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Monday, September 17, 2012

Star-up village start getting tax lessons

START-UP VILLAGE STARTS GETTING TAX LESSONS

Tax deducted at source (TDS) can be an area of concern for start-up companies, according to Kochi-based GyanMagnus Associates (GMA). A boutique corporate law, tax and corporate finance firm, GMA conveyed this to an audience at the Startup Village campus, the telecom innovation hub in Kochi.

UNDERSTANDING TAX

The topic of the session conducted for the benefit of companies incubated in the facility was ‘How to understand and act on taxation related matters’. The audience comprised primarily of youngsters who were either still in college or had just passed out. Balakrishnan K., chartered accountant and co-founder, GMA, took the audience through the basics of income tax. He explained the rates at which TDS has to be deducted and emphasised the severe consequences of failure to comply. He advised start-up companies on steps to be taken before filing income tax returns and cited simple methods by which tax benefits and exemptions can be claimed.

NOT IN ALL CASES

Advocate Jose Jacob, another co-founder of GMA, explained the various exemptions and benefits available for incubate companies. But exemption may not be the most tax efficient option in all cases, he said, and illustrated those where it would be beneficial not to claim exemptions. Recent changes in service tax law cast added responsibility on recipients of service to discharge service tax on certain services. This would mean increase in compliance even by start ups and could prove a potential area of exposure, Jose Jacob said.

PROS AND CONS

Sherry Oommen, chartered accountant and a third co-founder, GMA, emphasised on getting it all right from the beginning — from choosing the correct legal entity for doing business. He gave comparisons between running a business under traditional forms such as a partnership firm or private limited company as against a limited liability partnership. He highlighted the pros and cons of each and reminded the audience of things to be kept in mind while choosing the form of legal entity. He also explained the compliances to be undertaken under labour law and other regulations, often not taken seriously by start-up companies.


source: www.thehindubusinessline.com

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