FAQ

FAQ

When we have to appoint Auditors for the Company?

A company shall appoint an auditor within 3 months from the date of incorporation unless it is exempted from audit requirements under Section 204B or 205C of the Companies Act.

When we have to register for GST (Goods & Service Tax)?

You must register when:

  • At the end of a quarter if your taxable supplies exceed S$1 million for a quarter and the immediate past 3 quarters. Quarter refers to March, June, September or December; or
  • At any time if your taxable supplies are expected to exceed S$1 million for the next 12 months.

You can choose to register voluntarily when:

  • You make taxable supplies below S$1 million annually; or
  • You make Supply of Goods outside Singapore
  • You provide Financial Services that are also international services

It is a condition that you must remain GST-registered for at least 2 years for voluntary registration. IRAS may also impose other conditions e.g. the requirement of Security Deposits on a case-by-case basis.

Overseas companies must appoint an agent in Singapore to be responsible for its GST matters and obligations when applying for GST registration.

Goods and Service Tax is like value added tax in some countries is payable by an entity. In Singapore if any time the taxable supplies are expected to exceed S$1million in the next 12 months of operation in Singapore.

You are required to register for GST, you must apply and register within 30 days of becoming liable to pay the tax as mentioned earlier Para.

Exports are made out of Singapore are ‘ZERO’ rated and in order to claim the GST you have suffered at the time of import or local purchase of goods it is advisable to register for GST, even though you will not exceed S$1 million business in any financial year.

For GST registration requirements and any other formalities, kindly contact our Tax Dept for details and information or email tax@nscpa2000.com.

Shall we maintain books of Accounts in US$?

If your functional currency happens to be other than Singapore dollars, considering your group companies overseas, the Singapore Company can maintain the books of accounts in the functional currency. The financial statements can also be presented in the functional currency.

Usually companies would like to maintain the books of accounts in US$ and it is possible if the functional currency of the group happens to be US$. For more details you can refer to FRS 21 and interpretation INT FRS 19 or consult your audit department for details.

When we have to pay Skills Development Levy (SDL)?

Payments of levy under the skills development levy act (CAP.306) and the skills development levy regulations 1991.

SDL is payable for all employees whose gross remuneration is less than or equal to the salary ceiling of SGD 4,500/- per month and the employees include casual, part-time, temporary and foreign workers rendering services wholly or partly in Singapore.

Rate of contribution is 0.25% of employees’ gross remuneration* for the month or $2 whichever is the greater (i.e. minimum of $2 is payable for employees earning $200 or less)

Employers should make full payment on SDL together with the other monthly contributions to the central Provident Fund (CPF) Board as CPF is collecting SDL on behalf of the Singapore Workforce Development Agency.

When we have to File the Annual Return of the Company?

A local company is required to hold its Annual General Meeting (“AGM”) within 18 months of its incorporation and present its accounts to its shareholders. These accounts must not be made up to a date older than 6 months from the date of the AGM for a private company/unlisted public company, or 4 months for a public listed company. Thereafter, an AGM must be held once every calendar year but not later than 15 months from the date of the last meeting. A company has to file its Annual Return together with the accounts or the Exempt Private Company Certificate online within one month from the date of the AGM. Failure to comply with these statutory requirements may render the company and all its officers liable to prosecution.

What is the Importance of Company Registration No.?

With effect from 1st October 2004, the Companies Act will require every company to have the registration number (in addition to its registered name) on all business letters, statements of account, invoices, official notices and publications of or supporting to be issued or signed by or on behalf of the company. Bills of exchange, promissory notes, endorsements, cheques, orders, receipts and letters of credit issued by or purporting to be issued or signed by or on behalf of the company only needs to have the company’s registered name appearing on them. The rationale for the amendment is that the company registration number acts as a unique identifier distinguishing one company from another.

How to open a CPF Account and make Contributions?

Now all employers with 10 or fewer employees can submit CPF via the 300 AXS Stations Island wide!

With AXS stations, you can submit your CPF contribution details without computers or the need to look for Internet access. CPF e-Submission is now right at your doorstep with 300 AXS Stations conveniently located island wide. This is an extra convenience you enjoy as compared to manual submission. Pay with NETS or cash card at the AXS stations and you don’t have to worry about late or missing cheque anymore.

It takes just a few steps to complete your CPF submission at AXS stations:
  • Select “Employer Contribution”
  • Log on with your 7- digit Employer reference Number followed by your CPF Account Number
  • Enter details of payment
  • Select mode of payment
For further details visit www.cpf.gov.sg

When a company has to appoint Company Secretary?

Every company must appoint a secretary within 6 months of the date of incorporation.

When a Company holds its AGM ?

A company is required to hold its first AGM within 18 months after its incorporation Under Section 175. Subsequent AGMs must be held every calendar year and the interval between AGMs should not be more than 15 months.

When you have to file the Annual return for the company Incorporated in Singapore?

A company has to file its Annual Return together with the accounts or the Exempt Private Company Certificate online within one month from the date of the AGM. These accounts must not be made up to a date older than 6 months from the date of the AGM for a private company/unlisted public company, or 4 months for a public listed company. Failure to comply with these statutory requirements may render the company and all its officers liable to prosecution.

When you have to file the ECI (Estimated Chargeable Income)?

The company has to file to the income tax department the estimated chargeable income within 3 months from the date of closing the books of accounts of the company. If the company is dormant and is not engaged in any business, you still need to file a ‘NIL’ income statement to the department.

If you fail to do so, the tax department will estimate the chargeable income and expect the tax to be payable within one month of the assessment order being issued. Hence, we request you to liaise with us to file your returns for your company on time.

Please ignore this letter if your company has held its AGM and filed the AR.

Who is a non-resident Indian (NRI)?

Non-resident Indians (NRIs) are Indian citizens who stay abroad for employment or other purposes. NRIs include Indian citizens working abroad on assignments with foreign governments/government agencies or international/regional agencies such as the UN, IMF and World Bank. It also includes Indian officials (Centre, State and public sector undertakings) deputed abroad on temporary assignments or posted to their offices (including Indian diplomatic missions) abroad.

What is an OCB?

Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin resident outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of atleast 60% by individuals of Indian nationality or origin resident outside India as also overseas trusts in which atleast 60% of the beneficial interest is irrevocable held by such persons. Such ownership interest should be actually held by them and not in the capacity as nominees, The various facilities granted to NRIs are also available with certain exceptions to OCBs so long as the ownership/beneficial interest held in them by NRIs continues to be at least 60%.

What are the investment opportunities available to NRIs?

There are two types of investment opportunities available to NRIs:

  • Investment with repatriation benefits
  • Investment under non-repatriation basis

I am a NRI. How do I trade through the secondary market?

You can trade in shares and debentures through any member of a stock exchange, after obtaining necessary RBI permission. To obtain RBI permission, you need to open a bank account in India (under the Portfolio Management Scheme) with a designated bank. Through this bank, the RPI form is forwarded to RBI seeking permission to trade in shares and debentures from the secondary market on a repatriable basis. This form is to be filled by the client in duplicate.

RBI permission is blanket permission valid for five years. Investments on a non-repatriation basis can also be made from NRO accounts and also from funds remitted directly. For this, an NRI form must be submitted to RBI.

Do I need to get approval from RBI to buy and sell shares in the Indian capital market?

Yes, RBI approval is necessary for NRI investors to deal in the Indian capital market.

Is it necessary for me to get direct RBI permission to invest in Indian companies?

No, the RBI has granted permission to authorised dealer banks to purchase such shares/Debentures on behalf of NRIs/OCBs.

What are the formalities required for opening a bank account?

It is preferable that NRI investors deal only with one designated bank branch under portfolio investment services. To open an account, an undertaking letter, the bank account opening form and the following annexure should be submitted:

  • Two photographs signed across.
  • Copy of passport (first four pages and last page) and visa. These copies should be attested by the Bank Branch Manager (Overseas)/ Notary Public/an official of the Indian Embassy in the country of residence. 3. RPI form for repatriating the benefits or NRI form for non-repatriating the benefits.

FEMA

As per the FEMA (Transfer or Issue of Foreign Security) Regulations, 2004, Indian companies as well as individuals can make overseas investments. The investment by companies is referred to as “Corporate ODI”, while the investment by individual is referred as “Individual ODI”. In light of your queries, the difference between Corporate ODI and Individual ODI is summarized as follows:


  Corporate ODI Individual ODI
Limit on Investment of up to 400% of its net worth (paid up capital and free reserves) as per its last audited balance sheet. Limit applicable to overseas investment in any number of entities / in any form (including loans and guarantees). No limit applicable on investment through the EEFC Account (export earnings) of the Indian company. up to USD 250,000 per financial year, under the LRS
Activities of overseas entity Any activity other than the business of real estate or banking Any activity other than the business of real estate, banking or financial services
Step down subsidiary Allowed. No prior permission of RBI is required. Only reporting is required. Not allowed (it should be an operating entity only)
Branches or other forms of business presence No restriction, subject to applicable laws. No prior permission of RBI is required. No restriction, subject to applicable laws. No prior permission of RBI is required.

Note: All the compliances applicable in case of Corporate ODI (eg., filing of Form A-2, ODI, APR, valuation of shares etc.) are applicable in case of Individual ODI as well.

Q1: a) The annual return to be filed by an Indian Company to RBI for their operations of their overseas subsidiary- I need information relating to annual filling plus, the forms to be filed & the deadline for their filling.

A: In terms of the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004, the Indian company shall have to submit an Annual Performance Report (APR) to the RBI in Part II of Form ODI (as attached), on or before Dec 31 st every year. The APR shall be based on the audited annual accounts of the overseas subsidiary for the preceding year, unless specifically exempted by the RBI.

Q1: b) Penalties for non-compliance and for the delay in submission.

A: Section 13(1) of FEMA prescribes the penalty for any contravention of the provisions of the FEMA or any rule, regulation, notification, direction or order issued thereunder, which, upon adjudication

  • shall be up to thrice the sum involved where such amount is quantifiable, OR
  • up to two lakh rupees where the amount is not quantifiable;
  • In case of contravention is a continuing one, further penalty up to five thousand rupees for every day is prescribed.

Q2: a) Consolidation of overseas subsidiary to an Indian holding company, presently the requirement for consolidation is for only listed company, have they included for Private limited companies & when it is required to be done for private companies.

A: The requirement of consolidation of accounts of subsidiaries by an Indian Holding Company is prescribed under Section 129 of the Companies Act, 2013, which is applicable to all the companies, i.e., private as well as public companies. Section 129(3) requires an Indian company to consolidate Financial Statements (FS) of all of its subsidiaries, which includes overseas subsidiaries as well. The Listing Agreement, which applies only to the public companies listed on any stock exchange in India, additionally prescribes such requirement.

Q2 b) What is the deadline for consolidation of financial statements, filling requirements to the registrar of companies & the income tax department.

A: The audited consolidated FS are required to be laid before the shareholders at the annual general meeting of the company, to be held every year within 6 months of the closure of the financial year, i.e., by September 30 th . As per section 137(1), the audited FS are thereafter required to be filed with the Registrar of Companies, within 30 days of the date of annual general meeting.

As per the Income Tax Act, 1961, the Indian company shall be required to prepare its standalone financial statements and get them audited. The financial statements along with the audit report would have to be filed by the company to income tax department by furnishing a Return of Income before 30 th September of the subsequent year. Thus, in most of the cases, the Indian companies would not be required to furnish the consolidated financial statements to the income tax department. However, where the corporate entity in India is the parent entity having subsidiaries outside India, then it may be required to report its consolidated financial statements to the income tax department, subject to certain conditions provided in section 286 of Income Tax Act, 1961 (Country by Country Reporting). The text of Section 286 is attached for ease of reference.

Q3: If an overseas citizen of Indian Origin buys a property/Land (not an agricultural land) what are the permission required from RBI before purchase & the requirements before the sale of the land/Property.

A: Regulation 4 of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000, provides that a Person of Indian Origin Resident Outside India (PIO) may acquire any immovable property in India other than any agricultural property, plantation, or a farm house without any prior approval of the RBI. The payment of purchase price can be made through normal banking channels by way of inward remittance from any place outside India or through funds held in any non-resident account, if any. The immovable property thus acquired can be transferred by way of sale without any prior approval of RBI, but only to a person resident in India. Such sale proceeds can be repatriated outside India subject to the following conditions:

  • The amount to be repatriated does not exceed the amount paid for acquisition; and
  • In case of residential property, repatriation is restricted to not more than 2 properties.

Q4 a) If an Indian citizen remits money under LRS (Liberalized Remittance Scheme), can he use the fund to subscribe for the shares of a private ltd overseas and are there any restrictions on controlling interest (Say holding 51% to 100%)

A: Under the LRS Scheme any resident individual of India is allowed to invest by way of subscription / acquisition of shares of overseas companies (listed as well as unlisted), within the overall limit of USD 2,50,000 per financial year. No restriction is prescribed as regards the controlling interest of the Indian investor. However, the overseas company should be engaged in bona fide business activity and not in real estate / banking / financial services. Further, such entity must be an operating entity only and no step down subsidiary is allowed to be acquired or set up.

Q4 b) Any annual returns are to be filled about the investments to RBI under LRS scheme.

A: All remittances under the LRS can be made through an Authorized Dealer (Indian Bank). The remitter is required to furnish Form A2 (as attached) and Form ODI (Part I) to its Bank, at the time of each remittance. Thereafter, the APR shall have to be filed annually (Please refer to our response to Q # 1 above)

DO NRIs need to register and obtain an Aadhar Card issued in India?

INDIA’s Finance Act 2017 has made it mandatory to enrol for Aadhar (a 12-digit unique identification number issued by the Indian government to every individual resident of India) to file tax returns in India or apply for a Permanent Account Number (PAN) card. Aadhar card has been made mandatory for anyone filing an Income Tax return.

According to the Act, only a resident individual is entitled to obtain Aadhar, wherein resident means an individual who has re- sided in India for a period or periods amounting in all to 182 days or more in the 12 months immediately preceding the date of application for enrolment. Accordingly, the requirement to quote Aadhaar as per section 139AA of the Income-tax Act is not applicable to an individual who is not a resident as per the Aadhar Act, 2016.

Service tax or GST paid by any non-resident companies / resident companies can claim for tax offset in the double taxation agreement signed with India.

India’s Double Tax Avoidance Agreement (‘DTAA’) with Singapore is only in respect of Direct Taxes covered as per Article 2 of the said DTAA, which states that:

(a) in India:

income-tax including any surcharge thereon (hereinafter referred to as “Indian tax”);

(b) in Singapore:

the income-tax (hereinafter referred to as “Singapore tax’)

Service tax is an indirect tax and not a direct tax and as such is not covered by Article 2 of the said DTAA and hence charterer is not entitled to get credit in Singapore.

Please note that India has not signed any tax Treaty in respect of indirect taxes.