All Forum Posts by: Deepika Nair

Small businesses are the most important aspect of the indian economy. As per the report of MSME, there are over 36 million small business in india providing employment to over 80 million persons.

Small Business Ideas-

You can strat small business as a service or manufacturing units. As per the ministry of micro, small and medium enterprises any service sector unit with the investment in equipment of not more than 2 crore falls under small business. In the manufacturing sector any unit with an investment in plant and machinery of less then 5 crores falls under small business.

Before choosing small business ideas to implement you need to consider following requirements-

• Market opportunity
• Investment requirement
• Entrepreneur experience
• Business objective
• Raw material requirement
• Staffing requirement
• Business entity
• Business license required
• Taxation
• Break-even point
• Financial projections

Business Entity-

Most of the businesses in india are started as proprietorship or partnership due to the ease of compliances. However to afford limited liability protection and creation of a registered entity the Govt. Of India has introduced limited liability partnership in india. So those small business who is having turnover of more than 10 lakh a year can start LLP to enjoy additional benefits.

LLP does not require an audit if the annual sales turnover is less than 40 lakhs and capital contribution is less than 25 lakhs .

Tax Registration-

Once business registration has been obtained then you need to get various tax registrations. Here are few tax registrations required by a small business-

Pan Card:- Pan card is the first thing a business needs to obtain after the registration. As it required for opening bank account and doing various financial transactions in india.

TAN Registration:- TAN is required for those businesses required to deduct tax at source, also known as TDS.

Service Tax Registration:- It is required for any business that provides more than 9 lakhs of taxable services in a financial year.

VAT Registration:- VAT registration is required for any business that sells goods and products. It is controlled by the state government. Hence the process and requirement for VAT registration varies from state to state.

Business Registration-

In addition to the tax registration a small business can get one or more of the business registration from the following when the need arises:

Udhyog Adhar:- Udyog Aadhar has been introduced by the Government in lieu of MSME registration to make the process for registration of small businesses easy. Udyog Aadhaar registration can be obtained by the small business to avail various schemes promoted by the Government aimed at small businesses.

Trademark Registration:- Trademark registration helps a business to protect their brand name. It is important for small business to obtain trademark registration and protect the brand from competitors or future litigations.

Import Export Code Registration:- IEC registration is required for business involved in the import and export of goods from india.

ESIC Registration:- It is necessary for small business once they employ more than 20 employees.

Service Tax is an indirect tax, imposed by the Central Government on providers of services in India. It is not borne by the service provider, but the end user. The regulatory authority responsible to look after the registration, compliance and collection of service tax in India is Central Board of Excise and Customs (CBEC). As per the applicable laws, a service provider in India is mandatorily required to obtain registration of Service Tax once the services provided by him exceed Rs. 9 lakh in a financial year. This requirement is mandatory and has to be complied by all service providers. Registration may also be obtained voluntarily before reaching the turnover limit. 

Service Tax is currently charged at 14% (inclusive of cess) on the amount of services provided. On registration, a service provider can collect Service Tax from his clients on the services rendered. Service Tax Registration can be obtained by filing ST-1 on the website, aces.gov.in. 

You need to print and sign the acknowledgement you will receive online. Then, within 24 hours of filling the online form, you have to take the signed acknowledgement, a hard copy of the ST-1 form, along with your PAN card, proof of residence and the Constitution of the Applicant to the nearest Commissionerate, with whom you are registering yourself. After this is done, the Service Tax Rules, 1994, specify that within a week's time, the nearest Superintendent will provide you with further information of the status of your application, whether accepted or rejected. Upon acceptance, you will receive a Service Tax Registration Certificate, also known as ST-2. This is a document which gives proof of your registration and a unique 15-digit Service Tax Number. Upon rejection, the reasons for the same will be intimated to you. If you do not receive such knowledge within seven days, it should be assumed that the application has been granted and the Certificate will be given to you in the manner you have specified in the ST-1 form. 

You can opt for both online or by post (physical form) of ST-2. This online certificate can be viewed by opening one's account on the website. Post registration, the Service Provider is allotted a Service Tax Registration number which is required to be mentioned on all Tax Invoices and Returns. 

As the Service Provider is collecting the amounts of indirect taxes, service tax in this case, on behalf of the Central Govt, the amounts collected have to be remitted to the Central Govt at regular stipulated intervals. The payment criteria for a private limited set-up is monthly, and for partnerships and proprietorships is quarterly. 

Another compliance required to be met by a Registered Service Provider is periodic return filing. Filing is required to be done at half-yearly intervals by all service providers, irrespective of the organisational setup. 

From 2012 onwards, all services are taxable in India except those which are included in the negative list. Earlier, only certain specified services were taxable, or, those with a transaction value of a certain amount were taxable. However, since the Union budget of 2012, all service providers are liable to pay service tax on all the services they provide except those included in the negative list.