Are you a sole proprietor? You must know this.
With regard to bank accounts for sole proprietary concerns, there has been a new compliance procedure introduced by Reserve Bank of India. These new procedures are not only applicable to new concerns but also for existing businesses.
Effective from 1st April 2010, as per RBI Circular, the key changes in Proof of existence for proprietorship bank accounts are as follows:
Going forward, the banks require any two of the following documents as proof of name, address & activity of the concern:
- Registration certificate (in the case of a registered concern)
- Certificate/license issued by the Municipal authorities under Shops & Establishment Act
- Sales and income tax returns
- CST/VAT certificate
- Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities
- License issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities, Import/Export Certificate, etc.
The above documents have to be in the name of the proprietorship whose account is being opened, and not in the name of the proprietor or any sister concern
Hence, the banks require 2 entity proofs & a separate address proof for opening Proprietorship bank accounts.
These guidelines will apply to all new customers, while in case of accounts of existing customers, the above formalities should be completed in a time bound manner and should be completed before December 31, 2010.
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