Tax Registrations under Government of India
Launching a Startup in India is not a fairy tale story, but the Nation has made tremendous progress recently and made starting a business quite simple for Entrepreneurs. Here we will look at the most commonly referred to as licenses and registrations required for a business in India. The process of obtaining the license is different for each type of business. The requisites for licensing change based on various determining factors like the number of employees, sector, the place of business etc. In this article, we will discuss commonly obtained licenses or registrations for a business. To determine the exact requirement for your business, get in touch with a TAXAJ Business Advisor.
All businesses need government licenses and registration, while nearly all require more than one registration. For example, even air-conditioned restaurants need both GST registration and Food License registration, depending on turnover and location, in addition to a Trade License or Shops & Establishment License.
EPF (Employee Provident Fund)
The Employee Provident Fund (EPF) is a scheme that helps people save up a sufficient corpus for retirement. The plan was introduced with the Employees' Provident Funds Act in 1952 and is today managed by the Employees' Provident Fund Organisation (EPFO).
ESI (Employee State Insurance)
Employees' State Insurance is a self-financing social security and health insurance scheme for Indian workers. The fund is managed by the Employees' State Insurance Corporation according to rules and regulations stipulated in the ESI Act 1948.
MSME - Udyog Aadhar
The Ministry of Micro, Small and Medium Enterprises, a branch of the Government of India, is the apex executive body for the formulation and administration of rules, regulations and laws relating to micro, small and medium enterprises in India
Profession tax is the tax levied and collected by the state governments in India. It is a indirect tax. A person earning an income from salary or anyone practicing a profession such as chartered accountant, company secretary, lawyer, doctor etc. are required to pay this professional tax.
Shop & Establishment
The Shop and Establishment Act is regulated by the Department of Labor and regulates premises wherein any trade, business or profession is carried out. The act not only regulates the working of commercial establishments but also societies, charitable trusts, printing establishments, educational institutions run for gain and premises in which banking, insurance, stock or share brokerage.
Goods & Service Tax
Goods and Services Tax is an indirect tax used in India on the supply of goods and services. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes.
Import Export Code
Import Export Code (also known as IEC) is a 10 digit identification number that is issued by the DGFT (Director General of Foreign Trade), Department of Commerce, Government of India. It is also known as Importer Exporter Code.
ISO refers to International Organisation for Standardisation. in terms of quality, safety, and efficiency of products and services provided by businesses. It is important to deliver high quality of goods & services in order to sustain in the markets.
PAN stands for Permanent Account Number. In India every taxpayer has a unique identification Number i.e. PAN Number. It is the single source root of every financial identity of an individual or enterprise. For company registration or bank account opening every transaction needs a PAN Card to be seeded.
TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. Under Section 203A of the Income Tax Act, 1961, it is mandatory to quote TAN allotted by the Income Tax Department on all TDS returns.
Difference between Business Registration & Tax Registration
While starting the business, you need a Company Name or a Brand Name. So for doing business on a brand or business name, you have to always register that business or business name. Simply put, Business Registration refers to register a legal entity that can do business in India legally. Even indirectly, business registration is taking permission from the government to start the business transactions.
Some advantages why you should register your business legally –
👉 You can issue Bills & invoice to your customers.
👉 You can do the business legally as per the government law
👉 You can integrate the payment gateway into your website/app.
👉 You can sign legal agreements with third parties.
👉 You can build brand loyalty & trust between customers.
👉 You can open a current bank account on the company name.
👉 You can receive the payments from Customers.
👉 You can issue the internship certificate & recognition to interns.
👉 You can hire employees as per the government regulations.
So above are some benefits regarding register a Business in India. When you register your business in India, two main terms are used in business registration.
- Legal Entity – Legal Entity refers to a separate business name where the owner can do the business in India or abroad on a Brand Name & people recognizes the products or services from a particular business name.
- Business Bank Account – Individuals, operate a personal savings bank account where banks give you the interest on your money parked in your account. Still, in the business, there is a different thing. For doing all business transactions, you need and have a separate business bank account. So as per the RBI Guidelines, each bank can open a business current bank account on production of the Registration & legal certification basis where it’s on the company or business or brand name.
Summary Point on Business Registration: Business registration simply means registering a business in India. This newly incorporated business gives you a separate identity for your business and gives you the right to do business across India. Business Registration Legal Entity & Current Business Bank Account is Mandatory before starting any type of business.
Once your business registration is done, you can start by opening a current bank account, but the government needs the taxes. so these are the two types of taxes:-
- Direct Taxes (Income Tax): – Direct taxes refer to the taxes by the government on the business owners or companies that apply to the net profit of the business. For Ex – Income Tax. Now every person in India earning from India is liable to pay the income tax to the government. Similarly, each business owner and company or firm has to pay the government's taxes on the profit. It's required the PAN Card, and yes, PAN Card is linked with the Income Tax in India.
- Indirect Taxes (GST):- Indirect taxes refer to the taxes by the government which is recovered from the end customers indirectly through the business. e.g., you purchase a product or take the service from the business that charges the GST.
FSSAI: It's applicable for Food-related business organisations.
Shop Establishment: It's applicable in certain states for any shop or office having a physical presence.
Summary on Tax Registration Point: Direct Tax Registration like PAN Card is required before starting the business in India, but Direct Tax Registration is not required. When you cross certain turnover limits or have some conditional situation with the parties or customer when needed at the starting of business, it's necessary. For example, selling on the e-commerce portal required indirect tax registration starting or as a sole proprietorship firm.