/---

Ratio Analysis - Analyze the business

Leave a Comment
1)      Profitability Ratio:-

   G/P ratio =  Gross Profit  *100
                        Net Sales    


2)      Operating ratio:-

            Cost of goods sold + operating exps *100
                           Net sales

a)      Cost of goods sold  =  Opening stock + Purchase + Direct exps + Manufacturing   Exps – Closing stock or Sales – G/P.

b)      Operating exps = Administrative + Selling & distribution exps.

3)      Expenses Ratio:-

         a)  Material consumed                               :-     Material Consumed *100
                                                                                          Net sales

         b)  Conversion cost                                   :-     Labour exps + Manufaturing Exps * 100
                                                                                          Net sales
   
         c)  Administrative Expenses Ratio            :-   Administrative Expenses Ratio * 100
                                                                                          Net sales


        d)  Selling & Distribution Expenses          :-   Selling & Distribution Expenses *100
                                                                                          Net sales


        e)  Operating Profit Ratio                          :-    Operating Profit *100
                                                                                 Net sales

                                                                      OP=GP+Operating Income-Operating Exps

        f)  Net Profit Ratio                                     :-    Net Profit *100
                                                                                Net sales


4)      Return on Capital Employed             :-                       N/P                  * 100
                                                                                     Capital Employed


  a) Net Profit :- N/P after depreciation before interest on fixed liabilities dividend on    shares and taxation.


   b) Capital Employed :- Fixed Assets + Current Assets – Current Liabilities

OR

Equity Shares + Preference Share + Undistributed Profit +    Reserves & Surplus + Fixed Liabilities – Fictitious Assets

5)     Return on Share Holders                      :-                         N/P                 *100
                                                                                      Shareholders Funds


a)      Net profit :-  N/P after payment Taxes, Interest on long term liabilities & Preference   dividend.

b)      Share holder Fund :- Equity Share Capital + Preference Share Capital + Capital Reserve +Revenue Reserve.

6)            Return on Total Assets                         :-           N/P After Tax *100
                                                                                  Total Assets

7)      Debt Service Ratio                                :-           N/P Before Interest & Tax
                                                                                  Interest on fixed debenture

8)      Earning per Share                                :-           Net Income – Preference Dividend
                                                                                    Number of Equity Shares



9)     Price Earning Ratio                                :-           Market Price Per Equity Share
                                                                                         Earning per Share

 
10)    Payout Ratio                                  :-           Dividend per Equity Share
                                                                                     Earning per share


11)   Dividend Yield Ratio                           :-            Dividend Per Share  *100
                                                                                      Market Price Share

12)   Turn Over Ratio  :-                            


       a) Capital Turn Over Ratio                      :-                    Sales                                        
                                                 Capital Employed (Shareholder fund +long term Liabilities


       b) Fixed Assets Turnover Ratio:-            :-                   Sales           *100
                                                                             Net fixed Assets


      c) Working Capital Turnover Ratio         :-                   Sales  * 100
                                                                                     CA -CL

             
      d) Total Assets Turnover Ratio                :-               Net Sales *100
                                                                                     Total Assets


      e) Stock Turnover Ratio                                         :-          Cost of Goods Sold
Average Stock (Op+Clo stock)
2

       f) Debtors / Receivable Turnover Ratio                   :-       Net Credit Sales
                                  Average Drs (op Dr/Bill Receivable + clo Dr’s/ Bills Payable)
2
Collection Period = 365/DTR

       g) Creditor’s Turnover Ratio                  :-     Average Credit Purchase
                                                                             (Creditors + B/P)



      h) Average Payable                                 :-     Month/Days in a year
                                                                            Creditors Turnover Ratio

 13)  Financial Ratio

       i) Current Ratio                                      :-       Current Assets
                                                                             Current Liabilities


       j) Liquid Ratio                                        :-    Quick Assets
                                                                         Current Liabilities

       k) Absolute Liquid Ratio        :-   Cash in Hand & Bank +Short Term Securities                                    
                                                                         Current Liabilities

14) Inventory Turnover Ratio         :-    Inventory/Working Capital
                                                         Working Capial= Current Assets- Current Liaballities

15) Fixed Assets Ratio                      :-    Fixed Assets
                                                              Capital Employed



16) CA to Fixed Assets                     :-    CA/FA


17) Debt to Equity Ratio                  :-   Long Term Debts
                                                        Shareholders Funds + Long Term Debts


       a) Proprietary Ratio                      :-  Shareholder Funds
                                                                  Total Assets

18) Capital Gearing Ratio                :- Fixed Interest Bearing Securities
                                                               Equity Share Capital

19) Leverages Ratio                              

     a) Operating Leverage                    :-  Marginal Contribution
                                                         Earning Before Interest & Tax (EBIT)
                                MC= Sales-Variable Cost     EBIT=Marginal Contribution- Fixed Cost


     b) Financial Leverage                    :-    EBIT
                                           Earning Before Tax (EBT)

                                                                           EBT= EBIT- Interest

      C) Combined Leverage            :-               Operating Leverage * Financial Leverage

Read More...

direct tax ready reckoner [updated]

Leave a Comment
Direct Taxes Ready Reckoner 
Income from “Salaries”
10. Meaning of Salary – Sec. 17(1)
11. Basis of charge – Sec. 15
12. Salary
12.1 Leave salary
12.1-1 Maximum amount not chargeable to tax as specified by the Government
12.1-2 Clarification from the Board
Circular No. 431 dated 12.09.1985
Circular Letter No.: F. 35/1/65—IT(B) dated 5.11.1965
Circular no. 309 dated 3.7.1981
12.1-3 Scope of exemption under section 10(10AA)(ii)
CIT v. R.V.Shahney
12.2 Gratuity [Sec. 10(10)]
12.2-1 In the case of Government employee [Sec. 10(10)(ii)]
12.2-2 In the case of an employee covered by the payment of gratuity act [Sec. 10(10)(ii)]
12.2-3 In the case of any other employee [Sec. 10(10)(iii)]
12.3 Pension
12.3-1 Pension [Sec. 17(1)(ii)] 
Section 89 read with rule 21A
12.3-2 Pension scheme in case of an employee joining C3entral Government on or after January 1, 2004 or any other employer on , before or after January 1,2004
12.4 Compensation received at the time of voluntary retirement or separation [Sec. 10(10C)]
12.4-1 Rule 2BA
12.5 Salary received by a teacher/ professor from SAARC Member States
13. Allowance
13.1 House rent allowance [Sec. 10(13A) and rule 2A]
13.2 Entertainment allowance [Sec. 16(ii)]
Special allowances prescribed as exempt [Sec. 10(14) read with rule 2BB]
13.4 Allowance to High Court and Supreme Court Judges

14. Perquisites – S. 17(2)
Owen v. Pook (Inspector of Taxes (1969)
15. Valuation of perquisites
15.1 Valuation of rent-free unfurnished accommodation [Rule 3(1)]
15.1-1 Central and state Government Employees
15.1-2 Private sector or other employees 
15.1-2a Salary – How to calculate
1) Salary shall be determined on due basis
2) Salary from two or more employers
3) Monetary payments v. Perquisites
4) Gas, electricity, water bills, payment of income tax
15.1-2b Basis of valuation
15.2 Valuation of rent-free furnished accommodation
15.3 Valuation of accommodation provided at concessional rent
15.4 Valuation of perquisite in respect of free domestic servants
15.5 Valuation of perquisite in respect of gas, electricity or water supply provided free of cost
15.6 Valuation of perquisite in respect of free education
Training of employees
Fixed education allowance for children
Payment of school fees  of employee’s children
Reimbursement of school fees of employee’s children
Education facility in employer’s institute
Scholarship – CIT v. M.N. Nadkarni
15.7 Valuation of leave travel concession in India [Sec. 10(5)]
15.7-1 Other points
Meaning of family
Only 2 journeys in a block of 4 years is exempt
Carry-over concession
Exemption is based upon actual expenditure
Exemption is available in respect of fare
Exemption is available in respect of fare
Fixed allowance is not subject to exemption – Dr. Reddy Laboratories Ltd. V. ITO[1996]
15.8 Employee’s obligation met by employer [Sec. 17(2)(vi)]
15.9 Amount payable by employer to effect an assurance on the life of employee [Sec. 17(2)(v)]
15.10 Valuation of perquisite in respect of interest-free loan or loan at concessional rate of interest
15.10-1 SBI Lending rates
15.10-2 When perquisite is not chargeable to tax 
15.10-3 Other points
15.11 perquisite in respect of use of movable assets
15.12 Valuation of the perquisite in respect of movable assets sold by an employer to its employees at a nominal price
15.13 Valuation of medical facilities
15.13-1 Hospital approved by the Chief Commissioner
15.13-2 Prescribed diseases or ailments
15.14 Valuation of perquisite in respect of motor car
15.14-1 Conditions to be satisfied if car is used for official purposes
15.14-2 Other points
Meaning of month
When two or more cars are allowed
Car at concessional rate
Car facility between office and residence
Conveyance facility to judges
Conveyance facility to Chairman/ members of UPSC
15.15 Valuation of perquisite in respect of free transport provided by a transport provided by a transport undertaking to its employees
15.16 Valuation of perquisite in respect of lunch/ refreshment, etc.
Circular no. 15/2001 dated December 12, 2001
15.17 Valuation of perquisite in respect of travelling, touring, accommodation
15.18 Valuation of perquisite in respect of gift, voucher or token
15.19 Valuation of perquisite in respect of credit card
15.19-1Expenditure incurred by employer
15.19-2 Expenditure for official use
15.20 Valuation of perquisite in respect of club expenditure
15.20-1 Expenditure incurred by employer
15.20-2 Expenditure for official use
15.21 Tax on perquisite paid by employer [Sec. 10(10CC)]
RBF Rig Corpn. LIC (RBFRC) v. CIT
15.22 Sweat equity shares – Rule 3
15.23 Employer’s contribution towards approved superannuation fund
15.24 Perquisites received by a teacher/ profession from SAARC Member states
15.25 Any other benefit, amenity, etc.
Circular no. 8/2012 dated October 5, 2012
16. Deductions from salary income [Sec. 16]
16.1 Standard deduction
16.2 Entertainment allowance [Sec. 16(ii)]
16.3 Professional tax or tax on employment [Sec. 16(iii)]
17. Employees’ Provident Fund
18. Approved superannuation fund
19. Approved gratuity fund
20. Tax on salary of non-resident technicians [Sec. 10(5B)]
21. Salary of foreign citizens [Sec. 10(6)]
22. Relief under section 89
22.1 Computation of relief when salary or family pension has been received in arrears or in advance [Rule 21A(2)]
22.2 Computation of relief in respect of gratuity [Rule 21A(3)]
22.3 Computation of relief in respect of compensation on termination of employment [Rule 21A(4)]
22.4 Computation of relief in respect of payment in commutation of pension [Rule 21A(5)]
22.5 Computation of relief in respect of other payments [Rule 21A(6)]
22.6 Procedure for claiming the tax relief – Circular no. 331, dated March 22,1982

Read More...

Registration of PF (Provident Fund) Procedure For Employer

Leave a Comment
These document required to submit  for EPF along with list of employees.
Form is available at the site EPFO & for "esic" pls visit ESIC
Essential Document(s) to be submitted (For other than a proprietary concern)

1. A copy of Memorandum and Articles of Association and the certificate of incorporation issued by the Registrar of Companies, in the case of Public and Private Ltd. Companies.
2. A copy of partnership deed in the case of partnerships.
3. A copy of Registration certificate issued by the Registrar of Co-operative societies.
4. A copy of Registration certificate issued by Registrar in the case of societies registered under Societies Registration Act along with a copy of the objects and Rules of the Society.
5. Partition deeds creating HUF.
6. Any agreement or other legal documents in the case of Association of persons as defined in the Income Tax Act.
A list of documents which can be submitted as a proof of date of set up :-
(Any one of these documents has to be submitted)
1. First Sales Invoice.
2. Any proof regarding date of trial production.
3. Incorporation Certificate issued by the Registrar of Companies together with the report of the Managing Director to the Shareholders in the Annual Report.
4. Commencement of Business Certificate issued by the Registrar of Companies.
5. Certificate of Registration issued by the Registrar of Co-operative Societies.
6. Certificate of Registration issued under Societies Registration Act.
7. Certificate issued by Reserve Bank of India registering newly set up and non-banking financial companies.
8. License issued by the Health Authorities.
9. License/permission issued by the Municipal/Corporation Authorities.
10. Permission/approval granted by the appropriate State Govt. Authorities in the case of Educational Institutions.
11. Certificate issued by the Fire Authorities in the case of establishments coming under Explosives Act.
12. First assessment order issued by the Sales Tax Authorities.
13. First assessment order issued by the Income Tax Authorities.
14. Certificate issued by the Small Scale Industries authorities registering the establishment.
15. Reports/returns to Central Excise authorities.
16. Sanction/connection of power like H.T. connection, L.T. connection etc.
17. Any other Certificate issued by any authority under any law for the time being in force prior to the commencement of business activity/manufacturing activity.
The above list is not exhaustive and is only illustrative. Any one or more of the above documents may be submitted along with your application for allotment of a Code Number.

Read More...

New Partner Introduce in Existing Partnership

Leave a Comment
THIS DEED is executed on this _____ day of __________ between:
Sh.________________ s/o, Sh. __________________, r/o of _________________________, 

Sh.________________ s/o, Sh. __________________, r/o of _________________________, (hereinafter referred to as "the existing Partners") of the one part 
AND
Sh.________________ s/o, Sh. __________________, r/o of _________________________, hereinafter referred to as "the new partner") of the other part
The existing partners and the new partner hereinafter collectively referred to as the "Parties". 

WHEREAS 
1. The existing Partners have been carrying on the business of ___________ in partnership together at under the firm name M/s _______________ vide terms of a deed of partnership dated ____________ (hereinafter called "the existing partnership business").
2. Sh. __________ has expressed his desire to join the existing partnership business as the new partner and is ready to contribute a capital of Rs.__________
3. The existing Partners have agreed to introduce Sh. __________ as the new partner in the existing partnership business on the terms and conditions hereinafter appearing.
NOW THIS DEED WITNESSETH AS UNDER:
1. Term of Partnership
The partnership hereby constituted (hereinafter called "the new partnership") shall be deemed to have commenced on the day of ____________ and from such date the deed of partnership dated _________shall be superseded by this deed and shall continue unless otherwise determined by the Parties. 
2. Name
That the business of the Partnership shall be carried on under the same name and style as that of the existing partnership business i.e. M/s ____________________. 
3. Place of Carrying Business
That the business of Partnership shall be carried from ________________________ or any other place as may be agreed upon by the Parties.

4. Capital Contribution & Interest on Capital
The capital of the new partnership shall be Rs. __________ whereof Rs.________ represents the capital of the existing partnership contributed by the partners and the balance of Rs ________ shall be contributed by the new partner __________ as his share. However, further funds required for the new Partnership shall be contributed or arranged by the Parties equally and in such manner as may be mutually agreed upon by and between the Parties from time to time. Interest at the rate of ____ percent per annum or as may be prescribed under Section 40 (b) of the Income Tax Act, 1961 or any other applicable provisions as may be in force under the Income tax assessment of Partnership firm for the relevant accounting period shall be payable to the Parties on account standing to the credit of the account of the Parties. Such interest shall be calculated and credited to the account of each partner at the close of each accounting year. However, in case of loss or lower income, rate of interest can be nil or lower than ____ percent as may be agreed upon by and between the Parties from time to time. 
5. Remuneration
That the new partner shall also be a working partner in the firm and he shall be entitled to a remuneration of Rs. ________ per month which shall be paid by the __th of each month. The Parties shall be entitled to increase or reduce the above remuneration as may be agreed upon from time to time by and between the parties. 
6. Drawings by Partner
The new Partner shall be entitled to draw (in addition to the remuneration as per clause 4) out of the partnership business any sum or sums of money not exceeding Rs. ________ per month for his own use, such sums to be duly accounted for on each succeeding settlement of accounts and division of profits of the partnership and if any excess drawings is found on any such settlement, the same shall be refunded by the new partner concerned (with interest at ___% per annum).
7. Debts of Old Partnership
All the debts and liabilities of the existing partnership shall be discharged by the existing partners and they shall indemnify and keep indemnified the new partner and also the assets and the properties of the new partnership against such debts, liabilities and against all proceedings, costs, claims and expenses in respect thereof;
8. Profits of Old Partnership
All the profits of the existing partnership up to the commencement of the new partnership shall belong to the existing partners only in the proportions in which they would be entitled thereto vide the terms of deed of partnership dated ________
9. Profit Sharing Ratio of new partnership
That profits or losses of the new Partnership (including losses of capital nature, if any) shall be divided amongst and borne by the Parties in proportion to their respective shares in the new partnership.
10. Deed of Partnership dated _____ to remain in force
All the terms of the deed of partnership dated _______, except those as has been modified by this deed, shall remain in force and shall have effect as if the same have been executed by the parties hereto. 
IN WITNESS WHEREOF,the parties have set their hands this ____________ day of __________.

The Existing Partners

The New Partner

Witnesses: 
1. 

2. 


Read More...

Corporate Social Responsibility ~ FAQ

Leave a Comment
FAQs on Corporate Social Responsibility:

1. Which company to be covered under section 135 of COA, 2013?
A) Every company, its holding and subsidiary company and foreign company having branch/project office in India having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year. (Section 135 of COA, 2013 read with Rule 3 of CSR Rules, 2014)
B) A company shall be exempted from compliance under sec 135 of COA,2013 if it is not falling in the ambit of section 135 (1) for the last three consecutive years.



2. State the responsibilities of company in regard to CSR?
A) To constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.
B) Spending at least 2% of average net profits of the previous three years will have to be spent on corporate social responsibility activities 
C) To disclose to shareholders about the policy adopted in the process, giving reasons on failure of implementation.

3. State the contents of Board’s Report in regard to CSR?
A) Composition of CSR committee 
B) Contents of Policy 
C) Failure to spend amount shall, the reasons for non-compliance 
D) Annual report on CSR containing particulars specified in the CSR Rules, 2014.

4. State the responsibilities of Board in regard to CSR?
A) Shall approve the CSR Policy based on recommendations made by the CSR Committee. 
B) Shall disclose contents of such Policy in its report and also place it on the company's website.
C) Shall ensure the expenditure @ 2% of average net profits of the company made during the three immediately preceding financial years.
D) Shall ensure that the activities as are included in CSR Policy of the company are undertaken by the company. 

5. What are the functions of Corporate Social Responsibility Committee?
A) Formulate and recommend to the Board, a Corporate Social Responsibility Policy
B) Recommend the amount of expenditure to be incurred under CSR
C) Monitor the Corporate Social Responsibility Policy

6. What should be the major contents of CSR policy should be?
A) List of all projects and programs for CSR activities along with the modalities if execution of such project or programs and implementation schedules for the same.
B) Monitoring process of such projects or programs.
C) Surplus arising out of CSR projects shall not form part of business profit of the company.

7. What are the activities which can be done under CSR? (Amended Schedule VII of Companies Act, 2013)
A) Activities which may be included by Companies in their Corporate Social Responsibility Policies:
eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation including contribution to the Swacch Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water;
promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;
promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund setup by the Central Government for rejuvenation of river Ganga;
protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts:
measures for the benefit of armed forces veterans, war widows and their dependents;
training to promote rural sports, nationally recognised sports, Paralympic sports and Olympic sports;
contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government
rural development projects;( NOTIFICATION dated 27th February, 2014)
slum area development.( NOTIFICATION dated 6th August, 2014)
 Explanation.— For the purposes of this item, the term ‘slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.”

B) Contribution to corpus of a trust/society/ section 8 companies will also be included in the CSR expenditure if created exclusively for the same or the specific corpus is made for that specific purpose.
C) Expenditure on Administrative Overheads (max. 5% of total CSR expenditure of the company in one financial year).
D) Expenses excluded from CSR expenditure:
i. Contribution to political parties not included.
ii. Exp. Benefitting only employees, their families not included.
iii. One-off events such as marathons/ awards/ charitable contribution/ advertisement/ sponsorships of TV programmes etc. would not be qualified as part of CSR expenditure.
iv. Expenses incurred by companies for the fulfilment of any Act/ Statute of regulations (such as Labour Laws, Land Acquisition Act etc.) would not count as CSR expenditure under the Companies Act.

8. What are the means for undertaking CSR activities?
A) Activities can be undertaken by self or by implementing agencies through Institutions with established track records of at least three financial years (max. 5% of total CSR expenditure in one financial year including Expenditure on Administrative Overheads).
B) The Board of a company may undertake its CSR activities through a registered trust / registered society /section 8 company established by the company, either singly or along with its holding or subsidiary or  associate company, or along with any other company or holding or subsidiary or associate company of such other company, or otherwise:
  Provided that-
(i) if such trust, society or company is not established as stated above, it shall have an established track record of three years in undertaking similar programs or projects;
(ii) The project or programs, modalities of utilization of funds on them and monitoring and reporting mechanism for them are specified.

9. What are the consequences of non-compliance to CSR provisions?
A) In case of any non- compliance, the Companies Act, 2013 imposes an obligation on the board to the company at Annual General Meeting (AGM). 
B) No specific provision is provided for non-compliance for spending on CSR under the Companies Act 2013.

10. State the SEBI compliances , if any.
A) Clause 55 of Listing Agreement states that all the listed entities shall submit, Business Responsibility Reports, as part of their Annual Reports, describing the initiatives taken by them from an environmental, social and governance perspective, in the suggested format. One of the format provides for description of Financial Details of the Company under which Total Spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%) is to be disclosed.

Read More...

Balance Sheet Finalization - Quick completion check list

Leave a Comment
BALANCE SHEET FINALIZATION CHECK LIST

1. NO ENTRY ON NATIONAL HOLIDAY.

2. CONFIRMATION OF SECURED LOANS.

3. CONFIRMATION OF UNSECURED LOANS.

4. CONFIRMATION OF S.CREDITORS (SPECIALY THOSE WITH DEBIT BALANCE.)

5. CONFIRMATION OF S.DEBTORS (SPECIALY THOSE WITH  CREDIT BALANCE)


Read More...

New partner in an existing partnership (Partnership Deed)

Leave a Comment
INTRODUCING A NEW PARTNER IN AN EXISTING PARTNERSHIP

THIS DEED is executed on this _____ day of ________ between:
Sh.________________ s/o, Sh. __________________, r/o of _________________________, 

Sh.________________ s/o, Sh. __________________, r/o of _________________________, (hereinafter referred to as "the existing Partners") of the one part 
AND
Sh.________________ s/o, Sh. __________________, r/o of _________________________, hereinafter referred to as "the new partner") of the other part
The existing partners and the new partner hereinafter collectively referred to as the "Parties". 
WHEREAS 
1. The existing Partners have been carrying on the business of ___________ in partnership together at under the firm name M/s _______________ vide terms of a deed of partnership dated ____________ (hereinafter called "the existing partnership business").

2. Sh. __________ has expressed his desire to join the existing partnership business as the new partner and is ready to contribute a capital of Rs.__________

3. The existing Partners have agreed to introduce Sh. __________ as the new partner in the existing partnership business on the terms and conditions hereinafter appearing.

NOW THIS DEED WITNESSETH AS UNDER:
1. Term of Partnership
The partnership hereby constituted (hereinafter called "the new partnership") shall be deemed to have commenced on the day of ____________ and from such date the deed of partnership dated _________shall be superseded by this deed and shall continue unless otherwise determined by the Parties. 

2. Name
That the business of the Partnership shall be carried on under the same name and style as that of the existing partnership business i.e. M/s ____________________. 

3. Place of Carrying Business
That the business of Partnership shall be carried from ________________________ or any other place as may be agreed upon by the Parties.

4. Capital Contribution & Interest on Capital
The capital of the new partnership shall be Rs. __________ whereof Rs.________ represents the capital of the existing partnership contributed by the partners and the balance of Rs ________ shall be contributed by the new partner __________ as his share. However, further funds required for the new Partnership shall be contributed or arranged by the Parties equally and in such manner as may be mutually agreed upon by and between the Parties from time to time. Interest at the rate of ____ percent per annum or as may be prescribed under Section 40 (b) of the Income Tax Act, 1961 or any other applicable provisions as may be in force under the Income tax assessment of Partnership firm for the relevant accounting period shall be payable to the Parties on account standing to the credit of the account of the Parties. Such interest shall be calculated and credited to the account of each partner at the close of each accounting year. However, in case of loss or lower income, rate of interest can be nil or lower than ____ percent as may be agreed upon by and between the Parties from time to time. 

5. Remuneration
That the new partner shall also be a working partner in the firm and he shall be entitled to a remuneration of Rs. ________ per month which shall be paid by the __th of each month. The Parties shall be entitled to increase or reduce the above remuneration as may be agreed upon from time to time by and between the parties. 

6. Drawings by Partner
The new Partner shall be entitled to draw (in addition to the remuneration as per clause 4) out of the partnership business any sum or sums of money not exceeding Rs. ________ per month for his own use, such sums to be duly accounted for on each succeeding settlement of accounts and division of profits of the partnership and if any excess drawings is found on any such settlement, the same shall be refunded by the new partner concerned (with interest at ___% per annum).

7. Debts of Old Partnership
All the debts and liabilities of the existing partnership shall be discharged by the existing partners and they shall indemnify and keep indemnified the new partner and also the assets and the properties of the new partnership against such debts, liabilities and against all proceedings, costs, claims and expenses in respect thereof;

8. Profits of Old Partnership
All the profits of the existing partnership up to the commencement of the new partnership shall belong to the existing partners only in the proportions in which they would be entitled thereto vide the terms of deed of partnership dated ________

9. Profit Sharing Ratio of new partnership
That profits or losses of the new Partnership (including losses of capital nature, if any) shall be divided amongst and borne by the Parties in proportion to their respective shares in the new partnership.

10. Deed of Partnership dated _____ to remain in force
All the terms of the deed of partnership dated _______, except those as has been modified by this deed, shall remain in force and shall have effect as if the same have been executed by the parties hereto. 
IN WITNESS WHEREOF,the parties have set their hands this ____________ day of __________.

The Existing Partners

The New Partner

Witnesses: 
1. 
2. 
Read More...

Basics of Investing in Shares

Leave a Comment
This article is about the basics of investing in shares. It is a well known fact that the markets have outperformed other asset classes such as property over time. Investing in shares offer tax benefits, diversification, flexibility and control over your own financial future. Buying a share (or in other words the stock) means that you are buying a share of the company. You own a share of the profits, which are handed down to shareholders through dividends and you can also see capital growth as share price increases. The company benefits from listing on the stock market as they can finance their business or an expansion plan without needing to borrow money.

But before you jump into investing into any company shares, here are a few important questions to ponder and answer to help assess your own financial situation and your financial goals for the future: What is the outcome that you want to achieve from investing in shares? What kind of return would you like? Income from company dividends or capital growth? Are you aware of the risks? And are you prepared to take the risk of investing your capital in the share market for the opportunity for a return?



Starting capital for investing in shares can vary greatly: but if you are looking to start with the minimal amount, you can start investing from $500 plus brokerage costs. However, most people start with $2000.

Another part of a sound comprehensive investment plan (of which investing in shares is one component) is considering your time frame as well as your age. For example, someone who is young have the time to risk a little more (since they have time to recover any major losses) but may have limited capital to invest with. Older people have less time to correct any major loss, hence have to choose more secure investments but are more likely to have more capital to play with.
Holding shares and investing in stocks may have tax implications and you may be eligible for some tax benefits. When companies have paid tax on their profits, as the dividends are distributed to the shareholders, tax credits which are called franking credits are included per share. The franking credits can then be used to offset the tax payable on your other income. Another tax benefit that may be available to you is a 50 percent discount on capital gains payable if you hold your shares for longer than 12 months. Please obtain professional advice from your accountant which suits your particular circumstances.

Investing in shares allows you the investor to diversify. This will spread your risk and you may choose to distribute your risk over different industry sectors such as financial services, healthcare or the risky exploration sector.

Another benefit in investing in shares is that you basically have flexibility of choice: you can buy or sell shares quickly as you please. For highly liquid shares, once you execute a sell order, you have access to your cash within two days. Compared to other investment classes (such as real estate) it may take much longer to exchange or liquidate your investment into cash.

Finally, choosing to invest in shares you've basically put yourself into the driving seat of your financial future. You've got the steering wheel and you are in charge of controlling your financial future - you have the responsibility of choosing where your investment capital will be placed and for how long. You may also choose to use a full service broker to give you further advice.


Read More...