Firm Registration

Firm Registration – Registering a Partnership Firm in India (UPDATED June 2017)

Last updated: June 2, 2017

Here are complete instructions on firm registration so you can register your Partnership Firm with the Government.

A Background on Partnership Firms

So, how can you be sure that your business is considered a partnership firm, then?

For starters, partnerships are types of firms that do not result to unlimited liability to its members, compared to traditional businesses. What sets partnership firms in India apart is the fact that partnership firms do not need to have at least one mandatory member who would shoulder unlimited responsibility. Therefore, the liability would then depend on the capital that the partners have invested for the current business.

Another thing you can keep in mind is that partnership firm members would be able to have high level of protection, and only limited liability when it comes to financial risks regarding the business.

Before you set out for firm registration of your partnership firm, you do have to be mindful of the following:

  • You or your partner/s cannot file any suit in court against other partners or the firm itself, as this is written in India’s Partnership Act.
  • You or any of your partners cannot claim mutual adjustment of debts, otherwise known as set-offs, which are owned by disputant parties, or any other proceedings.
  • You cannot enforce any contract from the court, and it couldn’t be allowed to arise in any way.

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Choosing a Name for Your Partnership Firm

One important thing that you should do first when it comes to proper firm registration of a partnership firm is that you have to choose a name for your business first. For this, you have to keep two important things in mind, and these are:

  • You have to make sure that the name isn’t too similar to that of another existing firm. This way, confusion would not ensue, and in case the other firm with the same name as yours gets into squabbles, or gets negative reputation in business, your business would not be compromised. There are also several mobile apps that can help you check whether the name you want is already registered or not. These apps are available on the iTunes and Google Play stores and they support all phones including the upcoming mobile phones.
  • You have to make sure that you would not use the following names for your business: Emperor, Crown, Empire, and Princess. Using these terms would not make firm registration easy because these words imply patronage, approval, or sanction of the Government, unless you have to use them as allowed by the government itself.

Check for Name Availability. You might also want to check the availability of your chosen name/s first, just to be sure. This will also save you a lot of time and effort so you won’t have to waste your firm registration time choosing names that have already been taken, or are not allowed. To do this, just follow the guidelines below:

  • Go to the MCA website, and then enter your proposed name in the space labeled Company Name.
  • You’ll then see a dropdown box that shows names of the same kind, if any, so you’d know if your chosen name has already been used before, or if it might cause confusion once you push through in using it.
  • If you see the words “no records found” flashing on your screen, it means that there are no companies with a similar name, and you can push through with using the name that you have already chosen.
  • You can also do the same to check for trademarks or trademarked names. Just enter your proposed name in the wordmark, followed by relevant class, and then you’ll see if any records have been found or not.

The Process of Registration

Now that you’re able to prepare for it, it’s time to understand how the process of firm registration should go for your business. For this, you need to make a partnership deed, mostly because oral arguments do not have any value whatsoever when it comes to the state of your business. A partnership deed should include the following:

  • Name and address of the firm—which also includes names and addresses of all partners involved;
  • Enter your full name, which should be more than a single alphabet in both the first and last name fields. You’d have to fill up your father’s name, as well.
  • Attach a photograph with a full view of your face, facing front.
  • If you’re a foreign national, the nationality you should input is the one that’s written on your passport.
  • Enter educational attainment and current occupation, as well.
  • Take note that for foreign nationals, adding passport number is mandatory to make firm registration
  • Enter residence details—and make sure it matches your current area of residence, and not where you have lived years ago, or in the future.
  • The date when the business was commenced, or would be commenced;
  • The Nature of the business that you’d be carrying on. This means that you have to say what the business would be about, why it is important to put the business up, why it matters in its niche, etc;
  • The Capital Contribution of each of the partners;
  • The Duration of the Partnership. This could denote whether it’s for a given period of time only, or if it would be for a permanent position or amount of time, and;
  • The kind of profit-sharing that would happen between the partners.
  • Provide identification details, affidavits, if needed, and digital signature. Once you have provided all the required details, register using the eForm, also on the said website.

To make firm registration happen, you have to make sure that the application is signed and verified by all of the partners, and that all the prescribed fees are enclosed within the partnership deed, or application documents.

Application Form 1

In the envelope, you will also have to enclose Form 1 for firm registration, which should contain the following:

  • The Class No. of Your Business—you can figure this out at the office of the Ministry—there are lists you can follow there;
  • The full name and nationalities of the partners;
  • Design/blueprint or sketches of the business;
  • The name of the article or design which the business applies to the trade description of each set;
  • Name of country, official date when the business was set or has been thought of, official number of service, and make sure that you have it addressed to the Controller of Designs in Calcutta.

Specimen of Affidavit

The next step in firm registration in India is to make sure that you fill up your specimen of affidavit. Basically, this is a sworn statement that would verify firm registration, and make sure you’re following due process. The affidavit should contain the following:

  • The identity of the person making the declaration (you and your partners), or the declarant;
  • The individual’s current address—do this for each one signing the document, or the location;
  • The signature of the one who’s signing the affidavit, also known as signature;
  • A list or statement of facts that you’re trying to declare under oath, and;
  • Notary Acknowledgment—which means that you need to have the affidavit notarized to verify its authenticity.

Completing the Partnership Deed

Aside from what was mentioned, you have to complete your partnership deed by adding the following:

  • Commissions, salaries, and other forms of payables to all parties;
  • Partner’s Capital Interest and Interest Rates, all of which have to be charged on drawings;
  • Account Preparation Methods;
  • Rules that the company would have to follow in case of accidents, bankruptcies, or deaths, and;
  • Division of responsibilities and tasks, together with obligations and powers for all of the partners

You can customize and personalize the partnership deed, depending on the kind of business you have, and what you and your partners deem to be good for it, and should be placed on a stamp paper for it to be considered helpful for firm registration. This is in accordance to the Indian Stamp Act, which contains the following parameters:

  • Several instruments should be used for single transactions of mortgages, sales, or settlements;
  • Instruments should be chargeable with duty;
  • No payment on principal instruments of the Payment of Punjab Duty should not be made prematurely;
  • Debentures and Bonds relating to 1879’s Act 11 should be declared;
  • There should be sea insurance policies;
  • The use of adhesive stamps should be well thought of;
  • You have to know how duties should be paid;
  • There should only be one instrument on the same stamp;
  • The deed should denote the proper duties of the partners involved;
  • Facts affecting the said duties should be duly noted;
  • Payable duties should be made known, and;
  • There should be obligation to give receipts up on certain cases.

DSC

Acquire DSC. Next, you’d have to get DSC, or Digital Signature Certificate so that you would get the right level of security. If you have managed to read the earlier instructions, you’d know that you can get this while applying for DIN eForm 1. However, if you choose to make this the first step of your personal firm registration, you can check out a couple of websites that can allow you to do this. Not only will you be able to download the certificate you need, you will also be able to track your application, review certificates, and revoke them, if needed.

Now that you know how firm registration happens, it wouldn’t be a surprise if another question plagues you, and it is about how much the whole registration process will cost.

How much would it cost?

What you have to know is that there are different fees that you’d have to be prepared to pay during firm registration. These are as follows:

  • Firm Partnership Registration. This could be around Rs 500 to Rs 5000, depending on the amount of contribution, which in itself could range from Rs 1 Lakh to Rs 10 Lakh. Take note that these fees will have to be paid until you have submitted or have gone through Form 3.
  • Document Recording/Registration. You would also have to pay for the recording or registration of documents that you have. These include forms, Statement of Accounts and Solvency, notices, or any other kind of annual returns that could make way for the registration, privatization, or conversion of any companies. This could go from RS 50 to Rs 500, depending on the amount of contribution, which could range from Rs 1 Lakh to Rs 10 Lakh.
  • Conversion of firms or unlisted public companies. Applications of names u/s 16 would cost Rs 200; names u/s 18 would cost Rs 10,000; names under rule 18 would cost Rs 10000; renewal of names would cost Rs 5000, and application for DPN rule would cost Rs 100.
  • Inspection of Documents. You might also have to pay to have your documents inspected properly. For documents under section 36 of the LLP, you’d have to pay Rs 50; for extraction or copy of documents under section 36, you’d have to pay Rs 5 per fractional page, as filled up by the registrar or Ministry.
  • Statement of Accounts and Solvency. And of course, you would also have to pay for the notices or solvency of documents courtesy of the foreign limited liability partnership. Documents under rule 34 cost Rs 5000, and any other documents or forms of Accounts and Solvency would cost Rs 1000.

These costs are laid out not to scare you, but to make sure that you would be prepared for them, so that the incorporation of your firm would not be derailed simply by small financial matters—and so you’d know what to expect, as well, and that way, firm registration would not be a hassle.

Keep the Following in Mind

Finally, you have to keep the following in mind so that you won’t be confused when it comes to firm registration:

  • It is a Separate Legal Entity. Partnership Firms are considered as juristic persons, and legal entities, based on the Partnership Act of India. This means that it is its own property—no matter how small it is—which means it is seen as a form of organization, and at the same time, it can also incur its own debts, without affecting others in the process. This also means that Firm Partners would have no liability to creditors—which is definitely a winning situation for the firm.
  • One is not responsible for the other. When a business goes down, what comes to mind is that everyone gets to be affected, especially the business owners or managers. That’s not the same for Partnership Firms. When your partner experiences certain losses, it does not necessarily mean that you will, too. If your partner gets involved in fraud, it also does not necessarily mean that you’ll have to be indicted, as well. It also means that your personal properties would not be taken as collaterals to pay off your debts—which definitely lessens the hassle of the process for you.
  • An uninterrupted existence. Partnership Firms make way for perpetual succession. This basically means that the firm would have uninterrupted existence, and would still be continued until the event that it gets dissolved. This also has a lot to do with the fact that it is a separate entity, which means it would not get affected by departures of any kind, or worse, death. It would go on, no matter what the changes in partnership might be.
  • Easy Transferability. Suppose you or your partner would want to give your rights as owner of the firm to somebody else, you would be glad to know that when it comes to Partnership Firms, transferability is fairly easy. What you only have to do is introduce and induct them as your Designated Partners, which would then allow Managing Partners to be changed, and thus, the ownership of the firm follows.
  • Ownership of Property. You and your partner/s would be considered as both the owners and managers of the company, and no one else could take that position and power away from you. No other person could also claim ownership of the property, unless it has been legally transferred, as well.

Keeping Things Right and Legal

As you can see, partnership firms are pretty much the kind of businesses you’d like to get yourself into. They give you enough privacy, security, and freedom, especially if you’re new in the world of business. It gives you enough power to run the business without negatively affecting your personal life. It also gives you the chance to have working power transferred to those you see fit, without having to go through unnecessary rubbles.

Of course, there are downsides, too, such as the fact that partnership firms cannot, in any way, raise public funds, and that the wind up process may be a bit complicated. The amount of fees that you’d have to pay may even be considered staggering by some.

But when it comes to allowing you to run your business freely, and make sure that you have something you will be proud of, partnership firms are the real deal. This is why it makes sense to know what needs to be done to make things legal.

Now that you know how firm registration is done, you now have the chance to achieve the kind of business that you can make an honest living from—and now, you can also be sure that everything will be right and legal, too.

Is Bitcoin a Threat to the Global Banking System?

Is Bitcoin a Threat to the Global Banking System?

Who knew what shape the 4th industrial revolution might take, and the exponential acceleration of blockchain and cryptocurrency technologies. Along with voice-AI developments like Amazon Alexa, I think we’re witnessing the beginning of the transformation of banking.

While the Banks and people in finance warn of the Bitcoin bubble, Millennials are opting in like nothing before. Thus, CME (December 18th), NASDAQ and all of Wall Street must following offering Bitcoin futures.

Let’s face it, the decentralized structure and nature of Bitcoin completely eliminates the necessity of central entities and authorities within the network to settle transactions between two parties. Think about how fucking scary that must be to banks.

Even the Turkish Central bank has basically admitted that Bitcoin is a threat to the global banking system. Russia is creating Global ICO ratings standard with 30 countries. There’s a new kind of regulation occurring, as central bank themselves scramble to bring their national fiat currency on to a cryptocurrency, on a blockchain, but of course not decentralized.

US Commodity Futures Trading Commission will allow bitcoin futures to be traded on some public exchanges. The commission reached agreement with CME Group Inc. and Cboe Global Markets Inc. on how to provide oversight for futures trades in the cryptocurrency. The move comes before US regulators have even agreed what exactly Bitcoin is. (Source: LinkedIn).

Basically what this means the Cryptocurrency Singularity is racing along faster than banks and regulators can adjust to. In an age where even NAFTA doesn’t have provisions for digital businesses like Netflix, regulating the next iteration of AI and blockchain is going to be interesting.

The Russian Association of Blockchain and Cryptocurrency (RACIB), announcing that they will be developing a uniform ratings standard for ICOs shows that with the speed of new ICOs and altcoins launching, and with occasional fraudulent activities, not to mention Cryptocurrency Exchange flash losses, perhaps Wall Street can create some structure and no doubt try to profit from it as well. That’s why they will use Bitcoin Futures to ‘Elevate Cryptocurrencies Into an Emerging Asset Class’, and try to piggy-back on its mainstream adoption. In other words, the banks and financial service powerhouses, want their cut.

But no amount of regulation can really control this; ICOs are being used to crowdfund startups and to decentralize innovation itself and that’s something Venture Capital should also be scared of, not just banks and Wall Street. Millennials are showing they care more about alternative methods that could one day tap out banks, VC and very centralized power of outdated institutions.

Meanwhile as Amazon rolls out new innovations of “Alexa Skills”, many of those will be in finance and banking. At first they will be for the banks themselves, but Amazon will eventually cut out the banks from the equation, as it evolves into Health and banking, in addition to its food, entertainment, retail and artificial intelligence push. The most seamless banking is done via voice, and with Alexa skills going to the workplace, can you imagine how this could facilitate cryptocurrency exchanges?

By 2025 or earlier, we’ll literally be doing everything by Voice-AI.

We’ll be houndifying all of our devices and our entire lives. The conversational interface will be king, not the smart phone — and it will be everywhere including at banks, you guessed it, replacing banks altogether. In the future, it turns out, you don’t need a cashier, a teller or a financial (sales) representative. What cryptocurrencies and the gig-economy teamed up in the IoT mesh of the future?

Millennials want instantaneous on-demand interactions, that are secure, private and don’t require a 3rd party. Why would we give all of these hidden fees and cuts to banks, if we had the choice? Altcoins and Alexa both give us hints about how the future is done.

Hey Alexa, what’s the price of BitcoinYou don’t need Google to visit the future, and you certainly don’t’ need Wall Street.

Is Bitcoin a threat to the global banking system? Probably not. Yet the blockchain, ICOs, cryptocurrencies and the a new ecosystem of trust that young people are desperate for prefers secure and decentralization transactions and that means institutions like profit hoarding banks, manipulative Wall Street, Venture Capital centralized in Silicon Valley and corrupt nation states who seek to control their populations, may in fact, be disrupted soon.

Correct me if I’m wrong?

Seems like youngsters’ will favor Bitcoin over Banks

Seems like youngsters’ will favor Bitcoin over Banks

Instead of opening traditional bank accounts, one of the four millennials is investing in the major digital currency called Bitcoin. They earn more from their Bitcoin investments and their money is safe, according to the survey.

According to a survey conducted by BlockCapital, 70% of 10,000 youngsters have said that they do not matter with banks’ interest rates, and about 65% say they have secured their money safely in bitcoin. According to the survey, almost two-thirds of female competitors have begun to emerge from Bitcoin and invest in other digital currencies to diversify their capital.

Other highlights of the survey

As their preference of Bitcoin as a form of investment, somehow less than 50% of the millennials said that they are also looking for a more convenient form of banking and 45% stated that they want their banks to integrate Bitcoin wallets in their operations so they can directly invest in the cryptocurrencies through their existing bank accounts.

The survey estimates that most millennials invest in third-quarter real-time currencies of their savings. According to site founder Andrew Sung, survey results show that younger generations are faster than adopting new technologies than their old counterparts.

Income Tax for Pensioners

Income Tax for Pensioners

For the purposes of taxation, pension payments are treated as salary income in return forms in India. The dictionary defines a pension as an amount paid at regular intervals by the State or a past employer on account of services previously rendered, age, disability, poverty or other uncontrollable loss suffered. Similar definitions obtain in Section 60 of the Civil Procedure Code and Section 11 of the Pension Act. Pension payments end only upon the death of the retiree.

Pensions in India

Those who serve the formal part of the non-government sector address their pension requirements by legally enforceable pension plans based on schemes of the Employees Provident Fund Organisation. Employers may decide to opt out of these and form Exempted Funds or Superannuation Funds for those employees who choose to decide in favour. Self-employed professionals and blue-collar workers in both organized and unorganized sectors may choose to adopt other voluntary pension schemes.

Difference between Commuted and Uncommuted Pension

Pension is often paid on a monthly basis but it can also be commuted, ie, paid as a single consolidated sum. This consolidated sum may be any percentage of your monthly payment. In such a case, your commuted sum would be calculated and your regular pension would be reduced by an equated monthly amount for as long as your commuted sum remains unrepaid.

Regularly paid pension is taxed in the same manner as regular income.

Commuted pension for a government retiree is fully exempt from income tax payment while it is only partly exempt for others.

Plan your taxes with a professional.

Income Tax Exemptions and Deductions for Pensioners

  • For a private sector employee, income tax rules state that where gratuity is also received by the retiree, the exempted income is one third of the amount of pension that would have been received assuming 100% of the pension was commuted. If gratuity is not a part of retirement benefits alongside pension then only one half of the pension that would have been receivable had 100% of the pension been commuted would be exempt from income tax.
  • Commuted family pensions are not taxed by the authorities. But the part that is given out in monthly or periodic instalments would be exempt by Rupees 15000 or one third of the amount received depending on which one is lesser.
  • UN employee families that receive family pension are not obliged to pay any income tax on that amount.
  • Family pensions received by relatives of armed forces personnel are also exempt from income tax.

 

Rates of income-tax for Senior Citizens between 60 and 80 years
1 where the total income does not exceed Rs. 3,00,000 Nil
2 where the total income exceeds Rs. 3,00,000 but does not exceed Rs. 5,00,000 5%
3 where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000 20%
4 where the total income exceeds Rs. 10,00,000 30%

 

Rates of income-tax for Senior Citizens between 60 and 80 years
1 where the total income does not exceed Rs. 3,00,000 Nil
2 where the total income exceeds Rs. 3,00,000 but does not exceed Rs. 5,00,000 Nil
3 where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000 20%
4 where the total income exceeds Rs. 10,00,000 30%

 

Deductions:

  • Section 89 of the Income Tax Act, 1961 provides relief to family pension beneficiaries who receive a commuted sum. If the commuted sum inflates the income tax rate for the assessment year, the Assessing Officer is bound upon receiving an application in this regard, to grant exemptions as above. Reference may be made, in such a situation, to Rule 21A and 21AA and the use of Form 10E for furnishing particulars.
  • Income tax deductions applicable to pensioners are the same as those for other categories of taxpayers. Click here to find out which ITR form needs to be filed for the purposes of filing tax returns.

Upon receipt and assessment by tax authorities you may obtain income tax refunds for if deductions and exemptions have been properly mentioned. CA assisted tax return efilings the best fit for you if you possess multiple sources of income.

e-commerce business

Is 30% RTO, cost of doing e-commerce business?

The Indian e-commerce ecosystem is quite unique. Unlike mature markets in US /Europe, the most popular payment method is an Indian ‘Jugaad’ — cash-on-delivery (COD). COD suits the Indian consumer and thus makes up 70% of all Indian e-commerce. However, it comes with a unique Problem — Return to Origin (RTO).

RTO is when orders cannot be delivered and have to be shipped back to the warehouse. This puts a significant cost burden on e-commerce firms as they lose money on:

  • Forward & Reverse Logistics.
  • Blocked Inventory (Items stuck in transit)
  • Physical Quality check and re-packaging of returned items
  • Increased probability of damage to fragile items.
  • Operations cost in processing this order.

In case of COD orders, RTO can be as high as 40%. When one in three orders has the potential to damage your bottom line, instead of adding value to it, the situation is alarming! To find a solution we analysed RTO data and some common patterns emerged:

  1. Order without Intent (for Fun)
  2. Customer Error (Intent is there but incomplete address etc.)
  3. Orders from transitory addresses (hotels, friends place etc.)
  4. Price sensitive intent (drop in price — reorder)
  5. Impulse buy but without paying. (there is no downside to refusing delivery).
  6. Intent to Fraud (Habitual fraudsters)

Companies have little choice and fewer tools to prevent RTO — they just take it as a ‘cost of doing business’. Most firms resort to blunt static rules like:

  1. Block all International credit cards
  2. Do not deliver to certain pin codes and cities
  3. Cap the order size

These macro-level rules do more harm than good as many genuine orders are lost and customer relationships damaged. Solving the RTO problem by manually scanning every order does not work either due to the sheer scale of the problem and evolving nature of fraud techniques. With the Indian e-commerce market becoming hyper-competitive, firms need better solutions as they cannot afford to lose customers and orders. Machine Learning technology offers an attractive solution as it addresses all the challenges in preventing fraud — scale, complexity and changing patterns.

Machine Learning for Fraud Detection

Catching digital frauds requires us to first gather the ‘Forensic Evidence’. Every user interaction leaves behind a subtle digital forensic trail like proxy IP, device ID, email address, time to order etc. Machine learning models combine hundreds of such innocuous parameters, which are seemingly unrelated, to identify the patterns that indicate fraud.

Enriching the Data

Machine learning and natural language processing are used to differentiate between real and fake address. This is just the beginning. Transaction and User data is enriched by adding context to it. For example by adding the price of the user’s phone device or categorizing an address as five stars or one star we turn meaningless data (Phone model) into actionable information which increases the accuracy of the Red or Green flag that the machine learning models generate for every transaction.

User and Device Profiling

As we augment and enrich the data we can create risk profiles for each user. We can understand common email and physical address patterns as well as the digital fingerprint of the device used. Even when fraudsters reset their phone, to wipe the traces of their previous frauds, the digital fingerprint enables the algorithms to identify the fraudster. By leveraging the augmented data and machine learning algorithms, we saw an 81% reduction in RTO within 3 months at a large e-commerce firm.

Follow the user!

Fraudsters are habitual creatures. They leave similar footprints on multiple sites. Network effects can be harnessed by pooling in anonymized data to predict and prevent fraudulent behavior. This de-incentivizes and penalizes fraudulent behavior across the ecosystem.

By combining network effects with augmented data and machine learning, RTO can be reduced by over 80%. RTO reduction has a cascading effect as it makes the entire ecosystem more robust, accountable and profitable. It will help the Indian e-commerce ecosystem to mature and become available pan-India — where no location is a “no-delivery” zone. Moreover, e-commerce firms will truly know their customers so that goods are delivered to a person not merely to an address. Most importantly, RTO will no longer be just a “cost of doing business”.

Impact of GST on Digital Marketing

Impact of GST on Digital Marketing

Digital Marketing is the new revolution sweeping the globe and national and multinational companies alike are taking full advantage of the same. Digital Marketing has become an integral part of economies around the world and Indian Economy is no exception. Indian Economy is caught in the eye of a storm with GST and it will have a profound impact on the digital market economy as well.

GST is a huge step in the history of tax reforms to create confidence and an atmosphere of investment, manufacturing, and growth. GST is portrayed to provide the requisite impetus to the business sector and at the same time reducing the price burden due to regressive taxes on the consumers.

The most salient feature of the GST is that it would remove the multiple taxes levied on products both by the state and central government by virtue of taxes being in the concurrent list. GST seeks to replace these taxes which are primarily regressive in nature, due to which a cascading effect is created and as a result, the ordinary consumer pays around 20-30% extra. Another major problem with the previous tax regime was that there were constant disputes about whether certain items come in the category of goods or services and this would be addressed by GST as it explicitly provides a rate card to the same effect.

Digital Marketing and Advertising agencies fall under the services sector and would now be subjected to the Central GST, State GST and the Integrated GST which they will have to charge at 18% which was previously 15% as well as per the state/base of the client. However, previously digital marketing services were not eligible for input tax credit for the taxes paid, which now stands changed. The result

The result will, however, be an increase in the cost of digital marketing as well as the Google Tax Equalization Levy effective from 1st June 2017 will further add to it. This will also increase the cost of digital services in all.

This will go through the initial implementation turbulence which will cause static in the workings of small businesses more than MNCs who are expected to be covering all tracks.

Calls vs Puts

Calls vs Puts

Understanding the difference between calls and puts and how they are traded is essential to fully grasping the art of options trading. Although they can sound a little complicated at first, the strategy behind trading calls and puts is very simple. Let’s start with the definitions.

A call option is an option contract in which the holder (buyer) has the right (but not the obligation) to buy a specified quantity of a security at a specified price (strike price) within a fixed period of time (until its expiration).

A put option is an option contract in which the holder (buyer) has the right (but not the obligation) to sell a specified quantity of a security at a specified price (strike price) within a fixed period of time (until its expiration).

Rather than trying to dive into every detail of exactly what those definitions mean, it is much easier to focus on the big picture.

If you are bullish on a stock and want to profit off of the rise in stock price, your options strategy would be to purchase, or go long, a call option.

If you are bearish on a stock and want to profit off of the fall in stock price, your options strategy would be to purchase, or go long, a put option.

Whether you decide to buy a call or a put, you’ll need to decide on the price of each options contract, the amount of contracts you want to buy, a strike price and an expiration date which can all be done via the options chain. These are the four most important aspects of an option trade and determine how much you’ll be risking, how fast you think the price of the stock will move and how much you think it will increase or decrease in price.

Now that you’re a little more familiar with the difference between calls and puts, we invite you to start placing a few trades on your own. Remember, always do as much research as you can before buying a call or put as they are volatile in nature and can change price very quickly throughout a given trading day.

Car Insurance

What Is The Best Way To Buy Motor Insurance Plans In India?

With the advent of online platform where you can compare a car or a bike has made the process of buying for regular customers very easy. Since the factors on the basis of which things can be compared are quantifiable so it becomes very easy for a regular customer even though they don’t understand the technicalities around a car or bike.

Other than that online, auto magazine can be of great help, but when it comes to buying motor insurance for your car or bike things are quite thoughSince it is quite tough to find quantifiable value around an insurance policy so things become worse while finding the right policy around a car or bike.

The complexity of financial products, unknown jargons used by offline brokers and insurance company make the process tougher. There are quite lot of chance that a wrong policy being sold to you which you can’t even understand till the time you make a claim. Plus there are calculation around understand the right IDV for which one should take a policy.

The chain of registered garages any insurance company has is still not identifiable information and you might end up buy Motor Insurance Online plans from an insurance company which doesn’t offer cashless facility in the city of residence.

One of the smarter solutions to this never ending problem is to buy a motor insurance online. Now there are lots of online insurance comparison websites which are registered under the guidelines of web aggregators or as insurance brokers of the insurance regulator can act as quite beneficial tool. Another big problem this entire website solves is helping users in identifying the right policy. There are thirty two general insurance companies which are offering motor insurance plans. In fact there are a lot of variants available for the same plan too.

To understand the overall process by not going into the hassles is tough to think off in an online scenario. Online comparison of motor insurance plans can act as a helpful enabler in this case. Through all these online tools we can understand our requirement easily and find the most optimized solutions which fit into one’s requirement. Online insurance comparison can help you to understand the nuance of each and every plan available in the market today in a very easy manner. You can easily judge which one is good and which one bad for you plus the online comparison also help to you in buy car insurance online plans India and also which leads to lot of savings.

So the online comparison of motor insurance can acts as a real savior to help one to buy the best motor insurance policy that fits one’s requirement in the true sense

Term Insurance

How to Buy the Right Term Insurance plans in India?

When we are speaking of buying the right insurance term insurance is something that always comes in anybody’s mind. You should always keep in mind that Insurance is actually financial protection against emergency and what you should look at the paying the insurance company is a price for it. The insurance company takes the risk on you behalf and refunds you with a claim amount depending on the sum assured. A regular term policy for continuation of the benefits needs to be renewed every year. You can also opt payment of premium on quarterly or half yearly basis but then the cost of protection will always be high.

Buying a term insurance is always very helpful which you are doing the same at an early age. People at early age are believed to be a low risk for the price charged as premium for any amount of sum assured is always very less compared to what you pay at an older age. But this doesn’t say that you can’t have a term insurance at an old age. The insurance requirement generally increases as you grow old and your financial situation improves. While taking the policy at an early age people generally not able calculate the exact amount of sum assured so it is always advised that you start the policy and early age and increase the cover as your financial requirements increase. Starting early will always have its own benefits and the insurance company will continue the benefits even if you increase the cover at a later age.

The challenge here is now to Buy Best Life Insurance Policy India. There are close fifteen plus insurance companies in India offering term insurance plans. Every plan has some specific feature customized to suit specific needs. Plus there are certain complex calculations which need to keep in mind to buy the right policy. In fact it is always believe that people buying term plans online are more knowledge and they have already taken steps to protect him / herself for future risks so insurance companies have started offering online term plans which are bit different from the regular term plans which is available through offline agents. Online term plans are generally cheaper than their offline variants since the insurer views the risk associated with online policyholder is less. The smartest way to buy a term policy is to buy it online, online websites acts as facilitators for this particular job. You can easily compare term insurance plans online, know the underlying nuances and identify the best features available that suits your needs. This is actually a herculean task if you try to do it offline. Online comparison of term plans help you to take the right decisions keeping you future needs in mind and help you understand the right price that one should pay for safeguarding a particular amount of risk.

We should remember that emergencies can occur any time. if you are the sole bread earner in the family any mishap happening to you can have disastrous consequences when their financial well being too. Their life is aligned to your well being so get insured with the right term insurance cover as early as possible.

Why GST is Getting Surat Terrified

Why GST is Getting Surat Terrified

Starting the 27th of June, the MSMEs belonging to the Textile Industry in Surat have been in a state of shock! They quickly tried to figure out what hit them — got scared to no end doing so — took to the streets, processions, dharnas, fasts — even withstood a Lathi Charge — all within a week! GST surely is Getting Surat Terrified!

To understand why this is so, we need to first understand a bit about Surat.

Surat is the polyester capital of India. Whether you shop at retail stores or buy a Saree, Salwar Suit or a Kurti through one of the daily deals on Amazon, chances are that it has a link back to Surat.

Migrants

The Surat textile industry is full of migrants — people from all over the country (other cities, more from small towns and villages) have migrated to the city to serve their native market. Over the years this additional demand resulted in the growth of the entire sector — and a few of these migrant units grew to a large scale. Most, however, stayed small. The barrier to entry was and is zero causing a continuous influx of migrants from all over the country. Anyone from a small village could come

Anyone from a small village could come into Surat, take a small 160sq ft shop on rent (basic reference of someone from his native already settled here) to start his business operation within a day! Ease of doing business was at all time high here!

The Textile Value Chain

Surat has thousands of weavers — (those who convert yarn to fabric). Around 450 process houses (engaged in printing and dying of fabric). Thousands of embroidery units, stitching units and lakhs of people employed in the checking, packing, cutting, transportation — and thousands of agents, arhatias, brokers, commission agents aiding each step.

The key about the Surat value chain is that it lacks Integrated units — not that they don’t exist — but that they are the exception. GST is a boon for the Integrated players and they are not complaining at all! The norm in Surat, however, is for the migrant trader to buy greige from the weaver, send it for processing to a process house, send it to an embroidery unit, then send it to value addition multiple times before the product is ready to be packed and sold to his native market.

It is worth noting that the value chain is a buyer’s market all the way. Oversupply at each step is the norm. (Reason? Zero barriers to entry at the migrant trader level, and it’s these traders who’ve “graduated” to other parts of the value chain — often to escape competition at their previous link).

Given the above, it is easy to see that these migrant traders drive the value chain. They place the orders at the Weaver, the mills process their orders, and so on in other parts of the chain. These migrant traders started with zero or very little “books capital”. The taxation and the attitude towards taxation ensured that even when they made money, their books capital stayed low — and a parallel economy bloomed! The nature of the value addition required (lace stitching, diamond sticking, handwork etc) and the kind of people executing them (often housewives at their homes) meant that there were lots of avenues to deploy the cash capital. The fact that nothing except income tax was applicable effectively meant that book-keeping was an annual exercise — reserved to be driven by the CA!

Competition, however, is another story. The zero barrier to entry meant more and more competition. This created a large section of migrant-traders who stayed small — and cut corners everywhere to survive! Tax evasion was just one example of such “cost-cutting”.

Goods so produced are typically sold via agents in the native market. The buyer downstream is just as disorganized. Returns are high. Often goods are sent to the agent on a consignment basis. Unsold. To be sold — and invoices created after the agent informs who he sold the goods to and at what rate/discount — sometimes as late as 60 days after dispatch! The high competition also means that even a small migrant-trader deals with multiple agents and keeps switching agents even for the same customer!

Enter GST

With the introduction of GST, the entire value chain breaks down — and will need to re-organize in a big way!

Inverted Duty Structure

The weavers buy yarn with 18% GST, sell fabric with 5% GST. This renders them totally uncompetitive against an integrated player who will be able to sell fabric almost at the cost of the yarn used. (100 Yarn + 20 Conversion + 6 GST = 126 for Integrated, 100 + 18 (GST) + 20 + 7(GST) = 145 for weaver). No ITC Cash refund system for the textile sector ensures that he will not be able to benefit from the yarn GST credit lying with him! There are thousands of weavers facing this!

Cheaper Imports

Imports have become cheaper: Post GST, you can import fabric @ 15%. Earlier it was @27–29%. This is another nail for the weaver! Not only has GST rendered him uncompetitive against local integrated players, it has taken away the protection that the government provided via import duty!

The migrant traders owing to his scale buys from the local weavers. His costs are bound to rise rendering him uncompetitive.

Reporting and Compliance

All transactions need to be reported. Purchases need to be reconciled with the supplier on a monthly basis. This will mean that even even the smallest of traders will need to invest in a full time accountant and be far more organized. The issue may appear frivolous. After all, who runs a business and not even invest in keeping books properly? Welcome to Surat! For the large section of small migrant-traders of Surat, this change itself requires a change in mindset and a recurring expense that they would rather not do!

Cash Capital

Transaction-level reporting as mandated by the GST will mean that the booming parallel economy will collapse! Cash Capital that the trader generated over decades can no longer be deployed in his business. The thriving parallel economy was a tool to cut costs will collapse! GST almost forces that you buy from organized players, and this will, in the Surat’s textile sector, mean that the cost of purchase for these migrant-traders will go up! Bank loans will increase — servicing them will be an additional cost for the trader.

Other Operational Issues

The thousands of housewives working from home stitching laces, sticking diamonds could lose their jobs — lest someone amongst them organizes them into a GST compliant outfit. Even when that happens the costs of the chain increases!

Sales in other states via agents — when goods are sent unsold and later sold by the agent, as per the GST Law, requires registration in each state! This means more compliance, more costs!

No Input Tax Credit Refund to the textile sector — effectively meaning that each and every item is now 5% more expensive!

Fear Factor

Provisions of jail term, audits, inspectors — those mentioned in the GST Law have only served to escalate the fear in the minds of the Surti Trader! The trader has till now been exempt from all taxes (except income tax) — 99.9% are not even covered under ESIC, PF or any other such tax/levy/fee. Fear of being harassed at the hands of the inspector in the GST regime drives them to revolt!

In summary, the traders and weavers, the ones who are up in arms — fear being rendered uncompetitive & jobless, they fear being harassed by the inspectors and getting sucked into a bribe culture (which is non-existent currently!) — it is really a question of survival for many and therefore GST is Getting Surat Terrified!

GST's Role in Pushing Investments in the Real Estate Sector

GST’s Role in Pushing Investments in the Real Estate Sector

The Goods and Services Tax (GST) is one of the largest indirect tax reforms in the country anticipated to not only simplify the complex tax structure but would also boost consumer demand in the prevailing timid realty market.

The GST will be effective beginning 1 st July 2017, and with any new reform, there are some areas where further clarity is required. As people start implementing the tax regime, there will be queries that need further clarification. It is natural for people and businesses to feel overwhelmed when implementing a new reform.

It has been slated that under construction properties or residential construction services, will be subject to a 12 percent GST rate for developers selling residential units prior to the completion of construction to home buyers. Stamp duty will be levied in addition to GST on these transactions. Currently, with the exception of stamp duty, buyers need to pay several indirect taxes such as excise duty, value-added tax and service tax.

In a recent financial analysis, it was estimated that the current real estate transaction taxes are:

15.2% for Bangalore = 4% VAT, 4.5% Service Tax, 5.7% Stamp Duty, 1% Registration

11.5% for Mumbai = 1% VAT, 4.5% Service Tax, 5% Stamp Duty (recently reduced), 1% Registration Charges

11.5% for Pune = 1% VAT, 4.5% Service Tax, 5% Stamp Duty, 1% Registration Charges

14.5% for Chennai = 2% VAT, 4.5% Service Tax, 7% Stamp Duty, 1% Registration Charges

15% for Gurgaon= 4% VAT, 4.5% Service Tax, 6% Stamp Duty, 0.5% Registration Charges

Furthermore, real estate builders will now receive the benefit of input credits on materials such as steel, cement, sand, which will be deducted from tax liabilities. It has been anticipated by the government that builders will transfer these benefits onto the end consumer by way of price reduction/installments with a view to boost consumer demand in a tepid sales environment. The government in a recent statement has alluded to using ‘anti-profiteering’ rules in line with the Directorate General of Safeguards (DGS) stipulations, as a deterrent to ensure builders transfer these benefits to the end consumer. It is, however, in the interest of the sector as a whole to maximise consumer demand and encourage purchase activity.

GST of 18 percent tax will be applicable for leasing commercial properties. Experts have clarified that the threshold limit for the applicability of GST has been increased from Rs 10 lakhs to Rs 20 lakhs. Hence, some of the landlords that came within the purview of the service tax regime, may not be included under the tax net of the GST.

GST is slated to be applicable on financial services at an 18% rate. Hence, loan processing charges are expected to increase in the GST regime.

The affordable housing segment has been currently exempted from service tax and hence a clarification is expected on GST for affordable housing. Additional clarifications are also required with respect to abatements and composition schemes.

The introduction of RERA, the GST, REITs, Benami Transaction (Prohibition) Act and other government initiatives such as demonetisation, contribute to enhancing transparency and accountability across the sector. For the NRI market, it is anticipated that with the easing of purchase norms combined with these measures, there will much needed simplification to the transaction process which should contribute to increasing confidence in the sector. It is also important to remember that when buyers purchase properties, they focus on the value, their individual needs/requirements and potential appreciation of the asset, rather than on taxation slabs!

A uniform tax structure in markets such as Indonesia, Thailand, among others has been seen to be a catalyst to increase investment. With the introduction of input tax credits, there is now an incentive for added transparency at the construction stage, an area that has been of concern to investor’s previously. Limited visibility on transactions and questions around the credibility of companies across the sector has often been a reason for hesitance among investors, especially with respect to equity deals. A combination of these measures should in the long run help improve the perspective of investors and consumers towards the sector.

With the introduction of RERA and the GST, the real estate sector is metamorphosing into a transparent, tightly controlled and regulated industry. All these measures will, in the long run, create stable businesses, as well as contribute to reducing the trust deficit between the consumer, the investor and the developer. Hence, a simplification to the existing complex taxation systems should be welcomed positively as we get more structured as an industry and as an economy