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The majority of the businesses often under look Project feasibility study during a brand-new project and jump straight into delegations and timelines.  But a well-planned feasibility study can not only save precious time, money and resources but also ease the project management.

Businesses do not succeed by brilliant and world-changing ideas, but rather succeed by hundreds of hours of hard work and careful planning. That is why out of 50 ideas only 1 makes into a real business. This is where the importance of due diligence and Project feasibility study comes in. 

Here are few advantages of Project feasibility study.

1.      Starting a New Business: Launching a brand new business isn’t only about short-term gains and profits, but about making business sustainable to generate long-term growth. In the case of launching a business, two types of feasibility studies can be performed. How many resources are necessary to start the business and long-term viability of the business.

Many businesses have ignored the importance of feasibility study, and have failed horribly. One such example would be during late 90’s .com bubble- companies who had great ideas but unsustainable methods became examples of high profile failures. All because they ignored the importance of feasibility study.

2.      Changing an existing product or service: Change is the law of nature. And businesses who don’t change with time often end up remaining just a brand (Nokia, Blackberry), innovation is the key to success. Just look at apple and google for example. At times when making changes in the existing products or services become necessary, a feasibility study proves to be extremely useful. Based on the study companies can strategically decide to experiment with their existing products and meet customer demands.

3.      Launching a new Product or Service: Just like changing existing products or services, launching new products or services without risking the entire company can only be done through the help of routine feasibility study. Based on their studies companies decide whether a change in consumer demand is worth making a new product or not.

4.      Starting a partnership:  Investors, employees and shareholders need assurance that merger of companies will indeed lead to a better future. Feasibility studies help them understand whether the partnership or merger is going to bring any long-term benefits or not.

The simplest way of doing a Project feasibility study for your business:

·        Conduct a pre-feasibility study and decide whether you actually need the study or not.

·        Check all your options before you finalise your idea.

·        Assess the Demand in you desired market.

·        Assess the competition and marketing possibilities.

·        Determine the challenges, both short –term and long-term.

·        Make a routine for your feasibility study.

·        Hire expert consultants for a pure objective Project feasibility study.

Conducting a project feasibility study can be time and resource consuming, that is why it is always a good idea to hire professionals to help you get a completely objective feasibility analysis.  We at pnjlegal.com provide professional project feasibility analysis and other services.

We, "PNJ Legal Consultants" are one of the well known organizations engaged in providing Consultancy Services keeping in mind the Client Service Mentality.

We have a team of highly qualified professionals and time to time training is provided by us as per the requirements. Our team members deliver excellent performance in providing these services and our clients can avail the services at affordable prices.

Our sophisticated team has complete knowledge of various exercises and technicalities that are used in our services. Our services includes Strategy Consulting, GST Consulting, Asset Management, Feasibility Study, International Arbitration, Due Dilligence, Franchisee Consulting, Financial Audits, Operational Audits, Tax Heaven Registrations, Shareholder Agreements, Start up Consulting, IP Consulting, Taxation Services, Accounting system design and Mergers Acquisitions.

Contact at parascs@gmail.com or refer website www.pnjlegal.com

MLM or Multi level Marketing is an alternate form of distributing products and services. Instead of using the traditional distribution channel (distributors – retailers- consumers), MLM companies sell their products and services directly to consumers. That’s why it’s also called Direct Selling. When these consumers or customers like these products and services naturally they start sharing it with others.

MLM companies pay you when people buy their products and services from your recommendation. But the awesomeness doesn’t stop there, you are given an option to build a team of distributors (generally consisting of happy consumers recommended by you and those you recommend and those they recommend and so on.) contrary to common misconception< you are not paid to recruit people, you are paid depending on the total sales volume generate from your entire team. Instead of spending money on advertisement, MLM companies reward their consumers and distributors for their word- of- mouth advertisement efforts.

To regulate the sale of goods and services outside of retail establishments otherwise known as "Direct Selling (Multi Level Marketing)" and to provide for protection of consumers who purchase goods and services from direct sellers, following guidelines are issued with the approval of the Competent Authority. These guidelines will come into force from the date of publication in official Gazette and will remain in force till an appropriate legislation is enacted for the said purpose:

1. Definitions:-

Direct Selling : Means marketing or sales of goods directly to the end user consumer using word of mouth publicity, display and/or demonstrations of the goods/products, and/or distribution of pamphlets. Explanation: Companies can open pick up points and delivery points for maintaining effective delivery system.

Direct Selling Entity: Means a business entity as recognized by law for the time being in force including but not limited to a Company duly incorporated under the Indian Companies Act, a registered Partnership Firm constituted under the Indian Partnership Act.

Direct Seller: Means a person who is authorized by the Direct Selling Entity to engage into the business of Direct Selling.

Consumer: An individual who buys goods or services for personal use and not for manufacture or resale and shall have the same meaning as provided under the Consumer Protection Act. 1986.

Goods/products: Goods/Products shall have the same meaning as defined in the Sale of Goods Act and section 3(26) of the General Clauses Act, 1897, that is, it shall include every kind of movable property other than actionable claims and money.

Sales Incentive: Sale incentive means share of profit payable to the Direct Seller for effecting sale of goods/products as stipulated in the contract between the Direct Seller and the Direct Selling Entity.

Ø What is the law for setting up Multi Level Marketing Company India?

There is no separate law for setting up a Multi Level Network Marketing (MLM) in India by now it was proposed in Indian Parliament in 2005 but not yet passed as a law, however there are certain acts of Indian constitutions which we need to consider before setting up Multi Level Marketing Company:

• It should not be a only head count commission Model which falls in Pyramid Scheme which is banned in India, covers MRTP Act alias Money Rotation Trade Practice Banning ACT 1969.

• It should not be only money involved investment return format which falls in PCMC Act alias Prize Chit and Money Circulation banning Act 1978. It should be feasible Product selling Business Model.

What is the best practice to setup a Multi Level Marketing Company?

Essentials of setting up a MLM ENTITY Private Limited or Limited Company are to be setup. In India Multi Level Marketing Company involves limited risk for directors who are setting up a Multi Level Marketing Company Business.

Pertain IDSA (Indian Direct Selling Association) Membership. It’s not a government body but it’s a private setup by Amway India and other big network marketing companies which is trying to govern the whole Direct Selling Companies in India which prevents unethical and illegal MLM companies and Multi Level Network marketing Business practices to operate and destroy the MLM Business route.

Apply for Vat/Service Tax/ Tan No and all necessary license and registration required for manufacturer and product seller. Last but not the least Appoint a Legal Advisor, Consultant and a Chartered Accountant to create rules and regulation forms, manage paper works and other company related legal documents and stationary materials.

Please does not cut copy paste other company’s print materials as it may not be applicable on your product or MLM Business Model? It is also desirable to develop exclusive website content and information related to company written by legal advisor of the company to counter legal laws of the Land.

2. Conditions for Permissible Direct Selling:-

Should be a Direct Selling Entity, having sales tax/Vat, Income Tax, TDS and other license as may be required as per the law/regulations of its principle place of business.

Should have bank account with at least one nationalized bank.

Partnership Deed or Memorandum of Association should clearly state their nature of business. (Those who do not have such specific clauses should get their memorandum of Association or Partnership Deed, as the case may be, amended within 2 months from the date of publication of these Guidelines).

Pay sales incentive at the agreed rate within the agreed period.

Shall display names and Identification numbers of their authorized Direct Sellers in the official websites.

Should have a consumer grievance cell that should ensure redressal of consumer grievances within 7 days from the date of making such complaints.

Website should provide space for registering consumer complaints hassle free.

3. Appointments/Authorisations:-

Direct Selling Entity shall appoint/authorise Direct Sellers upon receipt and scrutiny of application in a prescribed format.

An agreement recording terms of such appointment should be executed between the Direct Selling Entity and Direct Seller.

No application should be considered unless such applicant is eligible to enter into a contract under the Indian Contract Act.

Each Direct Seller shall be allotted Unique Identification Numbers before granting license/permission to start direct selling.

Direct Selling Entity should not give incentive to any persons for joining of Direct Sellers.

4. Prohibition:-

Payment of incentive by whatever name it is called unrelated to their respective sales volume.

Supply/Distribution of goods with the knowledge that such goods/products are inferior or exceeded its validity period as per the manufacturer.

Direct Selling Entity/Direct Seller will not indulge in money circulation scheme or any act barred by the Prize Chits and Money Circulation Scheme (Banning) Act, I978.

5. General Conditions:-

MRP of the goods should be visibly displayed on the package.

Accounts of individual Direct Sellers shall be maintained properly and should be made available through World Wide Web.

Sales incentive should be distributed to the respective Seller on or before the agreed due dates.

Goods sold by the Direct Selling entity should carry guarantee/warranty of the manufacturer. However consumer should be given opportunity to exchange/return the goods if he finds any manufacturing defect or the product purchased is not useful for the purpose it was meant, within 30 days from the date of purchase, provided any seal/protection on the product is kept unbroken.

6. Information Readiness (Ready Information file):-

Every Direct Selling Company should maintain a file with all relevant documents that include:

Certificate issued by Registrar of Companies, MOA and MOM.

Xerox copies of TIN, DIN of Directors, TAN, PAN.

Certificate of Sales Tax, Service Tax, CST Registrations.

Copies of all Sales Tax Returns filed with the authorities.

Copies of Service Tax Returns filed with the authorities.

Copies of IT Returns of company filed with the authorities.

TDS Statements of Distributors and respective challans paid.

Every Direct Selling Company should maintain KYC/KYDS (Know Your Customer/Know Your Direct Sellers) as a mandatory process. Specific formats are to be provided on their websites to be available for all at any time.

7. Grievance Redressal Mechanism:-

Every Direct Selling Company must have a complaint redressal mechanism to address any problem of their customers/Direct Sellers.

8. Breach of Guidelines:-

The sale activities not following the above guidelines shall not be considered as Direct Selling and would be dealt appropriately under relevant provisions of existing laws.

We, "PNJ Legal Consultants" are one of the well known organizations engaged in providing Consultancy Services keeping in mind the Client Service Mentality.

We have a team of highly qualified professionals and time to time training is provided by us as per the requirements. Our team members deliver excellent performance in providing these services and our clients can avail the services at affordable prices.

Our sophisticated team has complete knowledge of various exercises and technicalities that are used in our services. Our services includes Strategy Consulting, GST Consulting, Asset Management, Feasibility Study, International Arbitration, Due Dilligence, Franchisee Consulting, Financial Audits, Operational Audits, Tax Heaven Registrations, Shareholder Agreements, Start up Consulting, IP Consulting, Taxation Services, Accounting system design and Mergers Acquisitions.

Contact at parascs@gmail.com or refer website www.pnjlegal.com

Composition Scheme Rules under GST provide for all the procedural compliance w.r.t. intimation for Composition Scheme, effective date for levy, conditions and restrictions on levy, validity of levy and rate of tax.

The current state indirect tax regime has provided a simpler compliance for small dealers known as the Composition Scheme. Under this scheme you,

Pay taxes only at a certain percentage of turnover

File periodic returns only (usually on a quarterly basis)

Have an option of not having to maintain detailed records or follow tax invoicing rules

Are not allowed to take Input Tax Credit (ITC)

Are not allowed to collect tax on sales

A. Intimation and Effective date for Composition Levy

1.   For persons already registered under pre-GST regime

Any person being granted registration on a provisional basis (registered under VAT Act, Service Tax, Central Excise laws etc) and who opts for Composition Levy shall file an intimation in FORM GST CMP-01, duly signed, before or within 30 days of appointed date. If intimation is filed after the appointed day, the registered person:

a) Will not collect taxes

b) Issue bill of supply for supplies

FORM GST CMP- 03 must also be filed within 60 days of exercise of option:

a) Details of stock

b) Inward supply of goods received from unregistered persons held by him on the date preceding the day of exercise of option.

2. For persons who applied for fresh register under GST to opt scheme

For fresh registration under the scheme, intimation in FORM GST REG- 01 must be filed.

3. Registered under GST and person switches to Composition Scheme

Every registered person under GST and opts to pay taxes under Composition Scheme, must follow the following:

a) Intimation in FORM GST CMP- 02 for exercise option

b) Statement in FORM GST ITC- 3 for details of ITC relating to inputs lying in stock, inputs contained in semi-finished or finished goods within 60 days of commencement of the relevant financial year

b. Conditions for a Composite Tax Payer

Apart from the threshold limit, the following conditions are applicable for a composite tax payer:

Cannot be engaged in supply of services, other than supply of food or drinks for human consumption

Cannot be engaged in manufacture of specific notified goods

Cannot supply goods not taxable under GST

Cannot supply goods through an e-commerce operator

No Interstate outward supplies – A composite tax payer should not engage in interstate outward supply of goods and / or services .

Payment of composition tax – If the composite tax payer is in the trade of supplying goods and services, then composition levy will be applicable for both supply of goods and supply of services.

Does not have to collect tax – The composite tax payer does not have to collect tax on all his outward supply of goods and / or services.

Applicable for all business verticals under the same PAN – Composition levy will be applicable for all business verticals operating within state or interstate under the same pan.

What does this mean?

An individual with different business verticals, like:

Mobiles & Accessories

Stationery

Franchisee

In the above scenario, the composition scheme will be applicable for all three business verticals. The dealer cannot opt for any one business vertical to fall under the composition scheme. For example, if the business vertical’s place of business is in Karnataka & Kerala for a single PAN, each of the business vertical in that particular state should have only ‘Intra-State(within state)’ supplies.

Cannot claim Input Tax Credit – The composite tax payer is not eligible to claim input tax credit on all his inward supply of goods and / or services.

What does this mean?

If a dealer chooses to be a composite tax payer, he cannot claim input tax credit even if he makes taxable purchases from a regular taxable dealer. Ideally, the taxable amount would be added to the composite tax payer’s cost.

Conclusion

Any person who opts for the scheme will be deemed to have been opted for all the places of business having the same registered PAN. Hence, you may not choose any one of all the place of business to be registered under scheme.

Composition Scheme Rules under GST have been targeted to be strict and crisp for the persons availing the Composition Scheme.

We, "PNJ Legal Consultants" are one of the well known organizations engaged in providing Consultancy Services keeping in mind the Client Service Mentality.

We have a team of highly qualified professionals and time to time training is provided by us as per the requirements. Our team members deliver excellent performance in providing these services and our clients can avail the services at affordable prices.

Our sophisticated team has complete knowledge of various exercises and technicalities that are used in our services. Our services includes Strategy Consulting, GST Consulting, Asset Management, Feasibility Study, International Arbitration, Due Dilligence, Franchisee Consulting, Financial Audits, Operational Audits, Tax Heaven Registrations, Shareholder Agreements, Start up Consulting, IP Consulting, Taxation Services, Accounting system design and Mergers Acquisitions.

Contact at parascs@gmail.com or refer website www.pnjlegal.com