OPC: One Person Company

People like me who love to work alone with not being dependent to anyone, waiting for other to finish his/her part(or other way around), etc. Some works are better done solo.

                                                     

Benefits of Sole proprietorship have always attracted entrepreneurs with tax benefit, solo ownership control, etc. No matter how beneficial Sole Proprietorship looks from outside, it can never beat company in terms of Goodwill that it enjoys in Corporate world. People end up paying millions for Goodwill of companies. I doubt that anyone would shell out so much for Sole Proprietorship. However, one major problem that many people face with company incorporation is that, you require at least 2 people to incorporate it.

Well, not anymore. No need to search for friends, relatives, etc for incorporation of your dream company. Say hello to OPC-One Person Company.
With assent to Company Bill, 2013, concept of OPC has been finally introduced. In simple words, I can form my own company, all by myself. It's like having the power of Sole Proprietorship with the legal entity of private companies by being the only Sole Shareholder. OPC is a great opportunity especially for solo entrepreneurs.

Though, just like any other law, OPC has it's own baggage of Good & Bad.

Major restrictions:-
a) Appointment of a nominee is compulsory.
b) OPCs could only be formed by Natural persons and not by artificial persons.
c) Inheriting currently prevailing company's tax bracket of 30% & provisions relating to MAT.
d) The name of the company must include the word 'OPC' within bracket below the name of the company.

Major benefits:-
a) Separate legal entity.
b) No restriction of further appointment of Director.
c) If only one director, there is no compulsion to conduct Board Meeting.

OPC is not a newly founded out concept. It has been into existence for quite some time in countries such as China, USA, etc. OPCs will be welcomed by many sole proprietorship firms who have grown tooooo big. It will also redefine how small businesses could be managed with more professionalism & effectively. With OPCs, people would need to comply more, just like private & public limited companies.

Also, bringing in greater transparency in the business dealings. It is hoped that there will be positive change in the business spectrum all over.

Service Tax on GTA

Few years ago, whenever I used to hear ‘GTA’, the first thing that used to come to my mind was ‘Grand Theft Auto’. Things change and so did I. Now ‘Goods Transport Agency’ flashes instantaneously. Though some people take Service Tax for granted, forcing Indian Government to come up with VCES (which is very brave step). Any way I will not get into all that now.

GTA means any person who provides service in relation to transport of goods by road and issues consignment note. Now, there are two very vital things that we need to keep in my mind:

a)   Transportation of goods should be via Road.

b)   Service provider should have issued a consignment note.

The question we need to ask ourselves is, Who is liable to pay the tax on the service? For that, we first need to know about ‘Reverse Charge Mechanism’. As the name suggests, in certain services, Service receiver is liable to discharge the Tax to the Government. GTA also comes under this mechanism.

But how do you determine who is receiving the service? (Questions….questions..Indian Law) If the goods are booked on ‘freight to pay’ basis, the consignee will be liable if he falls under any one of the specified categories. If goods are booked ‘freight paid’ basis, consignor will be liable, if he falls under the specified categories.

The Service receiver also gets an exemption of 75%, thereby making him liable only for 25% on Gross Amount.

However, the big bummer in this service is that, there is no Credit on Input Services to GTA available. This condition was there when service tax on GTA was introduced but later was removed. Unfortunately, the impractical condition has been brought back.

GTA has many provisions which are practically difficult. Hopefully, they will be amended. Sad part is that I cannot cover up everything due to obvious practical difficulties. I hope now everyone will think of  Goods Transport Agency when they come across 'GTA'.

C.A Articleship: No pain No gain

Starting your Articleship is a  big step forward for any CA student. The excitement of doing a real life job is so tempting. Then, finally having the power to spend money earned by yourself is the best feeling is the world. Although only if it was that easy & simple. How a fixed asset depreciates over the period of time, value of excitement also goes down. Like everything else in the world, C.A also has its own bad & good side.

The big question we need to ask is, whether 3 years are enough or it's too much or is there an alternative? I certainly feel that there cannot be any fixed period fixed for Learning(training). Instead, ICAI should structure the period in such a way that students get an idea of every area. I would say better make it 2 years under a CA & balance 1 year specifically approved from ICAI. That will give a massive flexibility to students.

Another problem for CA students is managing office & studies. They not only need to manage office work, but also studies. The restrictions imposed by ICAI do not allow them to relax even for a minute, as coaching classes also take a big chunk of time from their daily routine.

Another major thing that CA students cry about, STIPEND. There is a reason they are called, 'Cheap Labor'. CA(s) charge huge amount as professional fee, with major work being done by Article Students and shockingly ICAI recommends a stipend starting from Rs 1,000. Also, Article cannot work any where else due to Office timings & restrictions by ICAI and they expect them to manage on Rs 1,000 per month in 21st Century. To an extent its understandable, that, as its a training period, payment slab is kept low. However, ICAI and CA(s) should look into the amount of work an article puts in. I am actually surprised that no one has taken this matter at higher authority. I guess even an article in his/her last stage of training feels, yaar mene toh kar liya ab....mujhe hi paise dene pad jaenge meri practice ke time..chod jaane do( I am almost done with my training....I will only end up paying once I Start my work as C.A..forget it). Its not that I recommend articles to be paid buckets of money. There is a difference between paying for the sake of it & respectably paying.

Like I said earlier, it also has numerous positives. Articleship period helps CA students to get familiarize with the real life working of Business.We should not forget that no organisation will appoint you without experience. Not only do C.A firms appoint students, they also guide them in their professional careers in so many ways. Its like a relationship between Guru & student. Imagine getting the Certificate of Practice & not even having the knowledge on 'Filing of Income Tax return or any other statutory filing'.

Look it how you want, every one will have their own opinions. I certainly think that ICAI should start making some changes to Articleship period structure apart from programmes  such as GMCS & many more.

For CA student, bare the pain & just get on with it.

NO PAIN, NO GAIN