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DIN – What Does It Stand For?

DIN is the unique number provided to the director of a company by the Central Government. We can also say it is a specific number provided to an individual, who directs one or more companies. DIN is specific to a person, which means even if he or she is a director in two or more companies, he or she has to obtain only one DIN. And if he or she leaves a company and joins some other company, the same DIN would work in the other company as well.

Well, DIN is made up of an 8-digit number that is valid all through, which means DIN exists until the person continues to be director of the company. Through DIN, details of the directors are maintained in a database.

The Usage of DIN

If a return, an application or any information related to a company is submitted under any law, the director signing such return, application or information will mention his DIN underneath his/her signature.

DIN Application Procedure

Whenever the application fee is paid and the application is submitted, the system will generate an application number. Central Government will undertake the application and decide the approval or rejection.

When the DIN application is approved, the central government will communicate the DIN to the applicant within one month.

In case, the DIN application is rejected, it will e-mail the the reason for rejection to the applicant and will also put the reason on the website. The applicant will have 15 days to rectify the reason. If he rectifies such reasons and is able to satisfy the central government, he will be allotted DIN otherwise central government will label the application INVALID.

The Categories For DIN: 

a)     SPICe Form: Application for allotment of DINs to the proposed first Directors in respect of New companies shall be made in SPICe form only.

b)    DIR-3 Form: Any person intending to become a director in an already existing company shall have to make an application in eForm DIR-3 for allotment of DIN.

 c) DIR-6 Form: Any changes in the particulars of the directors shall be filed in form DIR-6.

To apply for DIN, the above forms are to be filed electronically. It has to be digitally signed and then uploaded on the MCA21 portal .

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The Documents Required For DIN:

a) For SPICe Form

 Attach proof of identity and address proof. DIN would be allocated to an applicant only after approval of the form.

b) For Form DIR 3 

i)  Attachments: Photograph, Identity proof, Residence proof, Verification (Name, father’s name, present address, date of birth, text of declaration and physical signature of the applicant). In the case of foreign nationals, they are required to submit their passport as identity proof.

ii). Documents to be attested by a CA or CS or CMA:

Photograph, identity proof and residence proof must be attested by a Chartered Accountant or a Company Secretary or a Cost Accountant, in whole-time practice.

iii) In the case of foreign nationals, their documents can be attested by the Consulate of the Indian Embassy and Foreign Public Notary.

iv) After uploading DIR-3 and the supporting documents, the applicant will pay the fee in the next window screen. It has to be paid through net banking, credit card or NEFT. Manual(offline) payment is not allowed.

 c) For Form DIR-6
For changing any details mentioned in the DIR-3 form/ SPICe with respect to Directors, then Form DIR-6 has to be submitted online. With the form, the attested supporting document is also required to be submitted

 Generation of DIN:
 

Once the application fee is paid and the application is submitted, the system will generate an application number. Central Government will process the application and decide the approval/ rejection.

If the DIN application is approved, the central government will communicate the DIN to the applicant within 1 month.

If the DIN application is rejected, it will e-mail the reason for rejection to the applicant and will also put the reason on the website. The applicant will get 15 days to rectify the reason. If he rectifies such reasons and is able to satisfy the central government, he will be allotted DIN otherwise central government will label the application INVALID.

Intimating DIN to company:

Within one month of receiving a DIN from the central government, the director has to intimate about his DIN to all companies where he is a director.  

The company will intimate RoC about DIN within 15 days from the date when the director intimates his DIN to the company.

Failure of the director to intimate DIN to the company or failure of the company to intimate RoC about DIN will result in penalties.

Reasons for Surrendering or cancelling the DIN
The Central Government may cancel the DIN due to the following reasons:

If a duplicate DIN has been issued to the director. 
DIN was obtained by wrong means
On the death of the concerned person
The person has been declared of unsound mind by the court
The person has been adjudicated as insolvent
The director can also surrender the DIN in Form DIR-5. With the form, he has to submit a declaration that he has never been appointed as a director in the company and the said DIN has never been used for filing any document with any authority. Upon verifying the e-records, the central government will deactivate the DIN.

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What is Income of a Company?

Taxable Income of a company is the income obtained by it minus the allowed tax deductions. This is the amount of Income which a company makes on which the government imposes taxes. Under the Income Tax Act,1961 income is defined as a sum of profits and gains, dividends and various other components mentioned in section 2(24), it is not an exhaustive but inclusive definition.

Tax Rates Applicable

Domestic Corporations

Source:incometax.gov.in

Foreign Corporations

Source: incometax.gov.in

Everything about Filing Income Tax Return by Corporates

Due Date

There is a due date for filing income tax returns, which in India is 30 October every year, if a venture has come into existence in that year it has to file the return on or before 31st October. However, these dates were extended during the pandemic.

Forms to be Filed by the company

Form ITR 6: All the companies have to fill this form except the companies who are claiming deduction under section 11.

Form ITR7: All the companies which are registered under section 8 of companies Act,2013 have to fill ITR7.

Tax Audit

Tax audit refers to the exercise of verification of account books that are maintained by the taxpayer. Purpose of the tax audit is to ensure compliance with the income tax laws. It is carried out to catch any discrepancy or mistake that may have occurred in the account, which may lead to disclosure of wrong information to the authorities. In India, the income tax Act mandates a company to get an audit done, and submit the audit report as well as the Income tax return.

The date for submitting tax audit report is September 30.

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Application and Exemption of Minimum Alternate Tax (MAT)

MAT is applicable to companies not individuals, partnerships etc. All the Corporations are mandated to pay MAT, if the Income tax payable(which includes Sur charge and cess) is less than 15% of the book profit plus cess and surcharge. Moreover, it is not applicable to any income obtained by a company from life insurance business and shipping income liable to tonnage taxation.

MAT will not be applicable to a foreign company if:

• the company belongs to a country or territory with which the government of India has an agreement as per Section 90 (1) or the company lacks a permanent establishment in the country as agreed to the Central Government under Section 90A(1) and
• the company does not have the above agreement and is further not required to seek registration under any law relating to companies
• It is a foreign company whose total income comprises of profits and gains arising from businesses mentioned in sections 44AB, 44BB, 44BBA or 44BBB of the income tax Act (section 115JB(4A)).

Tax Rebates Applicable on Corporate Tax

The rebates allowed to corporates in India are:

• Domestic companies can deduct the dividends that they have received from other domestic companies.
• Section 10 of Income Tax act applicable to venture fund and venture capital enterprises.
• Deduction allowed for exports and new undertaking in special cases.
• New infrastructure and power source setup subject to deductions.
• Provision of Business losses being carried over for upto 8 years.
• Interest, capital gains and dividends can also be rebated in some cases.

Corporate Tax Planning

Corporate tax planning is the simple process of strategizing financial business affairs in such a way so as to maximise the profits accrued and minimize the taxes payable. This has to be done by taking into account the deductions, rebates and exemptions that are available. A very Central factor of tax planning is to do so while remaining within the legal limits. It has to be done carefully by experts as huge money of the corporates remain at stake.

Health and Education Cess

It is a cess levied at 4% of the tax payable, by the government for the various welfare programs in the primary and secondary education and the development of the health infrastructure. In the budget of 2022 the finance minister has stated that this cess is not a business expenditure, which means corporations cannot claim its deduction.