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Please help me

sunita (study) (40 Points)

21 March 2011

gud mrng to all,

my uncle is going to open a fabricator co where we will manufacture very lage jars.

my uncle was thinking to go for proprietorship but one of accountant sy to go for partnership.

i want to know which one is better propritorship or partnership and why?

what is crieteria of PF an ESIC for employees ( since it is starting we will have 5 to 6 employee.)

what types of taxes we will face in future and how v shd prepare to us for that.

pl help me..................................

advance thnx to all for helpingggggggggggggggggg...........................................

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4 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 21 March 2011

proprietorship has less paper work and tax obligations, while partnership / company is good for bank finance.

you have to obtain service tax number after 10 lacs turnover

you have to get vat/CST number from start / 5 lacs

ESIC applicable on 10 or more employees engaged

PF applicable on 20 or more employees engaged

you have get excise registration if turnover exceeds 150 lacs or the manufacturer wants to avail input credit of cenvat duty paid on inputs or capital goods ( machines)

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CA Saiyum khan (Practicing CA) (685 Points)
Replied 21 March 2011

If job work of manufacturing of jars is being carried out then service tax registration is required to be taken if the turnove exceeds Rs.10 lacs.

If Jars is being manugactured after procurment of input material then excise registration would be applicable if turnover excees the threshold limit of Rs.150 lacs.

In any case VAT and CST would be applicable if TO exceeds Rs.5 lacs.

The proprietorship and partnership depend upon the volume of business and expected profit. If the annual profit is going to be above the level of maximum marginal tax then partnership firm is advisable for better tax planning.

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Vikas Marele (CA in Service) (1144 Points)
Replied 21 March 2011

In ma opinion at 1st phase, u should start with propriotership bcoz it required less obligations & formailities & very easy 2 start. However, when ur buss. got established & in expanding mode then u can convert it in firm or co. as beneficial 2 u......!

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