The producer company was registered under the companies act in 2013. Marketers, producers, poolers, graders, sellers, procurements, harvesters, and handlers are among the activities carried out by the industry. The process may also include distillation, preservation, brewing, drying, ventilation, canning, and packaging. Producing, supplying, and selling machinery and equipment are the tasks of this company.
Under the Companies Act of 2013, Producer Company is a registered company. Major activities include production, procurement, harvesting, pooling, grading, handling, marketing, selling, export of members’ main products, or importing goods and services for their own use. Produce of its members is preserved, distilled, dried, brewed, canned, vented, and packaged. In addition to manufacturing, supplying, or selling machinery, equipment, or consumables, producer companies also provide services to their members.
Key Features:
- A company that is registered as a producer is treated as a private limited company.
- Producer companies are limited by only their share capital, with limited liability.
- The company can contain up to 50 members.
- A public limited company will never be formed.
- A producer company must have a minimum of five directors. DINs (Director Identification Numbers) and DSCs (Digital Signature Certificates) must be obtained by all directors.
- It is necessary to have a minimum paid-up certified capital of Rs.5 lakh when incorporating a producer company.
Why do we need a Producer Company?
- Incorporate a statutory and governing framework that allows producer-owned businesses to compete on an equal footing with rivals.
- To provide for the registration and formation of “Producer Companies” under the more comprehensive regulatory framework of the company law, with adequate modifications, which embody the concepts of “mutual assistance” and “cooperation.”.
- Provide the present large multi-state cooperative societies with the opportunity to become producer companies through voluntary conversion.
Dispute Resolution
According to the Arbitration and Conciliation Act, 1996, disputes involving the producers’ companies will be settled by arbitration or conciliation, as if the parties to the dispute had in writing agreed to such procedure.
Requirements for Audits and Internal Audits
According to its articles of association, Producer Companies are required to conduct an internal audit of their accounts at regular intervals. An annual audit report is also presented by the auditor to the company members on examination of the accounts, in addition to the internal audit. Following his information after examining the financial statements in the requested format will give a true and fair picture of the company.
Benefits of Taxation
India’s economy is largely based on agriculture. The livelihood of more than two-thirds of the Indian population depends on agriculture. Tax on agricultural income is explicitly exempt under section 10(1) of the Indian Income Tax Act, 1961. Amounts of agricultural income are exempt from tax depending on the type of agricultural activity.
Despite the Income Tax Act’s omission of specific benefits or exemptions for producer companies as such, certain tax advantages are available for certain types of agricultural activities.
The income produced from growing and selling green tea leaves directly, however, is not taxed, as it is considered agricultural income under the Income Tax Act. In the case of processing green tea leaves and manufacturing tea, only 60% of income is generated by this activity. As a result, the income is categorized as agricultural income, and the tax exemption can only be obtained on 60 percent of that income. Therefore, we can conclude that the kind of activity carried out by the producer company is relevant to whether or not the company is tax-exempt.
The reasons mentioned above are some of the reasons why you should set up a producer company in India.
The producer company is a registered private company. Shareholders have limited liability, and they are limited by capital. There can be up to 50 members in a company. A producer company must have at least 5 directors, each with a DSC (Digital Signature Certificate) and DIN (Director Identification Number).
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