Opening an offline or online current account is something business owners cannot ignore while starting a new company. Doing so assists in keeping business operations separate from personal transactions and banking activities. Also, with this account, you can constantly track all business expenses. However, many often wonder if the report has any tax implications as high transactions are involved.
Note that while all regular massive business transactions are performed through the current bank account, the account is still tax-free as it generates no interest on the balance maintained. However, as a business owner, you must bear tax on the income earned through distinct investment sources like fixed deposit, recurring deposit, equity, debt, etc.
As you know, a current account has no tax implications attached; let us dive into the benefits of opening such reports and the recent documents you must keep for a stress-free opening process.
What is a current account?
A current bank account is opened by entrepreneurs, share and stockbrokers, insurance companies, non-government organizations (NGOs), etc., who require daily business transactions. Owing to the provision of benefits like a high transaction limit, overdraft facility, unlimited high-amount withdrawals, etc., no interest constituent is offered on maintaining a balance with the current accounts.
What are the features and benefits of a current account?
Unlike a savings bank account for saving surplus funds, a current one is opened to meet business needs with higher transaction requirements. An existing bank account meets liquid deposits and provides various personalized options that help smooth financial dealing. Listed here are some notable features and current account benefits –
- The current account allows transactions over and above the savings permitted account limit.
- Unlike savings accounts, the current account requirement for a minimum average balance is higher. This is because an existing version offers higher benefits and better features than a savings bank account.
- This account facilitates constant banking transactions – transfer/receive funds, cheques, cash, etc.
- Such accounts are available to individuals (Indian residents), HUFs (Hindu Undivided Families), sole proprietorships, private limited companies, partnerships, associations of persons, public sector undertakings, foreign banks, share and stockbrokers, non-government organizations (NGOs), religious organizations, etc.
- There is no restriction on the transactions conducted during the day.
- Offers free outstation cheque collection at the bank branch.
- Provides a business debit card for swift transactions of any amount based on business needs.
- Unlimited free demand drafts
- Free alerts through SMS and emails
- A dedicated relationship manager
- Better forex rates as well as efficient trade services
- Cash management services
- Point of sale (POS) solutions
What are the current account documents you must keep handy?
For public and private companies, the current account documents required are –
· PAN card in the company’s name
· Incorporation certificate
· Commencement of business certificate
· Updated articles and memorandum of association
· List of shareholdings on letterhead
· Proof of business/mailing address/registered office
· Current list of directors with address and identity proof (passport, driving license, PAN card, Aadhaar card, voter ID, etc.)
· Beneficial owner details and KYC (Know Your Customer) documents
Do note that banks may ask for more documents; the above list is only indicative
Current bank accounts are popular among companies, firms, public enterprises, NGOs, etc. Such bank accounts are opted for owing to the flexibility and provision they provide to conduct high bank transactions easily. The bank account has no restrictions on commerce, deposits, and withdrawals. As stated above, they are nil or zero-interest bank accounts owing to the fluidity and benefits they offer in overdraft facilities, dedicated relationship managers, POS solutions, etc., making them completely tax-free.