Features Sole proprietary Partnership firm Limited liability company

concern (includes Private limited

and public limited
companies)
Liability of Unlimited liability. Unlimited liability. Limited liability. Limited to
business Liability extends to Liability extends to the the extent of shares held but
debts the individual’s individual’s private not paid.
private property. property for satisfaction
of partnership debt.
Minimum One person Minimum 2 but not In a private limited company
and more than 20. the minimum is two and
maximum maximum is 50. In a public
no. of people limited company the
minimum is seven and no
limit on maximum.
Separate No separate legal It does not acquire a Has a corporate personality
legal entity entity separate legal distinct from the individuals
status personality even if who are its members.
registered.

Charter documents None Partnership Deed Memorandum and

Articles of
Association
Registrations required to None. Register the Partnership Incorporate the
start. Other registrations Deed with the Registrar company with
required are under the of Firms. Registrar of
purview of separate Companies
legislations such as
service tax, professional
tax, PF, ESI etc. as
applicable.
Termination / continuity Dissolved on Dissolved on the death Perpetual.
the death of the of a partner, unless Terminated through
sole proprietor. there is a contract to the prescribed winding
contrary. Can be up processes.
terminated by voluntary
action of dissolving the
partnership.
Ownership of property Property The property of the Property belongs to
belongs to the firm belongs to the the company.
individual. partners and they are
collectively entitled to
it.
Capacity to sue Not a separate Only a registered Since a separate
legal entity, partnership firm can legal entity, a
hence the sue or be sued. Else, company can sue
individual can action may be brought and be sued in its
 sue or be sued. in the name of the own name.
members either
individually or
collectively.

Registration Procedure For Service Tax

Section 69 of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994
prescribe the manner and form for registration as an assessee, of any person liable to pay
service taxin accordance with the provisions of Section 68 of the Finance Act, 1994. Below
set, in brief is the procedure for registration:

• An application for registration in Form ST-1 has to be made to the concerned

Superintendent of Central Excise within 30 days from the date on which service tax
becomes leviable. However, where a person has commenced his business for
providing taxable services after the date when Service Tax is levied, the application
for registration is to be made within 30 days from the date of commencement of
business.
• For an assessee providing more than one taxable service, a single registration needs
to be filed by him mentioning therein, all the taxable services provided by him.
• If taxable services are provided by the assessee from more than one premise, and
has a centralized billing system at any one of such premises then he has the option to
get registration for only one premise from where such centralized billing is done. On
the other hand if taxable services are provided by the assessee from more than one
premise, and he does not have a centralized billing system, he has to make a
separate application for registration in respect of each of such premises.
• The assessee has to give some information like his name, address and the category
of services rendered except in the case of registration of a Stockbroker. The Service
Tax (Amendment) Rules, 2001, with effect from 16-7-2001, has inserted a new
column No 2A in Form ST-1 for furnishing PAN Number by the Assessee. If PAN has
not been allotted or applied for, the same is to be indicated.
• A certificate of registration in Form ST-2 shall be issued within 7 days from the date of
receipt of the application in Form ST-1. However if the registration certificate is not
granted within the 7-day period, the registration applied for shall be deemed to have
been granted. In the latter case where registration is deemed to have granted a slight
anomaly may arise owing to the non-allotment of registration number in the light of
the fact that Circular No. V/DGST/30-Misc-29/2001/3674 dated September 18, 2003
read with the Service Tax Credit Rules, 2002 require all service providers providing
taxable services to quote their registration number on their invoices.
• Every instance of transfer of business of a registered assessee to another would
entail the obtaining of a fresh certificate of registration.
• Every registered assessee, who ceases to provide taxable service, for which he is
registered, shall surrender his registration certificate immediately.
• The registration certificate issued to an assessee can be amended on various
grounds namely change in address of business premises, change in name and style
of firm etc.
• There is no minimum/threshold limit that is prescribed for registration.

It may be noted that Section 75 A of the Finance Act, 1994, providing for a penalty of Rs.
500/- to be imposed on such person who has failed to obtain a registration, being liable to pay
service tax, is proposed to be omitted by the Finance Bill 2004. Rules For Payment Of
Service Tax

• Service Tax is payable on the value of taxable services charged.

 • Where the assessee is an individual or a proprietary firm or a partnership firm: The
due date for payment of Service Tax is on or before 25th of the month immediately
following that quarter when the value of taxable services is received.
• For other assessees: The due date for payment of Service Tax is on or before 25th of
the month immediately following the month in which the value of taxable services is
received.
• A Non-Resident Indian (NRI) or a person from outside India who is liable to pay
Service Tax on taxable services rendered, but does not have any office in India, shall
pay the Service Tax through any other person authorized by him.
• Where an assessee is unable to correctly estimate the actual amounts of Service Tax
payable for any month or quarter, the assessee may make a request in writing to the
Central Excise Officer to make a provisional assessment of tax on the basis of the
amount that is deposited. The Central Excise Officer may, on receipt of such request,
order the provisional assessment of tax.
• Service Tax has to be paid to the credit of the Central Government and the service
tax, liable to be paid by the Assessee, shall be deposited in a bank designated by the
Central Board of Excise and Customs in Form TR-6 or any manner prescribed by the
Central Board of Excise and Customs.

Records Required To Be Maintained

The assessee is not required to maintain separate records for the purpose of service tax.
However, the assessee is advised to maintain the following documents:

• A bill file, containing the bills in serial, issued to the clients in respect of taxable
service rendered;
• Receipt, issued to the client in respect of payment received;
• A service tax register containing the details of the bills issued, payments received and
service tax deposited;
• Proper records for all the credit notes issued to the clients;
• A list of all accounts, maintained in relation to service tax including memoranda
received from branch offices, only at time of filing of return for the first time, is to be
furnished to the Superintendent of Central Excise.
Firm Registration

Proprietorship Firm

In the case of proprietorship firm, there is no registration required. As there is no

procedure to make application for availability of name (as in the case of companies)
applicable, you simply have to open a bank account with the name & style you want
to work. But if your business is liable for VAT and / or Service Tax registration, then
you have to obtain VAT and / or Service Tax registration. Further, for sole
proprietorship, no separate income tax PAN is required. The PAN of the proprietor
will be the PAN of the firm and proprietor will have to file income tax return in his
personal name.

Partnership Firm

A Partnership is defined by the Indian Partnership Act, 1932, as 'the relation between
persons who have agreed to share profits of the business carried on by all or any of
them acting for all'. This definition gives three minimum requirements to constitute a
partnership, viz.

(1) there must be an agreement entered into orally or in writing by the persons who
desire to form a partnership,

(2) the object of the agreement must be to share the profits of business intended to be
carried on by the partnership, and

(3) the business must be carried on by all the partners or by any of them acting for all
of them.

Section 4 of the Companies Act, 1956, provides that the number of partners in a firm
shall not exceed 20, and a partnership having more than 20 persons will be illegal.

A partnership firm is required to be registered under sections 58 and 59 of the

Partnership Act, though it is not compulsory. The main handicap being that a
partnership firm or its partner cannot file a suit against a third party.

Every change in the constitution of a partnership is also required to be registered. But

if it is not registered, then there are certain handicaps stated in S.69 of the Act.

For the purpose of income tax benefits It is necessary to register a partnership with the
Department under S. 184 and S.185 of the Income Tax Act, 1961.
Incorporation of company

Applicable law

The Indian Companies Act of 1956

Documentation of Incorporation Documents & Procedure for Company

Incorporation

When you chose to incorporate a company in India, an application for name

availability has to be filed with the Ministry of Corporate Affairs and post approval of
the same; the following documents are to be filed for incorporation of the company.

Each individual who want to become a director of the company, is required to apply
and obtain a Director Identification Number (DIN), which is unique and is required to
be quoted with all the companies in which, he / she is a director. For a registration of a
company, the first step is to make an application for DIN of those directors, who do
not have the same.

The documents required to be filed for incorporation at various stages are to be filed
online and the same are to be signed digitally be one of the directors. So before
initiating the procedure of name availability itself at least one director should hold a
digital signature.

An application for name availability has to be filed with the Ministry of Corporate
Affairs and post approval of the same; the following documents are to be filed for
incorporation of the company.

Memorandum of Association

Articles of Association;

A declaration stating that all the requirements of the Companies Act 1956 and the
applicable rules with respect to the registration and other matters have been complied
with;

A list of persons who have consented to act as directors of the company.

If the proposed company is a public company, consent of very person prepared to act
as a director must be submitted in a prescribed format;

Information about directors, managing directors and managers and secretary must be
submitted in a prescribed form 32;

Information about the registered office in a prescribed form 18;

Filing of Form 1 with Memorandum of Association, Articles of Association and

certification by a Chartered Accountant that the compliances are met.
Power of attorney and

Payment of applicable registration fee payable to the registrar of the companies.

RMC will undertake the procedures of applying for DIN of the proposed directors,
digital signature, guide you in naming your proposed company, draft the
Memorandum of Association, Articles of Association, and prepares the relevant
documents to be filed with the ROC in the prescribed formats and does
documentation and assists in fulfilling the requirements at different stages of
incorporation.
Guidelines for Name Availability

A Company you propose to incorporate can not have the same name or similarly close
name of another existing company registered in India.

The name of a company should start with a noun followed by the activity of the
company and should end with the words either 'Private Limited' in case of a private
limited company or the word 'Limited' in case of a public limited company.

Example: Right (Noun) Management Consultants (Acitivity) Private Limited (being a

private limited company).

If you own a trade mark, you can claim the text of the mark, for registering a
company with that name.

Authorised Capital
Key Words in the Name of a company
Required (INR)
(1) Corporation 5 Crores
(2) International, Globe, Global, Universal, Universe,
Continental, Inter-Continental, Asiatic, Asia, Asian, World 1 Crore
being the first word of the name
(3) If any of the key words at (2) above is used within the name
50 lakhs
(with or without brackets)
(4) Hindustan, Hindustani, Hindustanee, India, Indian, Bharat,
Bhrarati, Bharatiya, Bharateeya, being the first word of the 50 lakhs
name
(5) If any of the key words at (4) above is used within the name
5 Lakhs
(with or without brackets)
(6) Industries, Udyog, Industrial, Industry 1 Crore
(7) Enterprises, Enterprise, Products, Product, Business, 10 lakhs
Manufacturing, Manufacture

These names with key words at Serial Nos. (6) and (7) may be considered when the
company proposes to deal in various business activities or the company is already
carrying on various business activities (in the case of change of name).