A Private Limited Company is a Company limited by shares in which there can be maximum 50 shareholders, no invitation can be made to the public for subscription of shares or debentures, cannot make or accept deposits from Public and there are restriction on the transfer of shares. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. The minimum number of shareholders is two.

A Public Limited Company is a Company limited by shares in which there is no restriction on the maximum number of shareholders, transfer of shares and acceptance of public deposits. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. The minimum number of shareholders is 7.

The choice of entity depends on circumstance of each case. Private Limited Company has lesser number of compliance requirements. Therefore, generally where there is no requirement of raising of finances through a public issue and the ownership is intended to be closely held by limited number of persons, Private Limited Company is the best choice.

The minimum paid up capital at the time of incorporation of a private limited company has to be Indian Rupees 1,00,000. There is no upper limit on having the authorized capital and the paid up capital. It can be increased any time, by payment of additional stamp duty and registration fee.

The authorized capital is the capital limit authorized by the Registrar of Companies up to which the shares can be issued to the members / public, as the case may be. The paid up share capital is the paid portion of the capital subscribed by the shareholders.

An application in Form No. 1A needs to be filed with the Registrar of Companies (ROC) online through Digital Signature of one of the proposed director. The details to be furnished in the said application are as follows:

• 1) Alternative names for the proposed company. (The name can be coined names from the objects of the proposed company or the name of the directors, etc. but should definitely be indicative of the main object of the company. Justification for the name needs to be specified along with the application)
• 2) Names and addresses of the promoters (Minimum 7 for a public company while 2 for private company).
• 3) Authorized Capital of the proposed company.
• 4) Main objects of the proposed company.
• 5) Names of other group companies.

On submitting the application, the ROC scrutinizes the same and sends the approval / objections in about 3-4 days to the applicant through e-mail.

On receipt of the name approval intimation from the ROC the MOA and the AOA are required to be drafted. The MOA states the main, ancillary / subsidiary and other objects of the proposed company. The AOA contains the rules and procedures for the routine conduct of the proposed company. It also states the authorized share capital of the proposed company and the names of its first / permanent directors. After that MOA and AOA are required to be stamped. A stamp duty is required to be paid on MOA and AOA. The stamp duty depends on the authorized share capital.

The following documents are required to be executed before they are submitted to the ROC: MOA and AOA - These are required to be signed by the promoters in their own handwriting in presence of a witness stating their full name, father's name, residential address, occupation and number of shares subscribed for, etc.

• 1) Form No. 1 - This is a declaration to be executed on a non-judicial stamp paper by one of the directors of the proposed company or other specified persons such as Attorneys or Chartered Accountant stating that all the requirements of the incorporation have been complied with.
• 2) Form No. 18 - This is a form to be filed by one of the directors of the company informing the ROC the registered office of the proposed company.
• 3) Form No. 29 - This is a consent obtained from all the proposed directors of the proposed company to act as directors of the proposed company. (Not required in case of private company).
• 4) Form No. 32 - This is a form stating the fact of appointment of the proposed directors on the board of directors from the date of incorporation of the proposed company and is signed by one of the proposed directors.
• 5) Power of Attorney signed by all the subscribers of MOA authorizing one of the subscribers or any other person to act on their behalf for the purpose of incorporation and accepting the certificate of incorporation.
• 6) Filing fees as may be applicable.

After the documents are filed, the ROC calls the attorney for scrutiny and making the corrections in the MOA and AOA filed. On complying with the same, the certificate of incorporation is issued.

On receipt of the certificate of incorporation, the public company has to complete certain other legal formalities such as a statutory meeting (within 6 months), statutory report, etc. On completion of the said formalities and on filing of the statutory report with the ROC the ROC issues the certificate of commencement of business to the company. Thereafter, the Public Company can start the business operations. The Private Company can start its business immediately on incorporation.

You can give Power of Attorney to a person to appear before ROC to complete the necessary formalities after getting MOA, AOA, Power of attorney and other allied documents notarised by notary public and attested by Indian Embassy/Consulate situated in foreign country.

Once the company is incorporated in India, foreign investor has to either intimate Reserve Bank of India (RBI) of the foreign equity or take approval of Foreign Investment Promotion Board (FIPB). Intimation to RBI or approval from FIPB is dependent upon sector in which foreign investor intends to do business.

Either through:-

1. Automatic Approval - by the country's Central Bank, the Reserve Bank of India (RBI)

No prior approval required. The company is only required to report to RBI within 30 days of receipt of foreign equity/allotment of shares.

2. Foreign Investment Promotion Board (FIPB) approval is required for all other proposals not eligible for Automatic Approval.

Tax assessee may be resident or non-resident. Residents are further subdivided into two sub-categories

• Resident and ordinarily resident, and
• Resident but not ordinarily resident.

To determine which category you fall into, apply the following tests to the tax year from April 1 to March 31.

Resident

A Resident is one who falls into either of these two categories:

• Is in India for 182 days in the year or more, or
• In the preceding four years was in India for 365 days or more, and in the current tax year is in India for a total of 60 days or more

This applies to citizens of any nationality. However the period of 60 days in the second clause above will be extended to 182 days for those who fall into one of these two categories:

• An Indian citizen who left India in any year for employment outside India, or
• An Indian citizen or a foreign citizen of Indian origin (NRI), who is outside India, comes on a visit to India

Non-Resident

A tax assessee is non-resident if he or she is not a Resident as-per the section above.

Resident but Not Ordinarily Resident

A Resident is "Not Ordinarily Resident" if he or she fulfils either of these two conditions:

• Has been a Non-Resident in India for 9 out of 10 preceding years, or
• During the 7 preceding years been in India for a total of 729 days or less

Income tax can be imposed on income arising in local country as well as income arises out of the country.

Following is the table of incomes and their taxability:

Particulars	Resident & Ordinary Resident	Resident & Not Ordinary Resident	Non Resident
Income received or deemed to be received in India during the current financial year	Taxable	Taxable	Taxable
Income accruing for arising or deemed to accrue or arise in India during the current financial year	Taxable	Taxable	Taxable
Income accruing or arising or deemed to accrue or arise outside India, but first receipt is in India during the current financial year	Taxable	Taxable	Taxable
Income accruing or arising or deemed to accrue or arise outside India, but first receipt is outside India, during the current financial year	Taxable	Taxable	Not Taxable
Income accruing or arising outside India from a Business / Profession controlled from India during the current financial year	Taxable	Taxable	Not Taxable
Income accruing or arising outside India from any source other than Business / Profession controlled from India	Taxable	Not Taxable	Not Taxable

Following documents is required for filing of Income tax returns:

• 1) PAN number
• 2) Form-16 issued by your employer
• 3) Bank statements / passbook for Interest Income on bank deposits.
• 4) Statements of Interest Income besides Bank deposits
• 5) TDS certificates issued to you by your bank and others
• 6) Form 26AS - The Income Tax department of the Indian government shows you the tax credit you have received for Tax deducted at source. This typically should match all your TDS certificates.
• 7) Section 80C investment statements. Investments done under LIC, NSC, PPF qualify for Section 80C deductions.
• 8) Charitable donation statements. Donations that can be claimed for tax deductions under Section 80G. Typically the receipt issued by the institute you donate to mentions the eligibility under Section 80G.
• 9) Interest paid on housing loan. Interest on housing loan is eligible for tax saving up to Rs 150,000. This is for a self-occupied house.

The following documents may also be needed for tax filing:

• 1) Stock trading statement. The stock trades that were made during the year may be taxed under Capital Gain.
• 2) Section 80CCF investments. Up to Rs. 20,000 can be claimed as tax deduction under this section.
• 3) Education loan interest payments.

There are 2 types of companies:

• 1) Domestic Companies
• 2) International Companies

Tax applicability on domestic companies:

Basic Income Tax Rate: 30% of total income
Surcharge: The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge at the rate of 5% of such income tax, provided that the total income exceeds Rs. 1 crore.
Education Cess: 3% of the total of Income-tax and Surcharge.

Tax applicability on international companies:

Basic Income Tax Rate: 40% of total income
Surcharge: The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge at the rate of 2.5% of such income tax, provided that the total income exceeds Rs. 1 crore.
Education Cess: 3% of the total of Income-tax and Surcharge.

Service tax is an indirect tax levied on certain services provided by certain categories of persons/firms/agencies. With effect from 01.07.2012 service tax is applicable on all services except those either mentioned in Negative List or in Exemption Notification.

Certain Services Implicate:

Service’ has been defined in the clause (44) of the new section 65(B) Act and means any activity for consideration carried out by a person for another person and includes a declared service. However it does not include -

• A) any activity that constitutes only a transfer in title of (i) goods or (ii) immovable property by way of sale, gift or in any other manner
• B) Such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of Article 366 of the Constitution; or
• C) A transaction only in (iii) money or (iv) actionable claim
• D) Any service provided by an employee to an employer in the course of the employment.
• E) Fees payable to a court or a tribunal set up under a law for the time being in force

All people who provide services except the service mentioned in the negative list are liable to pay service tax to the government. Service exempted (negative list) for taxability of service tax are as follows:

• Services provided by Government or local authority.
• Services provided by Reserve Bank of India.
• Services by a foreign diplomatic mission located in India.
• Services relating to agriculture.
• Trading of goods.
• Processes amounting to manufacture or production of goods.
• Selling of space or time slots for advertisements other than advertisements broadcast by radio or television.
• Access to a road or a bridge on payment of toll charges.
• Betting, gambling or lottery.
• Entry to Entertainment Events and Access to Amusement Facilities.
• Transmission or distribution of electricity.
• Specified services relating to education.
• Services by way of renting of residential dwelling for use as residence.
• Services provided in financial sector.
• Service relating to transportation of passengers.
• Service relating to transportation of goods.
• Funeral, burial, crematorium or mortuary services including transportation of the deceased.

But in some cases, the person who is receiving services is liable to pay service tax. Such cases are:

• Services provided by an insurance agent to any person carrying on insurance business.
• Services provided by a goods transport agency in respect of transportation of goods by road.
• Services provided by way of Sponsorship.
• Services provided by Arbitral Tribunal.
• Services provided by individual advocate or a firm of advocates by way of legal services.
• Support services provided by Government or local authorities excluding renting of immovable property, services of Department of Posts, services in relation to an aircraft or a vessel or transport of goods or passengers.
• Services provided by way of renting of a motor vehicle designed to carry passengers by any individual, HUF, Partnership firm including association of persons.
• Services provided by way of supply of manpower for any purpose by any individual, HUF, Partnership firm including association of persons.
• Services provided in service portion in execution of works contract by any individual, HUF, Partnership firm including association of persons.
• Any services provided by any person which is located in a non-taxable territory i.e. State of Jammu & Kashmir or out of India i.e. Non-residents.
• Payment of sitting fees and reimbursement of expenses etc. to non-executive Directors (including independent & Govt. nominee directors*.
• Services provided by way of security services by any individual, HUF, Partnership firm including association of persons.

Rate of Service Tax is:
Service Tax – 12% of the amount of service provided
Add: EC – 2% of the amount of Service Tax
Add: SHEC – 1% of the amount of Service Tax

Due dates for payment of service tax are as follows:

a) If payment is made through bank:

Category	Frequency	Due Dates
In case of Individuals, proprietary firms and partnership firms	For quarter ended 30th June For quarter ended 30th September For quarter ended 31st December For quarter ended 31st March	5th July 5th October 5th January 31st March
Others (e.g. Companies, Societies, Trusts etc.)	Monthly	By 5th of the month immediately following the month in which payments are received towards the value of taxable services. However, in case of  March, the payment should be made by 31st March.

b) If payment is made through electronic mode:

Category	Frequency	Due Dates
In case of Individuals, proprietary firms and partnership firms	For quarter ended 30th June For quarter ended 30th September For quarter ended 31st December For quarter ended 31st March	6th July 6th October 6th January 31st March
Others (e.g. Companies, Societies, Trusts etc.)	Monthly	By 6th of the month immediately following the month in which payments are received towards the value of taxable services. However, in case of  March, the payment should be made by 31st March.

Audit is independent examination of financial info of any entity, whether profit oriented or not & irrespective of its size or legal form when such an examination is conducted with view to expressing an opinion thereon.

There are different types of Audits:

• Statutory Audit
• Tax Audit
• Internal Audit

1. STATUTORY AUDIT:

Overview: A legally required review of the accuracy of a company's or government's financial records. The purpose of a statutory audit is the same as the purpose of any other audit - to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, book keeping records and financial transactions.

Requirement: In India, mainly statutory audit means audit under Companies Act in which auditor reports to the member of the company i.e. shareholders. This audit is done by practicing Chartered Accountant only.

2. TAX AUDIT

Overview: The main objective of the tax audit is to compute the taxable income according to the law and for maintaining transparency in the financial statements filed by the assesses with the Income-tax department. The tax audit u/s. 44AB of the Income-tax Act 1961 is significant practice area for Chartered Accountants. Since the introduction of tax audit, we have been given responsibilities to discharge the duties as tax auditors for the proper compliance of tax law by the assesses. 

Requirement: This Audit is applicable on every person.

• Carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds 60 lakh rupees in any previous year; or
• Carrying on profession shall, if his gross receipts in profession exceed 15 lakh rupees in any previous year; or
• Carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under [section 44AE] [or section 44BB or section 44BBB], as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or
• Carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year.
  
  get his accounts of such previous year audited by Chartered Accountant.

This audit is done by practicing Chartered Accountant only.

3. INTERNAL AUDIT

Overview: Internal audit is an independent management function, which involves a continuous and critical appraisal of the functioning of an entity with a view to suggest improvements thereto and add value to and strengthen the overall governance mechanism of the entity, including the entity’s strategic risk management and internal control system.

Requirement: This audit is applicable on those companies on which CARO is applicable.

Exemption in CARO: If following conditions are applied

• Banking Companies
• Insurance Companies
• Section 25 Companies
• Private Company: but after completing the following conditions:
  • Paid up capital & reserves is 50 lakh or less or,
  • Outstanding loan from banks or financial institutions is 25lacs or less and,
  • Turnover is 5 crores or less during the financial year.