Goods and Services Tax (GST) - An overview.

Introduction

GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits from the producer's point and service provider's point up to the retailer's level. It is essentially a tax only on value addition at each stage, and a supplier at each stage is permitted to set-off, through a tax credit mechanism, the GST paid on the purchase of goods and services as available for set-off on the GST to be paid on the supply of goods and services. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

Illustration:- Let us suppose that GST rate is 10%, and a manufacturer is using goods and services worth Rs.100/- in the manufacturing process. He is making a value addition of Rs.30/- on this to sell the goods to the wholesaler. The manufacturer will then pay net GST of Rs.3/- after setting-off Rs.10/- as GST paid on his input goods and services worth Rs.100/-(i.e. Input Tax Credit) from gross GST of Rs.13/-. When the wholesaler sells the same goods after making value addition of (say), Rs.20/-, he pays net GST of only Rs.2/-, after setting-off of Input Tax Credit of Rs.13/- from the gross GST of Rs.15/- (10% of Rs.150/-) to the manufacturer. Similarly, when a retailer sells the same goods after a value addition of (say) Rs.10/-, he pays net GST of only Re.1/-, after setting-off Rs.15/- from his gross GST of Rs.16/- (10% of Rs.160/-) paid to wholesaler. Thus, the manufacturer, wholesaler and retailer have to pay only Rs.6/- (=Rs.3+Rs.2+Re.1) as GST on the value addition along the entire value chain from the producer to the retailer, after setting-off GST paid at the earlier stages. The overall burden of GST on the goods is thus much less.

Features of the proposed GST model

The salient features of the proposed model are as follows:

(i) Consistent with the federal structure of the country, the GST will have two components: one levied by the Centre (hereinafter referred to as Central GST), and the other levied by the States (hereinafter referred to as State GST). This dual GST model would be implemented through multiple statutes (one for CGST and SGST statute for every State). However, the basic features of law such as chargeability, definition of taxable event and taxable person, measure of levy including valuation provisions, basis of classification etc. would be uniform across these statutes as far as practicable.

(ii) The Central GST and the State GST would be applicable to all transactions of goods and services except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits.

(iii) The Central GST and State GST are to be paid to the accounts of the Centre and the States separately.

(iv) Since the Central GST and State GST are to be treated separately, in general, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST. The same principle will be applicable for the State GST.

(v) Cross utilization of ITC between the Central GST and the State GST would, in general, not be allowed.

(vi) To the extent feasible, uniform procedure for collection of both Central GST and State GST would be prescribed in the respective legislation for Central GST and State GST.

(vii) The administration of the Central GST would be with the Centre and for State GST with the States.

(viii) The taxpayer would need to submit periodical returns to both the Central GST authority and to the concerned State GST authorities.

(ix) Each taxpayer would be allotted a PAN-linked taxpayer identification number with a total of 13/15 digits. This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax facilitating data exchange and taxpayer compliance. The exact design would be worked out in consultation with the Income-Tax Department.

(x) Keeping in mind the need of tax payers’ convenience, functions such as assessment, enforcement, scrutiny and audit would be undertaken by the authority which is collecting the tax, with information sharing between the Centre and the States.

Central and State taxes proposed to be subsumed under GST

The various Central, State and Local levies were examined to identify their possibility of being subsumed under GST. While identifying, the following principles were kept in mind:

(i) Taxes or levies to be subsumed should be primarily in the nature of indirect taxes, either on the supply of goods or on the supply of services.

(ii) Taxes or levies to be subsumed should be part of the transaction chain which commences with import/ manufacture/ production of goods or provision of services at one end and the consumption of goods and services at the other.

(iii) The subsumation should result in free flow of tax credit in intra and inter-State levels.

(iv) The taxes, levies and fees that are not specifically related to supply of goods & services should not be subsumed under GST.

(v) Revenue fairness for both the Union and the States individually would need to be attempted.

On application of the above principles, the Empowered Committee on GST as recommended that:

The following Central Taxes should be, to begin with, subsumed under the Goods and Services Tax:

(i) Central Excise Duty

(ii) Additional Excise Duties

(iii) The Excise Duty levied under the Medicinal and Toiletries Preparation Act

(iv) Service Tax
(v) Additional Customs Duty, commonly known as Countervailing Duty (CVD)
(vi) Special Additional Duty of Customs - 4% (SAD)
(vii) Surcharges, and
(viii) Cesses.


The following State taxes and levies would be, to begin with, subsumed under GST:


(i) VAT / Sales tax
(ii) Entertainment tax (unless it is levied by the local bodies).
(iii) Luxury tax
(iv) Taxes on lottery, betting and gambling.
(v) State Cesses and Surcharges in so far as they relate to supply of goods and services.
(vi) Entry tax not in lieu of Octroi.

Purchase tax: Some of the States felt that they are getting substantial revenue from Purchase Tax and, therefore, it should not be subsumed under GST while majority of the States were of the view that no such exemptions should be given. The difficulties of the food grain producing States was appreciated as substantial revenue is being earned by them from Purchase Tax and it was, therefore, felt that in case Purchase Tax has to be subsumed then adequate and continuing compensation has to be provided to such States. This issue is being discussed in consultation with the Government of India.

Tax on items containing Alcohol: Alcoholic beverages would be kept out of the purview of GST. Sales Tax/VAT could be continued to be levied on alcoholic beverages as per the existing practice. In case it has been made Vatable by some States, there is no objection to that. Excise Duty, which is presently levied by the States may not also be affected.

Tax on Tobacco products: Tobacco products would be subjected to GST with ITC. Centre may be allowed to levy excise duty on tobacco products over and above GST with ITC.


Tax on Petroleum Products: As far as petroleum products are concerned, it was decided that the basket of petroleum products, i.e. crude, motor spirit (including ATF) and HSD would be kept outside GST as is the prevailing practice in India. Sales Tax could continue to be levied by the States on these products with prevailing floor rate. Similarly, Centre could also continue its levies. A final view whether Natural Gas should be kept outside the GST will be taken after further deliberations.

Taxation of Services: As indicated earlier, both the Centre and the States will have concurrent power to levy tax on goods and services. In the case of States, the principle for taxation of intra-State and inter State has already been formulated by the Working Group of Principal Secretaries /Secretaries of Finance / Taxation and Commissioners of Trade Taxes with senior representatives of Department of Revenue, Government of India. For inter-State transactions an innovative model of Integrated GST will be adopted by appropriately aligning and integrating CGST and IGST.


Taxation of Imports


With Constitutional Amendments, both CGST and SGST will be levied on import of goods and services into the country. The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available on the GST paid on import on goods and services.


Tax benefit for exporters


The subsuming of major Central and State taxes in GST, complete and comprehensive set off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.


Inter-State Transactions of Goods and Services


The Empowered Committee has accepted the recommendations of the Working Group of concerned officials of Central and State Governments for adoption of IGST model for taxation of inter-State transaction of Goods and Services. The scope of IGST Model is that Centre would levy IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The relevant information will also be submitted to the Central Agency which will act as a clearing house mechanism, verify the claims and inform the respective governments to transfer the funds.


Land and Real Property transactions


Under the ‘old’ VATs (such as those in Europe), land and real property supplies are excluded from the scope of the tax. To minimize the detrimental impact of an exemption under a VAT, business firms are given the option to elect to pay tax on land and real property supplies.

Under a modern GST/VAT (e.g., in Australia, New Zealand, Canada, and South Africa), housing and construction services are treated like any other commodity. Thus, when a real estate developer builds and sells a home, it is subject to VAT on the full selling price, which would include the cost of land, building materials, and construction services. Commercial buildings and factory sales are also taxable in the same way, as are rental charges for leasing of industrial and commercial buildings. There are only two exceptions: (1) resale of used homes and private dwellings, and (2) rental of dwellings:

• A sale of used homes and dwellings is exempted because the tax is already collected at the time of their first purchase, especially for homes acquired after the commencement of the tax. If the sale were to be made taxable, then credit would need to be given for the tax paid on the original purchase and on any renovations and additions after the purchase. Except where the prices have gone up, the net incremental tax on resale may not be significant. Theoretically, this system does create a windfall for the existing homes build and acquired prior to the commencement of the tax. In practice, the windfall is not significant as the home construction would have attracted other taxes on construction materials and services that prevailed at the time.


• Residential rentals are also exempted for the same reason. If rents were to be made taxable, then credit would need to be allowed on the purchase of the dwelling and on repairs and maintenance. Over the life of the dwelling, the present value of tax on the rents would be approximately the same as the tax paid on the purchase of the dwelling and on any renovation, repair, and maintenance costs. In effect (and as with other consumer durables), payment of VAT on the full purchase price at acquisition is a prepayment of all the VAT due on the consumption services that the house will yield over its full lifetime. A resale of a dwelling is exempted for the same reason: the tax was pre-paid when the dwelling was initially acquired.


• Many private individuals and families own residential dwellings (including their homes and summer residences) which they may rent to others. They are generally not in the VAT system, so do not get a credit for the VAT paid when they initially acquire their new home. Nor do they claim any credit for any repairs or renovations they may have made to the existing homes. If the rental of such dwelling were subject to tax, owners should also be given a credit for the taxes paid on such costs-which would be complex, and difficult to monitor.


Thus, virtually all countries exempt long-term residential rents and resale of used residential dwelling. However, short-term residential accommodation (in hotels, for example) is normally subject to VAT. Any commissions charged by the agents and brokers for the sale or rental of a dwelling are treated as a service separate from the sale or rental of the dwelling and attract tax regardless of whether paid by the buyer or the seller.

Sale or rental of vacant land (which includes rental of car parking spaces, fees for mooring of boats and camping sites) is also taxable under the ‘modern’ VAT system.

It would make sense to incorporate these concepts in the design of GST in India as well.


• Conceptually, it is appropriate to include land and real property in the GST base. To exclude them would, in fact, lead to economic distortions and invite unnecessary classification disputes as to what constitutes supply of real property.


• In the case of commercial and industrial land and buildings, their exclusion from the base would lead to tax cascading through blockage of input taxes on construction materials and services. It is for this reason that even under the European system an option is allowed to VAT registrants to elect to treat such supplies as taxable.


• Housing expenditures are distributed progressively in relation to income and their taxation would contribute to the fairness of the GST.


• The State VAT and the Service Tax already apply to construction materials and services respectively, but in a complex manner. For example, there is significant uncertainty whether a pre-construction agreement to sell a new residential dwelling is a works contract and subject to VAT. Where the VAT does apply, disputes arise about the allocation of the sale price to land, goods, and services. While land is the only major element that does not attract tax, the tax rates applicable to goods and services differ, necessitating a precise delineation of the two. Extending the GST to all real property supplies, including construction materials and services, would bring an end to such disputes, simplify the structure, and enhance the overall economic efficiency of the tax.

One potential argument against the levy of GST to land and real property would be that they already attract the stamp duty. This argument can be quickly discarded as the purpose and structure of the stamp duty is quite different from that of the GST. Stamp duty is a cascading tax on each conveyance of title to real property, whereas the GST is a tax on final consumer expenditures. The GST does not impinge on commercial property transactions, after taking into account the benefit of input tax credits. It does not result in tax cascading. Under the model described above, in the case of residential dwellings, the GST would apply to the first sale only. Thus, the two taxes cannot be viewed as substitutes. However, the application of GST to real property transactions does warrant a review of the structure and rates of stamp duties and registration fees. The rates should be lowered and the structure rationalized when the GST is introduced.

EPF rates and calculation

Employees Provident Fund Organization, India ( EPFO )

The EPF& MP (Miscellaneous provision) act was came in to existence from March 14th 1952.The act is applicable all over India except the state of Jammu and Kashmir. Presently the following three schemes are providing to employees under this act.
1. Employees’ provident fund scheme (EPF) 1952.
2. Employees’ pension scheme (EPS) 1995.
3. Employees deposit linked insurance scheme (EDLIS) 1976.

An establishment with 20 or more workers should register with Employees provident Fund organization which comes under any of the 180 industries mentioned. Here we mainly aimed for EPF rates and its calculation.

EPF, EPS, EDLIS rates in India
EPF, EPS and EDLIS are calculated on the aggregate of Basic salary, dearness allowances, cash value of food concession and retaining allowances, if any.
“Retaining allowances means an allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working, for retaining his services.”
Most of the organizations are following Basic+ DA Method. Below table tells you the rates of contribution of EPF, EPS, EDLI, Admin charges in India, except for sick industries.

Inspection charges payable by employer
Inspection charges must be paid by the employer in the following Cases:
1. Some establishment are exempted from EDLI contribution as they are providing the same nature of benefit without any contributions from employee, such establishments are liable to pay 0.005% on Basic salary
2. The establishments exempted under the scheme should pay 0.18% of Basic salary towards inspection charges.

EPF Ceiling Limit
EPF ceiling limit is fixed to 6500/-.The employer is liable to pay contribution only on 6500/- Whatever is the basic salary.

Calculation of Employees provident fund
Let us calculate the contribution of an employee who is getting a basic salary of Rs.3500/-
EPF Employees share = 3500 x 12% = 420
EPS Employer share = 3500 x 8.33% = 292
EPF employer share = 3500 x 3.67% = 128
EDLI charges = 3500 x 0.5% = 18
EPF Admin charges = 3500 x 1.1% = 39
EDLI Admin charges = 3500 x 0.01% = 0.35 (Round off to Rs 1/-)

Calculation of EPF for employees getting a basic salary over and above the ceiling limit Rs.6500/-
In such cases companies uses different method for calculation as per their pay roll policy.

Consider an employee getting a basic salary of Rs.7500/-
We can calculate it in different ways. The only thing we should take care is, EPS is calculated only up to Rs.6500/- that means the maximum amount is fixed to Rs 541.00. The three methods mentioned below are based on the above example.
Method-1
If the company consider total basic salary above the limit fixed Rs.6500/- for PF calculation.

EPF Employees share = 7500 x 12% = 900
EPS Employer share = 6500 x 8.33% = 541
EPF employer share = 7500 x 3.67% = 359 OR (7500 x 12% - 541)
EDLI charges = 7500 x 0.5% = 38
EPF Admin charges = 7500 x 1.1% = 83
EDLI Admin charges = 7500 x 0.01% = 0.75 (Round off to Rs 1/-)

We will discuss how Employer contribution of EPS and EPF is calculated. Employer is decided to contribute on total basic salary which is 12 % on Rs.7500.00 equal to Rs.900.00. EPS Share is fixed to Rs.541.00. Balance (900-541) goes to EPF account Rs.359.00.

Out of Rs 900.00, EPS share is RS 541/- which is fixed for a basic salary greater than 6500/-. The balance amount is 900-541 = 359.00 which will go to EPF account.

Method-2
Some companies follows the below method in which employee share is calculated on Rs.7500/- and employer share is calculated on up limit Rs 6500/-.

EPF Employees share = 7500 x 12% = 900
EPS Employer share = 6500 x 8.33% = 541
EPF employer share = 6500 x 3.67% = 239
EDLI charges = 6500 x 0.5% = 33
EPF Admin charges = 6500 x 1.1% = 72
EDLI Admin charges = 6500 x 0.01% = 0.65 (Round off to Rs 1/-)

Method-3
Some are calculating both employer and employee shares on Rs 6500/- in spite of higher basic salary.

EPF Employees share = 6500 x 12% = 780
EPS Employer share = 6500 x 8.33% = 541
EPF employer share = 6500 x 3.67% = 239
EDLI charges = 6500 x 0.5% = 33
EPF Admin charges = 6500 x 1.1% = 72
EDLI Admin charges = 6500 x 0.01% = 0.65 (Round off to Rs 1/-)

Remittance of contribution
It is the duty of employer to remit the contribution to the government account before 15th of the following month.

Employer's interest Liability
Employers are liable to pay @12% interest on late payment of EPF, EPS, EDLI, Administrative charges.

Damage liability
An employer is remitting EPF, EPS, EDLI, and Admin charges late shall be liable to pay damages as penalty ranging from 17% to 37% depending up on delay.

Audit Check List - People Services

I. Personnel / HR Department.
- Verify the Service Records / Personal Files / Joining records for qualifications/date of birth/experience/terms and conditions for offer etc.
- Verify the HR policies, training details (both external and internal), KRA Appraisal procedure etc.
- Verify the appointment procedure of contractors for various duties, records maintained by them and the copies of statutory payment challans made directly by the Contractors.
- Verify the personal files of employees relieved under VRS / retirement / resignation for settlement details.
- Verify the files pertaining to Vehicles given on subsidized scheme / loan and its insurance / copy of RC book / hypothecation etc.
- Verify the register for Identity cards / Punching cards and check whether the same is collected back from the separated employees.
- Verify procedure for giving LTA and the Leave taken for that. (Minimum 3 days PL)
- Verify the procedure / time frame for procurement and issue of Uniforms, Shoes etc. and the issue register of that.
- Verify the copies of statutory returns filed under various Acts like PF/ESI/PT/Labour/Arms&Explosives / Apprentice /Workmen compensation etc.
- Verify the pending labour cases and its present status, if any.

II. Security.

1) Main gate:
- Verify the Gate passes and check whether the entries are properly made and its authorization procedure – both returnable and non-returnable.
- Verify the procedure on keeping the godown/stores keys.
- Verify the system of issuing Visitor’s pass and its register.
- Verify the Movement Authorization requests and register of Company staffs either for OD or Personal work.

2) Material Gate:
- Verify the procedure for despatch of material and weighment details, if any, for that.

III. Time Office.
- Verify the attendance marking / regularisation system.
- Verify the procedure for Overtime marking and attendance for two continuous shifts.
- Verify the procedure for Special Leave, if any, after two continuos shifts.
- Verify the Out Gate – pass Register and Muster Roll Register and cross verify.
- Verify the deductions made from the wages for attendance less than 6 hours in a shift.
- Verify the procedure for change in shifts, if any.
- Verify the leave eligibility, leave credits, procedure for availing leave etc. and cross check the same with the leave rules.
- Verify the procedure for giving Compensatory Off, its carry forward, if any, and the application for the same.

IV. Health Centre.
- Verify the agreement with the present agency, if any.
- Verify the physical stock of medicines and compare the same with the Stock register.
- Check the expiry dates of medicines stored on random basis.
- Verify the no. of First Aid Boxes and the requirement of the same under Factories Act, 1948.
- Verify the accident record register and daily treatment register.
- Verify the logbook of Ambulance.

V. General Admn. Department.
- Verify the challans for payment of Property tax for timely deposit / penalty for delay etc.
- Verify the contract agreements for Gardening, Courier, Vehicles etc. and AMCs for the assets like Photocopier, EPABX etc.
- Verify the logbook of Company vehicles and Fuel consumption.

VI. Guest House.
- Verify the visitor’s register, asset register etc.
- Verify the guesthouse expense details and its approval.
- Verify the general maintenance and cleanliness of the guesthouse.
- Physical verification of Imprest cash.

Basic Things on Accounting

1) DEBIT - what comes in
2) CREDIT - what goes out
3) DEBIT - all expenses
4) CREDIT - all incomes
5) DEBIT - increase in asset
6) CREDIT - deacrease in asset
7) DEBIT - decrease in liability
8) CREDIT - increase in liability
9) CAPITAL = ASSET - LIABILITY

Limited Liability Partnership Act 2008 – An Overview

Introduction

Partnership is one of the oldest and is very popular form of business in India. Small businesses and professionals prefer it to any other form of business. However it requires some modifications to suit with changing requirements. Hence, there emerged a new concept called Limited Liability Partnership or LLP.

Limitations of Traditional Partnership Firms and Emergence of LLP

The major limitations of traditional partnership which lead to introduction of LLP is its unlimited liability. Today partners are compelled to compensate from their personal estate the debt of their partnership firm. This is the reason why many persons especially professionals afraid to join partnership. Limited Liability Partnership has become necessary to allow Indian professional to compete with international business community without apprehensive of being subject to excessive liability.
There is upper limit of partners (20 or 10) in Traditional partnership. LLP does not contain such kind of ceilings. This will allow professionals to compete on the larger scale. They can have larger capital base and also expand their operations without much restrictions.
In partnership, partnership does not have separate identity different from their partners. Hence, death, retirement or insolvency of any partner almost amount to dissolutions of partnership firm practically. But LLP has separate legal entity different from their partner just as share holder in company has. Therefore, change in partners does not have any effect on LLP. Moreover partner can enter into agreement with LLP and vice versa which is not possible now.

These three are main limitations which raised demand for LLP. This concept is getting popularity worldwide. The USA has adopted it as early as in 90s. UK, Japan, China, Canada, etc have started following it after 2000s. However in most of nations LLP is allowed only for professionals like accountant, lawyers or architects. Responding to global changes and demands from within, Government of India has enacted Limited Liability Partnership Act 2008. LLP can be simply defined as combination of Partnership and private company or
Partnership + Private Limited Company = Limited Liability Partnership
Hence it is very important to compare LLP with these two.

Introduction of LLP in India

There has been continuous demand for LLP in India. After globalization, Indian professionals are able to serve worldwide. They cannot serve in form of company because of professional restrictions. They hesitate to form partnership due to number of aforesaid reasons. The Limited Liability Partnership is expected to provide platform to small and medium professional firms of chartered accountant, company secretaries, etc to conduct their profession efficiently which in turn will increase their global competitiveness.

Hence government presented Limited Liability Partnership Bill 2006 in parliament which letter on become Limited Liability Partnership Act 2008. The LLP Act is broadly based on LLP laws of United Kingdom and Singapore. However a care is also taken to fit in Indian environment. In most of nations LLP is allowed to create for professional firms only. However there is demand from institutions like FICCI to allow LLP for business purpose also. Accordingly LLP can be set up for all profit earning objectives. LLP is expected to fill the room between partnership and private company in India.

How to incorporate LLP?

The incorporation procedure of LLP is very much same to incorporation of company. Prior to form LLP, person has to decide about designated partners.

Designated Partners:-
Every LLP must have at least 2 designated partners which must be individuals. One of designated partner must be resident of India. Designated partner should not be confused with working partner. Designated partner is one who is liable for regulatory and legal compliances in addition to his liability as partner.

Designated partner shall apply for Designated Partner Identification Number (DPIN) from Ministry of Corporate Affairs. He should also obtain digital signature certificate because he will be required to sign digitally all e-forms to be filled with ROC.

The designated partner shall electronically apply for reservation of name of LLP. Every LLP must contain word LLP after its name. Moreover, where LLP contains name like Chartered Accountants, Advocate, etc., approval must be obtained from concerned institution.

In order to get registration, LLP must file incorporation document with ROC. Such incorporation document must be signed by at least two partners. The internal management of LLP is governed by LLP agreement. The LLP agreement contains provision as to management, right, liability, contribution, remuneration of working partners, admission, retirement, accounts, etc. it is not compulsory to have LLP agreement. An LLP may adopt format given in Schedule 1 of LLP Act. However one may not agree with all provisions of schedule I and hence it is advisable to draft LLP agreement. LLP is also required to file details such as name, occupation, addresses of its partner. It is also required to have its registered office. LLP must convey any changes in above details to ROC with in prescribed time limit.

Administration of LLP

After discussing about incorporation of LLP, let us have a brief idea about administration of LLP. LLP carries on its day to day business in accordance of LLP agreement. Each partner shall be liable to contribute amount as per LLP agreement. Such contribution may consist of both tangible or intangible property and any other benefit to LLP.

LLP agreement will provide regulations for day to day business of LLP. Working partners have to observe such regulations. They are responsible for taking daily business decisions and may be paid remuneration for the same. Every partner of LLP is agent of LLP but not of other partner. Each partner is personally liable for any wrongful act or omission or fraud done by him. Other innocent partners are not being personally liable for the same. Any obligations of LLP have to be met with properties of LLP and not of its partners. However, where number of partners reduces below 2 and LLP carries on business with such reduced number, the existing partner shall be personally liable for the deeds.

Accounting and compliance provisions

Every LLP must keep such accounts which reflect true and fair view of affairs of LLP. However, different from traditional partnership, LLP Act contains mandatory provisions for audit of accounts where turnover of LLP exceeds Rs.40 lakhs or contribution exceeds Rs.25 lakhs.

As the partners have limited liability, creditors have greater risk in dealing with LLP compared to proprietorship or traditional partnership. Hence, it is necessary to provide for various compliance procedures for the same. LLP is required to file its Statement of Accounts and Solvency annually in e-form 8 with ROC. In addition to this it is also required to file Annual Return with ROC in e-form-10. Statement of Accounts and Solvency contain a brief abstract of Balance sheet and Profit and Loss account of LLP. While annual information contains details of Partners, their contribution and any changes therein. So far as taxation is concerned LLP is treated at par with traditional partnership firm.

Like company, LLP has to give notice about change in its partners, business, registered office, etc. it has to file details of charges if any created by it. Moreover such documents will be available for public inspection on payment of prescribed fees. Hence, act seeks to ensure transparency and credibility about functions of LLP to partners, creditors, public, government and other stake holders. List of documents available for public inspection are as follows.
1) Incorporation document,
2) Names of partners and changes, if any, made therein,
3) Statement of Account and Solvency,
4) Annual Return.

LLP Act also contains other advance provisions as to conversion of other business form into LLP and vice versa, merger, winding up of LLP, penalties and offences. Such provisions are broadly based on the existing provisions of Companies Act, 1956 which are adopted with slighter modifications. Now, we may interest to know what are the advantages and limitations of such concept.
The major advantage of LLP is obliviously its limited liability which will induce business persons to adopt. At present, partnership is considered an outdated business model in the age of globalization. But LLP can remove such wrong belief.
LLP involves lesser compliance and regulatory provisions compared to company. Hence, small businesses which are not required to be overburdened with larger compliance provisions may find LLP as a suitable option. Lesser compliance will ease operations and also reduce unnecessary wastage of cost and time which are involved in such compliances.
LLP contains provisions for audit of accounts. No statue provide for audit of partnership. But providing for audit of accounts will ensure that operations of LLP are in accordance with law. Government official may also rely on audited statement of LLP and go for sample scrutiny rather than each assessment.
Bank and other financial institution do not prefer to finance partnership because there are no much statutory restrictions on their operations. Hence they are not assured of reliability of their finance. But LLP is required to make proper disclosure of its operation. It has to register charge with ROC. So it is expected that financial institutions will consider LLP as better option to finance.
LLP is required to maintain minutes of its all meetings of partners. So it formalizes all proceedings and operations. Having written all the decisions, it is expected that it will create a better atmosphere of confidence amongst partners.
LLP is a form suitable to operate on global level. So in future, LLP may represent Indian Business Community which is presently monopolized by company form of organization.

However, this concept is criticized widely on following grounds:

LLP is suitable only for professionals like CA or CS because their professional does not allow adopting corporate form. This concept has not got popularity amongst trading community. This is why major LLP formed are of professional firms and not of business firms.
LLP is said to have lesser compliance requirement compared to companies. It is true to some extent. But on and average it cast significant burden of compliance on LLP. Filling of various documents and compulsory maintenance of records may lead to difficulties in operations of LLP.
There is not much awareness amongst general business community about LLP. They are totally ignorant of such development. So LLP has not got that much popularity which was expected for it.

Conclusion

LLP is new development in India. It is only year of its introduction. So it will be to early to conclude about relevance of LLP in our country. The entire provisions are based on foreign law with some modifications. Hence, it will be necessary to redraft some provisions to give them Indian touch.
It is getting popularity gradually. We may expect that Indians especially professionals will combine together in LLP and compete with glob to render their qualified services. When India is on way towards becoming economic super power, LLP is milestone in its journey.

Courtesy: Mr. Krutesh Patel

Balance Sheet Disclosure Requirements

BALANCE SHEET DISCLOSURE REQUIREMENT AS PER SCHEDULE VI (PART I) OF THE COMPANIES ACT, 1956

1. General

The Balance Sheet of the Company shall be either in horizontal form or vertical form. Except in the case of the Balance Sheet laid before the company after the commencement of the Act, the corresponding amounts for the immediately preceding financial year for all items shown in the Balance Sheet shall be given in the Balance Sheet

In case of companies preparing quarterly or half-yearly accounts, the above requirement relate to the Balance Sheet for the period, which entered on the corresponding date of the previous year.

Note:
· Where the period covered by the previous accounts does not comprise the same period as covered by current period a note thereof should be given.
· In case of first accounts, a note thereof should be given.

Figures in the Balance Sheet be uniformly stated in rupees giving paise also or rounded off to the nearest rupee if in horizontal form. In case of vertical form, figures stated rounded off to the nearest ‘000 or ’00 or in decimals of thousands or if in form approved by Central Government figured stated as approved.
The information required to be given under any of the items or sub-items, if it cannot be conveniently included in the Balance Sheet itself, shall be furnished in a separate schedule/s to be annexed to and form part of the Balance Sheet. This is recommended when items are numerous.

2. Share Capital
2.1 Authorized Capital
a) Various classes of capital.
b) Nominal value of each share of each such class.
c) Number of shares of each such class.
2.2 Issued, Subscribed and Paid-up Capital
a) Various classes of shares
b) Nominal value of each share of each such class.
c) Number of shares of each such class.
d) Extent to which each class has been called up and paid up.

Note:The following additional information should be disclosed in respect of each class of shares –
a) Terms of redemption or conversion (if any) of any redeemable
Preference capital together with earliest date of redemption or conversion.
b) Particulars of any option on unissued share capital
c) Particulars of the different classes of preference shares
d) Number of shares allotted as fully paid-up pursuant to a contract without payment being received in cash.
e) Number of shares issued as fully paid-up by way of bonus shares specifying the sources from which bonus shares are issued e.g. capitalization of profits or reserves or from Share Premium account
f) In the case of subsidiaries companies, the number of shares held by the holding company as well as by the ultimate holding company and its subsidiaries

In case where all particulars in respect of issued, subscribed and paid-up are same, these can be stated as combined. Otherwise subscribed, called-up and paid-up capital to be shown individually.

2.3 Calls Unpaid
a) Amount unpaid for each class of shares including different classes of preference shares.
b) Aggregate of unpaid calls deducted from paid-up capital
c) Amount unpaid by Directors and others separately disclosed.
2.4 Forfeited Shares
a) Amount originally paid-up for each class of shares
b) Aggregate of forfeited amount added to paid-up capital
Note:
Any capital profit on reissue of forfeited shares should be transferred to Capital Reserve.
3. Reserves and Surplus
3.1 Distinguish between:-
a) Capital Reserve
Note:
Capital Reserve shall not include any amount regarded as free for distribution through the Profit and Loss Account
b) Capital Redemption Reserve
c) Share Premium Account
Note:
Disclose details of its utilization in the manner provided in the Section 78 in year of utilization.
d) Other Reserves specifying the nature of each reserve and the amount in respect thereof
less : debit balance in Profit and Loss Account (To be shown by way
deduction from the uncommitted reserves, if any)
e) Surplus i.e. balance in Profit and Loss Account after providing for proposed allocations i.e. dividend, bonus or reserves.
f) Proposed additions to reserves
g) Sinking funds

Note:
· Additions and deductions since last balance sheet to be shown under each of the specified heads
· The word ‘fund’ in relation to any “Reserve” should be used only where such Reserve is specifically represented by earmarked investments.
· " Reserve” shall not include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability.

4. Secured Loans
4.1 Classify loans under the following heads:-
a) Debentures
Note:
In respect of each class of debentures the following has to be stated -
· Terms of redemption or conversion (if any) of debentures issued together with earliest date of redemption or of conversion.
· In respect of the Company’s debentures held by a nominee or a trustee of the Company, the nominal amount of the debentures and the amount at which they are stated in the books of the Company.
· Particulars of any redeemed debentures, which the Company has power to issue.
· The nature of security
b) Loans and Advances from Banks
c) Loans and Advances from subsidiaries
d) Other Loans and Advance
e) Loans from Directors and Managers.
Note:
The following additional information should be disclosed in respect of each of the above loans:
· The nature of security
· Aggregate amount of loans guaranteed by Managers and/or Directors under each head.
· Interest accrued and due on Secured loans included under the appropriate sub-heads.

5. Unsecured Loans
5.1 Classify loans as under:-
a) Fixed Deposits
b) Loans and Advances from subsidiaries
c) Short Term Loans and Advances
- From Banks
- From Others
Note:
Short Term Loans will include those that are due for not more than one year as at the date of the Balance Sheet.
d) Other Loans and Advances
- From Banks
- From Others
e) Loans from Directors and Managers
Note:
In respect of each type of loan, other than Fixed Deposit, the following additional disclosures is required:-
· Aggregate amount of loans guaranteed by Managers and/or Directors under each head.
· Interest accrued and due on loans included under appropriate sub-heads.
6. Current Liabilities and Provisions
6.1 Current Liabilities
Classify under the following heads:-
a) Acceptances
b) Sundry creditors segregated into
I. Total outstanding dues to small scale industrial undertaking)(s)
II. Total outstanding dues of creditors other than small scale industrial undertaking(s)
Note:
Name(s)of small scale industrial undertaking(s) to whom the company owes any sum together with interest outstanding for more than 30 days should be also disclosed.
c) Subsidiary Companies
d) Advance Payments and unexpired discounts for the portion for which values has still to be given e.g. for following companies – Newspaper, Fire Insurance, Theatres, Clubs, Banking, Steamship Companies etc.
e) Unclaimed Dividends
f) Other Liabilities(if any)
g) Interest accrued but not due on loans
h) Current Account with Directors and Managers
6.2 Provisions
Classify under the following heads:-
a) Provision for taxation
b) Proposed Dividends
c) Provision for Contingencies
d) Provision for Provident Fund Scheme
e) Provision for Insurance, pension and similar staff benefit scheme
f) Other provisions
Note:
The expression provision shall mean any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy. Where the amount provided which in the opinion of the Directors is reasonably in excess of the amount reasonably necessary for the purpose, such excess shall be treated as reserve.
7. Footnote to the Balance Sheet
7.1 Show separately:-
a) Claims against the Company not acknowledged as debts.
b) Uncalled liability on shares partly paid
c) Arrears of fixed cumulative dividends
Note:
· The Period for which the dividends are in arrears or if there is more than one class of shares, the dividends on each such class are in arrears shall be disclosed
The amount shall be before deduction of Income-tax, except that in the case of tax-free dividends the amount shall be shown free of Income-tax and the fact that it is so shown stated.
d) Estimated amount of contracts remaining to be executed on capital account and not provided for.
e) Other money for which Company is contingently liable.
Note:
Amount of any guarantee given by the Company on behalf of Directors or other officers of the Company and where practicable, the general nature and material amount of each such contingent liability stated.
8. Fixed Assets
8.1 Distinguish fixed assets as far as possible between:-
a) Goodwill
b) Land
c) Building
d) Leaseholds
e) Railway sidings
f) Plant and Machinery
g) Furniture and Fittings
h) Development of Property
i) Patents, trademarks and designs
j) Livestock, and
k) Vehicles, etc.
Note:
· Under each head the original cost, additions thereto and deductions there from during the year and the total depreciation written off or provided upto the end of the year to be disclosed.
· Difference in exchange rate during the year on account of liability for payment of the cost of asset or for repayment of any money burrowed, directly or indirectly, in foreign currency for the acquisition of assets should be added/deducted from the cost of assets.
· Where original cost cannot be ascertained without reasonable expense or delay, the valuation shown by the books should be given. In case of sale of such asset the amount of sales proceeds shall be shown as a deduction.
· In case of reduction of capital or revaluation of assets:

(i) Every balance Sheet (after the first Balance Sheet) subsequent to the reduction or revaluation shall show the reduced or revalued figures in place of the original cost together with the date of reduction or revaluation.
(ii) Each balance sheet for the first five years subsequent to the date of reduction or revaluation shall also show the amount of reduction or increase made.

9 Investments

9.1 Distinguish between:-

(a) Investments in Government or Trust Securities.
(b) Investment in shares, debentures or bonds (showing separately shares fully and partly paid-up and also distinguishing the different classes of shares and showing also similar details of investments in shares, debentures or bonds of subsidiary companies).
(c) Immovable Properties
(d) Investments in the capital of partnership firms
(e) Balance of unutilized monies raised by the issue.

Note:
All unutilized monies out of the issue must be separately disclosed indicating the form in which such unutilized funds have been invested.

9.2 In Respect of above investments the following disclosures are made:

(a) Nature of investments and mode of valuation i.e. cost or market value.
(b) Aggregate amount of company’s quoted investments and market value thereof

Note :
Quoted Investments means an investment in respect of which there has been granted a quotation or permission to deal on a recognized stock exchange

(c) Aggregate amount of Company’s unquoted investments
(d) Distinguish between trade investments and other investments




Note:
Trade investments mean an investment by a company in the shares or debentures of another company not being its subsidiary, for the purpose of promoting the trade or business of the company.

(e) Distinguish between long-term investments and current investments

Note:
Long term investments are investments that are intended to be held for a period exceeding a year.

(f) The names of the bodies corporate (indicating separately the names of the bodies corporate under the same management) and the nature and extent of the investment so made in each such body corporate (including all the investments, whether existing or not, made subsequent to the date as at which the previous Balance Sheet was made out).

Note:
- For investment Company whose principal business in the acquisition of shares, stocks, debentures or other securities, it will be sufficient if the disclosure is made of the investments existing as at the Balance Sheet date.
- For investments in the capital of partnership firms, the name of the firms with the name of all their partners, total capital and the share of each partner.

10. Current Assets, Loans and Advances

Note:
If in the opinion of the board, any of the current assets, loans and advances have not a value on realization in the ordinary course of business at least equal to the amount at which they are stated, the fact that the Board is of that opinion shall be stated.

10.1 Current Assets:
(a) Classify current assets as under:
(i) Interest accrued on investments
(ii) Inventories
(a) Stores and spare parts
(b) Loose Tools
(c) Stock in trade
(d) Work in progress

Note:
- In respect of above items other than loose tools mode of valuation shall be stated.
- Where practicable amount for raw material shall be separately stated.
(iii) Sundry Debtors
(a) Debts outstanding for a period exceeding six months
(b) Other Debts
(c) Less: Provision for bad and doubtful debts – shown by way of deduction from debtors

Note:

In respect of items (a) and (b) above disclose separately –
(i) Debts considered good – fully secured
(ii) Debts considered good – unsecured for which company holds no security other
than the debtors personal security
(iii) Debts considered doubtful
(iv) Debts due by directors or other Officers of the Company or any of then either severally or jointly with any other person along with the maximum amount due at any time during the year
(v) Debts due by firms in which any Director is a partner
vi) Debts due by a Private Company in which any director is Director or a member.
(vii) Debts due by companies under same management (Section 370(IB) ) along with the names of the companies.

Excise Invoice System

1. Introduction
1.1 An invoice is the document under cover of which the excisable goods are to be cleared by the manufacturer. This is also the document which indicates the assessment of the goods to duty. No excisable goods can be cleared except under an invoice. The invoice is the manufacturers own document and though the Department has specified the entries thereon, the format etc. is left to the manufacturer’s choice.
2. Removals only on invoice
2.1 Rule 11 of the Central Excise (No.2) Rules, 2001 (hereinafter referred to as the said Rules) provides that no excisable goods shall be removed from a factory or a warehouse except under an invoice signed by the owner of the factory or his authorized agent.
2.2 In case of cigarettes, which are under physical control, the Factory Officers are posted by rotation in the factory. If the factory is operation 24 hours, the officers are posted 24 hours. They check the operations of the assessee as per instructions, mutatis mutandis, contained in Commodity Manual for Cigarettes. Accordingly, in the case of cigarettes, each invoice shall also be countersigned by the Inspector of Central Excise or the Superintendent of Central Excise before the cigarettes are removed from the factory.
3. Serially numbered invoice
3.1 The invoice shall be serially numbered and shall contain the registration number, description, classification, time and date of removal, rate of duty, quantity and value, of goods and the duty payable thereon. The serial number shall commence from 1st April every year [beginning of a financial year].
3.2 The serial number can be given at the time of printing or by using franking machine. But when the invoice book is authenticated in the manner specified in sub-rule (5) of rule 11, each leaf should contain serial number. Hand written serial number shall not be accepted.
3.3 In case of computer-generated invoice, the serial number may be allowed to be generated and printed by computer at the time of preparation of invoice ONLY IF the software is such that computer automatically generates the number and same number cannot be generated more than once. For this purpose, the Central Excise Officers may check the system/software from time to time.
4. Number of Invoice copies
4.1 The invoice shall be prepared in triplicate in the following manner, namely:-
(i) the original copy being marked as ORIGINAL FOR BUYER;
(ii) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER;
(iii) the triplicate copy being marked as TRIPLICATE FOR ASSESSEE.
4.2 The above requirement is mainly for Central Excise purposes. However, the assessee may make more than three copies for his other requirements. But such copies shall be prominently marked "NOT FOR CENVAT PURPOSES’.
5. Number of Invoice book
5.1 The rule 11 of the said Rules provides that only one invoice book shall be in use at a time, unless otherwise allowed by the Deputy/Assistant Commissioner of Central Excise in the special facts and circumstances of each case.
5.2 The Board has decided that where assessee requires two different invoice books for the purposes of removals for home-consumption, and removals for export they may do so by intimating the jurisdictional Deputy/Assistant Commissioner of Central Excise.
5.3 Wherever, an assessee is allowed to keep more than one invoice book, he should be asked to keep different numerical serial numbers for the different sets.
5.4 In case of running stationary used in computers, the bound book shall not be insisted upon provided the stationary is pre-printed with distinctive names and marks of the assessee. After the invoices are prepared, the triplicate copy shall be retained in bound-book form. Where invoices are to be typed written, the leafs have to be first taken out from the book for typing. In such cases also the triplicate copy shall be retained in bound-book form.
6. Authentication of Invoices
6.1 The rule provides that owner or working partner or Managing Director or Company Secretary shall authenticate each foil of the invoice book, before being brought into use. However, in order to facilitate the trade it has been decided that any person duly authorised in this regard by the Company, owner or working partner may also authenticate invoices. Copy of the letter of authority should be submitted to the Range office.
7. Intimation of serial numbers
7.1 Before making use of the invoice book, the serial numbers of the same shall be intimated to the Superintendent of Central Excise having jurisdiction over the factory of the assessee. This can be done in writing by post/e-mail/fax/hand delivery or any other similar means.
8. Rounding off of duty in invoice
8.1 The amount of duty being shown in invoices issued under rule 11 of the said Rules should be rounded off to the nearest rupee as provided for under Section 37D of the Central Excise Act, 1944 and the duty amount so rounded off should be indicated both in words as well as in figures.
9. Provisions of CENVAT Credit Rules, 2001 regarding availment of credit
9.1 Where the part consignments traveling in a convoy or separately do not constitute "complete machinery" falling under a single heading or sub-heading, each such consignment will be classified on merits, say, as ‘parts’ and also a separate invoice showing the separate value arrived at under Section 4 of Central Excise Act, 1944 and the duty amount, must accompany each such consignment.

ANNEXURE – A - Undertaking For Availing Special Procedure
I / We ________________________ hereby undertake that only those components of a ‘complete machinery’ in terms of rule 2(a) of the interpretative rule to CETA which have first been assembled and constitute complete machinery falling under a single heading or sub-heading, and which are later dis-assembled only for the convenience of transport shall be cleared under this procedure on payment of entire duty as per the classification of such machinery / equipment and no ‘parts’ not satisfying this criterion shall be transported with such components unless appropriate Central Excise duty is paid as prescribed for ‘parts’ under the Central Excise Tariff Act, 1985.
Date:
Place: (Authorised Signatory)

10. Preparation of invoices when goods dispatched through more than one vehicle because of their size
10.1 Considering the difficulties faced by the manufacturers in documentation where a consignment of capital goods like heavy machinery, etc. which are first assembled by the manufacturer and are later disassembled only for the convenience of transport is loaded in more than one vehicle and travel separately or at intervals, the following procedure should be followed:-
(i) The manufacturer will intimate, on case to case basis, his option to avail this special procedure in writing for the complete machinery sought to be cleared in a number of individual part consignments after first being assembled to the jurisdictional Deputy/Assistant Commissioner of Central Excise with a copy to the jurisdictional Superintendent of Central Excise along with the description of such machinery/ equipment giving its tariff classification and list of components of such machinery/equipment in dis-assembled form and its value and an undertaking. These intimations shall be given at least 48 hours prior to the removal on any working day.
(ii) Though separate verification need not necessarily be made for each and every consignment, before the removal of the first consignment Assistant Commissioner should verify that the various part consignments are indeed constituents of the complete machinery which has been first assembled.
(iii) A separate invoice shall be made out for in respect of each conveyance on which the part consignment is loaded.
(iv) The manufacturer will pay the entire duty on the first such invoice (hereinafter referred to as "Parent Invoice") on the basis of entire value of the machinery unit/equipment. This parent invoice shall be prepared quoting all vehicle numbers, total value / duty of the consignment. An inventory shall be annexed to the invoice giving detailed item-wise description as loaded in different vehicles.
(v) The details of removals and duty payment shall be entered in Daily Stock Account.
(vi) Photocopy of the duplicate copy of the parent invoice duly attested by the authorised signatory of the Company shall accompany each conveyance.
(vii) CENVAT Credit, if any, shall be taken only on receipt of parent invoice and the entire consignment.
11. Cancellation of invoices
11.1 When an assessee is compelled to cancel invoice, the following actions should be taken:-
(i) Intimation of a cancelled invoice should be sent to the range Superintendent on the same date, whenever possible. However, in case of exceptional circumstances beyond the control of assessee should this not be possible, the intimation should be sent on the next working day;
(ii) Along with the intimation of the cancelled invoice sent to the range Superintendent the original copy of the cancelled invoice should also be sent.
(iii) Triplicate copy of the cancelled invoice may be retained by the assessee in the invoice book so that the same can be produced whenever required by audit parties, preventive parties and other visiting officers.

Courtesy : cacindia

ISO Certification - Basic needs and Procedures

I. Introduction.

ISO 9001:2000 is a System Standard certification applicable to all types of organizations. The certification can be for Design & Development or only for Development. The initial certification is valid for 03 years subject to yearly Surveillance Audit. ISO certification underlines a system which has the assurance or proper documentation or evidence for each and every activity of the organization.

II. Basic Needs for the System.

 Well-defined Objectives and Principles.
 Effective integrated System for achieving the objectives.
 Implementation of the said system with involvement of people.
 Performance review (minimum 02 management review per annum) and improvement attitude for the system in place.
 All the above should have documented evidence to certify by internal as well as external auditors.
In short, everyone should be ready to answer the following 06 questions on each activity/process/departments:
• What is your quality policy?
• How you do your job?
• Show the internal system which tells you to do this job?
• Show the evidences for that?
• What action do you take if you have problem?
• What training have you received to help you to do this job?

III. Requirements in brief.

1) Identify each Process / Department – Like Purchase/ Stores / Production/Finance/Admin/Marketing/Sales etc.
2) Determine the criteria and methods for controlling the same – Each dept. shall have its own working manual/policy with guidelines.
3) Ensure the availability of adequate resources and proper internal communication for implementation of the same – Define the reqd. qualification for each post/designation and communication of info thru proper channels.
4) Control of supporting documents and records – Electronic media or paper documents as support of each activities and instructions.
5) Regular management review followed by internal checking/evaluation, corrective action plan and training – Audit of a particular department (monthly or quarterly) by people from other departments and ensures the availability of resource/records, achievements and improvement methods. The same needs to be reported by a Management Representative (MR) to the management and to take corrective action and training, if required.
6) Customer oriented Product/Project Realization – As like Product/Project display and giving Proposal with respect to client requirement. There should be some records for each and every customer order/enquiry and for its response.
7) Identification and Traceability of each Product / Project – Supplier evaluation, verification and storage of purchased products and customer property (materials supplied by customers for production/inspection etc.). For this, List of approved suppliers should be there for each product and proper documented evidence for each purchase/storage/consumption.
8) Continual Improvement/Corrective Action/Preventive Action for each activity – The consistency level of each activity/department needs to be reviewed for improvement and in contrary the necessary Corrective and Preventive Action needs to be taken if the present level is a failure. There should be evidence for the failure/action/improvement.

IV. Conclusion.
The ultimate aim for the certification is the transparent functioning with documented evidence for future reference. Implementation of this System will bring well defined responsibility and authority to each individual of the organization. As an ISO certified organization, the Organization will have a reputation in front of our customers and suppliers.