Mandatory Registrations Applicable to All Businesses In India
“ there are certain registrations and licenses which are common to all forms of business and should be obtained immediately after the registration of business”
There are various forms of businesses in which an entrepreneur /startup can start the business. These types of businesses can be classified based on different parameters such as profit motives, number of owners, nationality of owners, etc. For a non-profit motive a society, section 8 company or a trust can be registered whereas with profit motives various other businesses like a partnership, LLP, Pvt Ltd company, or a limited company can be registered. Similarly based on nationality branch office , liaison office can be registered. Except proprietorship and partnership firm all other business require mandatory registration as per their regulatory acts for example for a private limited company the provision for registration is prescribed under the Companies Act, 2013 whereas for a LLP the provision for registration is prescribed under the LLP Act, 2008. Apart from registration of a business there are various other registrations which are mandatory in nature or desirable for smooth functioning of the business some of these are as under
1. Permanent Account Number (PAN):
Income tax department allots an account number to all those persons who are required to pay tax or to file a tax return or annual information report (AIR). This number is permanent in nature and need to be quoted on all the tax returns, tax payments challans, any correspondence with the income tax department. This number is an alphanumeric number of 10 digits which is allotted only once to a person. Income tax department also issues a pan card specifying the pan number, and particulars of the person to whom the number has been allotted like name and date of birth or date of incorporation.
2. TDS Number (TAN):
While making payments to suppliers, vendors, service providers, employees the tax needs to be deducted at source which is also known as TDS. Tan no. is a permanent identification number, allotted to those persons who are liable to deduct tax at source. A tan is mandatory while making payment of TDS to the Government which was deducted while making payments to various parties. It is also necessary to quote while filing the TDS return. All person who have been allotted a TAN Number must file with income tax department quarterly TDS returns and in case of NIL return a statement to that effect must be filed.
3. Shops and Establishment Registration:
In India every state have enacted a law to regulate conditions of work and to provide for statutory obligations for the employer and for the right of employees. The shops and establishment Act is applicable to all kind of commercial, trading, banking, insurance establishments, establishments where persons are employed or engaged mainly for office work, a hotel, restaurant, boarding or eating house, a cafe or any other refreshment house, a theater, cinema or any other public amusement or entertainment. The law require registration of establishment with department of labour and maintenance of registers having details of employment, fines, deductions and advances, salary, holidays etc. the name of register and its form may vary from state to state. The purpose of the law is to regulate Working hours, to lay down guidelines for spread over, rest intervals, opening and closing hours, closed days, national and religious holidays, overtime work, rules for employment of children, young persons and women, rules for annual leave, maternity leave, sickness and casual leave, and to provide for maintenance of registers and records and display of notices, obligations of employers as well as employees. The registration under shops and establishment act is mandatory in nature and should be applied within 30 days. Any failure on the part of employers in getting the registration under shops and Establishment Act is a serious offence with criminal liability.
4. Professional Tax Registration:
It is a tax on profession in India and is levied by State Governments on every professionals or employees of a private sector. Professional tax is levied by state governments on profession, trade, and employment, however, a parliament of India have placed a limit on the professional tax which a state government can collect within a year. At present the limit is set at Rs. 2500. The responsibility of obtaining the registration is with the owner of the business, directors in case it is a company and on designated partner if it is a limited liability partnership firm. After obtaining the registration with professional tax registration an employer have to collect the professional tax from its employees and deposit with the PT department. The employer is further required to maintain registers and file timely return of professional tax with the professional tax department. At present following states collect professional tax
5. Sales tax Registration :
A person who deals in the business of buying and selling of goods is considered a dealer and they need to register with local sales tax department subject to the , for example a person In case a business is engaged in an activity which involves a sale of goods, provision of works contractor engaged in Inter-State sales need to get themselves registered with sales tax department. States have some exemption based on turnover which is 20 lac for Delhi, 10 lac for Maharashtra, Bengaluru, Haryana, up at present. This exemption means dealers whose turnover is less than the limit prescribed need not to obtain registration with vat department, however in case there is any sale for any amount between two state then VAT & CST becomes a mandatory registration to obtain. While seeking registration with sales tax department the dealer have to furnish security which ranges from Rs. 25,000 to Rs. 1,00,000/- depending upon the state in which registration is sought.
6. Service Tax Registration:
for all service providers except that of the services which are in negative list the assessee is required to collect from their clients service tax @ 14% at present, Swachh Bharat Cess @ 0.5% and Krishi Kalyan Cess @ 0.5%. The collected tax need to be paid before 5th of next month and a return of service tax need to be filed with the government within due dates. However for small businesses having turnover less than 10 lac is exempt from the the applicability of service tax. It is advised to apply for registration of service tax immediately on reaching the turnover of Rs. 9 lac in a financial year.
7. Excise Registration for Manufacturers:
Every persons engaged in the manufacture of dutiable goods, first and second stage dealers desiring to issue cenvatable invoices, persons holding warehouses for storing non‐duty paid goods are required to obtain registration with central excise department. However the persons not liable to register under excise are those who manufacture the excisable goods, which are chargeable to nil rate of excise duty or are fully exempt from duty by a notification, a small scale units availing the exemption based on value of clearances under a notification, persons manufacturing excisable goods by following the warehousing procedure under the Customs Act, 1962 subject to certain conditions, the person who carries on wholesale trade or deals in excisable goods (except first and second stage dealer, as defined in Cenvat Credit Rules, 2004), persons who use excisable goods for any purpose other than for processing or manufacture of goods availing benefit of concessional duty exemption notification.
8. Import Export Code :
A person which wish to deal in international trade by way of import or export need to register with the director general of foreign trade and obtain IE Code.
9. Other Registrations:
Other registrations like provident fund registration can be obtained once the number of employees reaches 20, However optional registration with PF Department can be obtained even prior to reaching 20 employee on voluntary basis. Employee State Insurance Corporation (ESIC) registration and compliance thereof is mandatory after the number of employee reaches 10 in number. Drug license is needed in case the business is about dealing with scheduled drugs, food (FSSAI) registration is required if the business is relating to food.
Our team at setindiabiz.com, a unit of KPS Corporate Consultants Private Limited is experienced and specializes in all kinds of registration and licensing requirements of a business, get in touch with us.