Case Studies
In 2012, A US company, whose core areas of expertise are in providing Managed Staffing Solutions, Information Technology Solutions, and Information Technology Consulting Services approached us to set up a subsidiary company in India.
After registering company in India, we helped them obtain SEZ benefits under section 10AA of Income Tax Act wherein, it will be eligible for a deduction of 100 percent of export profits for the first five years from the year in which such manufacture/ provision of services commences and 50 percent of the export profits for the next five years. Also SEZ units are exempted from service tax(GST), customs Duty etc.
Since it is a captive centre for the US company, We were involved in the study and compliance of International Taxation by applying the Transfer Pricing regulations under Income Tax Act. We were also involved in facilitating dividend distribution to overseas investors efficiently.
During 2006, IIT engineers approached our firm, they want us to help in incorporating company which provide innovative and proven productized services and business fit solutions around SAP. They provide business fit solutions through products built on SAP Platform and SAP applications. On the SAP services side, they focus on SAP’s new dimension products including SAP CRM, SAP NetWeaver and SAP Business Objects providing business fit and cost-effective solutions to its customers spanning four Continents and Industries like Pharmaceutical, Consumer Goods Industry, Retail, and Discrete Manufacturing.
This Company had faced problems relating to TDS and was using an inbuilt application for the purpose of accounting which was not very Productive. BCS team has helped them in resolving the issues relating to TDS and has helped them in shifting their Books of Accounts from their inbuilt application to Tally which rationalized the entire process of accounting.
During 2008, a group of IT professionals approached us for incorporation of a company. They want us to help not only in setting up the entity, but they want us take care all compliance services. They are into cloud advisory services and designing the app.
We helped them in obtaining lower TDS (withholding of taxes) certificate from the Income Tax department under section 197 for lesser deduction of TDS from the client. Because of this, fund stuck in the form of TDS is reduced and helped them in working capital management. Apart from this we assisted them to obtain substantial GST refund on quarterly basis.
This company had problems in sharing data for the purpose of accounting and payroll was processed manually which was hectic. The payroll is being processed using KEKA software, which has made the process easier.
In 2017, A US based company with an Indian Subsidiary approached us for setting up their company in the Special Economic Zone. The company is into delivering the next generation of AI compute. Their Agent based ‘Real AI Processor’, delivers much higher compute performance and significant energy efficiency. Real AI Processor greatly accelerates AI workloads at datacentres and provides Perception and Decision-making ability to the edge in applications ranging from autonomous cars, drones, robots to Dialog Systems where latencies are crucial.
We have helped the company in setting up an office in the Special Economic Zone, through which they have acquired various benefits like deduction under section 10AA of Income tax Act, exemption from customs and Service Tax (GST).
We have also offered the service of preparing Calendar year financials every year, to the holding Company as it requires the same for its Audit.
Due to some reasons, the company wishes to exit from the Special Economic Zone and wants to set up its business in a different zone.
Since the company desires to exit from SEZ before the completion of a period of 5 years, there shall be various tax implications in respect of Customs, GST and SEZ provisions. BCS team has helped the client in taking the decision by providing them an opinion on Exit from SEZ.
The opinion includes the calculation of applicable duties and taxes to be paid with respect to the stock of goods remaining with the company, on which customs and IGST was foregone at the time of imports and purchases respectively, after considering the depreciation benefit. We have also given a brief description of how the depreciation benefit is calculated as per the SEZ provisions.
The Development Commissioner shall also verify all the SEZ filings such as SOFTEX and Annual Performance Report at the time of exit. In case the SOFTEX forms are not certified by the DC of CSEZ, the services rendered by the Company would not be considered as “exports” by the Authorities, and accordingly applicable duties and taxes thereon along with interest and penalty may be demanded.
BCS has been consistent in conforming with all the monthly and annual SEZ filings which will ease the exit process.
In 2018, an IT expert company involved in Software publishing, consultancy, and supply, approached our firm for seeking various tax compliance services. Software publishing includes production, supply, and documentation of ready-made (non-customized) software, operating systems software, business & other applications software, computer games software for all platforms. Consultancy includes providing the best solution in the form of custom software after analysing the users’ needs and problems. Custom software also includes made-to-order software based on orders from specific users.
We have served the client by providing various compliance services and have also helped them in resolving notices related to Service tax, VAT, and Income tax.
We have offered advisory services to the management of the appropriate course of action in relation to cost and efficiency. We are assist in forecasting Cashflow through the software Futrli, which will help the client in projecting their future position in financial terms.
The structure of a forecast is comprised of the basic financial components: revenue, direct costs, expenses (fixed and variable), debt servicing and other assets and liabilities. The components of the profit and loss statement are usually completed first, and then if possible, cash flow and balance sheet are considered.
Utilizing a software i.e., Futrli to sync with the Quickbooks Online and assist with the forecasting calculations has made the job easier.
Effective business planning is relevant for an entity to earn profit throughout its business. So, we also provide budgeting service in which we help the client in setting financial targets for the business and support them in planning, to attain those targets. This has helped them in having a control over their money, in organising their spending and in evaluating their performance.
In 2019, an Indian based firm has approached us to provide the professional services on processing the GST refund of accumulated Input tax credit on purchases made in India. The company is a publisher of research and databases for the oil and gas industry. The main product is E&P transactions database and the services are provided to companies outside India which is to be considered as export of service without GST.
As the company procures the goods and services in India by paying GST at higher rate and the export is zero rated, huge accumulated Input tax credit effected their working capital requirement.
As exports are considered to be Zero rated and hence exempted from GST with certain conditions, GST paid on purchases will be accumulated in books. There is a provision under GST Act to get the refund of such accumulated ITC with certain conditions and procedures. Though there is a provision to get the refund of accumulated ITC, the procedure is not as simple as it looks. Submission of documents and information in the process plays a vital role in the process.
It is important to pay the tax and file the GST returns within due date by declaring the exports under particular column in the return. It is also important to prepare the reconciliation between the ITC claimed vs invoices reflected in GSTR 2A. Submission of proof of documents for receipt of export proceeds in convertible foreign exchange from authorized banker is essential.
We at BC Shetty having the subject matter expertise in GST refunds, helped our client to get the GST refund in considerable amount which helped the client not only to liquidate the fund but also to manage the working capital for the business.