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'.