Setting up a Business in India is considered a challenge but it is not the difficult when you know the facts right, possess the required documents and work as per the defined procedures.
In this post we will be covering the details of liquor import compliance for setting up a business in India with a perspective on Import and Trade of Alcoholic Beverages. We will be detailing the Treatment of Excise Duty for Import and Trade of Alchoholic Beverages in India.
india is a looked upon market for International Trade. And that is the reason many F&B International Brands are interested in understanding Liquor Import Compliance for Setting up a Business in India: be it an Indian Office/ Branch or subsidiary. Export/ Import Business also called as International trade is the exchange of capital, goods, or services across international borders or territories. The Government of India amends formalities and procedures from time to time for Setting-up an Export/ Import business in India. For setting-up an Export/ Import firm India, numeral documentation and registrations are required, which are explained below:
Rental agreement / or own property
After registering the firm’s name, a rental agreement with the premise owner must be established. Necessary stamp duty is paid for executing the rental agreement. This agreement is furnished to various government authorities for the firm’s address registration.
In case the premise is self-owned and the firm is a proprietorship concern, no separate rental agreement needs to be arranged; the sale agreement deed of said premise is treated as a proof of address. However, in case of running a partnership firm in self-owned premises, a rental agreement with other partners must be entered into with.
PAN – Permanent Account Number
Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department, to any “person” who applies for it or to whom the department allots the number without an application.
Separate permanent account number for individual and firm is required to be registered with income tax department. PAN enables the department to link all transactions of the “person” with the department. These transactions include tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, and so on. PAN, thus, acts as an identifier for the “person” with the tax department.
The manner of applying for PAN is laid down in Rule 114 of the Income-tax Rules, 1962. This rule, amended in 2011, also specifies the copies of documents required to be submitted along with the PAN application (in form 49A or 49AA, as the case may be) as proof of identity and address of the PAN applicant. Rule 114B lists down the documents in which PAN is required to be quoted while entering into specified transactions/activities. Persons who do not have PAN are exempted from quoting PAN on furnishing a declaration in Form 60. Rule 114C lists the persons to whom section 139A does not apply. These are persons who have agricultural income by furnishing declaration in Form 61, non-residents, and Central Govt. /State Govt. and Consular offices, where they are payers
Is individual PAN number sufficient for firm name? How to obtain a PAN number for Proprietor, Partnership or Private limited company?
This is one of the most common questions among the people who are setting up a business.
In case the business is a sole proprietorship, the PAN number of the individual/ proprietor is sufficient. In case, the firm is a partnership firm, a separate permanent account number – PAN in the name of firm is required to be obtained from Income Tax Department. While applying for the said PAN number in the name of company, a copy of individual PAN number of each partner has to be furnished in the application form.
And if you are setting up a private/ public limited company, a separate PAN number in the name of the firm is required. While applying, a copy of PAN number of each director of the company must be furnished along with the application form.
If your firm is engaged in a partnership, you need to a have a partnership agreement between partners with terms and conditions as per partnership Act. The complete details of terms and conditions among partners with share of profit are mentioned clearly in the agreement. For safekeeping, the partnership agreement must be registered with the authorities to settle dispute among partners if arises in future.
For Setting up a Business in India, a current account is the type of account which is should be opened by any company in order to operate as per the Companies Act, 1956. An account for availing the inward/ outward remittances must be opened in such a bank which has Trade Service expertise with a deep understanding of regulatory requirements.
How to obtain an IEC number with DGFT with branch code?
Since this post is about the Import- Export aspect of Setting up a Business in India. Let us check the details on that.
An IEC or “Importer Exporter Code” number is mandatory to import or export in India. No person or entity shall make any Import or Export without IEC Code Number which is obtained from Director General of Foreign trade within the jurisdiction office of the company. Without an IEC code, no movement of goods from/to the country to outside is allowed.
Directorate General of Foreign Trade (DGFT) issued a Policy Circular No.15 (RE-2006)/2004-2009 Date: 27th July, 2006) for New System for issuance of Importer-Exporter Code Number.
Eligibility condition and Legal Provisions are given for IEC Code Number Application in Foreign Trade (Regulation) Rules, 1993 Ministry of Commerce, and Notification No. GSR 791 (E), dated 30-12-1993.
An application for grant of IEC number shall be made by the Registered/Head Office of the applicant and apply to the nearest Regional Authority of Directorate General Foreign Trade, the Registered office in case of company and Head office in case of others, falls in the ‘Aayaat Niryaat Form – ANF2A’ and shall be accompanied by documents prescribed therein. In case of STPI/ EHTP/ BTP units, the Regional Offices of the DGFT having jurisdiction over the district in which the Registered/ Head Office of the STPI unit is located shall issue or amend the IECs.
Only one IEC would be issued against a single PAN number. Any proprietor can have only one IEC number and in case there are more than one IECs allotted to a proprietor, the same may be surrendered to the Regional Office for cancellation.
DGFT procedures to obtain an IEC number are too liberalized now days. As per the recent notification, the following documents are required to obtain an Import Export Code:
1. Bank receipt / demand draft against application fee. This fee is INR 1000.00 while writing this article. You may re-clarify with DGFT before applying.
2. Application form in prescribed format issued by DGFT for issue of Import Export Code number. This application for is prescribed in Appendix 21B.2.
3. Please attest the application for IEC with you banker where in you have opened current account in the name of firm to operate export import activities.
4. Self attested copy of Permanent Account Number PAN issued by income tax authorities.
5. Two copies of passport size photographs of the applicant. You need to attest the said passport size photographs with your authorized bank.
6. If any partner or partners are non resident interest or holding in the firm or company exists with repatriation benefits, you need to attach a self certified copy of Reserve Bank of India approval on the same.
This was briefly about the treatment of Excise Duty and Liquor Compliance for Import and Trade of Alcoholic Beverages in India. We have already talked about various steps involved in Setting up a Business in India and how Gapeseed Consulting can help
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