GST: Small taxpayers can opt for composition scheme before July 21
Small businesses with turnover of up to Rs.75 Lakh are eligible to avail the composition scheme under the goods and services tax regime. Any person who has been granted registration on a provisional basis and has turnover not exceeding Rs.75 Lakh, and who wishes to opt for the composition levy, is required to electronically file intimation at the GST portal on or before 21 July 2017. Under composition scheme, traders, manufacturers and restaurants can pay tax at 1%, 2% and 5%, respectively in the new indirect tax regime. Businesses opting for composition scheme will see a lesser compliance burden as they will have to file returns only once in a quarter as against monthly returns to be filed by other businesses.
Conditions / Consequences
In the case of the following States, the limit of aggregate turnover for composition scheme is Rs. 50 lakhs:- Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh.
Following persons are not allowed to opt for the composition scheme:
A casual taxable person or a non-resident taxable person;
Suppliers whose aggregate turnover in the preceding financial year crossed Rs. 75 lakhs;
Supplier who has purchased any goods or services from unregistered supplier unless he has paid GST on such goods or services on reverse charge basis;
Supplier of services, other than restaurant service;
Persons supplying goods which are not taxable under GST law;
Persons making any inter-State outward supplies of goods;
Suppliers making any supply of goods through an electronic commerce Operator who is required to collect tax at source.
A manufacturer of following goods:
- Ice cream and other edible ice, whether or not containing cocoa
- Pan Masala
- Tobacco and manufactured tobacco substitutes
Aggregate turnover will be computed on the basis of turnover on an all India basis and will include value of all taxable supplies; exempt supplies and exports made by all persons with same PAN, but would exclude inward supplies under reverse charge as well as central, State/Union Territory and Integrated taxes and cess.
A taxable person opting to pay tax under the composition scheme is out of the credit chain. He cannot take credit on his input supplies. When he switch over from composition scheme to normal scheme, eligible credit on the date of transition would be allowed
As the composition dealer cannot collect tax paid by him on outward supplies from his customers, the registered person making purchases from a taxable person paying tax under the composition scheme cannot avail credit.
·A person opting for composition levy will have to pay tax and electronically file quarterly returns in Form GSTR-4 before 18th of the month succeeding the quarter during which the supplies were made
The option to pay tax under composition scheme lapses from the day on which his aggregate turnover during the financial year exceeds the specified limit (Rs. 75 lakhs /Rs. 50 lakhs). He is required to file intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days from the day on which the threshold limit has been crossed.
A person paying tax under the composition scheme can issue a bill of supply in lieu of tax invoice.
If a person opting to pay tax under the composition scheme receives inputs/input services from an unregistered person, tax will have to be paid on such supplies by the composition taxpayer under reverse charge mechanism.
Such person is required to furnish the details of stock, including the inward supply of goods received from unregistered persons, held by him on the day preceding the date from which he opts to pay tax under the composition scheme, electronically, in FORM GST CMP-03 within a period of sixty days from the date on which the option for composition levy is exercised or within such further period as may be extended by the Commissioner in this behalf.
A person making application for fresh registration under GST can opt for composition levy at the time of making application. Such persons can give the option to pay tax under the composition scheme in Part B of FORM GST REG-01. This will be considered as intimation to pay tax under the composition scheme.
In case a person has registration in multiple states, the option to pay tax under composition scheme will have to be exercised for all states.
Such persons shall mention the words "composition taxable person, not eligible to collecttax on supplies" at the top of the bill of supply issued by him; and he shall mention the words "composition taxable person" on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.
The registered person will not be able to carry forward the excess ITC of VAT to GST if he opts for composition scheme.
It is mandatory for all individuals to file Income Tax Return (ITR) where his total income exceeds the maximum amount that is not chargeable to Tax ie, if it exceeds Rs.2,50,000 in the FY 2016-17. This limit is Rs 3,00,000 for senior citizens ( who are more than 60 years old but less than 80 years old) and Rs 5,00,000 for super senior citizens (who are more than 80 years old). In the case of partnership firms, return needs to be filed even if there is no taxable income. Due date of filing income tax return for the FY 2016-17(AY 2017-18) is 31st July 2017 for individuals and firms who are not subject to audit under section 44AB of the IT Act.
Different forms for return of income are prescribed for filing IT returns for different status and nature of income.
Types of taxable income
Salaries and perquisites
Income from house property (Ex: Rental income)
Income from Business or Profession
Capital gain on sale of assets/shares
Income from other sources (Ex: Interest earned on bank deposits)
Life insurance premium paid
Contribution to PPF or EPF
Children's tuition fee
Medical insurance premium paid
Subscription to Mutual Funds. (ELSS)
Contribution to Pension Funds including pension scheme of Central Government. (NPS)
Investment in listed equity shares. (for first time investors)
5 year post office time deposit
Subscription to notified securities/notified deposits scheme
Medical expenses of handicapped dependent relative.
Interest paid on loan taken for higher education.
Interest and principal repayment on loan taken for residential house property
Salaried individuals who live in a rented house/apartment can claim house rent allowance or HRA
Donations to approved charitable trusts/institutions, scientific research and rural development etc
Contributions to political parties.
Special benefits available for government employees
Benefits of filing your tax returns in time
Copy of ITR is required at the time of loan application
Eligibility to carry forward capital losses (short-term or long-term), which can help to plan and reduce tax liability in the subsequent years
Visa processing –ITR of last 3 years is a mandatory requirement prescribed under the visa application requirements of many countries
Life insurance companies, ask for ITR receipts for high life covers
Government tender- ITR of last five years are required to be submitted while applying for a government tender
Self-employed - ITR receipts acts as a proof of income source. Filing of tax on time, always adds to the credibility of the assessee
Credit for the tax deducted from you can be claimed through timely filing of ITR which results either in tax refund or reduces the tax liability by the amount already deducted.
ITR can be a sufficient proof for source of income , when a major expense is incurred over assets, events etc
Government is introducing Goods and Services Tax (GST),with effect from 01stJuly 2017. GST is a comprehensive, multi-stage, destination-based tax that will be levied on every value addition throughout India to replace taxes levied by the central and state governments.
Please ensure that the changes in new tax regime are properly understood and appropriate measures are taken for hassle free transition. Please determine the taxability of various transactions undertaken by you including purchases, sales, supply, credit notes, returns etc. to ensure correct payment of taxes and compliance under GST regime.
Pre – Implementation action points for smooth GST transition
If you are an existing tax payer, get your GST enrolment in time by making use of the provisional ID & Password that you have obtained from your concerned indirect tax authority.
Apply for migration in all states if you have centralised registration under Service Tax.
Complete the closing stock working as on 31.03.2017/30.06.2017 on or before the GST implementation date. Please make sure that no old stock ageing more than one year lies in the stock on GST implementation date.
A dealer or manufacturer who has input tax credit under State Vat or Entry Tax in his return on 30-6-2017 can carry forward his input tax credit as SGST Credit.A manufacturer who is having cenvat credit balance in his return on 30-6-2017 can carry forward his cenvat credit as CGST credit. Classify stock tax rate wise, purchased locally to get ITC (Input Tax Credit) into SGST. Also classify stock purchased on invoices bearing duty payment & non duty payments to get ITC transferred to CGST.
Make a separate file of those items which are shown in your unsold stock as on 30.6.2017 e.g. Purchase Bills/ Bill of Entry/ Excise Paying Documents etc.
Dealing with vendors/customers
Get the accounts statement from your suppliers / creditors for the year ended 31/3/2017 & reconcile with your books of accounts
Rectify mismatch reports of purchases, if persists; and revise your indirect tax Returns accordingly
If goods were supplied under CST Act, details of claims and CST forms (C, F, H, I, E-I/E-II) shall be submitted within 60 days)
·Inform your GSTIN / ARN to all suppliers of Goods & Services and obtain GSTIN of all Suppliers & Buyers.
·Make Chart of HSN CODES & GST Rates on your goods & services to be purchased &sold.
Books of Accounts & ERP
Get your Books of accounts finalised for FY 2016-17.
Updating your ERP or accounting systems
Keeping note of GST compliance requirements and effectively training your accountants for GST accounting and returns formats.
Update the invoice formats in ERP with GST requirements.
Take help of appropriate Tax engines/ Decision tables if found necessary.
Assess the requirements for transactional restructuring if any needed to be in compliance with GST. Also analyze the requirements for re-modelling business structures if any
As GST is a destination based tax, strategize your supply management strategies in a manner that minimizes cash flow impact.
Define your sales policies – schemes, discounts and returns and effectively redraft the pricing mechanism
Review and if necessary renew your contracts appropriately.
Impact of abolished and new levies on the recurring finance decisions needs to be analyzed and planned.
Special consideration to quantifying the penal provisions for non-compliance
Please contact us if you require any further clarification regarding the above step plan.
There are several reasons for NRIs to invest in India the major three being (i) to build up a strong financial security when they return to their homeland for good (ii) contribute to creating employment opportunities and (iii) contribute to economic growth of the country. Though NRI now have become a major segment of investors into India and many of them are successful, some of them have faced failures because of various reasons, including being duped by the promoters. In this article, I try to highlight a few points that an investor should look into before they conclude the investment deals.
Know your Industry
Before investing into a venture, it is really important to do a market study of the sector and understand the industry. It is often seen that NRIs are introduced to a concept or a business idea and are taken to a fictitious world of imagination of the promoters, in which everything is perfect with high returns and no provisions for plan B or contingencies are provided. Before investing, it is important to view the initiative in the most realistic way and identify all issues of the particular industry, so that a solution strategy, if deciding to invest, can be worked out.A market study by an independent agency can help the investor in obtaining a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) of the industry into which he is investing.
2.Project Feasibility Report:
Project reports form a crucial part in evaluating any business. Technical, operational and financial aspects must be studied in depth while evaluating any deal.Where the investment is made into a new venture or into a new idea, the investor should take care to review the project report in depth and the same should be analyzed and critically approached by a subject/ technical expert. The promoters should be able to provide a proper financial road map and convince the investor that the cash burn is justified and the revenue targets are achievable.
3.Valuing the business:
The pace at which technology has grown in the recent years can be understood from the fact that investments are now made on an idea of a person (promoter), and not on a product as it once used to be. Many a times it is difficult to put a proper value for the idea due to its uniqueness and lack of comparable data. Valuing a business helps in understanding the estimated worth of the company as well as the percentage of equity stake an investor can acquire in the company.There are different ways to value a business such as discounted cash flow method, comparable transaction method, multiples method, net assets method, etc. A financial model is built choosing one of these valuation methods which can aid the investor in understanding many financial indicators such as return on investment, break-even point etc. Choosing a method would depend on several factors including the nature and stage of the business, type of industry etc. In many cases valuation using different methods are taken and decision is made on a best judgment. While the above methods are acceptable methods of valuation, it is important for the investor to sit with his team to analyze the assumptions and figures of the financial model to ensure that they are correct and achievable.
Where the investment is made into an existing business, it is advisable to do a due diligence of the business by an independent authority directly reporting to the investor. Due Diligence helps an investor to assess the performance of the entity in the preceding years, details regarding unsettled disputes, unsettled outside & statutory liabilities etc. Due Diligence further helps the investor to compare the information gathered against that provided by the promoters and assess the genuineness of the business.
A proper Memorandum of Understanding (MoU) should be entered into between the promoters and investors that clearly states the amount of investment, the terms and conditions of investment. The MoU should also list down the various tranches in which the investments will be made and the milestones that the promoters should achieve before each tranche. It would also be advisable to review the MoU by a competent legal authority to ensure that interest of the investor is safeguarded.In addition to the MoU, shareholder agreement, term sheet, byelaws of the company etc all form an important part of documentation
6.Know your Promoters
Ensure that the promoters of the venture is trust worthy and reliable. The investor should do a proper back ground check of the promoters. It is the promoters that carries out the day to day business of the entity and their complete involvement in the project is critical to its success.
It is always wise to diversify the investment rather than investing the entire amount into one idea. Such an approach reduces the risk the investor is exposed to. Risk-averse investors should also consider the options of introducing the fund as debt or preference shares. The method of investing should be selected after understanding the risk and return parameters.
It is ideal to have an understanding on the exit strategy as well. Even though it may seem odd to be discussing about exit strategy at the commencement of a business, there should be an alignment of interests between the investors and the founders and planning is required in advance. For example, if the company plans to get listed in stock market, they might prefer to follow some accounting regulations from initial stage.
Once an investment is made, monitoring is necessary to ensure that the promoters are on track with the idea development and the cash burn are as budgeted. As the investor is not involved in the day-to-day management of the entity, he will not be able to monitor the performance of the entity. A monthly or quarterly governance report is a solution. The report can either be a summarized dash board with major findings on the performance of the company or a detailed internal audit report. To ensure reliability, the governance report should be prepared by an independent agency.
Everybody having money for all their needs happens only in an ideal world. So we all rely on financial credit at different occasions. For Purchasing or constructing a home, financing education, meeting business emergency, financing cultivation & harvesting of agricultural crops or at times it can even be to meet other finance emergency needs. Before sanctioning a loan the institutions will look at our profile and judge our repayment capability analysing various documents and factors like employment details, mortgage value, average bank balance etc and in addition CIBIL credit score & CIR report too.
CIBIL (Credit Information Bureau (India) Limited )
TransUnion CIBIL Limited is India's first Credit Information Company. They collect and maintain monthly reports (Credit Information Report- CIR) from banks and financial institutions, detailing individuals' and non individuals'(commercial entities) loan and credit card payment history. These records are submitted by banks and other lenders on a monthly basis. Using this information a Credit Information Report (CIR) and Credit Score is developed, enabling lenders to evaluate and approve loan applications. CIBIL has over 2,400 members–including all leading banks, financial institutions, non-banking financial companies and housing finance companies–and maintain credit records of over 550 million individuals and businesses.
What is CIR and a credit score?
Credit information report(CIR):
CIR is the factual record of your credit payment history compiled from information received from CIBIL members. It contains your basic information; details about all the credit facilities availed, past payment history, amount overdue, current status, etc. It also contains details about enquiries made by a financial institution for your credit report.
· Three digit numeric summary of your credit history.
· Value ranges between 300-900.
· Derived by using details found in on your credit information report(CIR).
· It indicates the probability of default of a borrower based on their credit history.
· Higher the score, more favourably your loan application will be viewed by the financial institution.
· A score of 750 or above is considered as good by banks and financial institutions.
· NA or NHmeans that either you have nocredit historyor are new to credit system. It also implies that you haven't had any credit activity in the last few years or you have no credit exposure. This is not a bad indication.
What impact does it make?
Based on the information received from CIBIL, banks will be able to know whether you are capable of and will actually repay the loan. An unfavourable credit score may result in rejection of your loan application or may actually sanction the loan with lower amount or with higher rate of interest to safeguard the risks. So the credit score on higher knots will give you higher probability of getting a loan sanctioned.For example, imagine you have an education loan from state bank of India and at the same time using an ICICI credit card. Both these institutions will submit details on your account activity to CIBIL on a monthly basis. Now assume you apply for a housing loan with HDFC. As a part of the home loan application processing, HDFC will approach CIBIL to obtain your CIBIL score and CIR. Only timely servicing of education loan and credit card dues will provide you a favourable credit score and prove you are credit worthy. HDFC bank will take this into account before taking a decision on sanctioning the home loan.
What affects the credit score?
There are four major factors that affect your score to fall below the expected level.
1. Payment history:
Recent/consistent late payments and EMI defaults establishes your trouble to pay existing credit obligations.
2. High utilization of credit limit:
Increased spending on your credit card will not necessarily affect your score in a negative manner; an increase in the current balance of your credit card indicates an increased repayment burden and may negatively affect your score.
3. Higher percentage of credit cards or personal loans(unsecured loans):
Having an unbalance mix in your credit portfolio of secured (such as auto,home loan) and unsecured loan (such as personal loan,credit card) will adversely affect your score.
4. Opening many new accounts recently:
Back to back availing multiple loans and credit cards will make lenders view your application with most caution, because this behaviour of being credit 'hungry, increases your debt burden, negatively impacting your CIBILscore.
What enhances your credit score?
You can maintain a good credit history by monitoring your credit report at intervals, paying bills on time, opting for moderate credits, maintaining a healthy combination of credits, and avoiding multiple loans, credit cards and new accounts, monitor your co-signed,guaranteed and joint accounts monthly. Maintaining a good credit history/score is important to avoid being rejected by banks.
Know your credit score
CIBIL allows you to obtain your score and CIR so that you can have a look at your credit rating. In case you want to view your score along with CIR, it will cost you in the following manner:
Payment can be made online or through demand draft. You need to fill up the request form and provide identity, address proof, PAN and submit the documents to CIBIL. On receipt of documents and payment, CIBIL will send you across your credit score and CIR.
What does status like 'closed', 'settled' and 'written off' in your credit report mean?
'Closed': If you find a date adjacent to the 'Closed' field in your account section, this means that that loan account has been closed by the lender. In other words, it means you have paid off your loan in full and the bank has reported this account as "Closed" to CIBIL.
'Written off' or 'settled': In case the report mentions that any of your loan or dues are 'written off' or 'settled', it adversely affects your credit score. Write off indicates that you have not made payment on your outstanding loan/dues for more than 180 days. Whereas, in case you settle the outstanding with an institution for lesser amount than original due, your account appears as settled,reflecting you paid less amount than actually due to them. Since both these statuses can impact your credit score, you need to ensure that there are no write offs and settlement to your loan account.
How to rectify information in CIR?
In case you find that any information in the CIR is inaccurate, you can approach the bureau to rectify the same. You need to identify the error in the report and appropriately report online through your "my CIBIL" account with your query. You further need to contact the concerned institutions against which the error is reflected and inform them about the error. You will be required to provide necessary proofs to substantiate your claim. Once the institution acknowledges the error and rectifies it, CIBIL will update the information based on revised data received from the institution.Since credit score will determine your future borrowings, it is important to ensure that all the loans taken are timely paid up. Further, one needs to restrict oneself from taking loans for mundane purposes and check his spending habits to have control on credit card dues. Financial discipline will go a long way in ensuring a good credit score. A good CIBIL score can play a very pivotal role in one's financial aspects. Few advantages are:
v Ability to get credit easily.
v Quick approval for mortgages.
v Low interest rate credit cards.
v More negotiating power.
v Get approved for higher limits.
v Easy approval for rented/leased houses and apartments.
1) Tax rate for individuals with total income between Rs.2,50,000 to Rs.5,00,000 reduced to 5%. For resident senior citizen, it will be between Rs.3 Lakh - Rs.5 Lakh. All other categories of tax payers in subsequent brackets will get benefit of Rs.12,500.
2) Simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income up to Rs.5 lakhs other than business income. A person of this category who is filing Income Tax Return for the first time would not be subjected to any scrutiny in the first year unless there is specific information available with the Department regarding his high value transactions.
3) Rebate: Rebate is available to a resident individual if his total income does not exceed Rs.3, 50,000. The amount of rebate shall be 100% of income tax or Rs.2,500, whichever is less.i.e. there will be no income tax up to Rs.3 Lakh income.
4) Surcharge :The amount of income tax shall be increased by a surcharge at the rate of 10% of such tax, where total income exceeds fifty lakh rupees but not exceeding one crore rupees and at the rate of 15% of such tax, where total income exceeds one crore rupees.
5) The tax rate of a domestic company has been reduced to 25% provided the total turnover or the gross receipt does not exceed fifty crore rupees in FY 2015-16.
6) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by bank, exceeds ten thousand rupees, no income tax deduction shall be allowed in respect of such expenditure.
7) Threshold limit for audit of business entities that opt for presumptive income scheme increased from Rs.1 crore to Rs.2 crores.
8) Under scheme of presumptive income for small and medium tax payers whose turnover is up to 2 crores, the present, 8% of their turnover which is counted as presumptive income is reduced to 6% in respect of turnover which is by non-cash means.
9) Reduction in the holding period from 3 years to 2 years for computing long term capital gains for transfer of immovable property being land or building or both. Also the base year for indexation is proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property
10) No deduction shall be allowed for 80G donation for any sum exceeding two thousand rupees unless such sum is paid by any mode other than cash. (prior it was ten thousand rupees)
11) MAT (Minimum Alternate Tax) credit is allowed to be carried forward up to a period of 15 years instead of 10 years at present. Similar provision is applicable for AMT (Alternate Minimum Tax) also.
12) Time period for revising a tax return is being reduced to 12 months from completion of financial year, at par with the time period for filing of return.
13)Under scheme for presumptive taxation for professionals with receipt up to Rs.50 lakhs p.a., advance tax can be paid in one installment on or before the 15th of March every financial year, instead of four installments.
14) Basic customs duty on Liquefied Natural Gas reduced from 5% to 2.5%.
15) No transaction in a single day for above Rs.3 lakh would be permitted in cash. The penalty for violation would be an amount equal to the transaction value.
16) Individual and HUF (Not liable for Tax Audit) will be liable to deduct TDS on Rent Payment in excess of Rs. 50,000/- per month or part of a month @ 5%. TDS may be deducted only once in a year at the time of last payment in previous year or last payment if premise is vacated during the year. Assessee need not apply for TAN in this case.
17) At present long term capital gain exemption up to Rs. 50 lacs can be availed by investment in NHAI & RECL bonds within six months from date of transfer. Now exemption will also be available for purchase of other central government specified bonds.
18) It is proposed that deduction of amount equal to one hundred per cent of the profits and gains derived from eligible business of start-ups for three consecutive assessment years out of seven years beginning from the year in which such eligible start-up is incorporated. (Previously deduction of profits was for three consecutive assessment years out of five years)
19) Expenditure incurred for acquisition of any asset in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by bank account, exceeds ten thousand rupees, such expenditure shall be ignored for the purposes of determination of actual cost of such asset.
20) Maximum amount of cash donation, a political party can receive, will be Rs.2000/- from one person
21) Allowable provision for Non-Performing Asset of Banks increased from 7.5% to 8.5%.
22)Where in respect of any assessment year, the net result of the computation under the head "Income from house property" is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to set off such loss, to the extent the amount of the loss exceeds two lakh rupees, against income under the other head.
23) Expenditure in respect of which payment has been made or to be made by the assessee to related parties has been excluded from the purview of Specified domestic transactions under transfer pricing provisions.
24) Fee for delay in filing of return has been proposed in a case where the return is not filed within the due dates specified. It is further proposed that a fee of five thousand rupees be payable, if the return is furnished after the due date but on or before the 31st day of December of the assessment year. A fee of ten thousand rupees is proposed to be payable in any other case. However, in a case where the total income does not exceed five lakh rupees, it is proposed that the fee amount shall not exceed one thousand rupees.
The increasing presence of women in the business field as entrepreneurs has changed the demographic characteristics of business and economic growth of the country. Women-owned businesses enterprises are playing a more active role in society and the economy, inspiring academics to focus on this interesting phenomenon.
ATTRACTIVE LENDING SCHEMES
Majority of the nationalised banks in India have been formulating and providing attractive lending schemes to promote entrepreneurship among women. Low awareness about such schemes ends up in not properly utilising the opportunities open. Most of the schemes offer relief in the terms of collateral security and interest rates. A Few among them are analysed below:
Priyadarshini Yojana scheme by Bank of India give a relaxation for collateral security upto Rs.5 Lakh loans and for SSI (small scale industries) units, interest reliefs are also available.
Orient Mahila Vikas Yojana scheme by Oriental bank of commerce offers collateral free loans up to Rs.10 Lakhs (in case of SSI up to 25 Lakhs) and also concessions up to 2 %.
Stree Shakti package by SBI which is available to women having 50% ownership in a business or firm, offers 0.50 % concession on interest if loan amount exceeds 2 Lakhs.Only women entrepreneurs who have taken part in Entrepreneurship Development Programmes organized by state level agencies are eligible to apply. No security is required for loans up to Rs.5 Lakhs in case of tiny sector units. The margin will be lowered by 5% as applicable to separate categories.
Bharatiya Mahila Bank:
The Bank is the first of its kind in the Banking Industry in India formed with a vision of economic empowerment for women. Launched in 2013, the Bank has carved a niche for itself as a pan India Bank and presently, has over 100 branches across the country. While the Bank focuses on the entire pyramid of Indian women, special attention is given to economically neglected, deprived, discriminated, underbanked, unbanked, rural and urban women to ensure inclusive and sustainable growth. The Bank with a team of professionals with rich experience and expertise has designed and developed new products and services to suit the needs of women of all segments including Self Help Groups, women entrepreneurs, salaried women, HNIs and Corporates. The Savings Bank rate of interest for Rupees One lakh and above is 5% and for amount less than Rs. One lakh, the interest rate is 4.5%. The Bank offers BMB Smart banking – the internet banking facility with many value added features. When in need they can also access Fixed Deposits to avail premature facility. The Bank's Mobile banking App can be freely downloaded from Google Play Store for Android mobiles and Apple Store for iPhone. Bank is one of the pilot Banks for introduction of the new payment system UPI, launched by NPCI.The Bank also conducts programmes on financial literacy, skill development, training for women of all segments of the society so that women in turn generate more income, more jobs and growth opportunities and contribute significantly for the economic growth of the nation.
SIDBI Mahila Udyam nidhi scheme under Small Industries Development Bank of India provides financial assistance up to Rs. 10 lakhs to female entrepreneurs for setting up the new industrial venture in small scale sector.
Dena Shakthi scheme by Dena bank offers 0.25 % reduction in interest rate and is available for entrepreneurs engaged in agriculture, manufacturing, micro-credit, retail stores or small enterprises.
Punjab National Bank offers 5 different schemes for women entrepreneurs, each one targeting a specific population.
PNB Mahila Samridhi Yojana – This scheme was launched to provide financial assistance to women who wish to set up boutiques, beauty parlours, cyber cafes, Xerox stores, telephone booths, etc.
PNB Mahila Udyam Nidhi Scheme – This scheme aims to reduce the gap in equity, helping women set up new ventures in the small scale sector or enhance their current undertakings.
PNB Scheme for financing crèches – This scheme aims to provide financial assistance to women who are keen on setting up crèches. The loan can be used to purchase the necessary materials and to meet any recurring expenditure.
PNB Mahila Sashaktikaran Abhiyan – This scheme provides credit to women who intend to establish small and micro enterprises in the non-farm sector, offering fee waiver and lower interest rate.
PNB Kalyani Card Scheme – This scheme provides loans for women engaged in agricultural, farm or non-farm activities.
Canara Bank has established Centre for Entrepreneurship Development (CED) for Women. The bank has also opened exclusive branches for women - the Mahila banking division, the first of its kind in the banking industry.
Cent kalyani scheme is provided by Central Bank of India for the benefit of female entrepreneurs. Under this scheme, a women entrepreneur can get adequate financial assistance for starting a new venture. Cent Kalyani provides loans to new as well as experienced business owners, professionals and self-employed. Besides, these business loans for women can also be availed by retail traders, small-scale industry owners and women entrepreneurs engaged in agricultural and allied activities as well as in village and cottage industries. Concession in rates of interest available & no Collateral Security as Advance is covered by Guarantee cover of CGTMSE (CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES).
Udyogini scheme by Punjab and Sind Bank that motivates female business owners to obtain loans online at liberal terms and low-interest rates. This loan is taken for establishing small scale industries, business enterprises as well as for agricultural activities. Moreover, this loan is also available for retail traders and other self-employed female entrepreneurs.
Favourable Government Schemes/Subsidies
TREAD(Trade Related Entrepreneurship Assistance and Development) subsidy scheme for women:
Provided by the Ministry of Micro, Small & Medium Enterprises, Trade Related Entrepreneurship Assistance and Development (TREAD) Scheme for Women offers a subsidy of up to 30% of the total cost of the project (that will be assessed by lending institutions). Women who can benefit from this scheme include those who are not being helped by banks. Generally, the applicants under this scheme are illiterate/semi-literate or lesser privileged women. The request for subsidy is considered for approval only if it is made through an NGO.
Mahila Coir Yojana:
Providing assistance to artisan women living in rural areas (producing coir fibre), The Mahila Coir Yojana Subsidy Scheme is a boon for women looking for funding options. The scheme materializes motorized ratts/ motorized traditional ratts that can be used by women for spinning the coir yarns.
As per the scheme, 75% of the total cost of the motorized ratt would be provided by the Coir Board, while the rest 25% would be raised by financial institutions. Only one person from a family can avail the benefits of this scheme.
Mahila Udayam Nidhi:
Mahila Udayam Nidhi is a subsidy scheme introduced by the Puducherry Government. Women entrepreneurs who want to start a new SSI unit in Puducherry can apply for this scheme. A seed capital of almost 25% is provided for a project worth Rs.10 lakh. Out of the remaining amount, 65% is funded in the form of term loan and the rest of the 10% is considered to be promoter contribution. Repayment term of this loan is between six to eight years, which includes a 12 year moratorium period.
Mahila Vikas Nidhi:
SIDBI has developed this fund for the entrepreneurial development of women especially in rural areas. Under Mahila Vikas Nidhi grants loan to women are given to start their venture in the field like spinning, weaving, knitting, embroidery products, block printing, handlooms handicrafts, bamboo products etc.
Rashtriya Mahila Kosh:
In 1993, Rashtriya Mahila Kosh was set up to grant micro credit to poorest and asset less women at reasonable rates of interest with very low transaction costs and simple procedures.
Startup India Scheme:
Stand-Up India Scheme Facilitates bank loans between 10 lakh and 1 Crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise. This enterprise may be in manufacturing, services or the trading sector. In case of non-individual enterprises at least 51% of the shareholding and controlling stake should be held by either an SC/ST or woman entrepreneur. The rate of interest would be lowest applicable rate of the bank for that category.The loan is repayable in 7 years with a maximum moratorium period of 18 months. For drawal of Working capital up to 10 lakh, the same may be sanctioned by way of overdraft. Rupay debit card to be issued for convenience of the borrower. Working capital limit above 10 lakh to be sanctioned by way of Cash Credit limit.
In addition to the special schemes for women entrepreneurs, various government schemes for MSMEs also provide certain special incentives and concessions for women entrepreneurs. For instance, under Prime Minister's Rozgar Yojana (PMRY), preference is given to women beneficiaries. The government has also made several relaxations for women to facilitate the participation of women beneficiaries in this scheme. Similarly, under the MSE Cluster Development Programme by Ministry of MSME, the contribution from the Ministry of MSME varies between 30-80% of the total project in case of hard intervention, but in the case of clusters owned and managed by women entrepreneurs, contribution of the M/o MSME could be upto 90% of the project cost. Similarly, under the Credit Guarantee Fund Scheme for Micro and Small Enterprises, the guarantee cover is generally available upto 75%of the loans extended; however the extent of guarantee cover is 80% for MSEs operated and/ or owned by women. Pradhan Mantri Mudra loan yojana is also favourable scheme for women in MSME sector, rural areas.
Money is one of the major ingredients for success in life and therefore it is always beneficial to have a fair understanding on the various aspects of money management. Many nations, many corporate bodies, many leading banks with a history of long successful years behind them have become broke all of a sudden on account of mismanagement of funds by men at the top even for short periods.
The speed with which money shifts its loyalty from one individual to another, from one corporate body to another, and from one nation to another is really astonishing. The more you try to chase it, the more it tries to avoid you and evade you. Unless you understand the peculiar behavior of money and the swiftness of its movement it is difficult to have any control and management over it.
One's priorities, behavior, outlook, character, motives, desires, aspirations and upbringing play an important role in money management. If the means and ways you adopt to earn wealth and money are unethical it may lead you to severe consequences including jail terms, loss of life, wreckage of families, lunacy, suicide etc.
We have all heard about the subprime crisis in the US, the financial crisis faced by Greece, Sathyam Scam, Kingfisher episode, so on and so forth. There are so many such unheard stories at smaller levels which occasionally come to our notice when they are reported in the newspapers. We have also heard about how Marvadis thrive wherever they are and whatever be the adversities they are faced with.
Following are some of the Do's and Dont's in Money Management.
When you go for any new ventures ensure that you have a sound and reliable partner to support you financially.
Whenever you borrow, ensure that you have more than one source for repayment. Before you go for a big loan, critically analyze and assess your repaying capacity.
Have a good track record with bankers and always bargain with the bank for better terms. Never allow your account to go NPA (Non-Performing Asset).
Be careful with Cash Credit / Overdraft facility and other similar Working Capital facilities extended by banks. Put on hold the human tendency to divert funds meant for financing Current Assets for any other form of investments. Always remember that it is the intelligent circulation of current assets that brings money.
In case you get into a debt trap work out a strategy to get out of it in a time bound manner using all your available resources and connections.
Whether the business is big or small, insist on a proper MIS (Management Information System). Have monthly budgets, compare the same with the actuals and study the variances. Budget is nothing but financials prepared with targeted and estimated figures for future periods.
Though you may bargain for the best terms in business be a good paymaster and meet your financial commitments on time. The goodwill it generates is beyond limits.
Pay off all your statutory dues on time and comply with all statutory requirements. The regulators can make your life really hell with unreasonable interest, penalty and even prosecution.
It is sometimes advisable to dispose of the existing loss making business before it swallows you.
Always watch your debtors. Insist on a bill to bill payment and always ensure that the balance in any individual debtor does not go up periodically and disproportionate to the business done through him. If possible, try to obtain a cheque as security for the amount due from him.
Keep accounts current and up to date
Feel proud to be in the company of less than 4% of India's population who file Income Tax returns. The more the income you declare, the more is your borrowing power.
Provide a small percentage of your income for friends, relatives and charity to enjoy the ecstasy of life
Avoid over trading. Limit your business within the available resources of manpower, machinery and funds.
Never succumb to the unreasonable demands from your kith and kin who may not be fully aware of your correct financial position.
Never invest in expensive cars, posh residential houses and such other luxuries with borrowed funds. These assets are indeed a liability.
Never sign a contract unless you go through and understand every term, condition and delivery schedule in it.
Never make payments against Works contract without getting it measured and assessed by a technical expert.
Do not mix up business with friendship and other relationships. Look at the business purely on its merits and demerits.
Never borrow money from a money lender.
Always avoid speculative and quick money business however attractive it may appear to be.
Never give false financial statements to banks. You cannot hide facts for long.
State of mind and Ethics in Business
Avoid business which is harmful to humanity.
Money alone cannot make you happy; more important is your heath, spirit and mind.
You are only just a custodian of everything that you think you own to the exclusion of others. So never try to posses wealth or get attached to it; just manage it well. Be ready to part with it if the situations so warrants.
Never ever regret for the follies you made in the past. Always look ahead with a positive mind. Every thought is a living being by itself and its main propose of existence is to give physical shape to the mental picture.
Believe in the universeand yourself and there is a solution to every problem that we face.
Role of Chartered Accountants in Money Management
A Chartered Accountant well versed in Financial Management can be of immense help in managing your money. Following are some of the areas a professional Accountant could be of help.
Preparation of Budgets and implementation of budgetary controls.
Preparation of monthly financials (MIS),
Implementation of Internal Control Systems and Risk Management
Advise on investment opportunities for better returns.
Negotiations with bank for better terms on borrowings, rescheduling, enhancement of credit limits, on offering of collateral security and personal guarantee.
Identifying potential investors in business.
Implementation of best practices and procedures at various levels.