Tax implication
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
07 August 2011
I am a software professional working out of Karnataka, India. I am planning to setup my own sole proprietorship. This is how I envisage to run it:
- only EXPORT software services to customers outside of India.
- raise invoices to customers in USD, and remit USD in INR here.
- the INR value of the invoice generated annually would, in all likelihood, exceed 10,00,000 INR (10 lacs).
Given this setup, I seek your advice for the following :
1. As sole proprietorship, do I need to register this entity with the Karnataka State Government, under the Karnataka Shops
and Commercial Establishments Act?
2. Do I need to pay the Professional Tax to the Karnataka Government before I start working? If yes, then do I need to register the entity with some Professional Tax department, if there is any? Is there any exemption clause to Professional Tax?
3. Since my professional services would be exported to clients outside of India, these would not qualify for Service Tax. However, do I still need to register with the Service Tax department?
4. Since the earnings out of this properietorship would be in USD, am I legally obliged to get an Import Export Code for myself? If so, could you please point me to a resource on the Internet where I could get details of IEC and the procedure to get it?
5. Given the broad expectations from the company, any other legal formality that I must fulfill per Indian and Karnataka State law before I could start this properteriorship?
I would greatly appreciate your guidance in this matter.
- only EXPORT software services to customers outside of India.
- raise invoices to customers in USD, and remit USD in INR here.
- the INR value of the invoice generated annually would, in all likelihood, exceed 10,00,000 INR (10 lacs).
Given this setup, I seek your advice for the following :
1. As sole proprietorship, do I need to register this entity with the Karnataka State Government, under the Karnataka Shops
and Commercial Establishments Act?
2. Do I need to pay the Professional Tax to the Karnataka Government before I start working? If yes, then do I need to register the entity with some Professional Tax department, if there is any? Is there any exemption clause to Professional Tax?
3. Since my professional services would be exported to clients outside of India, these would not qualify for Service Tax. However, do I still need to register with the Service Tax department?
4. Since the earnings out of this properietorship would be in USD, am I legally obliged to get an Import Export Code for myself? If so, could you please point me to a resource on the Internet where I could get details of IEC and the procedure to get it?
5. Given the broad expectations from the company, any other legal formality that I must fulfill per Indian and Karnataka State law before I could start this properteriorship?
I would greatly appreciate your guidance in this matter.
07 August 2011
You have raised so many query at a time anyhow these are replied as under
1) Yes you have to get the Shops & Establishment Registration
2) In addition you have to procure Municipal Licence (Trade Licence)
3)You are required to pay Professional Tax
4)In case you are manufacturing only and exporting then no service tax is payable and no need to register under Service Tax. It is advisable to register and file NIL Return
5) For import & Export yes you need to procure I & E code number from IEC
6) Since yours is a proprietorship[ concern you do not require any other formalities but if the workers are 10 or more with the aid of power and 20 or more without power then you are also covered by ESIC (Employees State Insurance), PF (Provided Fund)and registration with SSI shall be beneficial to you so that you can claim any subsidy declared by the State or Center
1) Yes you have to get the Shops & Establishment Registration
2) In addition you have to procure Municipal Licence (Trade Licence)
3)You are required to pay Professional Tax
4)In case you are manufacturing only and exporting then no service tax is payable and no need to register under Service Tax. It is advisable to register and file NIL Return
5) For import & Export yes you need to procure I & E code number from IEC
6) Since yours is a proprietorship[ concern you do not require any other formalities but if the workers are 10 or more with the aid of power and 20 or more without power then you are also covered by ESIC (Employees State Insurance), PF (Provided Fund)and registration with SSI shall be beneficial to you so that you can claim any subsidy declared by the State or Center
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