Mihir, you are my hero! 

Your suggestions have been very very helpful.

1. Im clear about the sweepstake account and I will get that done immediately tomorrow. 

2. Keyman Insurance, can we do that at any bank or its some other company ? I havent yet insured my office and equipments. I will do it as said by you. Whom to contact for standard fire and peril policy ? Cant we do it from general india insurance ?

3. Mediclaim of 20 lacs, how much premium per year ? And which company mediclaim is good ? I will open a PPF account as well and move some funds from current account to it. 

4. You mean not ask for loans from bank, but just ask them to let me take loan from my own current account ? Wow, that would be great and easy man. This is possible ?

5. My simple question. Can I withdraw money from current account with check in small denominations like 1 lac in every 5-6 days and that way, withdraw 6 lacs in a month and put them into the locker or those withdrawals has to be justified in the company accounts ? Can the CA manage it well ?

1) Keyman insurance policy is given by an insurance company, you can try with HDFC.

2) Insurance companies like United India Insurance, National Insurance, Oriental Insurance, will provide you the details of the premium, conditions and exclusions in the standard fire and peril insurance policy. Yes, its a general insurance so banks are not allowed to provide that service.

3) Mediclaim premium will depend on your age, your physical conditions and your occupation. ICICI Lombard has some attrative health policies.

4) You can take a loan from bank upto say 70% and the balance take it from company loan.

5) Yours is a private limited company, which means even if you are the owner, you are still not the owner. Your acts will be bound by the company law. Which means if you withdrawn money from your current account in cash, your cash balance will increase in your books of account because you are not really utilizing the cash. You will have to ask your CA how this cash transactions will affect your tax audit. Even if you put the cash in the locker, your books of accounts will show large cash balance, which might attract IT dept's attention looking at your balance sheet.

1. clear.

2. clear.

3. clear.

4. Banks are stupid! Even if I have been a customer for so long, they have a problem approving my loans and I hate joining hands. Lets see, I will talk. 

5. Okay, so you suggest to let the money added up and all money going to sweepstake account. So, thats like 50-60 lacs in sweepstake account in the year end. How does that affect the IT filing or taxation ?

1) You can let it accumulate and earn good interest.

2) You will develop very good relationship with the bank because of such an investment with them

3) You can use it to purchase new office

4) It is a legitimate FD which will not attract unwanted attention of IT dept, provided your CA has filed the returns properly removing all causes of suspicion. Pay all taxes, advance tax, TDS, Service tax, income tax in time, and file returns in time.

5) Who knows, maybe tomorrow you might get a good business opportunity and you can use this for expansion.

You can also take Commission of 2 to 3% based on your sales turnover. As you are a working director no onw will object. In this way, you'll be able to withdraw funds from your company and keep it in your savings account. and in future if company needs funds, you can always give a loan to the company and charges interest on it at bank rate. If you keep funds in company and withdraw it by way of deividend you'll be required to pay DDT at 18.5% over and above income tax