Understanding the basics of Stamp Paper and Stamp duty.

Under the Bombay Stamp Act, 1958, 62 categories of documents need to be legitimised by 'stamping' them (paying stamp duty or a kind of tax to the government). There are 14 different varieties of stamp papers, available in 10 denominations. They are of two kinds: Judicial, used for legal and court work; non-judicial, used for registration of documents, insurance policies etc. 

Telgi used loopholes in the Act. He sold fake stamp papers for share transfers or insurance policies which do not have to be registered at the stamp department. 85 per cent of stamped documents (mainly property transactions) have to registered. 

Stamp Duty basically is nothing but a type of tax collected by the government under its jurisdiction for a transaction of property.

The types of property may be freehold or leasehold from land (agricultural and non-agricultural), independent houses, flats to commercial units. As a general rule, Stamp Duty is generally paid by purchasers. Also read: Having trouble in filing returns? Here's a checklist Stamp duty in India was first introduced by Britishers in 1899.

According to early rules, the Duty has to be deposited in the government treasury for all property transactions, which are done through document or instrument under the provisions subscribed in Indian Stamp Act of 1899 and Bombay Stamp Act of 1958.

The amount, collected by government-appointed Stamp collectors, would go directly to the concerned State under which the individuals are taxed. In many states still the Indian Stamp Act, 1899 is in force.

The percentage of stamp duty levied varies in different states. For example Maharashtra charges 6.5 percent of the property value as stamp duty if the property lies within the city limit, while in Tamil Nadu 8 percent Stamp Duty is collected for all types of property transactions. In this, 7 percent is levied as Stamp Duty and one percent as registration charges. Tamil Nadu government has introduced its own stamp duty law in May to simplify and streamline transactions of immovable properties and securities. States such as Gujarat, Karnataka, Maharashtra, Rajasthan and Kerala too have their own stamp law. Tamil Nadu’s Bill brought some significant changes to the Central law. For example, the addition of sister, brother, husband of predeceased daughter and wife of predeceased son within the definition of family. The central law states that family means father, mother, husband, wife, son, daughter and grandchild. For those who buy flats, stamp duty is calculated on the basis of the land parcel applicable to the purchaser in the multi-storey apartment. This is known as undivided share (UDS) of the property. For example, if the apartments made on 2400 sq ft having 10 equal sized apartments, each member has to pay for a stamp duty for 240 sq ft land. The size of UDS varies if the apartment sizes vary and largest portion will be allotted for those having large sized apartments.

Why should one pay stamp duty? As mentioned earlier, this is a tax inline with sales tax or income tax collected by the Government. Technically speaking, Stamp Duty for any property transactions is paid under Section 3 of the Indian Stamp Act, 1899. Stamp duty is payable in full and on time. If there is a delay in payment, it attracts penalty at the rate of two percent every month on remaining amount and as maximum penalty being levied 200 percent for the unpaid amount. Another advantage for paying stamp duty is that the document acquires evidentiary value and admitted in any court of law in India as evidence provided the documents are how to pay the stamp duty properly stamped.

How to pay stamp duty? Now the question comes, how to pay the stamp duty? Many states have simplified the payment procedure. For example in Maharashtra, one can pay the stamp duty online as the government has recently announced linking of all sub-registrar offices across the state for easy payment. Otherwise, stamp papers, equivalent to the value of the stamp duty, should be purchased in the name of one of the parties involved in the transaction. The amount will be paid at the sub-registrar office of the jurisdiction on or before the execution of the sale deed.

Though in India it has become a practice that only purchasers bear the cost of stamp duty, actually, it is either paid by a transferee or purchaser or as mutually agreed in the agreement between parties.

Sources, readings from the TOI and money control.com 

Happy learning & Growing!

Kunal 

Corporate Law Update: Mandatory e-filing of service tax return w.e.f 1st October, 2014

The Central Board of Excise and Customs have made the filing of service tax return filing mandatory in electronic mode for all the assesses w.e.f 1st October, 2014.

Therefore all the assesses are required to file the returns diligently making use of internet banking.

Provided that the department has given powers to the Assistant commissioner that if the commissioner thinks fit, he can exempt any assessee from filing the return electronically.

For White-Collar Legal,

Partner

Kunal

Annual Compliance by Companies in India 2014.

Here is one for the Corporate, 2014, Annual Filing

Every Company registered under the Companies Act 2013/1956 shall file following Forms:-

S. NO	FORMS	PURPOSE	DUE DATE	REQUIREMENTS
1.	GNL - 2	Appointment of Auditor (Under Section 139 (1))	15 Days from the Date of Meeting in which auditor is  Appointed.	·   ADT-1, ·   Resolutions ·   Appointment Letter
2.	20B	Filling of Annual Return (Under Section 92 (1))	60 Days from the Date of AGM	·   Annual Return
3.	23AC and 23ACA	Copy of financial statement to be filed (Profit and Loss accounts and Balance Sheets) (Under Section 137 (1))	30 Days from the Date of AGM	·   Notice of AGM ·   Board of Directors Report ·   Auditors Report ·   Audited Financial Statement
4.	MGT 14	Filling of Board Resolutions for Approval of Financial Statements (Under Section 179 (3)(G))	30 Days from the Date Approvals of Financial Statements	·   Board Resolutions

IMPORTANT NOTE:- (In Case of Non Filling or Delay Filling)

1. The Company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakhs rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both;
2. Disqualifications for appointment of director u/s 164 (2)(A)
3. Winding up by the Tribunal;
4. Issue of Notice by the Registrar of Companies to declare as Dormant Company;
5. Additional Fees may attract for delay filling;

Staying Relevant.

How to understand the relevancy of people, of their knowledge to be precise…

Understand by observing whom they quote. If they keep quoting Bill Gates or Steve Jobs or Einstein (everyone’s favorite) I’m sure they’re just making it up. If they’re quoting someone who’s been in their profession for a long time, it is an indication that they haven’t been reading much lately and therefore are resorting to stay out of harm’s way.

The same applies for your professional colleagues as well.

Expertise is dynamic and the person germane today might have been a totally unknown name yesterday.

Best tip I received today (from a doctor actually)

BE RELEVANT. Everything else follows.   

Doing Business in a democracy! Part 2.

Doing business in a democracy pays off, as: 5 highlights!

1.      Large employable workforce (incentives to employ)

As the government is unable to cater to and provide employment to all, they provide incentives and subsidies to budding entrepreneurs and industrialists as they are provide mass employment. The rationale behind setting up SEZs and EHZ was purely to dole out employment to the rural population.

2.      Better pricing flexibility

A business has both types of clients. The niche’ clientele and the masses. In India, we have three, the uber rich, the middle class and the LIGs. (Lower income groups) Therefore, a business can have top of the line and basic products in their offering. For e.g. Mercedes Benz offers the S class for the 1^st group, the C class for the second, and a pre-owned & lease system for the ambitious third. A diverse client base allows you this.

3.      Working on national interests/products of national importance

It is only in a democratic set up that a company (even a private limited) can discharge sovereign functions. Who had thought to reliance entering into the fuel and natural gas biz. ONGC was earlier the only licenses one. One an organization proves its mettle; the government goes all out to share their chunk of responsibility towards citizens. Last IC session, we also understand how Lawrence & Mayo is helping measure the highways and so on. Even professionals get to work and defend the government even when they are not full time employees. Nani Palkhiwala was a jurist regularly hired by the govt to defend them in international cases. Please note, Mr. Palkhiwala was a private practitioner and in no way connected to the government. (Even the tax speeches he gave were widely publicized through various government mediums)

4.      Best of both worlds

As a developing democracy is hungry and just waiting for opportunities. One can either take a franchisee of a successful business (like McD) or start a quasi-biz. Many entrepreneurs have observed great business during their tours abroad and have simply replicated them in their home country. The reason why many domestic social networking sites have thrived in spite of there being google+ and facebook. (Fropper & fan2go are some examples)

5.      Accommodative governmental system

The government goes out of its way to promote entrepreneurs. There have been instances of the government letting Air India flight slots to the more successful ones like Indigo and Jet airways. Similarly, 100% EOUs don’t have to pay taxes, Industries like IT and others, which do not pollute get amazing 10-15 year income tax exemptions.

The government also stripes of the uber wealthy and royal families of their status and wealth. For eg. The pataudi family lost their nawab status and had to surrender much of their ancestral property to the government, as under the IT Act, 1961, the government has introduced caps on how much property can be held. This is enforceable in developed countries. Sometimes, I agree that this accommodative nature of the govt is taken for granted by some of the MNCs who are thriving here, but the pros clearly outweigh the cons.

Happy business you'all :)

Why starting a business in a democracy like India is good!

Five reasons why start ups prefer democratic country

1.       Freedom to choose your trade/profession

The government is very proactive in providing subsidies and benefits to start ups whose service area is that of catering to a mass audience. For e.g. Logistics & e commerce companies like flipkart & redbus have thrived in a democratic Indian set up.

Most of the areas except defense and atomic energy had open for an entrepreneur. This is a rare scenario in communist countries like China.

2.       No fear of monopoly

As the government is elected, they need to keep all their stakeholders happy. This ensures a healthy debate before protecting any sector and to maintain a competitive atmosphere at the market. E.g. the entry of Walmart is/was highly debated as it would stifle the domestic players.

3.       A larger diverse audience/client base

In a country like India, even if your business caters to a single community, you have an enormous client base.  A tailor made business (expertise) will always thrive in a democratic set-up.

4.       Peaceful modifications in the Government are possible

Democracy offers modifications in the government without hostility. Authority can be shifted from one party to another, based on their performance. What we experienced first-hand this elections.

5.       Feeling of gratitude/power in the hands of people/businessmen

As they have complete authority and responsibility, they can have the constitution amended, file an RTI and get all the info they need, sue the government, make the government accountable and so on.

Many businesses have cajoled the government by enacting special laws for them. The government too has established the CCI to regulate competition and unfair trade practices. It helps start ups grow.

The reason why many industrialists start their own trusts and provide services which ought to be provided by the government, in a amicable PPP (pub-private partnership) set up.  This is not the case in many developed countries. Might be the most important advantage of operating in a democratic setting

Understanding the legal world. Why we need laws?

So, here goes my first post. Before writing about how law is actually common sense in written form and explaining the nitty gritties of understanding the legal system, I firstly want to make the reader understand the significance of why LAWS are needed. Why is it Lawgical. Read on…

On a lighter note...:)

• Law acts as a kind of guideline as to what is accepted of someone in a society. Law is important because it keeps society running. Without law there would be conflicts and chaos. Laws are everywhere and it is important to follow them. They allow for the easy adoption to changes in society. As time changes so will a law. Laws are constantly being amended whenever needed. Others are used to regulate things such as: immigration, trade and sales.

• The most dangerous laws are those intended to protect the government from harm, or to increase its power for its own sake. Some Internal-wall Principle laws are necessary--laws against treason and espionage, for example, are essential to the stability of government. But Inernal-wall Principle laws can also be dangerous--laws restricting criticism of the government, such as flag burning laws that prohibit the desecration of symbols that remind people of the government, can easily lead to a politically oppressive society full of imprisoned dissidents and frightened citizens who are afraid to speak out.

• Laws exist for five basic reasons, and all of them can be abused. We will not focus on the abuse part as it is uncalled for and all loopholes/leakages should be plugged in asap.

• All governments have laws granting goods or services of some kind to its citizens. When these laws are used to control behavior, however, they can give some people, groups, or organizations unfair advantages over others. Laws promoting specific religious beliefs, for example, are gifts that governments extend to religious groups in hopes of gaining their support. Laws punishing certain corporate practices are sometimes used to reward corporations that are in the government's good graces, and/or to punish corporations that are not. Some conservatives argue that many social service initiatives are Safeguarding Principle laws intended to buy the support of low-income voters, who tend to vote Democratic.

• In addition to laws intended to discourage people from harming each other, some laws are written to prohibit self-harm. The Caring Principle laws include compulsory attendance laws for children, laws against neglect of children and vulnerable adults, and laws banning the possession of certain drugs. Some Caring Principle laws are essential to protect children and vulnerable adults, but even in those cases they can be oppressive if they are not narrowly written and sensibly enforced.

• Some laws are based not strictly on harm or self-harm concerns, but also on promoting the personal Ethics of the law's authors. These laws are usually, but not always, grounded in religious belief. Historically, most of these laws have something to do with sex--but some European laws against Holocaust denial and other forms of hate speech also appear to be motivated primarily by the Ethical Principle.

• Laws created under the Security Principle are written to protect people from being harmed by others. Laws against violent crime and property crime fall into this category. Without basic Security Principle laws, a society ultimately degenerates into despotism--the rule of the strong and violent over the weak and nonviolent. Harm Principle laws are essential, and every government on Earth has them.