With over 12 years of teaching experience (Online as well as Offline), he SURELY KNOWS IT ALL. According to the Indian Contract Act 1872 (hereinafter the Contract Act) all agreements are contracts if they are made with free consent of the parties who are competent to contract for a lawful consideration. The legal status of pre-incorporation contracts is not easy to define. He specializes in practical subjects – Accounting, Costing, Taxation, Financial Management. Legal status of pre-incorporation contracts in India. One of the pioneers in Online Education, he believes in providing a learning experience which is NEAT, SMOOTH and AFFORDABLE. He started teaching CA, CS, 11th, 12th, B.Com, M.Com students in an offline mode until 2016 when Konceptca was launched. He cleared his CA Finals in May 2011 and has been into teaching since. A firm believer of Real Teaching, according to him - "Real Teaching is not teaching standard methods but giving the power to students to develop his own methods". He is a story teller who specializes in simplifying things, connecting the dots and building a story behind everything he teaches. Yash Sir (As students call him fondly) is not a teacher per se. Perfectionist by heart, he is the founder of - Konceptca. Yashvardhan Saboo A Story teller, passionate for simplifying complexities, techie. Preliminary Expenses: These are those expenses which are incurred for setting up of new business i.e., before commencement, or for extension of existing undertaking or in connection with setting up of a new unit. setting off against Post-incorporation Profit Section 35D of the Income Tax Act, 1961 deals with the Amortization of Expenditure incurred in respect of Preliminary Expenses.It is treated as a part of business acquisition cost (Goodwill) It is transferred to Capital Reserve Account (i.e. For the period from the date of acquisition of business to date of incorporation.Interest on purchase consideration to vendor On the basis of turnover in the respective periods For Tax Audit under section 44 AB of the income tax Act, 1961.For Company's Audit under the Companies Act.Time Ratio - On the basis of time in the respective periods in the absence of any information regarding turnover and cost of good sold (third prefernce)įixed Common charges Įxpenses exclusively relating to pre-Incorporation period Ĭharge to Pr-incorporation period (but if the purchase consideration is not paid on taking over of business, interest for the subsequent period is charged to post incorporation period)Įxpenses exclusively relating to post-incorporation period On the basis of cost of goods sold in teh respective periods in the absence of any information regarding turnover (second prefernce) Sales Ratio - On the basis of turnover in the respective periods (first preference) It means that once you start operating your business, you can offset the costs. Fortunately, you can make a claim for these expenses incurred over seven years before the incorporation of a company. ![]() While pre–operative expenses are expenditures incurred by the promoters after the entity is set up and till the time the company commences actual production / operation.Basis of Apportionment between pre and Post incorporation period Section 61 of the Corporation Tax Act states that pre-formation expenses are taken as expenses that were incurred on the first day of incorporation. Pre-incorporation expenses are those expenses which are incurred by the promoters till the time the Indian entity obtains its legal existence and is registered with the government authorities. ![]() These expenses are often referred to as pre–incorporation and pre–operative expenses. Until then, invariably the headquarters invests its time in planning and also spends towards the initial set-up costs & execution of preliminary tasks, which are necessarily to be undertaken on behalf of WOS. ![]() The capital subscription money is technically available for use only after the WOS is incorporated and has an operative bank account. Usually, until incorporation, followed by reporting of capital subscription money, such WOS is supported financially from the headquarters. A Wholly Owned Subsidiary (‘WOS’), takes times and cost from the date of initiation till the time the Indian entity could be brought to a stage of functionality. Most foreign investors venturing into Indian markets have questions as to the optimal financing methodology.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |