Taxation And Company Formation Rules For Handicrafts Industry In india

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Taxation And Company Formation

Summary

Are you seeking insights on how to start a handicrafts business in India and possibly expand into exports in the future?

This page will provide basic information on company formation, taxation, licenses, and other corporate requirements for Indian handicrafts sellers, supply chains, and manufacturing firms.

The Handicrafts Industry is evolving rapidly in India, partly because of the unique, diverse, and magnificent socio-economic, historical, and cultural paradigm in this country.

Suppose you are looking to start your handicrafts and handmade items business. In that case, you can begin your journey by talking to a CA Firm in Kolkata.

Right now, in India, the West Bengal rural crafts hub is among the most pivotal platforms for encouraging and empowering innovative business frameworks within the Handicrafts Industry.

Here is a cohesive list of considerations and aspects that startups and emerging businesses need to know, whether they are working with Handloom, Handicraft, Handmade Good, or any type of Home-Based Artisan products.

Selling Handmade Crafts & Items Online in India – Licence, Taxes, Liabilities

There are so many handmade products that you can sell online, either through your Instagram account The list is :

  • Macrame planters,
  • Handmade soaps,
  • Crochet bags,
  • Papier-mache dolls,
  • Homemade pickles. ,
  • Squarespace or Shopify website, a blog, or a network of neighbors and friends.

Trade licenses and taxations of other norms of company formation in India – are hardly in the mind of the hobbyist who creates single products on request and sells occasionally.

However, when it becomes a practice, you are more or less creating and regularly supplying with an inventory and revenue; it is about time you should take license and taxations seriously.

When your hobby or passion becomes a profitable business, practically all jurisdictions in India have a set of rules for obtaining a business license.

So, even if you are supplying baked cakes in your neighborhood, it is time to consider yourself a micro-entrepreneur and a business license. There are different licenses for different types of products and business models.

Types of Business Licences Used in India

Whatever you are planning to sell, whether it is handicrafts or handmade items, or handloom textiles, a business is a business.

There are no licenses as such that cover artisan or handmade products. However, the charges are based on the type of product it is, whether food, cosmetics, etc.

To have a more detailed guideline, you can talk to a business consultant or CA firm in Kolkata, where an expert can prompt you about getting the right. Below is the list of all the license types.

FSSAI Licence for Food Businesses

Packaged food like pickles, cookies, or papad, home delivery for meals, street food like chaat, pani puri, momo, every food item requires FSSAI registration to ensure the safety and uniformity of the food items.

Trade Licence in India

Under the Shop and Establishments Act, you can receive an MSME registration or a sole proprietorship to get a trading license and sell your handmade products or trade others’ through your online store. Like a typical shop. These are the most practical methods for running a firm with fewer people.

Company Licence

It would help if you had this for company formation in India. The business gains a continuous existence, a separate legal identity, and limited liability protection by registering as a corporation.

Registration will assist the business in growing and expanding whenever turnover exceeds a certain threshold.

You can choose from OPC, PVT, and PLC incorporations. To simplify, you can appoint a CA firm in Kolkata or other Indian cities to make things easier.

License for Factories and Manufacturing Units

Before applying for factory registration, a factory must acquire approval from the labor and employment department for its building plan. This rule was set by the Factories Act of 1948. Factory license registration and renewal are also done under this statute to protect worker safety.

License for Import and Export Business

Indian SMEs and MSMEs can enter the exports market with an Import and Export Code. It is not a big deal; getting an Import Export Code from the Ministry of Commerce can get you going. Obtaining it is straightforward by online application.

Just visit the DGFT website, go through the instructions, submit necessary documents online like PAN card, ID and Address proof, Current Bank account statement, etc. And you will be given your Import Export Code soon after the successful verification is complete.

GST Registration

When a business entity crosses the turnover threshold and supplies intrastate, it is liable to pay taxes. The amount of the turnover threshold limit varies between ₹10lac and ₹20lac based on different states.

The GST Registration obtains a conglomerated yearly tax from the business instead of the previously used indirect taxes. This one tax covers them all.

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License Selling Your Products Through Exhibitions And Trade Shows in India or Overseas

Your business license will be sufficient to visit trade shows domestically and internationally. However, it is essential to get an Exporter’s License to start selling your products either on a b2b or b2c model.

License to Sell On Amazon, Etsy, and Other Marketplaces in India

While Etsy doesn’t need a business license to list and sell your products through its platform, the Indian Government recommends that businesses be licensed.

That includes Etsy sellers too! And Amazon does need its sellers to have GST Registration to list and sell products. Before you apply to list your products in a marketplace, enquire about the license needs and other eligibility criteria beforehand to avoid unnecessary hassle.

Taking Your Handicrafts Business Global

When you are ready to sell your products, start obtaining a Company PAN and Import-Export code.

Many small businesses think import and export business to be a big thing, but it is not something out of the reach of micro-businesses.

Amazon listings, for example, expose a business to a global customer base. However, you can sell one-two product by standard International Shipping for one-time orders. But if it becomes a regular practice, you need to get an exporter’s license.

If you are an NRI looking to import valuable handicrafts from your homeland, consider merging with an NRI Tax consultancy in Kolkata or any other Indian city that can provide first-hand guidance about handling your affairs in the domestic and international markets.

Tax Benefits for Handicrafts Businesses in India

Handicrafts businesses registered under any Commodity Boards and Export Promotion Councils may be eligible to avail tax benefits and Government incentives. As of 2022, most handicrafts items fall under the tax slab of 2.5% to 6% GST rate.

Moreover, Indian Artisans and Craftsmen would also profit from the GST system’s reduction in double jeopardy or double taxation of commodities at the federal and state levels.