You are right now at the peak of health, and able to manage all the tasks and obligations which your business demands and needs. You can visit your office/shop, conduct business meetings, make the payments, distribute the salaries and everything which is required to run your business.
What if suddenly, you are not able to do these tasks? Maybe due to some pressing health problem, or you are required to travel abroad suddenly, leaving everything in an instant.
Yes, it seems very unlikely, but if you think deeply, it’s not impossible. And one of the tasks of a successful entrepreneur is to consider every possibility.
If such a scenario occurs, then not only your business will suffer, and encounter a sudden discontinuity, but your business partners, and employees and everyone associated with your business operations will suffer.
Your absence can create a sudden void in your business operations or any other activity which needs your presence. This void can be managed by Power Of Attorney, a legal option which is provided by the Constitution of India.
In this article, we will share what does power of attorney mean, and what are the Types of Power of Attorney in India. We will also share the Power of Attorney Format for Authorised Signatory, and power of attorney format for income tax.
What Does Power Of Attorney Mean?
In layman terms, the power of Attorney means to allow and enable a person to act on your behalf. In the world of business, this means you are allowing and enabling another person to carry on business and general activities on your behalf, and take legal decisions on your behalf.
The person to whom the power of Attorney is provided can sign documents, buy/sell assets, and do everything which you were doing.
At the same time, the exact powers bestowed under the power of Attorney depends on the terms and conditions of the power-transfer.
The person who provides the power of Attorney to another person is called ‘Principal,’ and the person to whom this power is provided is called ‘Attorney’ or ‘Agent.’
The literal meaning of the word Attorney is lawyers and advocates, but in this case, that Agent can be anyone.
The keyword here is trust.
The Principal should have complete trust in the Attorney/Agent since that person can make decisions on his/her behalf.
In legal terms, a power of Attorney provides full transfer of legal rights from the Principal to the Attorney. In fact, the very concept of Power Of Attorney came into existence to enable the Attorney to take legal action, on behalf of the Principal, in case the Principal is not able to take them.
The transfer of rights and power and the authority to the Attorney is provided via ‘Instrument,’ which is often a non-judicial stamp paper.
In India, the legal definition and implementation of Power Of Attorney is governed by The Power-of-Attorney Act, 1882. You can find more details about this Act here.
Types of Power Of Attorney In India
There are two types of power of Attorney in India:
General Power Of Attorney: In this type of power of Attorney, the Principal gives full legal and general rights to the Attorney or Agent, and empower him/her to take all types of business, legal and general decisions on their behalf. In general power of Attorney, the Attorney can do these:
- Manage all properties of the Principal, buy, sell or manage rents of the property.
- Handle all bank related transactions. This can include cash withdrawal, deposit, opening new bank accounts, etc.
- Handle all tax-related matters. This can include filing tax returns, becoming the authorised signatory for tax-related disputes, refunds, audits, and more.
- Manage all registrations such as new business, new property, new vehicles, etc.
- Handle all legal disputes and represent the Principal in the Court of Law.
- Represent the Principal in all matters related to business and law.
Special Power Of Attorney: In this type of power of Attorney, the Principal provides the authority to make decisions only for some specific cause or purpose. Once that unique purpose is fulfilled, the power of attorney instrument ceases to exist. Some examples of special power of Attorney can include:
- Representation of the Principal in a property dispute, wherein the Principal is not able to appear or argue the case
- Representation of the Principal in a court case, wherein the Principal is not able to appear personally and fight the case.
Power Of Attorney Format For Authorized Signatory
This needs to be executed on a non-judicial stamp paper, whose exact value will depend on the jurisdiction of the instrument and the state where this jurisdiction exists.
Different states in Inda have different requirements of stamp duty. The value of the stamp on an instrument for the power of Attorney is defined by Article 48 of Schedule 1, Indian Stamp Act.
First, the Principal needs to draft the deed or the instrument on a paper, and finalise the terms and conditions of the power of Attorney.
Then this needs to be executed/printed on the appropriate stamp paper, in case of property matters. In the case of non-property matters, it can be printed on plain paper.
This stamp paper needs to be registered the sub-registrar office and then attested by the notary. Incase of non-property matter, the deed printed on a plain paper can be attested by the notary.
You can download a Power of Attorney Format for Income Tax here.
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