Tag Archives: Tax Advisor 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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VAT Registration in India

Value Added Tax or VAT is a mandatory requirement for all kinds of business. Proprietorships, partnerships, private limited companies, manufacturing firms and even traders of any kind of products need VAT registration. VAT is similar to Central Service Tax (CST) and Taxpayer Identification Number (TIN). They use the same 11 digit number.
What is VAT?
VAT is an indirect tax levied on goods and services when they are sold to the ultimate customer. VAT is paid by the producers to the government. The producers then collect the tax amount from the consumer, by adding it to the price.
A registered business may also apply for the Input Tax Credit (ITC) and apply it on future sales. This will relieve the company of paying VAT themselves. With ITC registration, the VAT amount is added to the retail invoice and the customer makes the payment.
When is VAT Registration Compulsory?
Businesses with an annual turnover of more than Rs.5 lakhs (in some states it is Rs.10 lakhs), must acquire a registered VAT id. The VAT rates vary from state to state, business categories and the type of goods delivered. The amount of VAT charged is controlled by the state governments. This is why it varies from place to place.

The tax is based on value addition to manufactured goods. VAT id owners having an annual turnover of Rs. 50 lakhs are entitle to the Composition Scheme. Under this scheme the business must pay only a small percentage of tax on its gross turnover. However, it requires the said business to compromise its ITC agreement and forgo its benefit.
Acquiring a VAT id
To obtain a VAT id you need to go through the process of VAT id registration. The procedure involves 6 basic steps.
Step – 1 Locate Central Tax Office
Identify the Central Tax Office within the city your business is based. The tax office should house the VAT registration department as well.
Step – 2 Obtain Registration Form
Request for a VAT id registration form from the VAT office.
Step – 3 Attach Valid Documents
Fill out the application form with the correct details and attach the following documents to it:
– Central Sales Tax registration certificate (Form A)
– Professional Tax registration certificate
– Proof of address and ID of the proprietor, partner or director
– Four passport size photographs of the proprietor, partner or director
– Bank account number and PAN card number of the proprietor, partner or director
– Documents stating the details of your business activities
– In case of a partnership, a copy of the Partnership deed
– Incase of a private limited company, a copy of the memorandum of association and articles of association
– A copy of the rental agreement of the business
Step – 4 Verification
At this step, the local VAT authorities will inspect your business premises at a time scheduled by them.
Step – 5 Collect Registration Certificate
The last step after verification and fee payment requires you to collect the Taxpayer Identification Number (TIN) provided immediately. The VAT registration certificate will be issued either the next day or within a week via post.
Why is VAT Registration Important?
VAT is a primary tax that adds to the nation’s revenue and economy. As a result it is a mandatory tax for all business establishments. The registration process is very easy. The fees are fixed and the verification process is simple. (Company registration in India)

Releated : How to Register a  Company in India

2017-02-04 12_32_32-Union Budget 2017

Union Budget 2017 highlights

Finance minister Arun Jaitley presented the Union Budget 2017 in Parliament on Wednesday. The biggest highlight in the 2017 budget was the slashing of income tax by half for individual tax payers, ban on cash transactions over Rs. 3 lakhs and reduction in holding period to 2 years for capital gains. In this article, we look at the highlights of the 2017 Budget with respect to an Entrepreneur or Business Owner in India.

 

Income Tax
Income tax rate has been slashed from 10% to 5% for individuals who earn between Rs.2.5 lakhs to Rs.5 lakhs. Now after rebates, even a person with a Rs.3 lakhs income could enjoy zero tax liability. Since, proprietorship firms are taxed similar to individuals, micro enterprises having income of less than Rs.5 lakh would enjoy the benefits in tax reduction.

 

Tax Break for Startups
Continuing to build on the 2016 Budget by extending special support for Startups, the Finance Minister has increased the period of profit-linked deductions available to Startups to 3 out of 7 years from the current 3 out of 5 years.

 

Budget 2016-17 kick-started the process. Several deductions were reduced and sunset dates put for others along with reductions in tax rates for some categories of businesses – new manufacturing companies set up after March 2016 were given the option of being taxed at 25 percent provided they did not claim any exemption and companies with turnover less than Rs 5 crore got a 1 percent reduction. However, some new exemptions were given to start-ups, with certain conditions.

This year, admittedly, Jaitley has not moved forward on withdrawing exemptions even as he reduced corporate tax rates.

But let’s look at who has got this benefit: the small and medium enterprises sector. Income tax for companies with an annual turnover of up to Rs 50 crore has been brought down to 25 percent. A big chunk of this lot was paying an effective tax rate of 30.26 percent, while the large companies (turnover above Rs 500 crore) paid an effective tax rate of 25.9 percent. So Jaitley has in a way done the tax equivalent of social levelling. Large companies have not got any tax relief this year.

 

Stimulating Bank Credit
To stimulate bank credit to businesses, various measures have been announced as follows in the 2017 Budget:

  • The allowable provision for Non-Performing Asset (NPA) of Banks has been increased from 7.5% to 8.5% to improve the risk appetite of Banks.
  • In line with the ‘Indradhanush’ mission, Rs. 10,000 crores has been allocated in the 2017 Budget for recapitalisation of Banks.
  • Lending target under Pradhan Mantri Mudra Yojana hase been increased to Rs. 2.44 lakh crores. Priority under the scheme will be given to borrowers from certain backgrounds like Dalits, Tribals, Backward Classes.
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Direct Indirect Tax Difference

A tax is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a state or administrative division. Failure to pay tax is punishable by law.Tax is not a voluntary payment or donation.It is a contribution imposed by government, state or administrative division to enable them to meet the expenses.

So if anybody earns an income, he should share a portion of the same with the government. In India, taxes are divided in Direct Indirect Tax.

 

The way in which taxes are imposed, decides whether the tax is direct or indirect.

If a tax is levied directly on a person income then they are called direct taxes

Whereas the indirect taxes are levied on a product or a service the incidence of which is borne by the consumers who ultimately consume the product or the service.

 

For example I earn Rs. 12 Lac as salary. Suppose I need to pay Rs. 8000 as income tax on this salary income. Since the income tax of Rs. 8000 is directly levied on my salary income hence income tax is direct taxes.

Suppose in second case, I paid Rs. 950 (Rs. 900 basic amount + Rs. 50 as service tax) as my mobile bill to Airtel. Airtel will retain Rs. 900 and pay the Service tax Rs. 50 to the government.

 

Difference between Direct Tax and Indirect Tax:
There are different implications of direct and indirect taxes on the country. However, both types of taxes are important for the government as taxes include the major part of revenue for the government.

 

Key differences between Direct and Indirect Tax are:

  • Direct tax is levied and paid for by individuals, Hindu undivided Families (HUF), firms, companies etc. whereas indirect tax is ultimately paid for by the end-consumer of goods and services.
  • The burden of tax cannot be shifted in case of direct taxes while burden can be shifted for indirect taxes.
  • Lack of administration in collection of direct taxes can make tax evasion possible, while indirect taxes cannot be evaded as the taxes are charged on goods and services.
  • Direct tax can help in reducing inflation, whereas indirect tax may enhance inflation.
  • Direct taxes have better allocative effects than indirect taxes as direct taxes put lesser burden over the collection of amount than indirect taxes, where collection is scattered across parties and consumers’ preferences of goods is distorted from the price variations due to indirect taxes.
  • Direct taxes help in reducing inequalities and are considered to be progressive while indirect taxes enhance inequalities and are considered to be regressive.
  • Indirect taxes involve lesser administrative costs due to convenient and stable collections, while direct taxes have many exemptions and involve higher administrative costs.
  • Indirect taxes are oriented more towards growth as they discourage consumption and help enhance savings. Direct taxes, on the other hand, reduce savings and discourage investments.
  • Indirect taxes have a wider coverage as all members of the society are taxed through the sale of goods and services, while direct taxes are collected only from people in respective tax brackets.
  • Additional indirect taxes levied on harmful commodities such as cigarettes, alcohol etc. dissuades over-consumption, thereby helping the country in a social context.

 

Both direct and indirect taxes are important for the country as they are intricately linked with the overall economy. As such, collection of these taxes is important for the government as well as the well-being of the country. Both direct taxes and indirect taxes are collected by the central and respective state governments according to the type of tax levied.

internalaudit

Why Auditing Service is Necessity

Auditing

An audit is more than a formality, it is a necessity to protect your business and encourage it to thrive. Early warnings, open communication and pragmatic resolution of issues are the essential features.

Audit testing procedures tailored to the specific audit, our firms maintain excellent relationships with their clients. This quality-led approach means members provide an intelligent, constructive and challenging audit to every one.

Statutory Audits : It is a legally required review of the accuracy of a company’s or governments financial records. The purpose of a statutory audit is the same as the purpose of any other audit – to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, book keeping records and financial transactions of both Public and Private Companies, Banks, Financial Institutions, PSU’s, firms and Sole-Proprietors.

Internal Audit : Focus is to ensure strong internal control systems to minimize the risk of accidental or deliberate errors and omissions. Safeguarding of assets, adequate division of authority over key control areas and compliance with internal operating policies and guidelines are other focus areas.

Tax Audit : To prepare report in Form 3CA/3CB including annexure in Form 3CD as per div 44AB of the Income-Tax Act. We’ll help with your IRS tax audit by:
Reviewing the tax authority notice or inquiry and explain what it means
Researching issues involved
Assisting you in assembling documents and records for the tax audit
Reviewing the tax audit findings and explaining them to you
Explaining the appeal process and other options available to you in the event you disagree with the tax authority’s findings

Process / Transaction Audit : A process audit is an examination of results to determine whether the activities, resources and behaviors that cause them are being managed efficiently and effectively.

Management Audit : To assess the systems, methods and policies followed by an entity’s management in the administration and the use of resources, tactical and strategic planning, and employee and organizational improvement.

Stock Audit: : It is carried out on behalf of banks and financial institutions. The objective is to ensure that the security against which funds are lent by the bank is safe and valued correctly.

Due Diligence : We assist clients in conducting financial, legal and accounting reviews in case of mergers, acquisitions and investments. A sound understanding of local laws, regulations and accounting practices enables us to vet all critical issues in detail.

Forensic / Risk Audit : Our forensic audit focuses on high risk areas and helps you strengthen your internal controls.Chartered accountant in Delhi

What is it : Forensic audit techniques seek to uncover corporate or other organization fraud. Results emanating from a forensic audit are typically used to support both civil litigation and criminal prosecutions. Forensic audit techniques can be broken down into five basic categories.

Testing Defences : Most businesses and other organizations have procedures and defences set up to prevent the occurrence of fraud. A good initial forensic audit technique is to attempt to circumvent these defences yourself. The weaknesses you find within the organization’s controls will most probably guide you down the same path taken by suspected perpetrators. This technique requires you to attempt to put yourself in the shoes and think like your suspect.

Trend Analysis : Businesses have cycles and seasons much akin to nature itself. An expense or event within a business that would be analogous to a snowy day in the middle of summer is worth investigating. Careful review of your subject organization’s historical norms is necessary in order for you to be able to discern the outlier event should it arise within your investigation.

Digital Forensic Examinations : Every transaction leaves a digital footprint in today’s computer-driven society. Close scrutiny of relevant emails, accounting records, phone logs and target hard drives is a requisite facet of any modern forensic audit. Digital investigations can become quite complex and require support from trained digital investigators. However, many open-source digital forensics tools are now available to assist you in this phase of the investigation.

Face to Face Interviews : Forensic auditing is akin to detective work, and every good detective desires to look his witnesses and suspects in the eye. Personal interviews with the staff of your target entity yield a better understanding of its operations and of the culture that exists within it. According to John J. Hall of the Journal of Accountancy, critical information can be gleaned from interviews with parties who have knowledge of the events without being directly connected to the fraud.

Full Financial Auditing : Detailed financial audits can be complex and most often require the assistance of a qualified forensic accountant. Basic financial audit techniques include bank statement reconciliations, scrutiny of all vendor contracts and payments, review of tax returns and analysis of public filings. Financial forensic audit techniques seek to identify suspicious transactions and trace them back to potential perpetrators.

How we can help

Gather and analyze evidence
Integrate interview information with queries from databases, emails, and hard drives
Report our findings, review internal controls, and provide remediation options
Expert testimony

Internal Audit : The scope of the audit is defined as per the internal controls and is carried out with specific emphasis on cost control. The main purpose of an internal control audit system is to ensure no mistakes, omission or accidental or deliberate errors. Our team is well trained in safeguarding of assets and operating with internal guidelines and policies to ensure smooth procedures.