Tag Archives: Tax Consultancy Services in India

Tax adviser in India

Income tax Rectification

There has been a change in the way Income Tax Department (ITD) is processing the income tax returns (ITR) for financial year 2016-17.

This has led to Intimation u/s 143(1)(a) being issued to a lot of taxpayers with even the slightest discrepancy in their return.

How returns were processed till 2016:
Only tax details declared in your ITR were matched with the tax details available in your Form 26AS.

How returns are being processed in 2017:
Now all details declared in your ITR w.r.t. Income (gross total income, taxable income, other income like interest income, etc.) / Deductions / TDS, are being matched with the details available in your Form 16 as well. If there is any variance in details given in ITR and Form 26AS / Form 16 / Form 16A, you would get an intimation u/s 143(1)(a) of the Income Tax Act.

What to do when you get such intimation:
You are required to login to your account at ITD website and submit a response online explaining such difference within the stipulated time. In case timely response is not received, ITR will be processed without providing any further opportunities in this regard. This can lead to:
1.    Delay in refund processing
2.    Demand notice to pay tax, interest and penalty
3.    Delay in loan/visa application processing

 

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Document required for gst registration

What is GST Registration?

Every business carrying out a taxable supply of goods or services under GST regime and whose turnover exceeds the threshold limit of Rs. 20 lakh/ 10 Lakh as applicable will be required to register as a normal taxable person. This process is of registration is referred as GST registration.

GST is the beggest tax reform in India. By abolishing and subsuming multiple taxes into a single system, tax complexities would be reduced while tax base is increased substantially. Under the new GST regime, all entities involved in buying or selling goods or providing services or both are required to obtain GST registration.

 

Documents Required For GST Registration

  For Individual:

  • PAN card
  • ID proof and address proof of Individual
  • Photo (JPG – 100 KB)
  • Bank Details – Copy of canceled cheque or first page of Pass Book  or first page of recent bank statement
  • Registered Office Documents- Copy of electricity bill/landline bill, water Bill etc.  also in case the premises is rented, Rent Agreement will be required.

 

  For One Person Company/ Private Limited Company/ Public Company:

  • Company PAN Card
  • Memorandum of Association (MOA) /Articles of Association (AOA)
  • Registration Certificate/ Incorporation Certificate of the company
  • Bank Details – Copy of canceled cheque or first page of Pass Book  or first page of recent bank statement
  • A copy of the resolution passed by BOD / Managing Committee
  • Registered Office Documents- Copy of electricity bill/landline bill, water Bill etc. also in case the premises is rented, Rent Agreement will be required.
  • Director Related Documents- PAN and ID proof of directors& Photo
  • Proof of Authorized Signatory
  • DIN No of Partners & Digital Signature

 

For Partnership & Limited Liability Partnership (LLP)

  • Partnership / LLP PAN Card (as the case may be)
  • Partnership Deed/ LLP Agreement
  • DIN No of Partners & Digital Signature (in case of LLP)
  • Bank Details – Copy of canceled cheque or first page of Pass Book or first page of recent bank statement
  • Registered Office Documents- Copy of electricity bill/landline bill, water Bill etc.  also in case the premises is rented, Rent Agreement will be required.
  • Partner’s related Documents- PAN and ID proof of designated partners& Photo
  • Proof of Authorized Signatory

 

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Tax adviser in India

GST and its Impact on Indian Economy

Goods and service tax (GST)

The GST is a new concept that simplifies the giant tax structure by supporting and enhancing the economic growth of a country. It is a comprehensive term levy on manufacturing, sale and consumption of goods and service at a national level.

Goods and service tax bill or GST also referred to as the constitution (one hundred and twenty-second Amendment) bill 2014 initiate a value added tax to be implemented on national level. In India, GST will be an indirect tax at all the stages of production to bring about uniformity in the system.

 

Positive impact of GST on India’s GDP

A comprehensive and robust tax structure that will bring the current set of indirect taxes like VAT, sales tax, excise duty etc. under one umbrella and will be instrumental in creating a seamless experience across all states. By bringing the varied tax structures under one net, it is also expected to reduce the cost of transaction for various business entities that had to comply with multiple taxes. We are well aware of the fact that transport and logistics industry is pivotal to the growth of Indian economy as there are lot of products that are delivered from one part of the country to another on a daily basis. So, it is assumed that implementation of a decent GST structure will eliminate other taxes and the export of goods and services will become economical.

 

Negative impacts of GST

There can be no gain without pain and that may be especially true when it comes to GST. As about 160 countries overhauled their indirect tax systems, they confronted numerous challenges. Latecomer India is unlikely to escape some havoc.

  • Service tax rate 15% is presenting charged on the services, so, if GST is introduced at a higher rate which is likely to be seen in near future, the cost of services will rise. In simple words, all the services like telecom,, banking, airlines, etc will become expensive.
  • Increased cost of services means an add to your monthly expenses.
  • You will have to reschedule your budget to bear additional tax
  • Increase in inflation might be seen initially
  • Being a new tax, it will take some time for the people to understand it completely, its actual implications can be seen only when the rate of tax is determined.
  • If the actual benefit is not passed to consumer hand then the seller increase his profit margin, the prices of goods can also see a rising trend.

 

Related Posts:

Goods & Services Tax

Basics that Every One Should Know about GST

How GST Works in India

 

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Tax adviser in India

GST on digital advertising companies

Assessment of impact on digital advertising companies

Present Scenario

  • For services rendered by a digital advertising company, it charges a service tax @15%
  • For input services availed by a company, it claims an input tax credit (“ITC”)
  • However, a digital advertising company is not eligible to claim ITC on any products used in producing digital content or capital goods purchased by it
  • The company file its service tax return on half yearly basis
  • Two returns annually which can be revised within a period of 90 days from date of filing

Goods & Service Tax (“GST”)

Registration : Registration is mandatorily required as threshold exemption is not available to E-commerce operators*

Rate under GST :GST will be charged @18% on all invoices

Input Tax Credit : ITC can be availed on any supply of goods or services or both which are used or intended to be used in the course or furtherance of business
Read More

 

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GST-ROll-Out-COnfirmation

GST rollout: Retailers working overtime to be prepared, deny impact on sales

Organised retailers do not expect the Goods and Services Tax (GST) to impact their sales despite general fears that it could disrupt businesses, and hope to be fully ready for the uniform tax regime in the next few weeks. “As GST will be rolled out from July 1, we have to be prepared. It will lead to better compliance and an organised way of doing things,”

 

“We are not anticipating any sales disruptions. Nobody has expressed concerns on that…For retailers, benefits will come as and when manufacturer change the prices, which we, in turn, will pass it on to consumers,” he added. July onwards, large retail companies, including Reliance Retail, Future Group, Trent HyperCity and DMart, among others, are looking at aggressive price reductions.

 

The common objective of all retailers is also that margins should be protected, while ensuring that prices remain under check. “We will reduce prices by 2 to 20 per cent on various consumer products,”

 

GST will create a level-playing field for modern trade,” he added, explaining that the biggest challenge is to see that customers are not unhappy. “I believe tax rates should not be so complex as to create variations that adversely affect consumers,” he said.

 

Most retailers are awaiting more clarity on various issues, including input tax credit and e-way bills. Several retail stores have announced big discounts especially in the consumer electronics segment ahead of the GST rollout, in a bid to to clear inventories and to avoid implementation issues.

 

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Goods and Service Tax

Records you should Maintain under GST

GST Laws in India mandate that all registered persons under GST maintain records and accounts in a specified manner. Every law of Direct and Indirect Tax in our country also mandates that information in a prescribed manner has to be captured and preserved for a certain period of time.  In this article, we look at the list of records to be maintained under GST in detail.

Present Tax System:

  1.  Excise Duty : Under Excise, the general records to be maintained are the RG-1 register (Daily stock account of excisable goods), Form IV register (Register of receipt or issue of raw material), invoice book and job work register.
  2.  Service Tax : Under Service Tax, the suggested records include the bill register, receipt register, debit/credit notes register, CENVAT credit register, etc.
  3.  VAT (Value Added Tax) : Under VAT, the records to be maintained include purchase records, sales records, stock records, VAT account containing details of input and output tax, works contract account, etc

 

Documents to be Maintained (GST)

  • Details of production or manufacture of goods.
  • Details of inward and outward supply of goods or services.
  • Stock of goods.
  • Input tax credit availed.
  • Output tax payable and paid.
  • Any other particulars as may be prescribed.

 

If more than one place of business is specified in the registration certificate, accounts relating to each place of business must be kept at the respective places.

Maintaining books and records in electronic form will be ideal and convenient for accurate and timely compliance under GST.

 

Related Posts:

Goods & Services Tax

Basics that Every One Should Know about GST

How GST Works in India

 

If you have any query regarding this Click Here

 

 

 

 

 

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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Goods-And-Service-Tax-GST

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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Foreign Direct Investment (FDI)

India has already marked its presence as one of the fastest growing economies of the world. It has been ranked among the top 10 attractive destinations for inbound investments. Since 1991, the regulatory environment in terms of foreign investment has been consistently eased to make it investor-friendly.

The measures taken by the Government are directed to open new sectors for foreign direct investment, increase the sectoral limit of existing sectors and simplifying other conditions of the FDI policy. FDI policy reforms are meant to provide ease of doing business and accelerate the pace of foreign investment in the country.

 

Foreign Direct Investment (FDI)

FDI because the name suggests, it’s associate degree investment directly created by a remote company into business in another country. Such investment may well be either within the kind of business enlargement in another country or may well be a results of acquisition of the corporate.

Direct Foreign investments in India approval were introduced by the then Finance Minister Dr. Manmohan Singh in 1991 under Foreign Exchange Management Act to promote such investments thereby increasing supply of domestic capital & increase the economic growth.

As per Foreign Exchange Management Act, ‘FDI’ means investment by non-resident entity/person resident outside India in the capital of an Indian company under Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000.

 

Advantages of FDI in India
There are several benefits of increasing foreign direct investment in India. First of all, with more FDI, consumers will be able to save 5 to 10 percent on their expenses because products will be available at much less rates and to top it all, the quality will be better as well. In short, it will be a win-win situation for the buyers. It is also expected that the farmers who face a lot of economic problems will also get better payment for their produce. This is a major benefit considering how many farmers have been giving up their lives lately. It is expected that their earnings will increase by 10 to 30 percent.

FDI is also supposed to have a positive effect on the employment scenario by generating approximately 4 million job opportunities. Areas like logistics will be benefited as well because of FDI and it is assumed that 6 million jobs will be created. The governments – both central and state – will be benefited because of FDI. An addition of 25-30 billion dollars to the national treasury is also expected. This is a substantial amount and can really play a major role in the development of Indian economy in the long term.
Steps Taken by Government to Promote FDI
The Indian Government has taken a number of steps to show its willingness to allow more foreign direct investment in the country. In the infrastructure development sector, it has relaxed the norms pertaining to area restriction, the laws regarding gaining a comfortable exit from a particular project and the requirements relating to minimum capitalization. If companies are ready to commit 30 percent of their investments for affordable housing, then the rules for minimum capitalization and area restriction will be waived off. It is expected that this will benefit the construction sector a lot, especially in the form of greater investment inflow.

The Indian Ministry of Finance has also proposed that 100 percent FDI will be allowed in railways-related infrastructure. However, this does not include the operational aspects. While it is true that the foreign investors will not be allowed to intervene in railway operations, they will be able to provide for high-speed trains, such as bullet train, and enhance the overall network in the process.

 

Who can invest in India?

  • A Non-resident entity means a person resident outside India.
  • Non Resident Indian or Person of Indian Origin (PIO holder) or Overseas Citizen of India (OCI holder).
  • A body corporate means a company incorporated outside India.
  • Foreign Institutional Investor (FII) means an entity established or incorporated outside India which proposes to make investment in India and which is registered as a FII in accordance with the Securities and Exchange Board of India (SEBI) (Foreign Institutional Investor) Regulations 1995..
  • Foreign Venture Capital Investor (FVCI) means an investor incorporated and established outside India, which is registered under the Securities and Exchange Board of India.

 

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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.

 

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