Archive for July 2020

SETTING UP A SOLE PROPRIETORSHIP BY AN OVERSEAS CITIZEN OF INDIA(OCI)

A person with Overseas Citizenship of India (OCI) can live and work in India indefinitely. However unlike an Indian Citizen, he cannot vote, have no right to hold constitutional offices, and no right to buy agricultural properties. He is also exempt from registration with the Foreigners Regional Registration Officer (FRRO) on his arrival in India.

An OCI is allowed to set up a proprietorship concern in India, on non-repatriation basis. The money to conduct the business should come from Indian Bank accounts in INR. The OCI should have a PAN Number and Indian Valid Address proof (ideally Aadhaar). The OCI can also buy/rent/ lease immovable property in India for the purpose of his business, except agricultural land.

If the OCI intends to put in any money at any point in time in the business from an overseas account, such a transfers qualify as an FDI and FDIs are not permitted in Sole Proprietorship.

The basic licenses/registrations required are registration under the Shops and Establishment Act and GST Registration.

Important documents required are Passport, Aadhar, PAN and address proof for the business establishment.

Bank accounts of Minors

1. A minor is a person below the age of 18 years. The Reserve Bank of India, on May 6, 2014, issued a notification regarding the opening and operating minors’ accounts.

2. A minor of any age can open a savings/fixed/recurring bank deposit account through his/her natural or legally appointed guardian.

3. Minors above the age of 10 years may be allowed to open and operate savings bank accounts independently, if they so desire. Banks may, however, fix limits in terms of age and amount up to which minors may be allowed to operate the deposit accounts independently.

4. Banks can also decide, in their own discretion, as to what minimum documents are required for opening of accounts by minors. Usually Pan Card details of the parent/ guardian are required. Also, the parent/guardian should have an account in the bank where they wish to open the minor’s account.

5. On attaining majority, the minor should confirm the balance in his/her account and if the account is operated by the natural guardian/legal guardian, fresh operating instructions and specimen signature of the erstwhile minor should be obtained and kept on record for all operational purposes.

6. Banks are free to offer additional banking facilities, such as, internet banking, ATM/debit card, cheque book facility etc., subject to the safeguards that minor accounts are not allowed to be overdrawn and that these always remain in credit.

7. The interest earned on the amount saved in minor bank accounts is taxable. Usually, the interest from a minor account is clubbed with the parent/guardian’s income and is considered taxable. Any income that accrues or is paid to a minor is added to the parent’s income under section 64(1A) and the parent will be taxed just like if it were their own income. However, if the interest earned is less than Rs. 1,500, then a tax exemption equal to the amount of interest earned is granted. If both the mother and father are earning, the income of the minor is added to the income of that parent whose income is greater.