On January 31, The Reserve Bank of India (RBI) via its press release note, ordered Paytm Payments Bank (herein thereafter referred to as “the bank”), a wholly-owned subsidiary of fintech major Paytm, to stop accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags and more after February 29 upon persistent non-compliances and continued material supervisory concerns in the bank. Following this news, the Paytm stock fell around 20% on 1st Feb. thus hitting a lower circuit on the stock exchanges.
Let’s take a deep dive into what happened and the previous instances of RBI’s actions against the Paytm Payments Bank: The Central Bank has taken this punitive step under Section 35A of the Banking Regulation Act, 1949. Through this decision, RBI aims to curb certain irregularities and continuous non-compliance by the bank. A top executive of the bank said that the recent move by the central bank will have the maximum impact on the merchant payments given Paytm’s large network of merchants as they would have to shift to other players for their QR code, Point of Sales (POS) machines, sound box, and other requirements. However, this is not the first time where an action has been initiated against the bank by RBI. There are several other instances in the past. Let’s take a quick look at the same: • June 2018: RBI, following an audit, ordered the bank to stop onboarding new customers due to its issues regarding adherence to KYC norms. However, the restriction was later on revoked in January 2019. • October 2021: RBI imposed a huge fine of ₹1 Crore due to the bank’s non-compliance of laws pertaining to payments and settlements. • March 2022: RBI again prohibited the bank from onboarding new customers owing to “certain material supervisory concerns observed in the bank”. • October 2023: The Reserve Bank imposed a fine of ₹5.39 crores for non-compliance with its directions.
What next for the bank’s customers? Generally, when news such as “Bank restricted to carry on its operations” or “Bank shutting down” hits the market, there is a panic among its customers to withdraw their money from it as they fear of losing their money. However, in this case, the customers need not worry much as the RBI via its Press Release: 2023-2024/1774 has clarified that though the bank cannot accept deposits or indulge in credit transactions, the customers are permitted to withdraw or utilize their balance amount without any restrictions.
To address this issue, let us first understand an interplay of Sec 148,148A and 149(1)(b) and the relevant extracts are re-produced below:
Section 148 of the Act- income escaping assessment
Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within 15 [a period of three months from the end of the month in which such notice is issued, or such further period as may be allowed by the Assessing Officer on the basis of an application made in this regard by the assessee], a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice
On perusal of the above section, it can be seen that the thrust is on the words “income escaping assessment”
Section 148A of the Act
“148A. Conducting inquiry providing opportunity before issue of notice under section 148.- The Assessing Officer shall, before issuing any notice under section 148 –
conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;
provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);
consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b);
decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b).
ANALYSIS
The law requires an order to be passed under section 148A(d) of the Act by
conducting an enquiry in the manner provided under section 148A of the Act and
satisfaction to be arrived at on the basis of material available on record that income chargeable to tax has escaped assessment for the relevant assessment year.
But what does ‘material available on record’ mean?
The expression ‘material available on record’, has been consciously used by the legislature to put a fetter on the exercise of power in the manner that an order under section 148A of the Act deciding to issue notice under section 148 of the Act can be based only on the basis of material available on record.
Therefore, the decision in the enquiry as contemplated under section 148A of the Act needs to be based on material available on record. The words ‘material available on record’, in its just, fair and logical interpretation would only mean a tangible material and cannot be interpreted to mean remote likelihood of availability of material, it being taxing statute, requiring strict construction.
In the case of Abdul Masjeed v Income Tax Officer [High Court Of Rajasthan] (447 ITR 698) dated 29.06.2022, it was held that –
“[Para 22] Notice is proposed to be issued under section 148 of the Act after three years have elapsed from the end of the relevant assessment year that there should exist material available on record to reach to conclusion that some income chargeable to tax has escaped assessment, but the amount should be more than Rs. 50,00,000/-. Only on the basis that the cash deposits of Rs. 19,39,000/-chargeable to tax have escaped assessment, without anything more, the authority was not justified in jumping to the conclusion that the assessee may have more bank accounts. If such an interpretation is placed on the provision of section 148A(d) of the Act with reference to expression ‘material available on record’, then in that case, it will open flood gate and even without availability of any material, the authority would be initiating proceedings under section 148 of the Act, which will completely frustrate the object of incorporation of section 148A in the Act. It is well settled principle of interpretation that the taxing statute is required to be construed strictly”
But when can the proceedings be reopened after three years?
So, if this exercise is under taken beyond a period of three years with reference to the concerned assessment year, the proceedings under section 148 of the Act could be initiated only when the total amount of the alleged income represented in the form of asset which is said to have escaped assessment is more than Rs.50 lakhs otherwise such exercise may not lead to proceedings under section 148A of the Act because of statutory impediment under section 149 sub-section 1 clause (b) of the Act.
It is relevant to refer to the provision contained in section 149(1)(b) of theAct, which is reproduced herein as below:—
Section 149(1)(b) of the Act
“149. Time Limit for notice.-(1) No notice under section 148 shall be issued for the relevant assessment year,-
** ** **
if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of-
an asset;
expenditure in respect of a transaction or in relation to an event or occasion; or
an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more.”
What is the difference between “income” and “income chargeable to tax”?
The provisions which deal with computation of business income make it abundantly clear that definition of expression ‘income‘ and ‘income chargeable to tax’ are at variance to each other.
The expression ‘income’ is inclusively defined under section 2(24) whereas ‘income chargeable to tax’ obviously denotes an amount which is less than ‘income’. The ‘income chargeable to tax’ is arrived at after deducting the permissible deductions under IT Act from ‘income’. As such quantum of ‘income’ is invariably more than the income chargeable to tax. Infact, even in common parlance, the words Sales or Turnover and income are totally different.
Example-
MR. A has sold a land for Rs. 55 lakhs in AY 2019-20, with an indexed cost of acquisition of Rs.45 lakhs, so the capital gain chargeable to tax arising out of such sale is Rs.10 lakhs. So, can the said case be re-opened after issuing notice u/s 148 after 31.3.2023 on basis of information for sale?
Answer- In our opinion, the answer is NO!! This is because the amount of income chargeable to tax is Rs.10 lakhs and not the entire sales consideration of Rs.55 lakhs, and if the assesse escapes such gains assessment than section 148A r.w.s 149(1)(b)will not be attracted as the section says that the income chargeable to tax which has escaped assessment should be equal to or more than Rs.50 lakhs , which in this case is Rs.10 lakhs and not Rs.55 lakhs . So such transaction by Mr.A falls outside the purview of the aforesaid sections.
In the case of Nitin Nema v. Principal Chief Commissioner of Income-tax[MP HC] ( 458 ITR 690 ) dated 16.08.2023 it was held that:
“…it may not be out of place to mention that had the revenue arrived at the correct figure of income chargeable to tax instead of the gross receipts/consideration, the possibility of the amount of Rs. 72.05 lakhs coming down to a figure below Rs. 50 lakhs cannot be ruled out. From the aforesaid discussion what comes out loud and clear is that the revenue has failed to understand the fundamental difference between sale consideration on one hand and income chargeable to tax on the other. The revenue despite being assisted by thousands of experts in the field of finance and taxation, has committed such elementary mistake leading to harassment to the assessee who has been compelled to file the present avoidable piece of litigation. More so, this Court has been compelled to decide this frivolous matter wasting its precious time and energy which could have been utilized in more pressing matters. Thus, the revenue deserves to be saddled with exemplary cost and correspondingly the petitioner is entitled to compensatory cost.”
Further in the case of Sanath Kumar Murali v. Income-tax Officer [KARNATAKA HC] (455 ITR 370) dated 24.05.2023 it was held that
“The contention of the revenue that under section 149 what is required to be taken note of, is the ‘income that has escaped assessment’ being the entirety of sale consideration of Rs. 55.77 lakhs cannot be accepted, in light of the express words in the statutory provision ‘……….income chargeable to tax…… which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more’. It cannot be stated that since the stage at which the notice is issued is at a premature stage, the entirety of consideration of Rs.55.77 lakhs ought to be taken note of. A plain reading of section 48 would provide that the entirety of sale consideration does not constitute ‘income’. The memorandum explaining the provisions of Finance Act,2021 does not in any way lead to giving a different interpretation to the words, ‘income chargeable to tax’. The words used under section 149 for the purpose of extended time limit is to be interpreted in terms of the plain wordings of section 149 and cannot be construed differently while relying on any executive instruction.[ para 19]”
CONCLUSION
So, based on the detailed explanation of the above sections and case laws, it can be said that a sale transaction under co-ownership amounting to Rs. 90 lakhs would give rise to a sales consideration of Rs. 45 lakhs to each assesse and it is expected that the Assessing Officer ought to apply his mind on basis of preliminary enquiries and if it comes to his knowledge that the income chargeable to tax escaping assessment is less than 50 lakhs, the re-opening proceedings should be dropped. Even if the sale consideration comes to more than Rs. 50 lakhs as per assessee’s own share of co-ownership, and if the assessee is able to demonstrate in response to notice u/s 148A(b) that after deducting the indexed cost of acquisition or cost of improvement, the resulting capital gain is less than 50 lakhs and three years have lapsed from the end of the assessment year, the re-assessment proceedings is liable to be dropped.
Crafting an interim budget with elections in sight, FM Nirmala Sitharaman unleashed a slew of populist measures. As PM Modi seeks renewal, the government refrained from major changes, focusing instead on agriculture, infrastructure, social schemes, vulnerable communities, entrepreneurship and skilling to take its report card to the polls.
The budget retains income tax slab rates, extends startups’ tax breaks, upgrades 40,000 railway bogies under Vande Bharat, boosts R&D via interest-free loans, and provides 300 free electricity units monthly to 1 crore households through solar rooftops. It claims lifting 25 crore people from poverty.
On education, 7 new IITs and 16 IIITs have been established. To boost infrastructure, tourism projects are planned for islands including Lakshadweep.
Moreover, the budget highlights schemes giving rural homes and MUDRA loans to women entrepreneurs. It claims increased female enrolment in higher education and workforce participation.
While fiscal deficit is pegged at 5.8%, sustainability remains key. An India-Middle East-Europe economic corridor has been proposed to gateway trade.
Hoping to ride back to power, Modi has used the budget to highlight his record on governance and implement strategies to win over India’s sizable youth and countryside community.
Some Key Highlights are as follows:
Free ration eliminates worries about food for 80 crore people
Eligibility criteria for applicants’ incorporation for section 80-IAC Tax Exemption has been extended to one more year to 31 March 2025. Therefore, companies that have been formed in the next one year can apply for a tax break of three years under Section 80-IAC.
Direct Benefit Transfer of Rs 34 lakh crore through PM Jan Dhan Account has resulted in Rs 2.7 lakh crore savings for the government.
78 lakh street vendors have benefited from PM Swanidhi.
11.8 crore farmers are given direct support through PM Kisan. 4 crore farmers are supported through insurance.
30 crore Mudra Yojana Loans have been provided to women entrepreneurs. Governance, Development, and Performance are the new GDP.
Skill India Mission has trained 1.4 crore youth and retrained and up-skilled 54 lakh youth and established 3000 new ITIs.
The country’s capital spending for 2024-25 has been raised 11 percent to ₹11.11 lakh crore, or 3.4 percent of GDP.
The rural social landscape is transforming with 83 lakh SHGs, empowering nearly 1 crore women to become ‘Lakhpati Didis’.
The aviation sector has experienced significant growth, with the number of airports doubling to 149.
Withdrawing direct tax demands: Up to ₹25,000 for the period up to FY 2009-10 and Up to ₹10,000 for FYs 2010-11 to 2014-15.
FDI inflows stood at $596 billion, twice more than 2014-15.
PM Awas Yojana (Grameen): Despite COVID challenges, close to achieving 3 crore house target.
PM SVANIDHI has provided credit assistance to 78 lakh street vendors, from that total, 2.3 lakh have received credit for the third time.
PM Mudra Yojana has sanctioned 43 crore loans aggregating to Rs 22.5 lakh crore for the entrepreneurial aspirations of our youth.
The country received its highest-ever medal tally in the Asian Games and Asian Para Games in 2023.
Chess prodigy and our No. 1 ranked player Praggnanandhaa put up a stiff fight against world champion Magnus Carlsen in 2023, today, India has over 80 chess grandmasters compared to little over 20 in 2010.
Healthcare cover under the Ayushman Bharat Scheme will be extended to all Asha workers, all Anganwadi workers, and helpers.
Free cervical Cancer vaccines for girls from 9-14 years.
Application of Nano DAP on various crops will be expanded in all agro-climatic zones, similar to nano-urea.
GIFT IFSC and Unified Regulatory Authority IFSCA are creating a robust gateway for global capital and financial resources.
Implementation of Pradhan Mantri Matsya Sampada Yojana (PMMSY) will be stepped up to enhance aquaculture productivity from existing 3 to 5 tonnes per hectare, double exports to 1 lakh crore, and generate 55 lakh employment opportunities in the future.
To promote timely payments to micro and small enterprises, payments made to such enterprises have been included within the ambit of section 43B of the Act vide FA 2023. A new clause (h) has been inserted in section 43B of the Act to provide that any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006 shall be allowed as deduction only on actual payment. However, it has also been provided that the proviso to section 43B of the Act shall not apply to such payments.
Section 15 of the MSMED Act mandates payments to micro and small enterprises within the time as per the written agreement, which cannot be more than 45 days. If there is no such written agreement, the section mandates that the payment shall be made within 15 days. Thus, this amendment to section 43B of the Act allows the payment as a deduction only on a payment basis. It can be allowed on an accrual basis only if the payment is within the time mandated under section 15 of the MSMED Act.
Frequently Asked Questions (FAQs) on the amendment of Section 43B to get more clarity on the practical applicability of this amendment:
Q-1: From which Financial Year this amendment is applicable?
A-1. This amendment is made applicable from AY 2024-25 i.e. FY 2023-24.
Q-2: Which entities can be categorised as MSMEs?
A-2: Entity can be categorised as MSME – Micro, Small& Medium Enterprises
Particular
Micro
Small
Medium
Investment in Plant & Machinery or equipment
Upto Rs.1.00 Crores
Upto Rs. 10.00 Crores
Upto Rs. 50.00 Crores
AND
Turnover (excluding export turnover
Upto Rs.5.00 Crores
UptoRs. 50.00 Crores
Upto Rs. 250.00 Crores
Note that this amendment applies to only Small and Micro Enterprises and does not apply to Medium Enterprises.
Q-3: Whether this amendment can be made applicable for an amount outstanding to micro and small enterprise as on 31/03/2023?
A-3. This amendment is made applicable from AY 2024-25 i.e. FY 2023-24. Hence, this amendment is not applicable for an amount outstanding to micro and small enterprises as of 31/03/2023. It will apply to the transactions from 1st April 2024.
Q-4: To attract the disallowance u/s 43B(h), is it mandatory that supplier should have registration under the MSMED Act?
A-4:From the combined reading of section 8 and section 2(n) of the MSMED Act, 2006, it casts responsibility on MSME units to file a memorandum with the notified Authorities. However, that does not mean that Micro / Small Enterprise, which have not obtained Udyam Registration/filed memorandum are not be considered as Micro / Small Enterprise Creditor for Section 43B(h).An Enterprise, which is not registeredunder MSME but has merely furnished the Declaration in writing clarifying their Type of Enterprise viz. “Micro / Small” are required to be considered as such for all purposes of Section 43B(h) as Micro / Small Enterprise.
Reference is invited to the case below
Case Name: M/s Ramky Infrastructure Private Limited Vs Micro And Small Enterprises Facilitation Council & ANR (Delhi High Court) Appeal Number: W.P.(C) 5004/2017 & CM No. 21615/2017 Date of Judgement/Order: 04.07.18
However, this is a subjective issue and for the purpose of interpretation in Income Tax, the client may take a decision based on professional advice.
Q-5: How to verify whether a supplier is registered under the MSMED act or not?
A-5.: After the amendment in section 43B(h) in Budget 2023, many suppliers have started to include their MSME registration numbers on their invoices. Through the MSME Portal, one can verify MSME registration and the type of enterprise (Micro/ Small/ Medium) using the registration number. By this way, one can find that whether supplier is registered under MSMED act or not.
Q-6: What if a supplier has not intimated his registration under MSME in any manner to buyer?
A-6.: It is the responsibility of the supplier to intimate its registration to the buyer. If in any case, the supplier has not in any manner intimated his MSME registration, then in the absence of availability of information, no disallowance can be made under section 43B(h).
Q-7: Whether section 43B(h) is applicable for dues outstanding to traders having MSME registration?
A-7: As per section 2(e) of MSMED act, 2006 – “enterprise” means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951) or engaged in providing or rendering of any service or services. Hence, the definition of enterprise does not include traders.
The Ministry of Micro, Small and Medium Enterprises vide Office Memorandum (OM) No. 5/2(2)/2021-E/P & G/Policy dated July 2, 2021, has allowed Udyam registration for retail and wholesale trade. However, benefits to Retail and Wholesale trade MSMEs are restricted to Priority Sector Lending only. Hence, other benefits available under the MSMED act do not apply to traders. Resultantly benefit of section 15 of the MSMED act is not available to traders and hence 43B(h) cannot be made applicable to dues outstanding to traders.
It is advisable to yearly examine the classification of creditors.
Q-8: If a supplier is engaged in both i.e. trading as well as manufacturing/services, in that situation whether section 43B(h) apply for dues outstanding to that supplier?
A-8.: In such a situation, section 43B(h) can be made applicable for dues outstanding to such suppliers.
Q-9: Can disallowance be attracted under section 43B(h) for dues outstanding in relation to capital expenditure?
A-9.: Section 43B reads as – “Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of……” It is clear from above that 43B can be made applicable only to those deductions which is otherwise available under the Income Tax Act. Capital expenditure is not an allowable expense under the Income Tax Act. Hence, no disallowance will be attracted under section 43B(h) for dues outstanding to capital expenditure.
Q-10: How year-end provisions will be dealt with for disallowance under 43B(h)?
A-10.: As mentioned above, as per section 15 and section 2(b) of MSMED Act, 2006 payment must be made within 15/45 days from the actual delivery of goods or services. Hence, for any provision made for which actual delivery of goods or services does not take place till the end of the year, no disallowance can be made under section 43B(h).
Q-11: what if the buyer makes payment to the supplier after 15/45 days, but before the end of the financial year?
A-11.: In such a situation, a deduction can be claimed in a same financial year as payment is made in the same year.
Q-12: What if the buyer makes payment to the supplier after 15/45 days, but before filing the return of income for that financial year?
A-12.: As per the amendment made in the first proviso to section 43B, the benefit of the first proviso will not be available for due to micro and small enterprises, Hence, though payment is made before filing a return of income, the deduction can only be claimed in the year in which actual payment is made and not in the year of accrual.
Q-13: Disallowance under 43B(h) can be attracted for assessee opting presumptive taxation i.e., 44AD/44ADA/44AE etc.?
A-13: Section 43B does not apply to the assessee opting for presumptive taxation. Hence, no disallowance can be made in such cases.
Q-14: Chargeability of interest on delayed payments to MSME entities:
A-14: In case of failure to pay within the time limit specified in section 15 of the MSME Act, Section 16 charges liability to pay compound interest with monthly rests (i.e. interest will be calculated on the closing balance of the previous month) to the supplier @ Three times of bank rate notified by the Reserve Bank for the period of delay. The amount of interest payable or paid by the buyer shall not be allowed as a deduction under the Income Tax Act, 1961 as per provisions of section 23 of the MSME Act, 2006.
Q-15: Goods reaches late than how to compute the number of days?
A-15: Let us understand the question with the help of an illustration: X Dealt with an MSME where he received an invoice dated 16 March 2024 with respect to the supply of goods delivered on the same day. E having an issue with regards to the quality of goods supplied, communicated the same to the MSME vendor on 18 March 2024. Both the parties concluded with regards to the dispute on 30 April 2024 and accordingly E made a payment on 31 May 2024.
In this scenario, as a dispute with regards to the invoice was communicated within 15 days of the date of delivery therefore time limit under section 15 of the MSMED Act 2006 is applicable from the date on which dispute is resolved. And accordingly as the payment is made within 45 days from the date on which the dispute was resolved, E will be eligible for deduction of the said payment in the financial year 2023-24 when the expenses accrued.
With the current rainfall of IPOs by the companies in the Indian markets during current month or rather from last quarter, it will not be wrong to say that the with the onset of monsoon season in India there has been an onset of IPOs season for India. Hence, With this current trend, it is very imperative to get knowledge about how the whole mechanism of Inital Public Offering i.e. IPO functions in our country.
What is an Inital Public Offering (IPO)?
When an unlisted company makes either a fresh issue of shares or convertible securities or offers its existing shares or convertible securities for sale or both for the first time to the public, it is called an IPO. This paves way for listing and trading of the issuer’s shares or convertible securities on the Stock Exchanges.
What are the financial requirements for a company to issue an IPO?
SEBI has stipulated the eligibility norms for companies planning an IPO which are as follows:
Entry Norm I (Profitability Route)
Net tangible assets of at least Rs.3crore in each of the preceding three full years of which not more than 50% are held in monetary assets. However, the limit of 50% on monetary assets shall not be applicable in case the public offer is made entirely through offer for sale.
Minimum of Rs.15crore as average pre-tax operating profit in at least three years of the immediately preceding five years.
Net worth of at least Rs.1crore in each of the preceding three full years.
If there has been a change in the company’s name, at least 50% of the revenue for preceding one year should be from the new activity denoted by the new name
The issue size should not exceed 5 times the pre-issue net worth
Alternative
routes
To provide sufficient flexibility and also to ensure that genuine companies are not limited from fund raising on account of strict parameters, SEBI has provided the alternative route to the companies not satisfying any of the above conditions, for accessing the primary market, as under:
Entry
Norm II (QIB Route)
Issue shall be through book building route, with at least 75% of net offer to the public to be mandatory allotted to the Qualified Institutional Buyers (QIBs). The company shall refund the subscription money if the minimum subscription of QIBs is not attained.
Different
Types of IPOs
Book Building:- Compared to the developed countries, the concept of book building is new to India. In the book building issue, the price is discovered during the process of IPO. There is no fixed price, but there is a price band. The lowest price in the band is referred to as the ‘floor price’ and the highest price is referred to as the ‘cap price’. The price band is printed in the order document. And the investors can bid for the desired quantity of shares with the price which they would like to pay. Depending on the bids, the share price is decided. The securities are offered above or equal to the floor price. The demand is known everyday as the book is built
Fixed Price offer:- In the fixed price IPO process, the Company along with their underwriters evaluate the companies’ assets, liabilities, and every financial aspect. Then they work with these figures to fix a price per issue to achieve the target funds. This price, which is fixed per issue, is printed in the order document. The order document justifies the price with qualitative and quantitative factors. The demand for securities is known only after the issue is closed. The oversubscription levels are high in the fixed price offerings, sometimes several hundred times.
What happens during the Process of IPO?
The company should file for an IPO with SEBI by submitting all the required documents and information, consisting of the number of shares being issued, the set price, track record of the company, and the plans to utilize the capital being raised through IPO.
Once the company receives the regulatory nod, it issues a red herring prospect,containing all the information regarding the IPO and its records.
The company approaches a broking firm or investment banker to manage its IPO. This entity is referred to as the lead manager.
The lead manager would then invite bids for the IPO from various investors. Here, investors can be both financial investors or retail investors.
When the IPO is LIVE, the general public can subscribe to it and receive its shares corresponding to their investment if shares got allotted to them.
Generally, the IPO of a company would be open for subscription for three days to 21 days.
What happens Post IPO?
Once the IPO closes, all bids (applications) are registered and checked online. The incorrectly submitted ones are removed or disqualified (reasons being incorrect details, wrong PAN, etc). In case the total number of qualified applications is less than or equal to the number of shares offered in the IPO, complete allotment of shares takes place, resulting in every applicant getting assigned their shares.
If the bids are much higher than the total number of shares being issued, the lucky-draw system is used to allot shares. Only those bids that were at the upper band of the price band are valid. The remaining bids are rejected, and the money is returned to the investors.
How to invest in an IPO?
The applicant must have the following:
Demat account
Trading account
Mobile number linked to the bank account
UPI ID
The application shall be made with the stock broker manually or on its website by selecting the IPO for which application is to be made and specifying the number of shares and bidding price for the shares along with the UPI details for the payment.
Once the application is submitted the mandate request is sent on the UPI application for the approval. The applicant must log into the UPI application and accept the mandate request. Once it is accepted, the amount of IPO will be blocked in the bank account of the applicant.
Upon allotment, if no shares are allotted, the entire blocked amount is unblocked. If there is part allotment, the requisite amount is debited from the bank account and remaining amount is unblocked. The entire amount will be debited if the applicant is allotted all the shares that were applied for.
In today’s modern world, consumers are inundated and continuously exposed to trademarks in everyday life. Consider the terms Band-aid, Jacuzzi, Super-glue, Pampers, and Chapstick, to name but a few; consumers subconsciously regard these trademarks as the actual products rather than as their respective brands. So, how do you trademark a name, and what are the benefits of trademark?
Here are 7 reasons why trademarks are important for business:
1.
They Create Brand Recognition
Trademarking grants startups security of their brand. By trademarking a company name, one makes its services and products distinctive in terms of their competitors, becoming their intellectual property. In doing so, it prevents rivals from copying or stealing their brand.
2. It’s an Incentive for Employees to Join
It’s important for startups to preserve a positive reputation when they have a trademark. If a business maintains good repute, people are inclined to work with and for them. This applies even more so when an expansion is concerned. As a startup, more employees are a must if a company intends to grow. This brings about the need for a budget, making the trademark a crucial asset when being granted a business loan
3.
It Averts Legal Issues in the Future
Not registering a trademark leaves a business open to lawsuits from companies who did register one under the same name, sign, slogan, or design. If that does occur, a business will be forced to deal with altering all it came up with, such as the campaign, website material, and to a large extent, their brand identity. By registering a trademark, a startup would protect itself from another company using their name as well as from imitation of its products or services.
4.
A Trademark is for Life
A trademark is permanent, with
a need only for periodic renewal. Consider the aforementioned behemoth
companies of Pampers and Jacuzzi; they have been power-houses in their
respective domains for decades and will continue to thrive for decades to come.
This brings about the importance of conducting thorough trademark research to
ensure the governing body doesn’t deny a startup’s application.
Therefore, it is wise to use the services of a renowned Intellectual Property service provider with a good reputation.
5.
It is A Company’s Greatest Asset
It can act as a catalyst for
increasing value as a startup business matures, more so, if the startup
continues to expand. Thus, it is important to use a trademark for marketing
strategies to aid the enhancement of brand recognition and to draw in more consumers.
Once a startup has attained
positive repute for its product or service, consumers will associate its
trademark with how the business is running. Trademarks are significantly
beneficial when a business wants to:
Diversify its products or services,
Branch into franchising through licensing, and
Attain more value by putting itself up for sale.
6.
It Tells People That You Mean Business
It’s no secret that trademarks
lend credence to a business’s name; take Disney, for example. Could you imagine
Disney didn’t trademark their name or brand? Think of the legal carnage that
would ensue; people would be fighting tooth and nail to be able to profit from
the empire of success that surrounds their trademarked brand.
Moreover, if a business has a
trademark attached to its brand, it informs the world and competitors alike
that they have faith in the success of their business and that they have
something worth stealing. Indeed, that sounds morbid, but it’s the truth.
Would you protect something that isn’t worth it? Going the extra mile by registering a trademark for your business shines a different light on you in the eyes of your target consumers.
7.
It Gives a Sense of Autonomy
It’s no secret that the market
is hugely saturated into a plethora of different niches, widely ranging in size
and function. It’s a pretty brutal scene. Being even the littlest fish in the
tiniest pond as a startup is super tough. In this respect, a trademark can act
as a crutch; after a startup establishes itself, it’d want to maintain good
standing.
Trademarking a brand allows for a newly budding firm to cushion the blows from the market by wearing a protective blanket; it both directly and indirectly informs others that the brains steering the business, mean business.
How RSA Consultants can help?
We are team of experienced Chartered Accountants, Company Secretaries and Business consultants and having rich experience of intellectual Property Rights and understands the needs of such organization. We will fill out the application and submit it on your behalf with the Controller General of Patents Design and Trademark and will give you absolute clarity on the process to set realistic expectations. You may explore more at https://www.itatorders.in/products/trademark-registration
PAM, TAM, SAM and SOM are acronyms that represents different subsets of a market.
PAM or Potential Addressable Market includes people not currently included in your target market, but potentially could be in future.
TAM or Total Available Market is the total market demand for a product or service.
SAM or Serviceable Available Market is the segment of the TAM targeted by your products and services which is within your geographical reach.
SOM or Serviceable Obtainable Market is the portion of SAM that you can capture.
Let’s take an example to understand better
Let’s say you are starting a Co-working Space. Your TAM would be the worldwide all small-big enterprises, freelancers, Startup teams etc. Potentially, if you were present in every country and had no competition you would generate TAM as revenues.
Let’s be more realistic. You are starting your Co-working Space in two cities where the demand for Co-working Space can be estimated based on: the population, their work culture, and the revenues generated by Co-working Space in other cities having similar demographics.
That is your Serviceable Available Market: the demand for your type of products/services within your reach. In other words if you were the only Co-working Space in city you would generate revenues of SAM.
Now, Suppose you are probably not the only Co-working Space in your city.
So realistically you can hope to capture only a fraction of your SAM. Most likely you will attract people living or working close to your Co-working Space and a fraction of the people located further away that are willing to give your Co-working Space a try due to extra features being provided by you. This is your SOM.
How to Calculate PAM, TAM, SAM,SOM?
PAM – (Total available Customers in Market + Total potential to be customers in market) * Average Revenue/customer
TAM- Total Customers in Market * Average Revenue/customer
SAM – Target Segemnt of TAM * Average Revenue/customer
SOM – Last year’s market size * This year’s SAM
Summary
While PAM and TAM reflect the enormous potential that can be captured, SAM and SOM help in giving a more realistic and actionable perspective. Data can usually be collected through secondary sources such as publications, government records and even through online surveys. Market analysis is important to give the business a direction and raise funds if enough potential is found.
Market sizing is indispensible for both, established businesses and startups. Especially, for startups, investors prefer an established model for estimating the market size, namely the TAM, SAM and SOM. Such standardization reduces the risk of misunderstanding, provides the data baseline for investors to evaluate a business opportunity, and articulates the short, mid and long-term growth potential. The SOM shows what can be achieved with the business idea in the short term. The SOM / SAM ratio describes the market share initially aimed for. Finally, the TAM shows the greatest possible market potential.
RSA Consultants is a team of Chartered Accountants and other Professionals, rendering services in the field of Income Tax, GST, Indirect Tax, International Taxation, Corporate Law Advisory, Accounts & Assurances and Consultancy related to Startup & Entrepreneurship since 2011.
Our team can help your Startup to make application under the SISFS. Kindly get in touch with us via WhatsApp at 9723400220
The following are the guidelines for assistance to incubators under the Startup India Seed Fund Scheme
Experts Advisory Committee (EAC) shall evaluate incubators for grant assistance. A Grant of up to Rs. 5 (five) crore would be provided to a selected incubator in milestone-based three (or) more installments. The exact quantum of grant and instalments for each incubator will be decided by the Experts Advisory Committee (EAC) based on its evaluation.
Incubators shall use the grant only for disbursal to eligible startups and shall not use the grant for facility creation or any other expenses.
A component of Management Fee @ 5% of Seed Fund grant to the incubator will be provisioned (i.e. if an incubator is granted Rs. 1 crore of Seed Fund, then by including management fee @ 5%, the total assistance would be Rs. 1.050 crore)
The Management Fee provisioned for incubators shall not be used by the incubator for facility creation or any other administrative expenses. The Management Fee will be utilized for administrative expenditure, selection and due diligence of startups, and monitoring of progress of beneficiary startups
Installments shall be released to incubators upon submission of proofs of achievement of milestones as decided by EAC. Proportionate Management fee shall also be released with each installment
The quantum of first installment may be up to 40% of total approved commitment. When the cash-in-hand of the incubator goes below 10% of the total commitment by EAC, the Incubator may request for the next installment, which shall be released to incubator within 30 days of submission of proof of achievement of milestones
The grant should be utilized fully by the incubator within a period of three years from the date of receipt of the first installment of funds.
If the Incubator has not utilized at least 50% of the total commitment within the first 2 years, then the Incubator will not be eligible for any further drawdowns. It will return all unutilized funds along with interest.
Interest earned on all unutilized funds available with incubators shall be taken into account and adjusted at the time of next release.
The financing of beneficiaries will be done with efficiency and care. Selected incubators would be responsible for proper management and disbursement of the Seed Fund
Selected incubator shall maintain a transparent process of selection, monitoring, and disbursement mechanism for the fund. Seed Fund would be disbursed to selected startups after due diligence by the incubator
The incubators shall be responsible for providing physical infrastructure to the selected startups for regular functioning, support for testing and validating ideas, mentoring for prototype or product development or commercialization, and developing capacities in finance, human resources, legal compliances, and other functions. They are also expected to provide networking with investors and opportunities for showcasing in various national and international events. If the selected startup does not want to utilize the physical infrastructure of the incubator, the incubator shall offer all other resources and services to the startup
A startup selected by an incubator for assistance under this scheme shall not be charged any fees.
RSA Consultants is a team of Chartered Accountants and other Professionals, rendering services in the field of Income Tax, GST, Indirect Tax, International Taxation, Corporate Law Advisory, Accounts & Assurances and Consultancy related to Startup & Entrepreneurship since 2011.
Our team can help your Startup to make application under the SISFS. Kindly get in touch with us via WhatsApp at 97234 00220
Where the assessee had entered into agreement to sale cum possession of immovable property and paid substantial consideration prior to the date of amendment of the section 56(2)(vii)(b)(ii) of the act (i.e., if the consideration paid is less than the stamp duty value, the difference consideration shall be taxable), the AO is not permitted to invoke the provisions of section 56(2)(vii)(b)(ii) in the absence of sub clause (ii) in the Act as on the date of agreement although the final sale deed was executed and registered after the amendment in Section 56(2)(vii)
Facts of the case:
The assessee along with other co-owners has purchased immovable property for Rs.1.16 Crores as per executed Sale deed in AY 2014-15, although the consideration of Rs.87.99 lakh was paid on 28.12.2012. The assessee entered into agreement with the seller on 28.03.2013. The substantial part of the sale consideration was also paid to the seller, which is about 80% of the total sale consideration. Though, ultimately the sale deed was registered on 10.09.2013. The details of sale consideration is also mentioned in the registered sale deed, acknowledging the fact that substantial part of consideration was paid on the day of execution of the initial agreement. The assessee claimed that the possession of the land was also obtained by them at the time of agreement. The Stamp Valuation Authority (SVA) determined the stamp value of land at Rs.2.19 Crores on the basis of value determined by Stamp Valuation Authority. The assessee’s share is Rs.21,95,918/- and this difference of Rs.10,35,918/- (21,95,918 – 11,60,000) was added to the income of assessee under section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961 (‘the Act’).
Contention of the AR of the assessee
The AR of the assessee CA Mehul Shah contended that law cannot be amended in a retroactive manner so as to invalidate any transaction already done. When substantial purchase consideration is paid to the seller, it is very natural that the consideration is fixed between the buyer and the seller and hence even if the written agreement to sell is to be disbelieved, then the payment by account payee cheque itself shows the existence of oral agreement in place, which is also a valid agreement.
Held:
In absence of sub-clause (ii), in the statue book as on the date of agreement to sale of the property, the AO was not entitle to invoke the provisions of section 56(2)(vii)(b)(ii). As per the provisions of the Act from the A.Y.2014-15 sub clause (ii) has been introduced so as to enable the AO to tax the difference in consideration if the consideration paid is less than the stamp duty value. However, the AO is not permitted to invoke the provisions of section 56(2)(vii)(b)(ii) in the absence of sub clause (ii) in the Act as on the date of agreement.
Lead Cases:
Relying on the decision of
ACIT Vs. Anala Anjibabu
(185 ITD 0001) (Visakhapatnam- Trib)
M Shiv Parvathi & other
Vs ITO [129 TTJ 463 (Visakhapatnam- Trib)
the tribunal allowed the appeal in favour of the assessee.
On 2 August 2021, PM Narendra Modi launched a digital
payment platform called e-RUPI Digital Platform. National Payments Corporation
of India (NPCI) in association with Department of Financial Services (DFS),
National Health Authority (NHA), Ministry of Health and Family Welfare (MoHFW),
and partner banks, has launched an innovative digital solution – ‘e-RUPI’.
This platform is a cashless and contactless instrument that will be used for making digital payments. It is a QR code or SMS string-based e-voucher which will be delivered to the mobile of the users. The users of this seamless one-time payment mechanism will be able to redeem the voucher without a card, digital payments app or internet banking access, at the merchants accepting e-RUPI. e-RUPI would be shared with the beneficiaries for a specific purpose or activity by organizations or Government via SMS or QR code. This contactless e-RUPI is easy, safe and secure as it keeps the details of the beneficiaries completely confidential. The entire transaction process through this voucher is relatively faster and at the same time reliable, as the required amount is already stored in the voucher.
Uses of E-Rupi
With the help of the e-RUPI platform, the payment of the
service provider will be made only after the completion of a transaction. This
payment platform will be prepaid in nature which does not require any kind of
intermediary to make payment of the service provider. Other than that this
platform can also be used for delivering services under schemes that are meant
for providing drugs and nutritional support like mother and child welfare
scheme, TB eradication program, drug and diagnostic under a scheme like
Ayushmann Bharat Pradhan Mantri Jan Arogya Yojana, fertilizer subsidies, etc.
The private sector can also leverage these digital vouchers for their employee
welfare and corporate social responsibility programs. Leak-proof revolutionary
delivery of welfare services will be ensured through this initiative.
Voucher Issuing
Procedure
The e-RUPI digital payment system has been developed by the
National Payment Corporation of India on its UPI platform. The national payment
corporation of India has boarded banks that will be the issuing authority of
the voucher. The corporate or government agency is required to approach the
partner bank (private and public sector lenders) along with the details of the
specific person and purpose for which the payment is required to be made. The
identification of beneficiaries will be done by using their mobile number
voucher allocated by the bank. This platform will be our revolutionary digital
initiative which will improve the standard of living and make the procedure of
payment simple.
Benefits for Corporates
Corporates can enable
well-being of their employees
End to end digital
transaction and doesn’t require any physical issuance hence leading to cost
reduction
Voucher redemption can
be tracked by the issuer
Quick, safe &
contactless voucher distribution
Benefits for Hospitals
Easy & Secure – Voucher is authorized via a verification
code
Hassle free & Contactless payment collection – Handling of
cash or cards is not required
Quick redemption process – The voucher can be redeemed in a few
steps and lesser decline due to pre-blocked amount.
Benefits to the Consumer
Contactless – Beneficiary should not carry a print out of the voucher
Easy redemption – 2 step redemption process
Safe and Secure – Beneficiary doesn’t need to share personal details while redemption hence privacy is maintained
No digital or bank presence required – Consumer redeeming the voucher need not have a digital payment app or a bank account
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