughly. The roles and duties of the company secretary are vast. Some of the additional responsibilities of these officials also include taking care of the administrative agendas like insurance, company pension scheme, VAT registration, etc. With the growing focus on corporate governance, the importance of the secretarial role has increased over the years.
Why Hire A Company Secretary?
A company secretary is a legal mentor who takes every necessary measure to ensure that the business meets its legal checklists. As per the Companies Act, 2013, the primary role of a company secretary is to verify documents and carry out all the registration processes smoothly.
He/she performs the duty of an auditor and legal advisor, guiding every aspect of the business. A company secretary ensures that the company is abided by the laws and guidelines as mentioned by the Companies Act, 2013. By being a link between inter and intra business affairs, a company secretary establishes connections between every hierarchy.
All foreign companies and businesses looking forward to investing in India must act in accordance with the country’s management tax compliance. However, in today’s times, keeping an eye on every aspect of the business is challenging. To ease this out, global business management consulting firms have gained experience providing exclusive assistance for the better operation of foreign firms.
How does India Management Consultant help?
A consultant firm like Tecnova helps businesses meet their administrative goals by taking care of all the regulatory and statutory processes. From registration to providing management tax advisory, it does it all. They provide complete assistance over all the legal aspects of a business which includes:
i) Establishing branch-office, liaison office,
ii) Keeping at par with the FDI policies and their guidelines,
iii) Composition of board resolutions and many more. The primary purpose of this management consultancy is to make the operation of foreign ventures in India hassle-free. With a better understanding of the taxation system, these firms offer a plethora of services that includes all direct and indirect tax registration to maintain return files. The concept of management tax and its compliances are not complex, but understanding every tax bracket can be challenging. However, with excellent planning and adhering to the legal guidelines, businesses can achieve impeccable operations throughout. In India, several global consulting firms are exercising complete assistance to make business incorporation convenient and easy.
Reference
- GST Registration for Foreign Companies in India
- Return Filing
- ROC Filing Return with E-Forms (Step by Step Guide)
- Form 27Q – NRI TDS Deduction
- Duties & Responsibilities Handled By A Company Secretary
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