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Author: Sagar

Beware of Cash Transactions from April 1
Beware of Cash Transactions from April 1

Beware of Cash Transactions From April 1, 2017, be careful while accepting cash for more than Rs 2,00,000/- or pay 100% penalty for accepting it. Remember, it is the cash receiver who needs to pay the penalty and not the cash payer. It is a move towards eliminating cash transactions and shift towards cashless economy.

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EBITDA Margin Meaning | Formula | Calculation | How to Calculate
EBITDA Margin Meaning | Formula | Calculation | How to Calculate

EBITDA is the pulse rate of your company, and that’s also what makes it a sweet apple of investors eye. You just cannot ignore it, just cannot! It gives a clear reflection of your company’s ‘operating’ performance. There are many more ratios to check operating efficiency, but why this ratio stands away from the crowd is its ability to facilitate comparisons in the industry. Let’s dig into more.This post will cover EBITDA Margin Meaning, Formula, Calculation, how to calculate, and all you need to know.

EBITDA Meaning?

Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA). See, the name itself reveals more than half of the meaning as it is calculated as operating earnings before deduction of interest, tax and depreciation (Example at the end of this article).

EBITDA = Earnings Before Interest and Tax + Depreciation + Amortization

EBITDA, when compared with net sales, gives EBITDA Margin.

It gives you a ‘standard measure’ to compare your business’s earnings with your peers in the industry, irrespective of their capital investments, debt and tax profiles. It eliminates the interest and tax components, and depreciation component, which is a non cash expenditure.

Let’s say there are two different companies with different investments in assets or different amounts of debts, how would  you judge the operating performance of those companies? EBITDA margin is your solution.

Investors use this measure to compare similar companies across the same industry. EBITDA multiple is also used in company valuation after its division from Enterprise Value (EV). Hence, entrepreneurs must keep an eye on EBITDA margin to constantly measure where they stand against their rivals in terms of operating performance.

Why EBITDAis so important?

It gives you a fair picture of your operations, but it does have drawbacks.

If companies are more debt laden, and interest costs are higher than they should be, EBITDA won’t give you that picture, since it excludes interest costs. Companies that require constant equipment upgradation should also be careful while using it as it excludes depreciation.

It can manipulate you to believe a company is performing well, even if it is not. EBITDA can be impressive, but net profit of the company may be low due to interest cost or depreciation or tax rates. So, it is better to not overlook the net profits too for comparison.

Itwill always be more than your net profits.

Despite its limitations, it serves as a tool to compare your company with other companies and locate the points of your strengths and weakness, if you use it wisely.

How ebitda is calculated

Revenue= Rs 1 Crore

Expenses other than depreciation, interest and taxes= Rs 70,00,000

ParticularsAmount (Rs) In Words
Revenue10,00,00,00010 Cr
Expenses other than Depreciation, Interest and Taxes7,00,00,0007 Cr
EBITDA3,00,00,0003 Cr
Depreciation50,00,00050 Lakh
EBIT2,50,00,0002.5 Cr
Interest Cost30,00,00030 Lakh
PBT2,20,00,0002.2 Cr
Taxes @ 30%66,00,00066 Lakh
PAT1,54,00,0001.54 Cr
   
EBITDA Margin30% 
Net Profit Margin15.4% 

EBT and PBT have been assumed to be equal in this case.

Such a simple calculation, and you can figure out so much from it.

For any queries, feel free to reach out to Chartered Accountants on CA in Delhi ‘s homepage

Udyog Aadhaar: For Small And Medium Businesses
Udyog Aadhaar: For Small And Medium Businesses

Namaste from CA In Delhi! MSMEs, you are the powerhouse of India’s economy. Feel proud of it. The government recognizes your importance and hence, promotes you, provides you enormous benefits. Udyog Aadhaar is a valuable present that the government has provided for small and medium businesses.

To register your business as SME (Small and Medium Enterprises), you are required to register under Udyog Aadhaar, which was earlier called MSME registration.

First, why do I need to register?

The Ministry of Micro, Small and Medium Enterprises (MSME) have been assigned a task to support, promote, and regulate the MSMEs in the country. Financial and technical support is provided to the Indian entrepreneurs and small businesses, beside capacity building programs.

The following benefits are provided to the businesses by MSME departments:

  • Eligibility for the government schemes for funding like
    a) Loan without guarantee
    b) Easy loan
    c) Loan at concessional rate of interest
  • Financial support from the government to participate in the foreign expo
  • Various government subsidies
  • Priority sector lending schemes
  • Excise Exemption Scheme
  • Exemption under direct tax laws: Income Tax on SMEs has also been reduced to 25%.
  • Incentives and schemes laid down by respective states include power tariff concessions, capital investment subsidies, tax concessions, etc.

Udyog Aadhaar is a great way to get these perks.

Information/Documents required

  1. Aadhaar Number: 12-digit Aadhaar number of the applicant is mandatory.
  2. Name of the owner: The name has to be exactly same as that mentioned in Aadhaar Card. If the name of the applicant is Pan Singh Tomar, and on Aadhaar, it is mentioned Pan S. Tomar, then, Pan S. Tomar will only be mentioned as the name.
  3. Social Category: Applicant’s caste: General/SC/ST/OBC is needed. For categories other than general, proof of belonging to that category is required.
  4. Name of Business: The name of the enterprise is required to be filled, by which his/her enterprise is known to the public and needed to provide legal documents for that.
    More than one business can also be registered with single aadhaar number.
  5. Type of Business: You need to select the type of entity from the given options, which are:
    a) Proprietorship
    b) Partnership Firm
    c) Hindu Undivided Family
    d) Private Limited Company
    e) Cooperative Society
    f) Public Limited Company
    g) Self Help Group
    h) Others
  6. Postal Address: Address of place of business needs to be entered here, along with email and mobile number.
  7. Date of Commencement of business
  8. Previous Registration Details: Details of registration as MSME earlier, if any to be shared here.
  9. Bank Details: Bank account number and IFSC Code to be provided in this field.
  10. Major Activity: Major area of business activity: Manufacturing or Service
  11. NIC Code: NIC Code is National Industrial Classification (NIC) Code, which needs to be entered from NIC handbook.
  12. Number of persons employed in the business to be entered
  13. Amount of investment in plant and machinery to be entered
  14. DIC: Details of District Industry Centre nearest to the business, to be filled, if needed
Qualifications & Disqualifications of Auditor
Qualifications & Disqualifications of Auditor

What is Qualifications & Disqualifications Of Auditor-

What is Auditor?

Qualifications & Disqualifications Of Auditor is a person or a firm appointed by a company to execute an audit. To act as an auditor, a person should be certified by the regulatory authority of accounting and auditing or possess certain specified qualifications.

Qualifications of Auditor-

A Chartered Accountant holding a valid Certificate of Practice.

A firm shall also be considered to appointed by its firm name whereof majority of partners practicing in India are qualified for appointment as auditor of a company.

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How To Save Tax-Different Options To Save Tax
How To Save Tax-Different Options To Save Tax

 

How To Save Tax-Different Options

To Save Tax [AdSense-B]

Act before March-end, so that you don’t have to regret it in July! So many clients put their palms on their heads when it is time to pay taxes and file a return, in July. Taxes have already fired at them, they have done nothing to save themselves against the tax shots.
They could have saved a pretty good amount of taxes, but their lethargy proved to be costly for them. Now is the time! The financial year is about to end, build up your weapons. If you make appropriate investments, you can save a lot of tax. CA In Delhi‘s guide will help you answer a much-asked question – How to save tax and different options to save tax

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Startup India Scheme : How to Register [Full Guide]
Startup India Scheme : How to Register [Full Guide]

Startup India Scheme : How to Register [Full Guide] 

Let’s understand about the process of registering under Startup India Scheme.
See, you are a startup, and fostering an environment of innovation, something which the government is promoting. You do deserve some benefits for that. Startup India Plan of the government provides you those benefits.

Those benefits include:

  • Funding Support: A corpus of Rs 10,000 crore has been set aside by the government through a fund of funds, for startups.The fund shall ensure support to diverse sectors, including manufacturing, agriculture, health, education, and so on.
  • Tax Exemption: Startups registered under Startup India Scheme will get a capital gain exemption if such capital gain is invested in the Fund of Funds recognized by the government. Profits of the startups will be exempt from income tax for any three years out of ten years. Investment in startups recognized under this scheme, above their fair market value will be exempt under Income Tax. It is normally taxable for other companies.
  • Intellectual Property Protection: The scheme allows fast-tracking of startup patent applications, panel of facilitators will assist in filing of IP and 80% rebate is provided on filing of patents.
  • Quicker exits: The startups will be able to wind up the companies on fast track basis, just within 90 days with arrival of the Insolvency and Bankruptcy Code, 2016.
  • Self Certify Compliance: Start-ups are allowed to self-certify compliance (through the start-ups mobile app) with 9 labour and environment laws. In case of the labour laws, no inspections will be conducted for a period of 3 years.

Also read: How To Value A Startup : An Overview About Startup Valuation

Benefits are amazing for ‘startups’. Are you a startup? What?!?! Yes, the government has defined what would a ‘Startup’ mean.

Any Legal entity will be identified as a startup:

  1. If it is not older than five years from the date of incorporation.
  2. If its turnover does not exceed 25 crores in the last five financial years.
  3. It is working towards innovation, development, deployment, and commercialisation of new products, processes, or services driven by technology or intellectual property.

Point to be noted, my lord:

You are a startup only if you aim to develop and commercialise – a new product or a service or a process or significantly improve a product or service or process which will add significant value for customers or workflow.

So if your Startup is like another Ecommerce Startup Website or IT Sector, then there is not a positive news for you. It is not a startup.

A corporation, entity or a business is termed as a start-up if

  • The entity is registered under Companies Act, 2013
  • It is registered under section 59 of Partnership Act, 1932, as a partnership firm
  • Or registered under Limited Liability Partnership Act, 2002, as a limited liability partnership

Point to be noted, my lord: Sole Proprietorship Firm is not under the Startup India Scheme.
In order to obtain tax benefits, one has to obtain a certificate from the Inter-Ministerial Board of certification.

Great, we qualify all the above criteria. Let’s go ahead! [AdSense-B]

  • Log on to startupindia.gov.in/registration.
  • Fill details about your startup
  • Upload any of the following documents:
  • A recommendation in a format specified by DIPP from an incubator established in a post-graduate college in the country.
  • A letter of support from any central or state government funded incubator to promote innovation.
  • A recommendation in a format specified by DIPP (with regard to innovative nature of business) from any incubator recognised by the Central Government.
  • A letter of funding of not less than 20 per cent in equity by any incubation or angel fund/PE fund/accelerator or angel network duly registered with Securities and Exchange Board of India that endorses its innovative nature of business.
  • A letter of funding by the Central or State government as part of any scheme to promote innovation.
  • A patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of business being promoted.
  • Upload Incorporation/Registration Certificate
  • Brief note on innovativeness of products /services offered by the entity

The department will review your application and register you under the scheme if you meet the requirements. For more details, contact CA In Delhi at [email protected] or choose from a list of chartered accountants available on CA In Delhi ‘s homepage

Compliances for an LLP : Limited Liability Partnership
Compliances for an LLP : Limited Liability Partnership

compliances for an llp

Compliances for an LLP : Limited Liability Partnership [AdSense-B]

Namaste from CA In Delhi!
Probably, you chose to start LLP over company because it is less costly and compliances for an LLP is relatively lesser. But, you might be unaware of the fact that if you don’t comply with mandatory requirements for an LLP, you will end up paying such heavy penalties that it can even force you to shut down your business.

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Compliance for a private limited company
Compliance for a private limited company

compliance for a private limited company

Compliance for a private limited company [AdSense-B]

Giving a birth to a baby is not enough. You also need to take due care of that baby. Similarly, forming a private limited company is not enough, you also need to make sure that the company is following all the compliance for a private limited company and should not get into any trouble for violation.

CA In Delhi will tell you major compliance that you just cannot afford to avoid.

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Car Allowances and Reimbursements: How To Save Tax
Car Allowances and Reimbursements: How To Save Tax

car allowances and reimbursements

How To Save Tax : Car Allowances and Reimbursements [AdSense-B]

Use Your Car, Avail Benefits Apaar! 😉
Company offers car expenses reimbursement to its employees if these expenses are incurred for official duties. This post will guide you how to save tax using car allowances and reimbursements.

Car owned by employee, expenses borne by employer

Income tax liability in this case is based on the purpose of use: private, official or both.

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How To Structure Salary And How To Save Tax
How To Structure Salary And How To Save Tax

how to structure salary

How To Structure Salary And How To Save Tax

Salary! What a simple word it is. Zoom in, and you will realize this simple word is made up of so many components. These components can decide your taxability factor. Would you like to take home most of your pay or would you like to save tax or how about striking a right balance? Don’t worry, CA In Delhi will guide you in this article how to structure salary and how to save tax

CA In Delhi will help you in understanding the components of salary.

See, salary has 4 components – Basic, allowances, perquisites and retirement benefits/contribution

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