Tag Archives: Service Tax Audit in India

Tax-Return

Efiling of Income Tax Return

What is a income tax return ?

It is a prescribed form through which the particulars of income earned by a person through various sources(like salary, business, professional fees, interest, capital gains, etc.) in a financial year and taxes paid on such income is communicated to the Income tax department after the end of the Financial year, called as income tax return or ITR. It is like your report card in school but instead of  marks you have income and taxes.  It is the constitutional obligation of every person earning income to compute his income and pay taxes correctly. Different forms are prescribed for filing of returns for different Status and Nature of income .

 

What is efiling ?

Efiling or electronic filing is submitting your income tax returns online. There are two ways to file your income tax returns. The traditional way is the offline way where you go the Income Tax Department’s office to physically file your returns. The other way is when you efile through the internet. Over the past few years, efiling has become popular because it is easier, doesn’t require prints of documents and can be done for free.

 

What are advantages of e-Filing?

  • Anywhere, Anytime files, 24 x7 x 365 service.
  • Easy, fast,free and secure
  • Faster processing and quicker refunds.
  • Value added services like viewing Form 26AS,  tracking of refunds,email, SMS alerts regarding status of processing and refunds.
  • And now it is also compulsory for most.

 

Is E-filing of Income tax Return compulsory?

  • E-Filing Returns is  compulsory for:
    Individuals earning over Rs 5 lakh a year. They are required to file their tax returns in the electronic format from AY 2013-14 (FY 2012-13) and subsequent assessment years.
  • Individual/HUF, having total Income of Rupees 10 lakhs. It was made mandatory from AY 2012-2013((FY 2011-12) and subsequent assessment years.
  • Individual/HUF /Firm auditable under section 44B of the IT Act, 1961. It was made mandatory for AY 2012-2013 and subsequent assessment years.
  • All Companies

 

Difference between AY and FY

Financial Year is period between 1st April to 31st March. Assessment Year is the next year in which the income is liable to tax.

For example, if your financial year is from 1 April 2017 to 31 March 2018, then it is known as FY 2017-18. The assessment year for income earned during this period would begin after the financial year ends–that is on 1 April 2018 till 31 March 2019.

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Basics That Everyone Should Know About GST

With the passage of the GST bill in both the houses of Parliament, its implementation from 1 July 2017 is nearly certain.

India currently has a dual system of taxation of goods and services, which is quite different from dual GST. Taxes on goods are described as “VAT” at both Central and State level. It has adopted value added tax principle with input tax credit mechanism for taxation of goods and services, respectively, with limited cross-levy set-off.

 

GST (Goods and Service Tax)

GST means Goods and Service Tax. It is an indirect tax levied on sale of goods and services. The reformists believe that GST is one of the most awaited law which upon introduced will boost the economic growth in the country. This law if passed by the parliament may come into force from April 2016. As everyone is talking about it now, let’s get into the basics of the proposed law in this article.

 

Does GST apply to you?

Being an indirect tax, it is applicable to businesses, professionals, freelancers and service providers. It does not apply to salaried individuals.

 

Is it easy to implement in India?

Not really. Today states have autonomy in collecting state taxes. They have the feeling of losing their rights! They want liquor, fuel to be out of GST tax system. They are also worried about Central government sharing GST revenue with the states. If India becomes one common market, then the states will have to share their powers of taxing with the union government. (Which means states can’t increase the taxes as and when, as much as they want)

 

What is a “casual taxable person?”

A person who occasionally supplies goods and/or services in a territory where GST is applicable but does not have a fixed place of business in the said state is treated as a casual taxable person. For example, a person who has a place of business in Bangalore gives consulting services in Pune (where he has no place of business), then he would be treated as a casual taxable person in Pune.

 

What are the differences between the UPA’s GST and the NDA’s GST?
Below are the primary differences:

  • Petroleum sector has been kept out of the ambit of GST
  • Liquor for human consumption is exempt however tobacco and tobacco products will fall under GST.
  • There is a 1% tax on top of the GST for inter-state movement of goods and services.

 

What will be the short-term impact of GST?

The GST will fuel inflation for the short term. The GST rate starts at 5% and 18% taxation services such as restaurants, movies etc. are bound to increase prices. Another problem with the GST that many pundits feel is not including liquor and petroleum under GST’s ambit. These are major revenue sources for the government and experts feel this is being done due to a few crony capitalists who need some time to funnel away their black money as the GST promises to widen the tax paying population.

Related : How GST Works in India

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Reasons to set up a limited company

Setting up a limited company will mean more administration and more paperwork than if you are a sole trader but there are many advantages to being a limited company, not least eliminating and personal financial liability.

When a sole trading business fails then the owner is personally responsible for any debt, which can have a negative effect on your credit rating and ability to obtain personal loans in the future. You could risk becoming personally bankrupt if the debts are too high for your to pay off.

If you set your business up as a limited company you are protected from this risk.

 

What are the Benefits :

Whilst running a limited company does have its fair share of responsibility, and the administrative responsibilities are certainly greater than other ways of working, there are many advantages too.

    • Limited liability – In simple terms, if you run a Limited Company you are protected should things go wrong. Assuming all rules have been followed, as a director you will not be personally liable for any financial losses made by the company.

 

    • Separate entity – A Limited Company is a legal entity in its own right. This means that everything from the company bank account, to the ownership of assets relates to the business. They are totally separate from the interest of the directors and shareholders.

 

    • Tax – As a director and shareholder of a limited company you could elect to take the majority of your income in the form of dividends, which enables you to manage your own tax liability and potentially save on National Insurance costs.

 

    • Perception – If you plan to do business with larger companies, it can help if you are working via a Limited Company as it gives off a more professional image. In some industries, it may even be a mandatory requirement as they will not deal with sole traders or partnerships.

 

    • Protection – As well as the limited liability protection mentioned above, once you have successfully registered your company, your company name is protected by law. Companies House has very stringent rules for the naming of companies so no one else can use the same name as you, or anything deemed too similar.

 

    • Ownership and succession – As the sole shareholder in your business, you own the business. However, a Limited Company can easily transfer ownership of shares, or existing shareholders can sell a stake in the company to other parties at any time. If for example a shareholder wishes to retire, or bring a new director on board, it is far easier to transfer ownership, or part ownership, of a Limited Company than it is with a less formal business structure.

 

    • Take home pay – It’s safe to say that this is the area where you can really reap the rewards of running your own Limited Company. The only person you need to pay as a Limited Company is yourself – combined with the tax efficiencies on offer, this means you can keep anything from 81 to 86 percent.

 

Accounts

Accounts must be prepared each year but most small companies are not required to have them audited so the process is relatively simple, especially now that the process can be done online.

 

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Audits Under PCAOB Standards

A yearly audit is a key safeguard for your money and a planning tool for the year ahead. Think of it as a “year in review” for your finances.

The primary benefit of an annual audit under PCAOB standards  is the confidence it gives you and your members that the PTO’s financial house is in order. Basically, the audit verifies the numbers, ensures accuracy, and assesses procedures. A comprehensive audit also identifies internal controls that should be implemented to improve the integrity of your financial systems. Furthermore, the audit gives closure to the treasurer and sets a starting point for the new year’s activity. An audit is also the primary tool for uncovering financial mismanagement. Hopefully you won’t need to conduct an audit for this reason, but an annual audit can uncover problems before they become significantly more serious. Your PTO might also choose to include in your audit a review of how closely your group’s income and expenditures matched the year’s budget. This type of review can be a strong planning tool.

 

The audit is not within the jurisdiction of the PCAOB. This seems like a strange request.  Perhaps the client is a clearing agency or futures commission merchant registered with the Commodity Futures Trading Commission, which requires that entities registered with it have an audit performed in accordance with PCAOB standards. Maybe the client has entered into a contractual agreement that requires an audit conducted under PCAOB standards. Or maybe, for whatever reason, the client just wants an audit conducted under PCAOB standards.

 

The PCAOB determines which audits are within its jurisdiction, including audits of the financial statements of issuers and nonissuer brokers and dealers registered with the SEC. A regulator (other than the PCAOB) requiring that the audit be conducted in accordance with PCAOB standards does not make the audit fall within the jurisdiction of the PCAOB. Therefore, even though the regulator— for example, the CFTC— requires an audit to be conducted in accordance with PCAOB standards, that audit is required to also be conducted in accordance with GAAS.

 

The Auditor’s Report

The report from the auditor will mark the completion of the review. If you are using volunteers, you should clearly itemize what you expect back, so your auditors know when they have completed their job.

Ensure that your auditor has returned the files you provided, and file the original report in the PTOs permanent archives. At the first meeting of the new school year, you should present the auditors report and move that it be adopted. According to Robert’s Rules of Order, once the annual report of the auditor is adopted, it is no longer necessary to move to adopt each month’s treasurer’s report. The reports are presented and then simply filed for next year’s audit.

Related Things you should Know before Registering a Company in India

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What is Subsidiary Company in India

Subsidiary company is any company whose interests are held and controlled or held by another company. Paid up equity share capital and preference share capital of the subsidiary company can be used to determine the holding company, subsidiary company relationship between two companies.

 

What is a Subsidiary Company?

There’s often a lot of confusion regarding the position of the subsidiary company and what it does. A subsidiary company is a company that is either owned or owned in part by another company. The company that owns the subsidiary is known as a parent company or a holding company. It should be noted that a holding company does slightly differ from a parent company, though.

 

What is WOS (Wholly Owned Subsidiary)

When one company is 100% owned by another company, it is called Wholly Owned Subsidiary of the company who had made 100% investment in it.

 

How To Set Up a Subsidiary

To setup one of these companies, you only need a sole director. The requirement for a company secretary was waived some years ago. The only restriction is that the sole director cannot then act as the company secretary. When you register as a sole director, you will enter both your residential address and a service address. Only the service address will appear in the public records.

The key here is that in the various documentation you submit regarding shareholders you will have both an individual director and another company as a shareholder. You are prohibited from having an entire company owned by another company.

Once you submit the documents, you will have a decision within 24 hours from Companies House.

 

Conclusion

Opening up a subsidiary isn’t a decision that you should take lightly. It isn’t always necessary and it may be better to simply open a different company from scratch. You have to make this decision by yourself. And it may be better to employ a professional agent to help with the opening of your subsidiary.

 

Know more about how to register company in India

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Online Services May Face Google Tax

The digital space has grown rapidly in the past few years and is expected to grow substantially in next few years too. The biggest beneficiaries of this rapid growth in the digital space are companies earning through digital ads like Google,Facebook,Twitter,LinkedIn etc.

 

Moreover, these companies are located outside India, and hence they are not even subject to any taxes in India. These new business models have created new tax challenges by challenging the current manner of levy of tax which are based on the presence based on permanent establishment rules..
The ‘Google Tax’ or ‘Facebook Tax’ which was first announced in the FY17 budget statement by Finance Minister Arun Jaitley will be levied from June 1. Here’s all you need to know about it — what Google Tax is, who will pay it, and its implications —

As the name suggests, it’s got something to do with e-commerce companies.

 

The Google Tax was announced to introduce a tax on the income as accrue to a foreign e-commerce company outside of India. Google Tax or ‘equalisation levy’ as it’s called in India, is expected to impact the bottomlines of giants like Google, Facebook, and others.

 

Why has the tax been introduced?

The tax has been aimed at technology companies that make money via online advertisements. Their revenue is mostly routed to a tax haven country. This tax will help bring the said companies under the tax radar in India. With this new tax, India has also joined the list of other Organisation for Economic Cooperation and Development (OECD) and European countries where a similar tax is already in place.

 

The government has earned Rs.100 crore in revenue on account of the equalisation levy so far. Companies like Facebook, Yahoo, Twitter and Google earn significant revenues from India from local advertisers. A committee set up by the Central Board of Direct Taxes to examine indirect taxation in India of e-commerce had recommended an equalisation levy of 6-8 per cent on 13 broad services based on the OECD’s Base Erosion and Profit Shifting guidelines.

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How to Register a Company in India

Being register as a company is always turned to be a hectic schedule while accompanying with several rules and guidelines. In India as per New Companies Act, 2013; different companies of different rules as for private limited, public limited, govt. company, semi government company, One Person Company, NGO and many more. Company law for varied companies generally varies that need to be accompanied by the owners or partners before applying with company registration.

Company Registration India acts and laws do not only bring the status of legality but also the level of credibility and reliability in the target market. Companies with business laws are always preferred by the target audience where they expect the services with high quality ad best cost. Registered products and services are always be treated with high concern in compare of those unregister services. Thus, not only from law point of view but also from marketing and branding purpose; those company registration services have really proved to be as a bloom for all types of business houses.

 

Let’s start the registration procedure: 4 Steps

Step 1: Acquire Director Identification Number(DIN)

This is the first process in registration that each director of the company should obtain their identification number. As per the amendment act 2006, acquiring a DIN  is compulsory for every director i.e. as such every existing and intending directors have to obtain their DIN. To get DIN one need to file a eForm DIN-1. The DIN-1 form is available on Official site of the ministry of corporate affairs the link is DIN-1 Form.

  • Register yourself on MCA Website first and have a login id. After filling DIN-1 Form, one should upload the filled form by clicking to eForm upload button on MCA website and should pay applicable fees.
  • After getting generated DIN one should intimate their company about DIN. The director can intimate their company about DIN  by using DIN-2 Form.
  • Then company should intimate the Registrar of Corporates(ROC) about all director’s DIN through DIN-3 Form.
  • If there is any change in DIN or need for any updation  like change of address, personal details etc, then director should intimate this change by submitting the eForm DIN-4 Form.

 

Step 2: Acquire Digital Signature Certificate(DSC):

In order to ensure the security or authenticity of documents filed electronically the information act 2000 demands a valid digital signature on the documents submitted electronically. This is the only and safest way that one can submit their documents electronically. The digital signature certificate should be acquired by only those agencies which are appointed by the controller of certification agencies (CCA). One should not use DSC given by any other agency which is not approved and it’s illegal to use others DSC as yours or the false one.

If you already have a digital signature then you can use the same, no need to apply for another. But do check for your digital signature validity, agencies issue DSC’s with one or two year validity after expiry you have to renew it.

One can acquire his/her Digital Signature certificates  from these government listed agencies like TCS, IDBRT, MTNL, SAFESCRYPT, NIC, nCODE Solutions etc. to check out their price details of these Govt approved agencies, Go to this link.

 

Step 3: Create a account on MCA Portal – New user registration

This is about having a registered user account on MCA Portal for filing a eForm, for online fee payment, for different transactions as registered and business user. Creating an account is totally free of cost. To register yourself on the MCA portal, click on the register link.

 

Step 4: Apply for the company to be registered.

This is the final major step in a registration of your company which includes incorporating company name, Registering the office address or notice of situation of office and notice for appointment of company directors, manager and secretary. And also regarding the take and pay for their qualification shares.

 

After submitting these forms, once the application has been approved by MCA, you will receive a confirmation email regarding the application for incorporation of a new company, and the status of the form will get changed to Approved.

 

Formalities to be followed while company Incorporation in India:

  1. Obtain a TAN card
  2. Obtain a Permanent account number (PAN) from income tax dept. India
  3. If required: Documents obeying shop and establishment acts.
  4. If required: For foreign trade, Registration documents of import export code from Director, General of foreign trade.
  5. If required: Registration documents of Software technologies Parks of India (STPI).
  6. If required: RBI approval for foreign companies investing in India and FIPB approval.
  7. Both Indian and foreign directors need to have valid Digital Signature Certificates from authorized agencies.
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Can a Domain be Trademarked?

The Internet Domain Names have now become much more than mere representing the websites of different companies on the Internet. Today, in this age of well-developed information technology and worldwide businesses through Internet, these domain names have attained the status of being business identifiers and promoters. Since the commercial activities on the Internet are to go on increasing day by day, the importance and usefulness of domain names too, are to be enhanced for the purposes of greater publicity, popularity, and profitability of businesses in all economic sectors. According to Bill Gates, the founder of Microsoft, “Domains have and will continue to go up in value faster than any other commodity ever known to man”. Broadly, the functions of domain names are now quite similar to the functions of a trademark or service mark, for these purposes. Ours this very informative web-article offers rich and hugely beneficial and securing information regarding the registration and protection of the domain names as trademarks, with a view to help and serve people, companies, and professions pertaining to diverse occupational and economic fields.

 

General Rule
Domain names are written representation of an internet address. Hence, it is common for businesses involved in ecommerce to spend significant amount of money for the building of brand name around a domain name. Such businesses or those wishing to trademark a domain name can apply for the same by filling a trademark application as a wordmark. And, it is permisssible under the Trademark Act to allow for a domain name to be trademarked. However, just because a domain is registered does not make the mark eligible for trademark registration. The key test applied by the Trademark Examiner would be whether the wordmark proposed would be liable for registration, not simply, not simply as a domain name.

While processing of the application, the Trademark Registrar would still subject the application to usual criteria and test for registration of trademark. The elements of domain name included as part of the application would be not considered and only the reminder or the distinct part of the mark is considered.

 

What Names Can Be Registered?

Not all domain names can be registered as trademarks. The USPTO is particular about what can be registered as a domain name. For example, you will have a problem registering a generic name like drugs.com as a trademark. And you’d face an uphill struggle to register a domain name that you use solely as an address and not a signifier of services. For example, the law firm of Smith & Jones would have a hard time registering smith&jones.com as a trademark. It would have to prove that the domain is being used for some other purpose than for people to find and contact the law firm.

 

Example
If an application is made for the registration of snapdeal.com or snapdeal.in, the trademark examiner would not consider domain elements like .com or .in and would only consider the word “snapdeal”. If that word passes the normal test for objection like similar or identical trademark exists or other reasons, then the mark is cleared for publising in the Trademark Journal.

Further, in some cases, even words that are not eligible for registration as a word mark may be eligible for registratoin as a domain name, as there is no space in between the words and the addition of .com gives a character to the mark. For example, Fast Forward may not be eligible for trademark registration, but fastforward.com could be eligible for registration.

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Online Income Tax Payment – Procedure

Income tax payment can be done through online or manually by furnishing the hard copy of the challan at the designated bank. The Government has upgraded itself and introduced e-payment facility for income tax. In this Blog, we look at the procedure for online payment of income tax.

Mandatory Online Payment
Private limited company, one person company and limited company are mandatorily required to pay tax using internet banking facility. Further, taxpayers other than company who are liable to get their accounts audited as per section 44AB are also required to mandatorily pay income tax online.

Online income tax payment is mandatory for all companies and all non-corporate taxpayers covered by audit under section 44AB. However, a person not covered in the mandatory category can voluntarily pay income tax by using the e-payment mode.

Income Taxes That Can be Paid Online

Taxes that can be paid online through internet banking facilities are:

  • Income-tax
  • Corporate tax (i.e., income-tax paid by a company)
  • Tax deducted at source (TDS)
  • Tax collected at source (TCS)
  • Securities Transaction Tax (STT)
  • Wealth-tax and other direct taxes like gift tax, expenditure tax, etc


Online Income Tax Payment Procedure
To make income tax payment online, a net banking enabled account in an authorised bank is required. If the taxpayer does not have a net banking enabled account in his/her name, then payment can be made through some other persons account, but the tax should be paid in the assesses name.

Online Income Tax Payment

Step by Step Guide to Online Tax Payment

  • Visit www.tin-nsdl.com or the online tax e-payment website.
  • Open the respective chalan based on the payment type.
  • After selecting the correct challan, the screen for providing details will be displayed, the taxpayer should provide the correct details in the challan.
  • After providing all the requisite details correctly along with the correct Codes, the taxpayer should select his bank from the dropdown provided in the screen (i.e. the selection of the bank from which he wishes to make the online income tax payment).
  • After selecting the applicable bank, the taxpayer should input the verification Code appearing on the screen.
  • After providing the verification Code the taxpayer should click on the proceed button provided on the screen.
  • On clicking on the proceed button, a new page will be displayed containing the details provided by the taxpayer in the Challan and the name of the taxpayer as per the data base of Income-tax Department will be displayed. The name will be displayed from the PAN/TAN database with the Department.
  • In case of Form 26QB the name of the transferor and transferee will be displayed.
  • If the name and other details as displayed on the screen are correct then the taxpayer can proceed for making payment by clicking on the submit to bank button provided on the screen.
  • On submitting the challan to the bank, the gateway of the bank will be displayed on the screen and the taxpayer has to login to his account and input the details of tax, interest, cess, penalty, etc., to be paid.
  • After providing the details he should verify the details once again to check the correctness and then should submit the challan to bank for effecting payment.
  • On successful completion of the transaction, the challan of payment (i.e., receipt of payment) will be generated and will be displayed on the screen.
  • Challan will contain Challan Identification Number (CIN) and other details. The taxpayer should preserve the hard copy as well as soft copy of the Challan for his records and for further requirements.
  • Challan Status – Online Tax Payment Status Check
    Using the Challan Identification Number, tax payers can track online the status of their challans deposited in banks.