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Decoding New Tax Regime of Section 115BAC

Decoding New Tax Regime of Section 115BAC

The Finance Minister Smt. Nirmala Sitharaman on 1st February, 2020 presented her 2nd Budget where a new optional personal tax scheme has been proposed vide a newly inserted section i.e. 115BAC applicable to Individuals and HUF only. The income tax slab rates have been reduced significantly in the new regime. However, in order to opt for the new tax regime various key income tax deductions and exemptions as mentioned in subsection (2), which are currently available under the old scheme will have to be forgone.

The following table shows the new slab rates as per Section 115BAC.

Annual Income  New
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Vivad Se Vishwas Act, 2020 (Scheme)

Vivad Se Vishwas Act, 2020 (Scheme)

As per the announcement made by the Finance minister in Budget speech on 1st February 2020 regarding the resolution of Income Tax disputes pending in Court and appellate jurisdiction, the Vivad se Vishwas scheme was tabled on 5th February 2020 in Lok sabha. After discussion in both houses of parliament, the bill was passed by both houses of parliament and received the assent of President of India on  17th March 2020 and was accordingly published in the official gazette of India on 17th March 2020 making the same as “Vivad se Vishwas Act, 2020”

Benefit to Read more

TDS on salary under Section-192 of Income Tax Act’1961

TDS on salary under Section-192 of Income Tax Act’1961

TDS on salary under Section-192 of Income Tax Act’1961
Salary as defined u/s 17(1) of the Income Tax Act’1961 is the amount paid or payable by an employer to his employee in the return of the services rendered by him. However, salary as per 17(1) includes all wages, annuity or pension, any gratuity, fees, commissions, perquisites or profits, any advance salary, Leave encashment, etc.

Every employer is required to deduct TDS of his eligible employees on the estimated total salary as per section 192 and subsequently provide form 16 at the end of the financial year. For any sum to … Read more

Taxes on Gifts in India

Taxes on Gifts in India

Indian culture is a blend of various religions and there are numerous events and celebrations when people express their love and affection by way of exchanging gifts with each other. There is a misleading contention that there are no taxes on gifts in India.

Gifts can be defined as any sum of money, movable or immovable property, which has been received by any person either without consideration or by way of inadequate consideration.

In order to curb the evasion of tax flow, the Gift Tax Act was enacted by Parliament of India in the year 1958 from the 1stRead more

TDS-Section-194M

Compliances of TDS under section 194M

The Union Budget 2019 for the FY 2019-2020 presented on 5 July 2019, inter-alia, introduced section 194M of the Income Tax Act. This section mandates every Individual / HUF, who are making payment for the use of service of a contractor or a professional but not required to get their books of accounts audited, to deduct tax at source.

Intent behind introducing this section
Prior to the amendment an individual / HUF covered under section 44AB i.e. who are required to get their books of accounts audited and were making payment to a contractor or a professional were required to … Read more

Intimation under section 143(1)

Intimation under section 143(1)

Section 143(1) refers to the intimation order given by the Income Tax Department of India to the assessee against a return filed for any assessment year. In India, it is mandatory for individuals with a specified amount of annual income to file for an Income Tax Return within a specified time limit. Thus, it is necessary to understand what happens after the taxpayer has filed the return of income.

Income tax return is a form wherein taxpayer reports his gross taxable income obtained from various sources, his deductions and the net tax liability.

After the e-filing process has been completed … Read more

Tax Audit Report (Form 3CD)

Tax Audit Report (Form 3CD)

In order to get the various amendments made to Income-tax Act, 1961 and other laws (indirect taxes) within the format of tax audit report (TAR), the Central Board of Direct Taxes (CBDT) issued notification No. 33/2018  on 20 July 2018 amending the report format of tax audit. These amendments to TAR will come in force from 20 August 2018, which implies that the tax audits filed with the Income-tax on or after 20 August 2018 will have to be in the amended TAR. The point wise changes have been discussed in the ensuing paragraphs:

  1. Clause no. 4 of Form
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Section 194N

Section 194N

Tax Deducted at Source (TDS) is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments. Usually, the person receiving income is liable to pay income tax. But the government with the help of TDS provisions makes sure that income tax is deducted in advance from the payments being made by you. The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against … Read more

Reduced corporate taxes

Reduced corporate taxes

Various amendments to Income-tax Act, 1961 {Finance (no.2) Act, 2019} has been introduced vide Taxation Laws (Amendment) Ordinance, 2019. In order to boost growth in this period of sluggish economy and to promote “Make in India” initiative, Govt. of India has made series of announcements stated here as under:

  1. A new section 115BBA has been introduced, which gives domestic companies an option to pay tax at reduced rates from 30 per cent to 22 per cent. Effective tax rate, including surcharge and applicable cess reduced from 34.944 per cent to 25.168 per cent.
  1. Another section 115BAB has been introduced wherein
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Double-Taxation-Relief

Double Taxation Avoidance Agreement

Double Taxation means taxing the same income twice for the same purpose earned in same period and in the same tax jurisdiction. When such income is taxed in two countries, the aggregate of the tax liability will form substantial part of his total income.

Double Tax Avoidance Agreement (DTAA) is a tax agreement between two or multiple countries to prevent double taxation of income earned in both countries. DTAA is an agreement between two countries that the income of non-residents should not be taxed both in their country of origin and in the country in which they live.

In 1920, … Read more

Tax Audit under Section 44 AB Tax Audit under Section 44 AB

Tax Audit under Section 44 AB

Section 44AB of the Income Tax Act stipulates provisions pertaining to the tax audit under the Income Tax Audit. A tax audit is conducted to ensure that the taxpayer has properly maintained the books of accounts and other records, and they truly reflect the income of the taxpayer. Moreover, it is intended to verify whether the assesse has complied with various requirements like filing of income tax returns, accurate specification of claim and income tax deductions, etc. In short, tax audit is a measure which is initiated to curb fraudulent tax practices. The audited accounts must be reported by a Read more

New Taxation Rules

New Taxation Rules

Union Finance Minister Nirmala Sitharaman in her maiden budget speech announced some income tax-related changes which will come into effect from September 1, 2019. Cash withdrawals exceeding INR 1 crore in aggregate in a year from finance institutions will attract TDS while in case of property transactions, the definition of immovable property has been broadened to include charges like club membership fee and car parking fee for TDS levy. Also, in another income tax rule change, a higher TDS will be levied if life insurance maturity proceeds received are taxable in your hands. Here is a 5-point explainer of new Read more

Introduction to 15CA & 15 CB

Introduction to 15CA & 15 CB

When it comes to filing taxes, it is not only individuals who need to ensure that all the proper procedures are followed and forms are submitted. When a person makes any payment or remit any money to non-resident, the bank will need to check whether the tax was paid or not. Making payments outside India requires certain compliances. One such compliance is to submit Form 15CA and 15CBinstitutions have rules that must be followed, which helps the income tax department to determine the taxable amounts of NRI’s. Foreign remittances have tax implications, which may be missed out inadvertently by taxpayers. Read more

Decoding the Direct Tax Code

Decoding the Direct Tax Code

Over the period of 6 decades, the Income Tax Act of India has undergone various impediments. The judgments of the  courts or amendments by parliament has made the Act lengthy and hard to interpret as there was a need to ease up the provisions and make it shorter. It is expected that the government may introduce the country with the newly drafted Direct Tax Code (DTC) drafted by 8 members of the task force .The motive behind drafting the DTC includes simplifying the tax regime and provide relief to domestic and foreign companies. Below mentioned are the changes proposed by … Read more

Search and Survey operations

Search and Survey operations

Search and survey operations are conducted by the Income Tax Department defined as raid, where the department suspects an individual or business for hoarding illegal money. Powers to carry out search under section 132 and survey under section 133A are important tools in the armory of the Income Tax Department for detecting and preventing tax evasion. Though the need to have such tools cannot be grudged, the department has to use it sparingly and in deserving cases and after complying with necessary guidelines and safeguards. A search is violation of personal privacy and rights of a citizen and its use … Read more

FPIs exempted from super-rich tax

FPIs exempted from super-rich tax

India has quickly rolled back an additional levy on foreign funds and announced several measures to boost economic growth. The Finance Minister, Nirmala Sitharaman had proposed increasing the effective tax rate on individuals with taxable annual income of above 20 million rupees by about 3%, and for those earning above 50 million rupees by 7%. The tax proposal of higher surcharge on FPIs, along with a lack of measure to boost the economy in the July budget, led to foreigners withdrawing more than $3 billion from Indian shares, putting pressure on stocks and the rupee. Indian markets went down about … Read more

Employee stock option plan

Employee stock option plan

Employee stock option plan (ESOP) refers to the employee benefits scheme under which the employees are allowed to purchase the shares of their company. Most of the Indian and multinational companies use ESOPs as a compensation tool. The company encourages the employees to acquire firm ownership by offering the shares at a below-market rate in order to increase their involvement in the scheme. In many cases, the companies in India also offer the stocks as remuneration up to a specific percentage to employees. The compelling reasons for companies to implement ESOPs include wealth creators for its employees and retention. It … Read more

Long Term Capital Gains under section 112A of Income Tax Act 1961

Long Term Capital Gains under section 112A of Income Tax Act 1961

Central Government has inserted a new section 112A under Income Tax Act, 1961. The aim behind this section is to impose tax implications on the gains arising on account of transfer of equity share, units of equity oriented funds and units of the business trust. Before Assessment Year 2018-2019, long-term capital gain (LTCG) tax on transfer of equity share, units of equity oriented funds and units of business trust was exempted as per provisions of section 10 (38).

Applicability
Below mentioned is the applicability for long term capital gains under section 112A of Income Tax Act 1961:

  1. Section 112A shall
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Income Computation and Disclosure Standards

Income Computation and Disclosure Standards

Income Computation and Disclosure Standards (ICDS) have been notified u / s 145 (2) of the Income Tax Act, 1961 vide Notification No. S.O. 3079 (E) dated September 29th 2016. On 23rd March, 2017, certain clarifications were issued by CBDT by way of FAQs.

Below mentioned are the 10 ICDS that are notified up to the date:

  1. Accounting Policies
  2. Valuation of Inventories
  3. Construction Contracts
  4. Revenue Recognition
  5. Tangible Fixed Assets
  6. Effect of Changes in Foreign Exchange Rates
  7. Government Grants
  8. Securities
  9. Borrowing Costs
  10. Provisions, Contingent Liabilities & Contingent Assets

Applicability of ICDS:-
ICDS is applicable to all assesses having Income … Read more

Advance Ruling under GST

Advance Ruling under GST

A letter ruling is a written statement issued to a taxpayer by tax authorities that interprets and applies the tax law to a specific set of facts and an advance ruling is the written statement for interpretation of tax laws. It is issued to applicants when the tax payer is in doubt with regards to provisions of laws.

As per section 95 of CGST / SGST Law and section 12 of UTGST law, ‘advance ruling’ means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in section 97(2) or 100(1) … Read more