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What is a small company?
Definition (Section 2(85) of the Companies Act, 2013): A Small Company is a private company that satisfies both of the following conditions: Paid-up share capital does not exceed ₹4 crore; and Turnover as per its last Profit and Loss account does not exceed ₹40 crore. 🆕 (As per MCA Notification dateRead more
Definition (Section 2(85) of the Companies Act, 2013):
A Small Company is a private company that satisfies both of the following conditions:
Paid-up share capital does not exceed ₹4 crore; and
Turnover as per its last Profit and Loss account does not exceed ₹40 crore.
🚫 Exceptions – The following are not considered Small Companies:
Even if they meet the capital and turnover limits, the following cannot be classified as a small company:
A public company
A holding or subsidiary company
A company registered under Section 8 (non-profit)
A company governed by any special Act
Why Classification Matters?
Small companies enjoy certain benefits and compliances relaxations, such as:
Exemption from cash flow statements.
Lesser penalties for defaults.
Simplified board meetings and annual returns (can be signed by one director).
No need for rotation of auditors.
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Who can sign share certificates of the company?
As per Section 46 of the Companies Act, 2013 and Rule 5(1) of the Companies (Share Capital and Debentures) Rules, 2014, share certificates must be signed by: Two directors of the company — one of whom must be: Managing Director (MD), or Whole-Time Director (WTD), if any. The Company Secretary (CS),Read more
As per Section 46 of the Companies Act, 2013 and Rule 5(1) of the Companies (Share Capital and Debentures) Rules, 2014, share certificates must be signed by:
Two directors of the company — one of whom must be:
Managing Director (MD), or
Whole-Time Director (WTD), if any.
The Company Secretary (CS), if the company has appointed one;
If there is no Company Secretary, then by any other person authorised by the Board.
🖊️ Manner of Signing:
The signatures of the directors and CS/authorised person may be printed or affixed digitally, but must be:
In accordance with the Articles of Association.
Properly authorised by a Board Resolution.
Compliant with any applicable Secretarial Standards (SS-1).
💡 Note:
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See lessCommon Seal is not mandatory, but if the company uses one, it should be affixed in accordance with the provisions of the Articles.
The certificate must also be issued within 2 months from the date of allotment (Section 56).
In case deposit is taken from a person who is both a director and a member of the Company, will such receipt of money be treated as deposit or not?
The classification depends on the capacity in which the amount is given — whether as a director or as a member (shareholder) — and the conditions attached to each case. Under Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014, certain amounts are excluded from the definition of 'depoRead more
The classification depends on the capacity in which the amount is given — whether as a director or as a member (shareholder) — and the conditions attached to each case.
Under Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014, certain amounts are excluded from the definition of ‘deposit’, including:
📌 1. Amount received from a director (not a deposit)
As per Rule 2(1)(c)(viii):
✅ Conditions:
A declaration in writing that funds are not borrowed.
Disclosure in Board’s report.
📌 2. Amount received from a member (could be a deposit)
As per Rule 2(1)(c)(vi) (applicable only to private companies under certain exemptions):
Limit of 100% of paid-up share capital + free reserves + securities premium.
Filing of Form DPT-3.
Compliance with Board resolution and other prescribed conditions.
🛑 For public companies, money from members is generally treated as deposit, unless it falls under exempted categories.
💡 Now, if a person is both a Director and a Member, how to treat it?
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See less✅ If the amount is received under Director’s category (with declaration and compliance), it will NOT be treated as deposit.
❌ If the amount is received as a Member/shareholder, it may be treated as deposit, subject to conditions and restrictions — especially in case of public companies.
Whether advance taken from customers by real estate company on which no interest has been paid will be treated as advance or deposit as per the Companies Act, 2013?
Such advance will NOT be treated as a deposit, if it satisfies certain conditions under the Companies Act, 2013 and its Rules. As per Rule 2(1)(c)(xii) of the Companies (Acceptance of Deposits) Rules, 2014, the following amount is not treated as a deposit: “Any amount received in the course of, or fRead more
Such advance will NOT be treated as a deposit, if it satisfies certain conditions under the Companies Act, 2013 and its Rules.
As per Rule 2(1)(c)(xii) of the Companies (Acceptance of Deposits) Rules, 2014, the following amount is not treated as a deposit:
“Any amount received in the course of, or for the purposes of the business of the company — as an advance for supply of goods or provision of services… provided that such advance is appropriated against supply of goods or services within 365 days from the date of receipt of such advance.”
In Real Estate Context:
If a real estate company receives advance from home buyers for allotment of flat/property:
✅ It will be treated as advance, not deposit, if:
It is received in the ordinary course of business, i.e., sale of flats/units.
The amount is appropriated towards the agreement (like allotment, construction milestone payment etc.) within 365 days.
❌ It will be treated as deposit if:
The amount remains unadjusted for more than 365 days, and
No refund or documented extension is in place.
📌 Important Note:
Even if no interest is paid, the classification depends on purpose and utilization, not interest payment.
Also, RERA (Real Estate Regulation and Development Act, 2016) mandates that 70% of the amount collected from allottees must be kept in a separate escrow account. However, RERA does not override the Companies Act, so the 365-day limit under Companies Act still applies for determining whether it’s a deposit.
See lessWhat is the preservation period of register of members and annual return under the companies Act, 2013 ?
1. Register of Members As per Section 88(1) of the Companies Act, 2013, every company is required to maintain a register of members (ROM), separately for: Equity shareholders, Preference shareholders, and Debenture holders or other security holders. As per Rule 15 of the Companies (Management and AdRead more
1. Register of Members
As per Section 88(1) of the Companies Act, 2013, every company is required to maintain a register of members (ROM), separately for:
Equity shareholders,
Preference shareholders, and
Debenture holders or other security holders.
As per Rule 15 of the Companies (Management and Administration) Rules, 2014:
✔ This applies to all companies, whether private or public.
📝 Note: In case of a company being wound up, the register must be maintained for 8 years after the dissolution of the company.
2. Annual Return (MGT-7 / MGT-7A)
Filed under Section 92 of the Companies Act, 2013.
🕒 Preservation Period:
According to Rule 15 of the Companies (Management and Administration) Rules, 2014:
See lessHow many type of Assessment and Appeals are in the Income Tax?
The Income Tax Act prescribes 5 main types of assessments, each with a different purpose and scope: 1️⃣ Self-Assessment – [Section 140A] This is done voluntarily by the taxpayer while filing the income tax return. If tax is payable as per return, it must be paid before filing. ✔ No notice from deparRead more
The Income Tax Act prescribes 5 main types of assessments, each with a different purpose and scope:
1️⃣ Self-Assessment – [Section 140A]
This is done voluntarily by the taxpayer while filing the income tax return.
If tax is payable as per return, it must be paid before filing.
✔ No notice from department required.
2️⃣ Summary Assessment – [Section 143(1)]
Also known as Intimation.
Done by CPC through computerised checks.
Adjustments for arithmetical errors, mismatch in TDS, etc., are made.
✔ No detailed scrutiny involved.
3️⃣ Scrutiny Assessment – [Section 143(3)]
Involves detailed examination of the return and accounts.
Done to verify correctness of income, claims, exemptions, deductions, etc.
✅ A notice under Section 143(2) is mandatory.
Commonly called Regular Assessment.
4️⃣ Best Judgment Assessment – [Section 144]
Used when:
No return is filed,
Return is defective and not rectified,
Compliance is not made with notices.
Officer assesses income based on available material.
5️⃣ Reassessment / Income Escaping Assessment – [Section 147/148]
Done when the Assessing Officer believes some income has escaped assessment.
Notice issued under Section 148.
Time limits and prior approvals apply as per amended provisions post Finance Act, 2021.
𝗧𝘆𝗽𝗲𝘀 𝗼𝗳 𝗔𝗽𝗽𝗲𝗮𝗹𝘀 (With Relevant Sections)
1️⃣ Appeal to CIT(Appeals) – [Section 246A]
First appellate authority.
Can appeal against order of Assessing Officer.
Must file appeal within 30 days of receiving order.
2️⃣ Appeal to Income Tax Appellate Tribunal (ITAT) – [Section 253]
Against orders of CIT(A) or certain orders of AO.
ITAT is the second level appellate authority.
3️⃣ Appeal to High Court – [Section 260A]
On substantial questions of law arising from ITAT orders.
Must be filed within 120 days from date of ITAT order.
4️⃣ Appeal to Supreme Court – [Section 261]
Against High Court judgment, only if case involves important legal principles.
Requires certificate of fitness from High Court.
5️⃣ Revision by CIT (u/s 263/264)
Not an appeal, but a review power:
Section 263 – Revision by CIT if order is erroneous and prejudicial to revenue.
Section 264 – Revision in favor of taxpayer.
🔄 Faceless Assessment and Appeals (Recent Development)
Introduced to bring transparency and efficiency.
Conducted electronically, without physical interface.
Applies to 143(3), 144 assessments and CIT(A) proceedings.
🧾 Summary Table:
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What is NPS?
National Pension System (NPS) is a government-sponsored pension scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It allows employees (public, private) and self-employed individuals to contribute regularly towards a retirement corpus, which they can withdraw partly aRead more
National Pension System (NPS) is a government-sponsored pension scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
It allows employees (public, private) and self-employed individuals to contribute regularly towards a retirement corpus, which they can withdraw partly at retirement, while the rest is used to buy a pension (annuity).
Tax Benefits under the Income Tax Act (Post-Budget 2025):
1. Employee’s Contribution:
Section 80CCD(1):
Deduction up to 10% of salary (Basic + DA) for salaried individuals.
For self-employed individuals, deduction up to 20% of gross total income.
This deduction is part of the overall limit of ₹1.5 lakh under Section 80CCE.
Section 80CCD(1B):
Additional deduction of ₹50,000, over and above the ₹1.5 lakh limit under Section 80C.
Available to both salaried and self-employed individuals.
2. Employer’s Contribution:
Section 80CCD(2):
Employer’s contribution up to 10% of salary (Basic + DA) is deductible for the employee.
For Central Government employees, this limit is enhanced to 14%.
This deduction is over and above the limits under Sections 80C and 80CCD(1B).
ax Treatment on Withdrawal:
Lump Sum Withdrawal:
Upon retirement, up to 60% of the accumulated corpus can be withdrawn as a lump sum.
This amount is exempt from tax under Section 10(12A).
Annuity Purchase:
The remaining 40% must be used to purchase an annuity, which provides regular pension income.
Annuity income is taxable in the year of receipt under the head “Income from Other Sources.”
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