Redeemable Preference Shares

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Redeemable preference shares, as per the Companies Act 2013, are those that can be redeemed after a period of time (not exceeding twenty years). Redeemable preference shares are those shares where the issuer of the share has the right to redeem the shares within 20 years of the issuance at the pre-determined price mentioned within the prospectus at the time of issuance of preference shares and before redeeming such shares the issuer shall assure that redeemable preference shares are paid up fully and each condition specified at the time of issuance are fulfilled.

What are Redeemable preference shares? 

Preference shares are issued to a shareholder which has a callable option embedded, meaning they can be redeemed later by the company.

• It is one of the methods that companies embrace in order to return cash to the existing shareholder of the company. It is a way of share repurchasing but is different from traditional share repurchasing in certain ways.
• The price at which companies can repurchase these redeemable shares are already decided during the time of issuing those shares
• Issuing callable preferential shares that can be redeemed in the future provides the company flexibility to choose whether to go for share repurchase or go for share redemption. 

What are Preference Shares?

• Preference shares will be allotted by companies to any investor, with the agreement that whenever a dividend is paid, the holders of the preference shares are the primary to be paid.
•  Preference shares enjoy certain profits as against the other shares. 
•  The dividend of a preference share is fixed at a decided rate (or a set amount) even before the dividend on equity shares. 
• The preference shares must be repaid before all other investors and shareholders in the event of the winding-up of the company.
•  The issue of preference share is complete as per the rules prescribed under Section 48 of the Companies Act, 2013.

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Types of Preference Shares

There are eight types of preference shares. just in case of dissolution of the company, any of the eight types would be paid out before other forms of equity. Let’s understand each of them: 

• Cumulative: all dividends are carried forward until specified. And paid out only at the end of the definite period.

• Non-cumulative: The contrary of cumulative. Dividends are paid out of profits each year. There aren’t arrears carried over a period of time to be paid at the end of the term. 

• Redeemable: Such preference shares are often claimed after a set period or after giving due notice.

•  Non-Redeemable: Non-redeemable preference shares cant be redeemed during the lifetime of the company. But it can only be obtained at the time of carrying out (liquidation) of assets.

• Convertible: The shares are also converted into equity shares after a time period, or as per the conditions laid down within the terms.

• Non-convertible: non-convertible preference shares can not be, at any time, converted into equity shares. 

• Participating: Such shares have the right to take part in any other profits, afterward paying the equity shareholders. Furthermore, the accumulation of profit is apart from the fixed dividend paid up for preference shares. 

• Non-Participating: Non-participating preference shares don’t have any right to participate in surplus profits or any surplus gained at the time of liquidation of the company 

Process for Redemption of Preference Shares

These three steps are essential to be followed to redeem the preference shares:

1. A meeting of the general body needs to be termed. A notice has to be issued to the administrators and stakeholders regarding the meeting. This has to be done a minimum of seven days before the meeting.

2. At the final body meeting, a resolution has to be passed regarding the preference shares, the rules specified upon, the type of preference shares to be issued, and also the number of shares. Also, the resolution for issuing preference shares and a letter for redemption must be passed during the meeting.

3. Within 30 days of the resolution, SH- 7 must be filed with the Registrar. The SH-7 should contain the minutes of the meeting (the General Board meeting where the resolution was passed) and a real copy of the resolution signed by all the members of the board. 

When can preference shares be redeemed? 

Certain provisions must be fulfilled, under Section 48 of the Companies Act, 2013, for preference shares to be redeemed.

1. The redeemable preference share must be wholly paid up.

2. The redeemable preference share may be redeemed provided that the terms laid down at the time of issue are met.

However, on approval of shareholders and under the conditions laid down in Section 48 of the Act, certain provisions may be altered/modified. These include redemption of shares at a fixed time or during a selected period or at the time the shareholders and/or the company have approved and ratified.

The particular sum received after redemption of shares is often kept as Capital Reserve and may be utilized for any bonus on the issue of shares. This sum, within the Capital Redemption Reserve, is treated as Paid-up Capital by the company.

 Advantages of Redeemable Preference Shares

• Issuing redeemable preferential shares provides the company with a choice to make a choice from whether to repurchase shares or redeem shares depending on the market condition.
• The company redeems shares after it decides to pay back the shareholders. It’s some way of paying the shareholders like paying dividends. When shares are redeemed by the companies, the number of total shares outstanding reduces for the company, and also the earnings per share or the EPS of the company increases, which ends up in a rise within the share price.
• By redeeming shares, the company, utmost of the time, get rid of shares that were paying coupon rates, which are much higher than the current dividend profit for the equity share—thus, increasing the price for the existing shareholders of the company.
• Redeemable preferential shares often provide exit opportunities for venture capital funds, which are given with a predetermined exit option at a predetermined time and predetermined price point.

Disadvantages of Redeemable Preference Shares

• These types of shares are feasible for the companies to redeem only when the call price of the shares is not up to the present market price of the shares. Otherwise, it’s reasonable for the company to go for share repurchases in its place.
• The company must wait for the time predetermined while issuing the shares before having to redeem the shares.

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GST State Code List

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As you all know, GST (Goods and Services Tax) was introduced in 2017, and also the classified category of business is required to urge a singular GST positive identification. The GST number could be a combination of several numbers, and also the first two numbers are fabricated from state code. rather like any registered dealer, states even have a documented state code for GST. During this article, we shall study the GST state code list.

An overview of GST

GST may be a tax that’s paid by customers once they purchase goods or services. The payers don’t pay these taxes directly, but they pay together with the value they spend during their purchase. Usually, the government charges the manufacturers with GST. The manufacturers thereafter add GST to their products at the time of selling the products.

What is the GST State Code?

Each state in India is given a state code. This helps in understanding where a business entity or taxpayer is from. it’s a two-digit number, and therefore the list of those numbers for all states in India constitutes the GST State Code list.

The code is fixed and tiny, which makes less the likelihood of mistakes within the filing of GST Returns and in processing GST invoices. The primary two digits of GSTIN (Goods and Services Tax Identification Number) reflect the state code of GST. For instance- just in the case of GSTIN 08AAEPM0122C1Z8- the primary two digits show us that the business is found in Rajasthan. All in all, GSTIN may be a 15 digit alphanumeric unique number given to a taxpayer who is registered under GST.

What is the use of the GST State Code?

This GST Code helps the govt. to check whether to charge IGST, SGST, or CGST on a taxpayer or a business entity. From the products and Services Tax number of a buyer, displayed within the “Place of Supply” Section of GST invoice, the state code of GST of the client will be obtained. just in case where the state code of both buyer and supplier is different, then IGST is going to be charged. If the 2 state codes are similar, then SGST and CGST shall be charged.

The code lists are often employed by a taxpayer while registering for GST and entering invoice details in GST Returns.

Where can we need State Code in GST?

GST state code is required for:

GST license number (GSTIN) &

At the Delivery Zone or in recognizing “Place of Supply.”

Goods and repair Tax number (GSTIN) starts with state code. the primary two digits are the country code, as an example, in GSTIN 08AAEPM0111C1Z8, which begins with 2 “08” digits of the Rajasthan country code.

“Delivery zone” or “place of supply” is required to work out whether IGST is going to be imposed or CGST & SGST are charged. If the Supplier State Code and “Place of Supply” country code are different, IGST is going to be charged, and if the supplier state code and state of supply code are identical, CGST and SGST are charged.

List of GST State Code

Here is the list of State Code:

Serial No.	State Name	State Code
1	Jammu and Kashmir	1
2	Himachal Pradesh	2
3	Punjab	3
4	Chandigarh	4
5	Uttarakhand	5
6	Haryana	6
7	Delhi	7
8	Rajasthan	8
9	Uttar Pradesh	9
10	Bihar	10
11	Sikkim	11
12	Arunachal Pradesh	12
13	Nagaland	13
14	Manipur	14
15	Mizoram	15
16	Tripura	16
17	Meghalaya	17
18	Assam	18
19	West Bengal	19
20	Jharkhand	20
21	Orissa	21
22	Chhattisgarh	22
23	Madhya Pradesh	23
24	Gujarat	24
25	Dadra and Nagar Haveli & Daman & Diu	26
26	Maharashtra	27
27	Andhra Pradesh (Before division)	28
28	Karnataka	29
29	Goa	30
30	Lakshadweep	31
31	Kerala	32
32	Tamil Nadu	33
33	Pondicherry	34
34	Andaman & Nicobar Islands	35
35	Telangana	36
36	Andhra Pradesh (Added Newly)	37
37	Ladakh (Added newly)	38

Note that prior to January 26, 2020, Daman and Diu’s GST state code was 25.

Conclusion

GST has various positive impacts for little and medium enterprises with numerous benefits, simple use, digital and simplified processes. Many prospective entrepreneurs can easily give their ideas wings and start their firms. Small business owners can specialize in expansion and growth plans with easier accessibility to the nationwide market without concentrating more on state-wise tax minimization strategies.

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What is Income Tax

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Income tax is a kind of assessment that state-run administrations force on pay produced by organizations and people inside their locale. Personal duty is utilized to subsidize public administrations, pay government commitments, and give products to residents.

What are Income Tax Assessments?

In less difficult words, the assessment of the subtleties put together by a citizen (in their personal expense form) is called Income Tax Assessment. Personal Tax Assessment is a post-recording strategy. When a citizen has recorded his personal government form, they go through every single detail of it.

Documenting the annual expense form is a yearly custom. When consistently, everybody needs to document an annual expense form. Each citizen whose pay is over the essential exception limit needs to record in subtleties connected with his pay and derivation. This is finished by self-estimation of how much pay was procured in the past monetary year and paying assessment in like manner.

The Income Tax Assessment in India

After an assesses has recorded his subtleties, it goes into handling. The Income Tax Department investigations every one of the subtleties that a citizen submits. This is Income Tax Assessment. In easier words, the assessment of the subtleties presented by a citizen (in their personal government form) is called Income Tax Assessment. Annual Tax Assessment is a post documenting strategy. When a citizen has documented their annual government form, they go through every single detail of it.

7 Types of Income tax Assessment

Under Income Tax Act, 1961, there are four sorts of appraisal as referenced underneath:

1. Summary Assessment –u/s 143(1)

2. Self-Assessment –u/s 140A

3. Scrutiny Assessment –u/s 143(3)

4. Best Judgment Assessment –u/s 144

5. Protective Assessment

6. Re-Assessment or Income Escaping Assessment –u/s 147

7. Assessment in case of search –u/s153A

1. Summary Assessment

Appraisal under area 143(1) is like primer checking of the arrival of pay. Under this segment, the Income charge division sent insinuation u/s 143(1) in which relative Income Tax calculation [i.e. as given by Taxpayer in Return of Income and as figured u/s 143(1)] is sent by Income Tax Department. At this stage, no definite investigation of the Return of Income is done.

Time Limit for Summary assessment

Assessment u/s 143(1) can be made within a time period of twelve months from the end of the financial year in which the return of income is filled.

2. Self-Assessment

Prior to submitting returns assesses should observe whether he is at risk for any duty or interest. For this reason, this segment has been presented in the Income charge act. Where any duty is payable based on any return expected to be outfitted under segment 139 or segment 142 or area 148 or segment 153A, in the wake of deducting:

·        Advance expense Paid, in the event that any

·        TDS/TCS

·        Relief

·        MAT credit

Assesses will settle charge and interest prior to outfitting return and verification of such installment will go with the return of payment.

3. Scrutiny Assessment

Investigation appraisal alludes to the assessment of arrival of pay by giving an open door to the assesses to prove the pay announced and the costs, derivation, misfortunes, exceptions, and so forth guaranteed in the return with the assistance of proof.

Throughout the examination, the evaluating official gets an open door to lead inquiry as he considered fit from the assesses and from outsiders. The practice is pointed toward determining whether the pay in the return is accurately shown by the assesses and whether the cases for allowances, exclusions, and so forth are verifiably and lawfully right. If any oversight, errors, mistakes, and so forth come to light because of assessment, the evaluating official makes his own appraisal of the assessor’s available pay subsequent to thinking about every one of the applicable realities. These evaluations are made under segment 143(3) of the annual duty act.

The case chosen for Scrutiny Assessment can be off by two sorts – for example (1) Manual examination cases and (2) Compulsory Scrutiny cases.

4. Best judgment assessment

Area 144 of Income charge act, 1961 talks about Best Judgment Assessment. In the best judgment appraisal, a surveying official makes an evaluation in view of his best thinking. Assessed should not be exploitative in his evaluation nor have a malicious demeanor.

There are 2 types of best judgment assessment:

Compulsory best judgment assessment: It is done while surveying official observes that there is a demonstration adding up to non-co-activity by the assesses or where assesses is viewed as a defaulter in providing data to the office.

Discretionary best judgment assessment: It is done in situations where surveying official is disappointed with the realness of the records given by the assesses or where no normal technique for bookkeeping has been trailed by the assesses.

5. Protective assessment

However there is no arrangement in the annual expense act approving the duty of personal duty on an individual other than whom the annual duty is payable, yet it is available to the specialists to make a defensive or elective appraisal in the event that it isn’t ascertainable who is truly responsible to pay the assessment among a couple of potential people.

In making a defensive evaluation, the specialists are simply making an appraisal and leaving it as a paper evaluation until the matter is chosen (concerning whom the resource is possessed) somehow. Furthermore, a defensive request of evaluation can be passed yet not a defensive request of punishment must, but be noticed that while a defensive appraisal is reasonable, a defensive request for recuperation isn’t admissible.

6. Re-assessment Or Income Escaping assessment

Re-assessment is completed assuming the Assessing official has the motivation to accept that any pay chargeable to burden has gotten away from evaluation for any appraisal year.

 The goal of completing appraisal u/s 147 is to bring under the duty net, any pay which has gotten away from evaluation in a unique appraisal. Here, Original appraisal implies an evaluation u/s 143(1) or 143(3) or 144 and 147 (by and large).

7. Assessment In Case Of Search

Despite anything contained in area 139, segment 147, segment 148, segment 149, segment 151, and segment 153, on account of an individual where an inquiry is started under segment 132 or books of record, different reports or any resources are demanded under segment 132A after the 31st day of May 2003.

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What is PAN?

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What is PAN?

PAN stands for the permanent account number. It is a 10-digit alphanumeric (containing both alphabets and numbers) code that is imprinted on a laminated plastic card known as the PAN Card. PAN number is issued by the income tax department, govt. of INDIA, under the Income-tax Act 1961 to all taxpaying individuals and entities.

The department links all the transactions of the person. This transaction includes tax payment, TDS/TCS credit, returns of income/wealth/gift/FBT, specified transactions, correspondence, and so on. Thus, PAN acts as an identifier for the person with the tax department. This information is shared across the country hence no two people or tax-paying entities can have the same PAN.

History of PAN

Before the concept PAN was introduced there was a GIR number assigned to taxpayers. Since the GIR number was a manual system there could be higher chances of miscalculation and errors or cases of mistaken identity during tax assessment. In the year 1972, the PAN was introduced by the government of India and made statutory under section 139A of the income tax Act 1961. After that, it was abandoned in the year 1995.

Eligibility for PAN Card

Any individual or company having a source of income are eligible to apply for PAN Card.

Types of PAN Cards

1.     Individual

2.     Hindu undivided family (HUF)

3.     Company

4.     Firms/Partnerships

5.     Trusts

6.     Society

7.     Association of Persons (AOP)

8.     Foreign Assessee / Non-residents

Need of PAN Card

PAN is mandatory for financial transactions such as receiving taxable salary or professional fees, sale or purchase of assets, buying mutual funds, and more. It is mandatory for many transactions including opening a bank account, filling out an income tax return, and registering a business.

As per Section 139A(5)(c) of the IT act “PAN is required to be quoted on transactions prescribed by CBDT”.

How to apply for PAN Card

Pan Card applications can be made online as well as offline.

Following websites for registering a PAN Card online:

 Protean eGov Technologies Limited (formerly NSDL)

UTIITSL

Documents required for PAN registration

The two main types of documents required for registration of PAN that is POA(proof of address) and POI(proof of identity)

For Individual-

 POI- Aadhaar, voter id, driving license, etc

 POA- domicile, utility bills, water bills, electricity bill, passport, etc.

For Companies –

 A copy of the registration certificate of the company issued by the registrar of companies.

For Foreign Citizens-

You have to submit a copy of the PIO issued by the Government of India, a Copy of OCI issued by the Government of India, a Passport Copy, etc.

You have to submit Proof of Address can be a bank statement of the residential country, NRE Bank statement, Copy of VISA granted by an Indian company, registration certificate issued by FRO, etc.

For Trust-

 You have to submit A copy of the Registration Certificate Number issued by a Charity Commissioner.

For Hindu undivided family-

 You have to submit An affidavit of the HUF issued by the head of HUF along with POI/POA details.

For Firms/Partnership-

 Partnership Deed along with the certificate of registration of Firms/LLP

For Society-

 You have to submit a Certificate of Registration Number from the Registrar of Co-operative Society or Charity Commissioner

Benefits of PAN Card  

1.       PAN Card is used for filling income tax returns.

2.       PAN Card is used in financial markets like trading and opening a Demat account.

3.       For buying and selling of property such as land or house, PAN Card is important.

4.       On linking the PAN number with one’s bank account, the bank would only deduct 10% TDS instead of a higher rate of 30% when the account holder’s annual interest earnings on savings deposits exceed Rs. 10,000/-.

5.       Applying for a Car loan, or buying or selling a four-wheeler can be done easily with a PAN card.

6.       With a valid PAN card, one can buy foreign currency above Rs. 50,000/- or more.

7.       PAN Card can also be used as identification proof.

8.       For buying jewellery of more than 5lakh, PAN Card is mandatory.

If you are looking for any PAN Card services or any related services Call us at +91 89899 77769 or visit this page: Finaxis

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