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Financial/Estate Planning
Impediments to Income Tax Act for assessment year 2019-20

Impediments to Income Tax Act for assessment year 2019-20

The thrust of framing amendments in Income Tax Act (“IT Act”) was on social infrastructure, ease of living, and technology-led governance aiming at inclusive and equitable growth which means greater public expenditure.  With the following trends of market, IT Act ought to be updated from time and onwards. Following are the amendments made to the IT Act with effect from assessment year 2019-20:

  • Conversion of stock-in-trade into capital asset
    In accordance with section 2 (24), a new sub-clause (xiia) has been appended, stating fair market value of inventory to be included in income.

  • Modification in terms of employment
    Sub-clause (xviib)
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Genesis of a business entity

Genesis of a business entity

India is the fastest growing economy and a substantial recipient of foreign direct investment (FDI) globally. Among all, India shines to be the most stable economy claiming 100th spot in World Bank’s recently released Ease of Doing Business rankings. In addition to this, Make in India campaign, startup India and digital India has been a welcoming change. In order to reap the benefits of the fast growing economy, varied forms of business organizations are set up for doing business in India and are flourishing. Below mentioned is a brief connotation to incorporate an entity.

Incorporation of an entity idea … Read more

Concept of permanent establishment (PE)

Concept of permanent establishment (PE)

In this contemporary world, initiation of globalization has lubricated great technological advancement. All this has facilitated easy access as well as real-time communication among various countries notwithstanding the physical distance. Currently, the world is a ‘global hub’ where no destination is secluded. Subsequently, corporates around the world have become global in their operations and have been expanding their businesses beyond the boundaries of their countries into new markets in their quest to achieve growth and economies of scale.

Over time, two type of cross border transactions have emerged

  • Conducting business activities with a country – Residents of a country transacting
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angel-tax

Government to startup’s rescue – angel taxation

Concept of angel tax in India is gaining immense importance with each passing day. To keep abreast with the dynamism of market, government of India is persistently making amends in already existing provisions from time-to-time. For detailed information on tax relief provided to angel investors, visit Angel tax relief to startups.

Adding to the list of amendments, government has introduced certain changes at a roundtable organized on February 2019 under the chairmanship of Department for Promotion of Industry and Internal Trade (DPIIT). At this roundtable, Minister of Commerce and Industry, India along with few officials took up raging issues … Read more

highlights of Amendment

Highlights of Companies (Amendment) Ordinance, 2019

The ever-changing environment demands frequent adjustments to be made in the laws of land for efficient and effective management of both business as well as non-business activities. Government has just introduced the Companies (Amendment) Ordinance, 2019 thereby, bringing relevant alterations in Companies Act, 2013 (”Act”). This action has provided an affirmative action that any violation in complying with the set standards will lead to stringent repercussions for both the company and its management.

With the objective of promoting ease of doing business and improving corporate compliances, President has disseminated the Companies (Amendment) Ordinance, 2019 which came into effect in November … Read more

Overseas Direct Investment (ODI)

Overseas Direct Investment (ODI)

Foreign direct investments are investments made in Indian organizations for improved returns by foreigner nationals. Any Indian person or organization can invest funds in foreign countries via direct means. These are however, subject to Indian Taxation laws.

These ODI opportunities are great avenues for Indian entities to diversify and grow their companies in foreign countries. They can take the form of joint ventures (JV), wholly owned subsidiaries (WOS), share acquisitions, etc. Portfolio investments however, do not fall under the ODI umbrella.

Rules regarding ODI
The complete set of guidelines for ODI is provided by Reserve Bank of India (RBI) and … Read more

GST Amendment

Amendments in Goods and Services Tax (GST)

Since its advent, GST has been a subject of discussion in almost all social or political meetings. With the purpose of levying a single tax in entire nation, GST was introduced. In this fast pacing and dynamic world alterations in the already established rules of GST were equally important for uniform tax compliance throughout the country.

For complimenting GST era, GST Amendment Act, 2018 was introduced by Government of India in August, 2018. Amendments instituted via this Amendment Act were notified to be effective on and after February, 2019. In addition to this, on the recommendations of GST Council in … Read more

Latest updates on transfer pricing

Latest updates on transfer pricing

Transfer pricing concept has gained immense importance over the past few years. Rules and methods used for pricing of transactions among endeavors under common control are generally the basis forming transfer pricing. Transfer pricing has gained importance in diverse business enterprises because of requirement of reporting of financial information by segment and related party transactions as focused in the International Accounting Standard (IAS 14 & IAS 24) and Accounting Standard (AS 17 & AS 18).

Concept of transfer pricing
Transfer pricing on the whole cite to prices of transactions between associated enterprises which may be carried out under conditions different … Read more

Taxation of expat employees

Taxation of expat employees

Any person or persons residing temporarily or permanently in a country that is different from their home country or country of citizenship is referred to as an expat. Taxation of such expat employees involves a slightly different computation than the tax computed for a regular employee of an Indian organization.

Foreign expat in India
For any foreign expatriate working in India, the salary is deemed as earned in India if they are paid for services rendered in India. This is based on Section 9(1) (ii) of the Indian Income Tax Act. This rule is applicable irrespective of the resident status … Read more

Highlights of interim budget 2019

Highlights of interim budget 2019

  • Individual taxpayers with annual income up to INR 5 lakhs to get full tax rebate.
  • Individuals with gross income up to INR 6.5 lakhs will not need to pay any tax if they make investments in provident funds and prescribed equities.
  • Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to 2 crores; can be exercised once in a lifetime.
  • Benefits under section 80(i)BA being extended for one more year for all housing projects approved till the end of 2019-20.
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Angel tax relief to startups

Angel tax relief to startups

Angel funds refers to a money pool created by high net worth individuals or companies, generally called as angel investors, for investing in business startups. Various startups founder claimed that they received notice under section 56(2) (vii) (b) of Income Tax Act (“Act”) from Income Tax Department (“Department”) to pay taxes on angel funds raised by them. Entrepreneurs have raised their concern on such tax notices. However, India is likely to soon announce the concessions to shield startups from the angel taxes. The changes will be made to the conditions specified under section 56(2) (vii) (b) of the Act to … Read more

Transfer pricing country by country report

Transfer pricing: Introduction to Country-by-Country report (CbCR)

Transfer pricing documentation and CbCR are provided by the Organization for Economic Cooperation and Development (OECD). These reports benefit and enable development for multinational enterprises (MNE’s) by leaps and bounds.

CbCR will include details of global profit allocations, taxes paid and economic activity indicators in countries in which the multinational organizations operate. This implies that CbCR will have significant transparency and illuminate technical, operational and systemic challenges that any business faces.

In order to compile such a detailed report, there must be an engagement at the Board level. Senior management will have to step in at the early stages itself … Read more

FDI in India

Refining FDI provisions

Being one of the most diligent sources of revenue for the Indian economy, foreign direct investment (FDI) is gaining importance with each passing day. Investments made by any individual or firm in one country into business streams situated in a foreign country are termed as FDI. Generally, FDI takes place when the following conditions are satisfied by an investor:
 

  • Establishing foreign business operations
  • Acquiring foreign business assets
  • Establishing ownership
  • Controlling interest in a foreign company

With the purpose of fortifying the investor’s and stakeholder’s sentiments in the Indian e-commerce sector, refined policy is introduced to ensure that online and … Read more

Start-up registration with DIPP

Start-up registration with DIPP

With a view of improving the Indian economy and increasing the entrepreneurial drive, Indian Government under PM Narendra Modi’s leadership launched Start-up India Initiative in January 2016. The Action Plan shepherd by Department of Industrial Policy and Promotion (DIPP) is aimed at making start-up registration process more seamless and easing way for new entrepreneurs.

Start-up India Action Plan
Start-up India Action Plan benefits are three-fold:

  1. Simplification: First key benefit is expediting the start-up registration process. The idea is to improve compliance regime support, provide a hub for start-ups in India, registration and access through mobile app / portal, legal support
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filing on financial statement

Filing of financial statement

Financial statements of a company are necessarily required to be filed with Ministry of Corporate Affairs (MCA) annually. The form for filing such financial statements with MCA is AOC – 4. All the companies fall under this category and are compulsorily required to file form AOC – 4. However, few Companies are covered under Extensible Business Reporting Language (XBRL) and are required to upload the financial statements on MCA portal in XBRL format as per the Companies (Filing of documents & Forms in Extensible Business Reporting Language) Rules, 2015. In this case the requirement of signing under hand is not … Read more

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Foreign Direct Investment (FDI) in e-commerce

E-commerce generally refers to commercial transactions like buying, selling, leasing, hiring, etc., conducted electronically over the internet. At a very early stage, people were hesitant of transacting online but with the changing trend, advanced security services and movement of entire economy towards a paperless society, e-commerce is widely supported and practiced by a fair size of population.

The policies concerning FDI in e-commerce have evolved quickly in the last few years and the government has been constantly refining the relevant provisions. Some ambiguities still haunt people, either by deliberate design or otherwise, and it is believed that these complexities will … Read more

GST-India

Understanding GST concepts

Since the introduction of Goods and Services Tax (GST), early-day jitters have given way to general acceptance that this may not be the most perfect single tax system, but with each passing day the alterations and modifications introduced in GST regime has made it feasible to be accepted with open arms by the people. However, understanding the diversified provisions inculcated in this Act can be challenging for some. Two such provisions are explained in detail as follows:

Place of Supply (PoS)
A comprehensive, destination based tax, GST was introduced as an indirect tax on the supply of goods or services … Read more

Spotlight-on-GST-Auditor - Copy

Brace yourself for GST Audit

Goods and Services Tax (GST) has proved to have its own pros and cons. Since its introduction it has left ambiguity in the minds of people as to how one should file the returns, what transactions need to be recorded, what all comes under the purview of GST, how much GST rate needs to be charged on what products and who all are required to get their financials audited, etc.

To obliterate uncertainty regarding GST audit, the following procedure should be followed:

  • Filing of annual return: The annual return is an aggregation operation whereas the audit is reconciliation between
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Extensible Business Reporting Language (XBRL)

Developed by XBRL International Inc. (XII), XBRL is defined in Rule 2 of Companies (Filing of documents and forms in XBRL) Rules, 2015 as a standardized language for communication in electronic form to express, report or file financial information by the companies under the Act. It is a language for communicating electronically, financial and business data for business reporting. It has facilitated the process of creating, transmitting, using or analyzing such information.

Companies filing financial statements in AOC-4
With reference to Companies (Filing of documents and forms in XBRL) Rules, 2015 following companies are required to file their financial statements … Read more

gst audit in india

GST Audit- eradicating perplexity

What is GST Audit?
Audit means the critical examination of returns, records and other documents maintained and furnished by the registered person under CGST Act or the rules made thereunder or under any other law for the time being in force. It is also executed to verify the authenticity of turnover declared, refund claimed, taxes paid, and input tax credit availed, and to affirm compliance with the provisions of this Act or the rules made thereunder.

What are the rules of compliance for GST Audit?
GST audit is requisite for registered taxpayers with an aggregate annual turnover exceeding INR 2 … Read more