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IPO – Process, How to buy Shares, Risks and Returns

 An IPO or Initial Public Offering is the process for private companies to go public by selling and making their stocks available to the general public. This is done by getting listed on an exchange. The process of an IPO is open to all companies new and old.

1. Introduction

With the help of an IPO, companies are able to raise equity capital by issuing shares to the general public. This can also be done by selling off the shares of the existing shareholders without raising any new capital. A company that offers shares to the public is in no way obligated to repay the capital to the investors (public). The company offering its shares is referred to as the issuer. The issuing of shares is done with the help of investment banks. Once the IPO is done, the shares of the company are traded in the open market. These shares can then be further sold by investors through tradings in the secondary market.

2. What is the need for an IPO?

IPO is an avenue through which companies can access capital and grow. The main objective of an IPO is to raise money by borrowing through the issuing of shares to the public. This is known as the first public invitation in the stock markets and hence the name IPO. Buying these shares allows the investor an ownership in the company in accordance with the value of the shares owned.

3. The process of an IPO in India

a. In India, it is the Securities and Exchange Board (SEBI) that regulates the process of an IPO and companies hoping to issue shares through an IPO have to first register with SEBI

b. A company must submit the necessary documents with the SEBI which then is analysed and is approved only when the SEBI is convinced

c. While SEBI evaluates the application, the company is required to prepare its prospectus, stating that the approval from SEBI is pending

d. On getting the approval from SEBI, the company is required to determine the share price of the shares to be issued and disclose the number of shares it plans to issue

e. The company must decide between the two types of IPO issues

i. Fixed Price IPO is one where the company decides in advance the price of the shares

ii. Book Building IPO is where the company provides a range of prices and there is a bid for shares within that price range

f. The shares are made public once the company decides the type of IPO they want to go with. The interested investors submit their applications and once the company receives the subscriptions from the public, it allots the shares

g. The company now lists the shares on the stock market and post the issuance in the primary market, it gets listed in the secondary market. These are then open for trading on a daily business.

4. How to Buy Shares from an IPO?

Step 1: You may acquire the physical application form from a broker or a distributor or a bank branch. The same can be accessed online

Step 2: You can then fill the form with your details, both personal and bank and demat account related

Step 3: Provide your total investment amount

Step 4: The shares will be allotted within 10 days from the date of closing (of the offer)

5. Important considerations before an IPO subscription

It is important to know of the market dynamic before investing in shares. Read the prospectus issued by the company and go throughout the financial details. These will shed light on the amount of money the company intends to raise and the types of shares they plan to issue. It is wise to also understand how the company plans to use the money raised from the IPO and its expansion plans. All these will help an investor make an informed decision.

6. The Risk and Reward

When you subscribe to a share during an IPO, you become one of the first shareholders of the company. As the company flourishes, the share price will rise and you will stand to profit. But there is also the risk of the stock markets. The returns on your investment will depend on the growth potential of the company and if the company fails, you will risk losing your money. Particularly in the case of unlisted companies, one has to be very careful as these companies are not required to publish their financials and thus, you can’t analyze their past performance.

IPO investments carry the risk of market fluctuations and must be undertaken after careful consideration. If you are unsure about investing, visit ClearTax where we have a list of handpicked investment options for you to pick from.

SFT – Statement of Financial Transaction

Tax Reforms 2020  : 13/08/2020 

The scope of Statement of Financial Transactions (SFT) has been expanded to widen the tax base. Once the CBDT releases the notification in this regard, the notified persons should report the following transactions in their SFT:

1. Payment to hotels above Rs. 20,000
2. Payment of property tax above Rs.20,000
3. Payment of health insurance premium above Rs.20,000
4. Payment of rent above Rs.40,000
5. Payment of life insurance premium above Rs.50,000
6. Electricity consumption above Rs.1 lakh
7. Payment of educational fee/donations above Rs.1 lakh p.a
8. Purchase of jewellery, white goods, painting, marble etc. above Rs.1 lakh
9. Deposit/credits in the current account above Rs.50 lakh
10. Deposit/credits in the non-current account such as savings accounts above Rs.25 lakh
11. Domestic business class air travel or foreign travel
12. Share transactions/D-MAT accounts/Bank lockers

Also, it is to be noted that the following persons should file their SFT return mandatorily:

1. A person having bank transactions above Rs.30 lakhs
2. All professionals and business having turnover above Rs 50 lakhs

32nd GST Council meeting

 

10th January 2019
 
32nd GST Council meeting was held at New Delhi and chaired by Shri Arun Jaitley. Announcements made was a big relief to MSMEs and small traders.

The key takeaways of the 32nd GST Council meeting are as follows:

• Increase in GST registration limit from Rs 20 lakhs up to Rs 40 lakhs for suppliers of goods.
• 
  
• Changes in the existing composition scheme made by increasing the turnover limit to join the scheme up to Rs 1.5 crores, tax payments to be made quarterly and returns to be filed annually starting 1st April 2019.
• 
  
• New composition scheme is introduced for service providers and those who supply services along with goods; the Turnover limit set is Rs 50 lakhs and the Tax rate is fixed at 6%.
• 
  
• No rate cuts were announced this time. GoMs were formed to study taxation of under-construction properties & lotteries.
• 
  
• Calamity cess up to 1% for up to 2 years will be charged for supplies made within the State of Kerala.

GST State Code List

GST State Code List Overview

While migrating to a GST registration or while going for a new registration, most businesses would have received the 15 digit provisional ID or GSTIN (Goods and Services Tax Identification Number). Knowing the structure of the GSTIN is crucial for a business - to ensure that one’s suppliers have quoted the correct GSTIN in their invoices, and also to ensure that one mentions their own GSTIN correctly in invoices to customers – as input tax credit is dependent on this due diligence.

The 15 digit ID comprises of – 2 digits signifying the state code; 10 digit PAN number; 1 digit signifying number of registrations; and 2 digits having default and checksum values.

GST State Code List of India

Thus, it is important for businesses to know about the GST state code list, which form the first 2 digits of the GSTIN. This state code list under GST, is prescribed as per the Indian Censes of 2011, and is as follows:

State code list under GST	State	State code list under GST	State
01	Jammu & Kashmir	19	West Bengal
02	Himachal Pradesh	20	Jharkhand
03	Punjab	21	Orissa
04	Chandigarh	22	Chhattisgarh
05	Uttarakhand	23	Madhya Pradesh
06	Haryana	24	Gujarat
07	Delhi	25	Daman & Diu
08	Rajasthan	26	Dadra & Nagar Haveli
09	Uttar Pradesh	27	Maharashtra
10	Bihar	28	Andhra Pradesh
11	Sikkim	29	Karnataka
12	Arunachal Pradesh	30	Goa
13	Nagaland	31	Lakshadweep
14	Manipur	32	Kerala
15	Mizoram	33	Tamil Nadu
16	Tripura	34	Puducherry
17	Meghalaya	35	Andaman & Nicobar Islands
18	Assam	36	Telengana
		37	Andrapradesh(New)

CBDT Extends ITR and Tax Audit Report filing due date for AY 2018-19 to 15.10.2018

CBDT Extends ITR and Tax Audit Report filing due date for AY 2018-19 to 15.10.2018



F.No. 225/358/2018/ITA.II

Government of India
Ministry of Finance 
Department of Revenue 
Central Board of Direct Taxes North-Block, ITA.II Division 

Order under Section 119 of the Income-tax Act. 1961

On due consideration of representations from various stakeholders for extending the due date, being 30th September, 2018, for filing of income-tax returns and various reports of audit pertaining to assessment-year 2018-19 for assessees’ covered under clause (a) of Explanation 2 to section 139(1) of the Income-tax Act, 1961 (Act) read with relevant provisions of the Act & Income-tax Rules, the CBDT, hereby extends the due date for filing of income-tax returns as well as all reports of audit (which were required to be filed by the said specified date ), from 30th September, 2018 to 15th October, 2018.

However, there shall be no extension of the due date for purpose of Explanation 1 to section 234A (Interest for defaults in furnishing return ) of the Act and the assessee shall remain liable for payment of interest as per provisions of sec ion 234A of the Act.

(Rajarajeswari R.) 
Under Secretary to the Government of India

Copy to:-

1. PS to F.M./OSD to FM/PS to MoS(R)/OSD to MoS(R)
2. PPS to Secretary (Finance)/(Revenue)
3. Chairperson (CBDT),All Members,Central Board of Direct Taxes
4. All CCsiT/CCsiT/Pr. DsGIT/DsGIT
5. All Joint Secretaries/CsIT, CBDT
6. Directors/Deputy Secretaries/Under Secretaries of Central Board of Direct Taxes
7. ADG(Systems )-4 with request to place the order on official website
8. AddI. CIT,Data base Cell for placing the order on irs officers website
9. The Institute of Chartered Accountants of India,IP Estate, New Delhi-110003
10. CIT (M&TP),CBDT with request to issue appropriate Press-Release and for placing on Twitter handle of the department

New Delhi, the 24th of Sept mber, 2018

TCS and TDS applicable from 1st Oct'18 as per GST Law

TCS and TDS applicable from 1st Oct'18

After putting it off for long, CBEC finally made TDS and TCS applicable from 1st October 2018. Let's understand these briefly. TCS must be collected by every e-commerce operator if this operator collects payment on behalf of a seller. Rate should not exceed 2% (exact rate will be notified in due course). Such TCS collected must be deposited to the govt within 10 days after the end of the month in which it was collected. TDS must be deducted where total value of supply exceeds Rs 2.5L. This only applies where the payer is a government entity (central and state govts, local authority, govt agency) or those notified by the govt as GST Council may suggest from time to time. Implications - TCS will add another layer to your reconciliation process for GST. As a seller on an e-commerce website, your outward supplies must match those reported by the operator. If these don’t match, you’ll have to add them to your outward supplies and pay relevant tax and interest on them. Reconciling with your operator becomes critical to make sure you face no additional tax liabilities while filing your return. As an e-commerce operator, you will have to start filing GSTR-8 to start reporting your TCS collections and also reconcile with sellers on an ongoing basis. Amendment of registration GST portal has now allowed facility for amendment of Registration of non-core fields in Form GST REG-14 to those whom TCS or TDS applies. Therefore, in case you need to change your details due to TCS/TDS becoming applicable, you must do so now. Ask us here, if TCS/TDS can impact your GST registration. Search GSTINs by PAN Any person can view all GSTINs registered against a particular PAN on gst.gov.in, link here. Taxpayer details like status of GSTINs, whether active or inactive, type of taxpayers and date of registration etc can be seen. If you are doing business with new entities, you can quickly validate their GST credentials by going to this link!

What is the last date to claim Input Tax Credit under GST for FY 2017-18 ?

As per Section 16(4) of CGST Act 2017. Eligibility and conditions for taking input tax credit.

A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both

• after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or
• furnishing of the relevant annual return,whichever is earlier.

Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed[ Rule 61 of CGST Rules],a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars as may be prescribed, on or before the twentieth day of the month succeeding such calendar month or part thereof

Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, the Commissioner may, by notification,  specify the manner and conditions subject to which the  return shall be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.

ITR filing deadline extended to 15th September for Kerala assessees

Digital Signature Certificate @ just Rs 799

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Highlights

• Last date for filing ITR has been extended to 15.09.2018 for all income tax assessees in Kerala for whom the deadline till now was August 31, 2018

• Extension given as a relief measure due to severe floods in the state. This year penalty is leviable on late returns

Due to disruption caused by severe floods in Kerala, the Central Board of Direct Taxes (CBDT) has extended the due date for filing income tax returns (ITR) for all income tax assessees in Kerala to September 15, 2018, as per an official release here today. 

The original deadline for filing income tax returns for assessees whose returns are not liable to audit was July 31, 2018 for financial year 2017-18. This deadline was earlier extended to August 31, 2018 by the CBDT for all assessees to whom the July 31 deadline was applicable. 

The extended deadline of August 31 has now been extended further for assessees in Kerala. 

In a first, belated returns filed for FY2017-18 i.e. returns filed after the notified deadline will attract a penalty or late fee of upto Rs 10,000. 

The Central Board of Direct Taxes (CBDT) issued an order under section 119 of the Income Tax Act today stating that due to the disruption caused due to floods in Kerala the earlier order dated 26.7.2018 was being modified to extend the ITR filing deadline for Kerela assessees to 15.9.2018. 

Until last assessment year (AY) there was no penalty for filing belated income tax returns. However, this penalty is applicable from FY 2017-18 or AY 2018-19. A new section 234F was inserted by the go .

Tax experts say that as per the amendments made in the Finance Act 2017, taxpayers are liable to pay a fee of Rs 5,000, if their tax return for the financial year 2017-18 is filed after the return filing deadline but before December 31, 2018. The fee payable will increase to Rs 10,000, if the tax return is filed on or after January 1, 2019. However, if the total income of the taxpayer is less than Rs 5,00,000, the fee amount shall not exceed Rs 1,000. 

Clearly, the deadline for ITR filing for Kerala residents has been extended as a relief measure for the state's residents who are already battling nature's fury. 

ESIC and its applicability

Employees’ State Insurance Corporation (“ESIC”) is a statutory corporate body set up under the ESI Act 1948, which is responsible for administration of ESI Scheme. The ESI scheme is a self-financed comprehensive social security scheme devised to protect the employees covered under the scheme against financial distress arising out of events of sickness, disablement or death due to employment injuries.

The ESIC has its headquarters at New Delhi besides 23 regional offices, 26 sub-regional offices in the states and over 800 local offices throughout the country to support the implementation of ESI scheme. In addition, the Medical Benefit Council, a specialized body that advises the ESIC on the administration of Medical benefit is functioning.

Applicability of the ESI scheme

The ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment and the beneficiaries’ monthly wage does not exceed Rs 21,000 are covered under the scheme. Whether the employer has employed 10 or more employees, all employees employed by the employer, agnostic of the salary are reckoned.

The applicability of the scheme is explained through a flow chart below:

Note : 

The scheme under the act also supports restaurants, motor road transports, newspaper establishments and undertakings, movies and purview theatres, hotels, shops.

 The threshold for coverage of establishment is 20 employees in Maharastra and Chandigarh.

Features of the scheme

Complete medical care and attention is provided by the scheme to the employee registered under the ESI Act, 1948 at the time of his incapacity, restoration of his health and working capacity. During absenteeism from work due to illness, maternity or factories accidents which results in loss of wages complete financial assistance is provided to the employees to compensate the wage loss. The scheme provides medical care to family members also. As on 31 March 2017, 2.93 crore employees are covered under this scheme with total number of beneficiaries summing up to 12.40 crores. Broadly, the benefits under this scheme is categorized under two categories, 1) cash benefits (which includes sickness, maternity, disablement (temporary and permanent), funeral expenses, rehabilitation allowance, vocational rehabilitation and medical bonus) and, 2) non-cash benefits through medical care.

The scheme is self-financing and being contributory in nature. The funds under ESI scheme are primarily built out of the contribution from the employees and employers payable monthly at a fixed percentage of wages paid. Currently, the employee contribution rate is 1.75% of the wages and that of employer’s is 4.75% of the wages paid. For newly implemented areas, the contribution rate is 1% and 3% respectively for employee and employer for the first 24 months. The employer makes the contribution form its own share in favor of those employees whose daily average wage is Rs 137 as these employees are exempted from own contribution The employer is required to pay his contribution and deduct employees’ contribution from wages and deposit the same with ESIC within 15 days from the last day of the calendar month in which the contribution fall due. The payment can either be done online or through designated and authorized public sector banks.

Income Tax Return Filing Deadline Extended By A Month To August 31

Income Tax Return Filing Deadline Extended By A Month To August 31

Assessees can now file their income tax return (ITR) for assessment year 2018-19 (financial year 2017-18) by August 31 without any penalty charges.

The government on Thursday extended the deadline for filing income tax return for assessment year 2018-19. 

The deadline of July 31, 2018 has been extended by a month, the Ministry of Finance said in a statement. 

That means the assessees can file their income tax return (ITR) for financial year 2017-18 by August 31 without any penalty charges. 

source : https://www.incometaxindiaefiling.gov.in/moreNewsUpdates

JSON file errors and Possible suggestions/Actions to be taken…

Filing GST returns…?? As all GST returns have to be filed online only using either offline GST return tool or punching online on portal, it have all possibilities to get error if you have selected to upload the return using offline GST return tool using either “Excel template” or “CSV files”.

Unfortunately, GST return preparation tool will generate JSON file even if errors contain in the data entered but after uploading the same file on portal after some time you may get error status and you may get frustrated or even miss out the due date of filling the return.

I have complied possible error and suggestions while filing of GST returns;

1

Jason file uploaded successfully with no error report but less invoices updated on GST portal Suggestion/Action to be taken 1. Values accepted only up to 2 decimal point. More than 2 decimal figures will not be updated on online portal. Round up values in this manner only 2. Cross tally total invoice numbers uploaded and reflected in online portal 3. This error is due to wrong GST number of customer in Jason file 4. Cross tally for total turnover details and aggregate turnover details as same is not reflected when Jason file is uploaded. Q2 : GST number is not correct Utmost care must be taken while uploading the details in offline tool for GST numbers. It should be always validated well from GST portal Q3 : Error in Json structure validation 1. Punching of state name instead of selecting from dropdown in excel utility 2. Multiple tax rate in one invoice but same has punched with single line 3. Wrong Port code or Shipping bill number 4. In case of exports without payment of duty – selecting GST rate other than 0% 5. No special character should be present in any cell i. Ensure that GSTIN is mentioned in the JSON file. ii. Ensure that you have uploaded the most recent and correct JSON file in the GST Portal under the correct GSTIN. iii. If the problem still persists, download the latest version of the GST Offline return tool or GST software and prepare the JSON file Q 4 :No Gross turnover details reflecting after uploading JSON file Cross tally for total turnover details and aggregate turnover details as same is not reflected when Jason file is uploaded. You are required to punch the same online and save the same. Q5 : No documents issued reflected in Table no. 13 Cross tally for document issued during the period details (Table no.13) as same is not reflected when Jason file is uploaded. You have to update and save and wait for some time to update the same Q6 : No section data or Gross Turnover is available to process the request If you’re filing a NIL return without any invoices, you need to punch in table no.8 all values to 0 (again) then save the return. Error will be resolved Q7 : The GSTIN is invalid. Please provide a valid GSTIN 1. Download JSON report and open in Word Doc         2. Search for the error number‘RET191113’         3. You will see the invoices where    the issue has occurred.         4. Note the   invoice numbers         5. Correct the GSTIN and then re-upload to GSTN portal     Q8 :The rate entered is not valid according to the Rate List You must have not entered correct tax rates. Kindly round off the tax rate before uploading the same in excel utility or CSV file. Q9: Invoice number does not exist. Please enter a valid Invoice number. Invoice Number should be alphanumeric, a maximum of 16 characters in length, and can contain only ‘-’ or ‘/’ as special characters. Please check that all invoice numbers follow this format. Q10 : Invoice already exist with different CTIN or same CTIN. Please delete the existing invoice and re-upload again 1. Check if the invoice is already uploaded on govt portal: 2. Ignore the error if the invoice is   uploaded and you don’t need to  make any changes 3. To make changes, delete the old   invoice on the government   portal. 4. Upload the changed invoice with proper JSON file Q11: Date is Invalid. Date of invoice cannot be before registration date. 1. This is possible that invoice date you have mentioned is earlier than the date on which your customer has obtained their GSTIN registration. 2. Delete the these invoices 3. Enter these invoices to B2C(S)   section 4. Your client may not be eligible for ITC in such cases

source :taxguru