Tax

What is the importance of EIN and FEMA for Transparent Tax paying?

Employer Identification Number abbreviated as EIN: It is the number used by the Internal Revenue Service to identify each company’s tax payment. After registering a U.S. company, each company must apply for a federal tax number, which is unique. It is a number that the U.S. Company actually operates and must obtain an EIN for tax filing. This tax identification number is used to identify American companies. EIN is one of the materials to be provided for opening a bank company account after the establishment of the company and filing tax returns in the future.

If there is no corporate federal tax number, it will be impossible to open an account with a local bank, file tax returns, deposit or borrow money, and even be unable to hire employees and carry out a series of business activities, which is necessary for the business development of American companies.

The information required to apply for a U.S. Federal Tax Number (EIN) is as follows:

  1. The registration certificate of the American company;
  2. The business address or registered address of the American company;
  3. The purpose of a tax file number applied by a U.S. company, such as starting a business for a new company, or for the company to open an account, etc.;
  4. Industries that American companies are engaged in, such as trade, finance, consulting, wholesale, medicine, construction, etc.;

Can I operate a company in the US without EIN?

In principle, it can be operated for a period of time. Unless you are self-employed, you cannot open a bank account, file taxes, and handle many things in other forms of company. Therefore, there is actually no EIN number, and companies in the United States are basically unable to operate.

Once the EIN is successfully applied, it is valid for life. The Internal Revenue Service does not charge additional fees each year.

FEMA had become a crucial ally in the Indian government’s pro-liberalization agenda. Act’s major goal is to integrate and reform the laws relating to foreign exchange in order to facilitate external payments and commerce in order to promote the orderly maintenance and development of the Indian foreign currency market. FEMA (Foreign Exchange Management Act) 1999 governs all foreign exchange transactions to and from India.

  • In addition, it incorporates provisions for the gradual liberalization of capital account transactions, which is consistent with full current account convertibility.
  • Since the Reserve Bank and Government of India must grant explicit authorization for the acquisition or holding of foreign currency, it is quite clear in its application.
  • FEMA divides foreign exchange transactions into two categories: capital account transactions and current account transactions.
  • Reserve Bank of India is empowered to negotiate with the Central Government on capital account restrictions and transactions that the exchange will accept.

There is no restriction on holding, owning or transferring any foreign securities or immovable property acquired outside of India while residing in India. A violation of the FEMA Act is only punishable in extreme circumstances.

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