Archives 2025

Introduction

A tax deduction granted by Section 87A of the Income Tax Act, 1961 to Indian residents (it is not applicable to HUFs, businesses, or firms) whose total income for a financial year does not exceed ₹5,00,000. This ceiling limit is for the old tax regime. If your yearly income is ₹5 lakh or less, you are eligible to receive a deduction on the income tax that you owe to pay. The deduction is equal to either ₹12,500 or 100% of the tax owed, whichever is less.

After deducting other expenses, such as those under Section 80C or 80D, this deduction is applied. Your income may therefore be exempt from income tax altogether if it falls below the ₹5 lakh threshold. But if your income even slightly exceeds ₹5 lakh, you would not be qualified for this rebate.

The Indian Government is promoting the new tax regime to follow for tax payers to provide many additional benefits for the same. In this context, the limit of 87A has been increased for those who opt for the new tax regime. The said limits according to the relevant year is being discussed here in the article below.

Key Points for Old Tax Regime

• Only applicable to individuals who are Indian residents and does not apply to Hindu Undivided  Family (HUF’s), Companies, or firms.
• Yearly total income is 5 lakh or less,
• Deduction is equal to either ₹12,500 or 100% of the tax owed, whichever is less,
• Deductions (like 80C, 80D, HRA) is allowed

*There is no change in limit for those who opt for the old tax regime for this particular exemption to be claimed. This above said limit is applicable to FY 2024- 2025 and FY 2025-2026 as well.

Key Points for New Tax Regime

• Only applicable to individuals who are Indian residents and does not apply to Hindu Undivided Family (HUF’s), Companies, or firms,
• Yearly total income is 7 lakh or less. (for FY 2024-20205)
• Deduction is equal to either ₹25,000 or 100% of the tax owed, whichever is less
• Deductions (like 80C, 80D, HRA) is not allowed (except NPS, EPF, standard deduction etc).

*In budget 2025, FM raised the limit of income to ₹ 12 Lacs for the exemption under section 87A from the Financial year starting from  1st April 2025, i.e. for FY 2025-2026 and rebate of Rs. 60,000 or 100%, whichever is less is allowed under the new regime for the same. 

Standard Deduction

Introduction: Pensioners and salaried individuals are allowed to claim the standard deduction without requiring proof or documentation from the salary or pension part of income. Here as well, there are two limits that have been provided to tax payers on the basis of old and new tax regimes. By lowering the gross salary, this deduction lowers the taxable income.

Eligibility: Only pensioners and salaried individuals are eligible for the deduction of 75,000 under the new tax regime and 50,000 for old tax regime.

For example, a salaried person making ₹7.75 lakh a year would qualify for the full ₹25,000 refund under Section 87A since their taxable income would be ₹7 lakh after the standard deduction for the year 2024 – 2025 as a financial Year.

Marginal Relief under Section 87A

Marginal relief has been introduced for those taxpayers who earn a little bit more than the rebate maximum (such as ₹7,01,000 under the new regime) from having to pay more tax than the additional income. To prevent this scenario, it has been provided.

Also, there is no provision of marginal relief for taxpayers who opt for the old regime, if income exceeds ₹5,00,000 even with ₹1. This benefit is available for the new tax regime taxpayers.

In case, the taxpayer is earning ₹5,00,001 under the old tax regime after all the deductions other than 87A, the person needs to pay tax on ₹5,00,001 ignoring the benefit of 87A. The taxpayer does not fall for the limit here to claim section 87A.

Example of Marginal Relief

• Income: ₹7,00,000 → Tax = ₹0 (after rebate)
• Income: ₹7,01,000
• Tax on ₹7,01,000 = ₹25,050
• Extra income = ₹1,000
• Extra tax = ₹25,050

The provision of marginal relief helps to avoid this unjust burden. The amount of tax that must be paid cannot exceed the amount which would be payable for the income of 7,00,000 and the minor excess income earned over the year. This means that instead of paying ₹25,050 in taxes, the individual will only pay ₹1,000.

Feature	Old Tax Regime	New Tax Regime (FY 2024-2025)
Eligibility	Resident Individuals	Resident Individuals
Rebate Income Limit	Total income ≤ ₹5,00,000	Total income ≤ ₹7,00,000
Maximum Allowable Rebate	₹12,500	₹25,000
Marginal Relief Available?	Not specifically stated	Yes, provided to avoid paying more tax on minor excess income
Deductions (like 80C, 80D, HRA)	Allowed	Not allowed (except NPS, EPF, standard deduction etc.)
Best for Whom?	Those whose income is below ₹5 lakh due to deductions	Those with incomes up to ₹7 lakh and no or few deductions

How to File a Section 87A Tax Rebate Claim

Step 1: Figure out how much money you made overall during your financial year.

Step 2: Reduce the amount of your tax deductions for investments, tax savings, etc.

Step 3: After deducting the tax deductions, calculate your total taxable income.

Step 4: Fill out your ITR by declaring your gross income and tax deductions.

Step 5: If your total income stays below certain thresholds, you can claim a tax refund under section 87A.

Disclaimer: The content here is only for reference and is subject to update time to time. To get to know the tax liability, consult your professional advisor or connect to our operation team via 91-9267970588 or taxacumen.consultancy@gmail.com

Any person falling under the laws of GST must need to get registered under the GST and have the GSTN. Click the link here to know, whether you are falling within limit GST registration threshold limit, https://taxacumen.in/?p=978 and to understand the benefits of the same https://taxacumen.in/?p=986

Here, we will not discuss again whether you are required to have GST or not, but to know step-by-step registration process to apply for the same.

Step 1

Go to the Website https://www.gst.gov.in/ and to register, go to the “Register” tab on the Right side in Top location. If you are here for the first time go to “New Registration” and if you already have TRN, Click to TRN.

Step 2

You will get to watch the screen as mentioned here, fill the details asked here to proceed when you dont have TRN already

Select whether you are  Taxpayer, Input Service Distributor(ISD), Tax Deductor, Tax Collector (Ecommerce Operators), Non Resident Taxable Person, GST Practitioner, or else.

Also, mention your legal name as per Permanent Account Number (PAN) only, Business Name can be differ.

Mention your email Address and Mobile number for OTP and all future correspondence with the GST Department. Make sure to provide active email and mobile number.

And after filling all the details and information here, Click on Proceed to reach the next page.

Step 3

You will receive a page to enter a valid OTP, here Email and Mobile OTP will be the same. You can check and mention any of them to proceed.

Step 4

Once the OTP you entered above verified and approved, you will get this Screen, where TRN (Temporary Reference Number) will be mentioned for you. 

Save the TRN and write it down to your notepad for future correspondence. You will also get the said TRN through the text in messages and in your email mentioned in the application.

Step 5

Now, you have TRN with you to proceed for GST Registration. You must know that TRN will be available for 15 days to complete the process with the same TRN. Otherwise, a new TRN will be required.

Now you will login the Portal with your Received TRN and OTP to be received through your email and mobile both. After entering the OTP, you will be reached at a page where your Draft application is being shown.

Step 6

Here, you must complete this draft application within 15 days from generating the TRN. Till the date you didn’t get a GST Number from the GST Department, you can login with TRN for your registration.

Step 7

Here, you must provide Trade Name of business, Address details and proof of premise where the business is being operated, Personal details of Proprietor/Partners/Directors, Documentary proof of any additional premise for business to be attached, and all the details asked in the draft form must be provided. 

Here in the image, this is only first page of the draft form. The Applicant must complete the entire draft application, then Profile completion % mentioned in the right side of the image will be shown as 100%

Step 8

Aadhaar Authentication process

After the completion of the draft form, verification process is being done according to rules and provisions. There is an option to do Aadhaar Authentication with biometric verification of the primary authorized person. Where the mobile number of the primary responsible person used for registration is the same number with which Aadhaar has been linked, it is possible to authenticate the Aadhaar online with OTP. It cuts the time process of approval from the department within 7 days. 

Also, where a person opts to not to authenticate Aadhaar as described here before, he/she  can upload an Aadhaar copy to complete the KYC process. In such case, the GST Officer must verify the principal place of business physically and the time limit to approve the GST Registration Application is within 30 days.

It is advisable and beneficial to do Aadhaar authentication with biometric verification for GST Registration.

Step 9 

Approval of GST Application

Once the department is satisfied with all the details mentioned here and documents attached, the application will be approved. The applicant will receive an automatically sent mail having the login credentials in it.

Login path for First time users must be used, Here, Create the User Id ( not changeable) and change the system password given by the department through the mail.

Step 10 

Bank Account Update

Generally people thinks GSTN is received and work is done. But, this is untrue. The registered taxpayer must add their bank details with a cancel cheque or bank passbook first page mandatorily within 45 days from the date of registration granted.

In case of non compliance, the department can cancel the GST Registration after the deadline passed.

About Author – Deepa Kaintura

I am a lawyer by profession. I am a legal consultant in TaxAcumen providing services to corporates about GST, Income Tax, ROC Compliances, etc. My love for finance and law encouraged me to write and share the knowledge with the readers here. For any query, reach us at 

WhatsApp : +91-9267970588 Email I’d:taxacumen.consultancy@gmail.com

In GST (Goods and Service Tax) Laws, GST Registration is not required to be done for all the people who are engaged in some kind of business and other activities. 

In General, GST Registration is considered as a primary requirement for doing the business, but this is not the case. To know more about and check the applicability and threshold concept in GST Law, Click here https://taxacumen.in/?p=978

There are many activities which are not to be taxed under GST and also, there is an exemption to register according to threshold limit and place of business. 

In spite of the threshold limit, any business entity can voluntarily get itself registered under the GST Laws but once it gets registered, all the provisions, rules and regulations are binding upon and must be complied with.

Here, we will talk about the benefits of getting a GST Number whether or not, taken voluntarily or in other cases.

BENEFITS OF GST Registration in India

1. Availability of ITC Claim for Tax Payer

A business who pays GST on input services and goods, subject to  availability as per law, can claim the said GST Paid as ITC ( Input Tax Credit). Without GST, the same GST Paid is to be added to the cost of operations and no ITC can be claimed. 

2. Composition Scheme 

Small Business owners are being allowed to pay lower rates of GST and to be known as composite Dealers with some restrictions and some benefits as well. Small Business with Turnover upto 1.5 Crore / 75 lakhs, can get the benefit under this scheme. Not all documents are required to be maintained. But NO ITC is allowed to businesses using this scheme and they must not claim any ITC. Cash is to be paid for the same.

3. Simplified Tax System

Before July 2017, business entities must comply and ensure proper documentation and working as per many indirect tax laws such as Excise law, Service tax, VAT, etc. But with the implementation of GST, many laws are merged with GST and now, only one law needs to be taken care of. 

Returns under respective laws were required to be filled, and it was a burden on the businesses and also added extra cost to them. But now, only GST returns and Tax payments are needed. 

4. Elimination of Double Taxation

GST is based on the “Tax on value addition” concept.

For example, Mr. A Buys a bag for Rupees 1,000/- ( One thousand in words Only) and resell the same at Rupees 1,200/- (Twelve Hundred in words Only). He is required to pay 

GST on Purchase ( ITC) 18% on Rs 1000/- is Rs 180/- 

GST on sale (Outward supplies) on Rs 1200/- is Rs 216/-

New GST Payable after claiming ITC is Rs. 36/- ( Rupees Thirty Six in words only)

5. Better Recognition in Market

Practically, in many instances it has been a positive remark where the party is being registered in the GST Law, whether he is under the threshold  limit for the registration. The Market feels more confident when dealing with a GST Registered person to have a transparent and more genuine transaction.

6. Legal Recognition

A person can start doing the business with his own PAN only. There is no legal requirement to have any specific business registration in many cases. But when we practically go to open a bank account for business (current account), the Bank asks for a legal recognition certificate along with the GST Registration certificate. 

These are some benefits to get GST Registration even in case, you are falling under the threshold limit for exemption. One must consider all the factors together before deciding to have GST or not.

In this digital era, even a common man knows about the GST( Goods and Services Tax) by its name. Any person thinks of any idea for doing business, the first thing which strikes in his/her mind is that he/she must get the business registered under the GST Act.

But is it true that every business person needs to get registered for GST? Actually not.

Under the GST Act, the threshold limit is a very important term, which is the basis of registration requirement. Here, we will discuss the threshold limit applicable according to the provisions and rules. Threshold limit is decided based on the turnover as specified in the GST Law for the same.

Other than the business falling under the limit specified, there are a few other activities for which GST Registration is bound to be taken.

A person who is running a business or planning to start a business, must ensure whether he/she falls into the threshold limit to avoid the GST Registration till the limit meets or he/she is mandatorily required to get registered under GST laws as discussed below.

Threshold Limits are as specified under the Laws

Any person engaged in providing the services, where the aggregate turnover* exceeds Rs. 20 Lacs must get GSTN to do the business.

For special category states**, the above mentioned limit of Rs 20 Lacs to be considered as Rs 10 Lacs for checking the applicability.

Now, for the sale of goods within the same state, the threshold limit for states other than special category states, is Rs. 40 Lacs for intra state transactions. (Special category states** will be considered Rs. 20 Lacs)

* Aggregate Turnover means

The Aggregate Value of

1. all taxable supplies (excluding inwards transactions chargeable on Reverse Charge Mechanism basis), 
2. Exempt supplies
3. Exports of goods or services or both
4. Interstate supplies of persons with same PAN on all India basis, but, excluding the CGST, SGST, IGST, and cess.

** Special Category states mean the states of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.

The States/UTs had the option to choose the threshold limit to be considered for GST Registration. Accordingly, below mentioned states/UTs chose the limit for themselves.

States/UTs who considers the limit of Rs. 40 Lacs, are as mentioned below:

Kerala, Chhattisgarh, Jharkhand, Delhi, Bihar, Maharashtra, Andhra Pradesh, Gujarat, Haryana, Goa, Punjab, Uttar Pradesh, Himachal Pradesh, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu, West Bengal, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Andaman and Nicobar Islands, Chandigarh, Jammu and Kashmir, Ladakh and Assam.

Telangana, being a normal and the only state, falls for the limit of Rs. 20/10 Lacs, as the case may.

States/UTs who considers the limit of Rs. 20 Lacs, are here mentioned:

Puducherry, Meghalaya, Mizoram, Tripura, Manipur, Sikkim, Nagaland, Arunachal Pradesh and Uttarakhand.

Now, other than the business entities that fall under the threshold limit specified above, a few business entities are mandatorily required to get registered under the GST Laws, which are as follows:

1. Interstate Suppliers
2. Casual taxable Persons
3. Chargeable under Reverse Charge Mechanism
4. Non Resident Taxable Person
5. Persons required to deduct TDS under law
6. Persons required to collect TCS under law
7. Input Service Distributors
8. E-Commerce Operator
9. Persons making a sale on behalf of someone else whether as an Agent or Principal
10. Providing OIDAR Services
11. Suppliers who supply goods through e-commerce operators who are liable to collect tax at source.

It is also to be noted that any business entity does not fall under the threshold limit specified here, can also get registered under the GST voluntarily. But once the registration is done, all provisions and rules will be applicable on those who opted the same.

MSME Registered Enterprises are favoured by the Indian Government by various means , provisions and benefits for them. MSMEs massively contribute for the employment in Indian economy. These units are backbone of our economy.

To know who are eligible to be MSMEs and how to get register as MSME. Click on the link here https://taxacumen.in/?p=916

One of the benefits MSMEs get from the Government is the provisions and rules made for the payment to be made to MSMEs. Any transaction which is being done with MSME needs to be done timely to ensure proper legal compliances.

Payment to MSMEs need to be done as per agreed date (contract terms and conditions) or within 45 days, if there is an written agreement to avoid interest to be paid along with principal amount as per the Section 15 of the Micro, Small, Medium Enterprises Development Act, 2006. And in case of no written agreement, Payment must be done within 15 days from the acceptance of goods/services.

Also, In the Budget 2023 – 2024, the Finance Minister proposed an amendment to Section 43B of the Income Tax Act, 1961, to include payment made to MSMEs. It affects the big businesses who delay the payment to be made to MSMEs. Now, Deduction will be allowed to those for the expenses on accrual basis, only if payment made timely with the prescribed timelimit specified in MSMED Act.

Also, the Companies registered with Registrar of Companies (ROC) who have any outstanding dues to be paid to MSMEs suppliers, must file the “MSME FORM 1” for the half year starting from October, 2024 to March, 2025. The Due date to file the said form is 30 April 2025. And for the period starting from April to September, the MSME FORM 1 must be filed on or before 30th October.

The Buyer is required to pay compound interest, three times the RBI Bank Rate, on the principal amount, calculated monthly from the agreed payment date or 15 days after the acceptance of goods/services. The said Interest is not deductible (Disallowed) as an expense under the Income Tax Act, 1961.

To know more about the compliances to be followed while dealing with MSMEs and for the professional advice, one can reach to us: 

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About Author – Deepa Kaintura

I am a lawyer by profession. I am a legal consultant in TaxAcumen providing services to corporates about GST, Income Tax, ROC Compliances, etc. My love for finance and law encouraged me to write and share the knowledge with the readers here.  

Any company registered under the Company Act needs to appoint an Auditor to comply with the provisions of the said Act. The company, whether registered as private limited, or one person company, or limited, or any other firm, are required to conduct the Audit. The purpose of Audit is to ensure financial compliance is being followed by all.

The section 139 states

“Every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting and the manner and procedure of selection of auditors by the members of the company at such meeting shall be such as prescribed”

Who can be Auditor?

A Chartered Accountant or a firm of qualified Chartered Accountant including LLP, can be appointed as the Auditor, If he satisfies the conditions for the same.

Tenure for the Auditor

The tenure for the Auditor is from the conclusion of the meeting in which appointment is proceeded till the 6th AGM. But, there is need for ratification of the said appointment in every Annual General Meeting held before.

Cooling Period

There are provisions of cooling period, in case of Listed company or companies as prescribed. The period for which appointment can be made:

• An Individual as auditor for more than one term of 5 consecutive years; and
• An audit firm as an auditor for more than two terms of 5 consecutive years.

It is to be noted that the break in the term for a continuous period of 5 years will be considered as fulfillment of the above said condition of cooling period.

Appointment of 1st Auditor

The first auditor shall be appointed by the Board within 30 days from the date of Incorporation. In case of failure of Board to appoint, the EGM needs to be called for appointment within 90 days from the expiry of 30 days given to the Board. The tenure is till the first AGM.

Remuneration for Auditor

As per section 142(1), remuneration shall be fixed in its general meeting. But in the case of 1st Auditor appointed by the Board itself, the Board will decide the remuneration.

Form ADT-01

Once the appointment is done, the form ADT-01 is needed to file file with ROC within 15 days from the appointment date. There is no requirement for filing the said form, in case of first auditor.

Procedure mentioned below is required for appointment of auditor

1. Intimate the proposed auditor regarding the intention of the company for appointing him as auditor.

2. Obtain consent & certificate about the eligibility for appointment.

3. In case, the audit committee is required to be constituted under section 177, then obtain its recommendation. Otherwise, the Board can proceed.

4. The Board can only recommend in the Board Meeting, unless, the appointment is for 1st Auditor.

5. On the basis of recommendation of the Board, the shareholders will appoint the Auditor in the Annual General Meeting.

6. Now, the company needs to intimate the auditor about the appointment and file the form ADT-1 with MCA within 15 days.

For the professional advice, one can reach to us: 

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About Author – Deepa Kaintura

I am a lawyer by profession. I am a legal consultant in TaxAcumen providing services to corporates about GST, Income Tax, ROC Compliances, etc. My love for finance and law encouraged me to write and share the knowledge with the readers here.  

Excited to know How, isn’t it? Let’s discuss it here. 

In budget 2020, New Tax slab had been introduced in which Taxpayer need to deny the various deductions such as HRA, Loss from House Property, Tuition fees (Children), Life Insurance, NSC deposit, PPF, etc

Lower Tax Rate has been applied for the New Regime. But due to denial of various amazing deductions, taxpayers still prefer to be taxed under the Old Tax Regime. In order to shift the interest of taxpayers towards New regime, Tax Rate has been drastically reduced.

New Tax Slab with effect from 01.04.2025

Income Tax Slabs	Tax Rate
Upto Rs. 4,00,000	Nil
From Rs 4,00,001 to Rs. 8,00,000	5%
From Rs 8,00,001 to Rs. 12,00,000	10%
From Rs 12,00,001 to Rs. 16,00,000	15%
From Rs 16,00,001 to Rs. 20,00,000	20%
From Rs. 20,00,001 to Rs. 24,00,000	25%
More than Rs, 24,00,000	30%

Standard Deduction 

Standard Deduction for Salaried Person allowed as deduction is Rs. 75,000/- without any documentary proof. This deduction is available without any expense or investment.  This amount is from FY 2024-2025 for only under the New Tax Regime . For the Old Tax Regime, Rs. 50,000/- is the standard deduction.

Claim under Section 87A – Brief

An Individual whose net income after deduction is not more than Rs. 7,00,000/- can claim this deduction for FY 2024-25. In Budget 2025, the Relief has been increased for those whose Income is upto Rs. 12,00,000/-
So, The taxpayers who opt for New regime and having salary income upto Rs. 12,75,000/- will have nil tax liability. 

Marginal Relief is also available under New Tax Relief. Know here, How?

If the income of an individual exceeds Rs 12,00,000 and tax payable on such income is exceeding the income amount over and above Rs 12,00,000, then the tax will be limited to the extent of such income exceeding Rs. 12,00,000.

For Example, An individual resident in india, total income is Rs 12,50,000/- The tax Liability is calculated as below:

The step to calculate the relief here:

Step 1 Calculate excess above Rs 12 lacs which means (Rs 12.50 lacs – 12 Lacs) which is Rs. 50,000.

Step 2  Tax on Total Income Rs. 12,50,000 is Rs 67,500/-

Step 3 Since Step 1 is less than Step 2, the Marginal relief would be Rs. 67,500 – Rs. 50,000 = 17,500/-

Now, after allowing the relief of Rs. 17,500, Tax Payable will be Rs. 50,000 + cess @ 4% = 52,000/- for the taxpayer whose income is Rs 12,50,000/-

Deductions not allowed for Taxpayers opting for New Regime

• HRA
• Section 80C such as LIC Premium, Tuition fees, PPF, NSC, FD for 5 years, ELSS, etc.
• Loss from Self Occupied House property of Rs 2 lacs
• Professional Tax u/s 16(iii)
• Section 80D, Section 80TTA, Section 80TTB, etc.

How to Opt for New Tax Regime
The New Tax Regime is the default tax regime from FY 2023-24 and those who want to be liable for tax under the old tax regime need to opt out by filing Form 10IEA.

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About Author – Deepa Kaintura

I am a lawyer by profession. I am a legal consultant in TaxAcumen providing services to corporates about GST, Income Tax, ROC Compliances, etc. My love for finance and law encouraged me to write and share the knowledge with the readers here.  

The companies registered under the Companies Act, 2013, have a separate legal entity. The operations are managed by the Board of Directors, and not the owners, subject to the provisions of said Act. Along with the powers of management, directors have been assigned with some duties and responsibilities, provided in the said Act.

Section 166 of the Act, deals with the duties of the directors, towards the company. Here, duties specified under the law are as mentioned below :

1. Act according to Articles of Association

Every director of the company shall act, according to the terms decided under Article of Association. The powers given in the Articles cannot exceed, unless the provisions permitted.

2. Act in the interest of the company

All the directors shall act in good faith in order to promote the objects of the company, for the benefits of its members, as a whole, and in the best interests of the company, employees, the shareholders, the community, and for the protection of the environment.

3. Don’t make secret profits

A director shall not achieve, or attempt to achieve any undue gain or advantage, either to himself or to his relatives, partners, or his associates, and if found guilty, he shall be liable to pay an amount equal to that gain.

4. Due care and skill

Every director needs to ensure that the due care, skills and diligence is in exercise, while taking the decisions for the company. Also, independent judgement should be exercised.

5. Confidentiality

The directors are the core management personnel of the company. They come to know various sensitive, confidential information, while exercising their duties. This information can damage the company, in case of disclosure. Hence, there is a need to maintain confidentiality for the sensitive information of the company.

6. Attend meetings

As required by law, directors need to attend the meeting conducted for the operations of the company. He must provide valuable ideas, inputs for the smooth functioning and betterment of the company, whenever required.

7. Conflict of Interest

Directors must know that the company interests are more important than his personal interests. He should not be involved in such a situation, in which he may have any direct or indirect interest that conflicts, or possibly may conflict, to the interest of the company.

8. Assignment of his office

Director can not assign his office to any person. Such assignment, if done, shall be void. Directors must fulfil his/her duties towards the Company, otherwise he/she will be liable to be punished according to the provisions of law.

Also read the Article on Appointment of Director 

Appointment of Directors – Provisions and Procedure for Private Limited

For the professional advice, one can reach to us: 

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About Author – Deepa Kaintura

I am a lawyer by profession. I am a legal consultant in TaxAcumen providing services to corporates about GST, Income Tax, ROC Compliances, etc. My love for finance and law encouraged me to write and share the knowledge with the readers here.  

A company registered under Company Act, 2013 with MCA needs to ensure proper compliances as per the relevant said law. A company is a legal entity which needs a board of directors to operate its functions. A board of directors implies a group of individuals who are entrusted with the management of the company.

At the time of incorporation, a Private Limited is required to appointment a minimum of two directors. In case of no appointment made, all the subscribers to memorandum will be considered as first directors. After Incorporation, in case there is a need to appoint a director, the proper procedure needs to be followed.

Prerequisite for the appointment of a director 

1. A person proposed to be appointed as director, must have a Director Identification Number (known as DIN) and a valid DSC to sign the MCA Forms;

2. The person proposed to be appointed as Director must submit the form DIR 2 to give the consent for appointment and declare that he is not disqualified to be appointed as director in the company;

The eligibility to become a director in the company is as follows:

1. The proposed person must be above 21 of age;
2. The individual must be of sound mind;
3. An undischarged bankrupt or adjudged insolvent should not be appointed;
4. A person sentenced and convicted by court for more than six months is not eligible to become a director.

Documents required for appointment:

1. A copy of valid PAN copy 
2. A copy of Identity proof, such as Aadhaar, Voter Id, Passport, etc.
3. Passport Size Photo
4. Digital Signature Certificate (DSC)

During Incorporation process, the person to be appointed must have obtained DSC for sign the Form to subscribe and mention PAN for the process. A DIN will be allotted directly and no diferent form is required to sign or to apply.

And in case of Appointment after the incorporation, the procedure is required to be followed, which is as follows:

1. Firstly,check the AOA of the company to ensure that the appointment must be within the limit of Articles. If required, alter the Articles of Association for the same.

2. The proposed person must obtain a valid DSC.

3. The person proposed, if they don’t have a valid DIN, must apply the same with the Form DIR 3. Also refer the article on Allotment of DIN here https://taxacumen.in/?p=349

4. The proposed person must intimate the Company about his/her active DIN for further process.

5. Also, Submit the consent to act as a director and declare that there is no disqualification to him/her to appointment in DIR 2. No person can be appointed as director unless he/she submits the consent to act as director.

6. The proposed person must intimate the company about his/her interest in other entities. 

7. The appointment of directors takes place in a General Meeting by the shareholders. In case an appointment is being made in between the AGMs, the company can call an Extra General Meeting(EGM) for the purpose. Also, the additional director can be appointed by the directors in the Board Meeting only, if empowered in the AOA. The additional director can be appointed till the next AGM to be held.

8. The company must provide an appointment letter to the person appointed.

9. The company must file the FORM DIR 12 with ROC within 30 days from the event.

The article here is based on the provisions and procedure provided under the Company Act, 2013 in general language. 

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About Author – Deepa Kaintura

I am a lawyer by profession. I am a legal consultant in TaxAcumen providing services to corporates about GST, Income Tax, ROC Compliances, etc. My love for finance and law encouraged me to write and share the knowledge with the readers here.  

Under the company Act, 2013, Section 153 to 159 are in relation to the allotment of Director Identification Number (commonly known as DIN) to Director and conditions to be satisfied for the same and penalty for Non-compliance.

Section 153 states that

“Every individual who is intended to become a director needs to apply for DIN. Application to be made in the form DIR-3 to the Central Government (CG) along with the prescribed fees (presently fees is 500 for each application)

Procedure to Apply for DIN

The following documents need to be uploaded while applying DIN:

1. Photograph
2. Proof of Identity
3. Proof of residence
4. Verification of Signature specimen (Optional)

The form DIR-03 is to be digitally signed along with the applicant by 

A Chartered Accountant in practice; or

Company Secretary in practice; or

CMA in practice; or 

Managing Director or Director of the company in which applicant intended to be appointed; or

CS of the company in full time employment.

Section 154 states that the CG shall allot DIN within one month from the receipt of the application after due verification.

Conditions to be complied for Director Identification Number

There are also some conditions mentioned in relation to DIN under the above said Act which are as follows:

A Person can have only one DIN;

Every existing Director shall within one month of receiving the DIN, intimate to all the companies wherein he is a director;

Every company shall, within fifteen days of the receipt of DIN from the directors, furnish all the details to the Registrar;

Every company or directors, while furnishing any returns, information or particulars required under the Act, shall mention the DIN in the return, information or particulars relating to the said director.

Change in Particulars of the Directors – DIR-6 Form:

In case of any change in the particulars of the directors, the Form DIR-06 is to be submitted to intimate the changes such as change in address, or any other details.

Penalty/Punishment for Non-compliance

If any individual/ Director of a company, contravenes any provision, shall be punishable with the imprisonment for a term upto six months or with fine upto the limit of Fifty Thousands.

And it is also stated that in case of continuing Non-compliance, punishment can be extended with a further fine upto Five hundered for every day after the first contravention.

Also if any company contravenes the requirement of furnishing DIN of the directors or other officers under section 157, the company shall be punishable with the fine which is not less than Twenty thousands, but may extend upto one lakh rupees, and 

Every officer-in default of the company shall also be punishable with fine which shall not be less than twenty five thousands, but may extend upto one lakh rupees.

For the professional advice, one can reach to us: 

WhatsApp : +91-9267970588

Email I’d   : taxacumen.consultancy@gmail.com

Follow our Whatsapp Channel 

https://www.whatsapp.com/channel/0029VaXqUTnL2AU3Z1yxXD3S

Follow our Instagram Channel

https://www.instagram.com/taxacumen.20/?next=%2Fthelegalarena%2F 

About Author – Deepa Kaintura

I am a lawyer by profession. I am a legal consultant in TaxAcumen providing services to corporates about GST, Income Tax, ROC Compliances, etc. My love for finance and law encouraged me to write and share the knowledge with the readers here.