Setting up a factory in GIDA, Gorakhpur

The Gorakhpur Industrial Development Authority estate is where a large part of the city’s manufacturing sits. Putting a unit there is not one form. It is a sequence: who owns the unit, where the land or shed sits, how GST sees the place, how the bank sees the promoter, and how the books will survive the first tax-audit year.

1. Decide the person before you decide the shed

A factory is owned by a person in law — a proprietor, a partnership, an LLP or a company. Mixing them (land in the father’s name, GST in the son’s, bank account in a company not yet incorporated) is the most expensive error in the first year. If more than one family member is putting in money, or if a term loan is in view, a company or LLP is usually the cleaner vehicle. Incorporation is described in Company incorporation in Uttar Pradesh.

2. Land, lease and the registered office

GIDA allotment or a private lease of a shed has to match the name on the GST registration and, for a company, the registered-office proof. A leave-and-licence that cannot be produced at GST registration will stall the additional place. Keep the allotment letter, possession, rent receipts and a simple plan of the shed in one folder — the same folder the bank will ask for.

3. GST, e-way bills and job-work

Register the principal place, then add GIDA as an additional place before the first inward or outward supply through that gate. Job-work challans (delivery to a processer and the return of finished goods) are a regular feature of GIDA life; they are not sales, and treating them as sales is a common way to inflate turnover and GST liability. E-invoicing follows once aggregate turnover crosses the notified threshold.

4. Udyam, electricity and the other licences

Udyam classification (micro, small, medium) follows investment and turnover as defined, not as hoped. Get it right; banks and certain schemes read it. Factory licence, pollution consent and building completion sit outside the Chartered Accountant’s licence to procure, but they affect going-concern and CARO reporting later. A list of what is in place should live with the books. See Udyam registration — the form is national, the facts are local.

5. Books that will survive September

• A chart of accounts that separates raw material, stores, packing, scrap and finished goods.
• Quantitative stock, not just rupees — Form 3CD will ask.
• Contractor labour and job-work distinct from purchases.
• A weighbridge or gate record that can be sampled.
• Audit trail enabled in the accounting software from day one. See audit trail.

6. The first year of audit

A company needs a statutory auditor from incorporation. A business that crosses section 44AB needs a tax audit for that previous year. Internal audit arrives later, when section 138 thresholds are crossed, but a manufacturing unit benefits from a controls review in the first operating year — gates, scrap and cash. See statutory audit, tax audit and internal audit for manufacturing units.