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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

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Deadline to file the Income tax return

Recently, the government notified the income tax return (ITR) forms for financial year (FY) 2018-19. The year following the financial year in which income earned by a person is assessed is referred as assessment year (AY). This is the year in which you file your ITR for the financial year gone by. For instance, for the financial year 2018-19, the AY is 2019-20.There are various different categories to file ITR of taxpayers.

For individuals, Hindu Undivided Families (HUF) and the taxpayers whose accounts are not required to be audited, the deadline to file the ITR for the FY 2018-19 is … Read more

Realty Tax Filing: Errors that can lead to a tax notice

Realty Tax Filing: Errors that can lead to a tax notice

As per tax laws, an individual is required to report all sources of income and file ITR (Income tax returns) using the correct form applicable to him. It is mandatory to file ITR with utmost care because even a small mistake can land you in a trouble getting tax notice. The tax authorities have spruced up their efforts to catch the evaders. The new ITR forms seek detailed disclosures paving no scope for taxpayers to conceal income in their returns. Moreover, the Central Board of Direct taxes mandate to file the returns online, barring super senior citizens above 80 years … Read more

Relaxing startups for fund raising

Relaxing startups for fund raising (100 day action plan)

With a field of vision to facilitate fund raising by start-ups, the Department for Promotion of Industry and Internal Trade (“DPIIT” or the “department”) proposed relaxation in the income tax laws proposing a customized incentive package to attract foreign investments in sectors such as electronics, chemicals and food processing. This proposal is a part of a 100 day action plan prepared by DPIIT focusing “Startup India Vision 2024” to promote growth of bussing entrepreneurs facing difficulty in raising finances. At present, startups comply with a plethora of requirements such as GST filings, tax returns and other local laws every month. … Read more

India-US agreement for Country by Country reporting

India-US agreement for Country by Country reporting

India and United States of America signed an inter- governmental agreement for exchange of country- by –country (CbC) reports on March 27, 2019. This enabled both the countries to exchange CbC reports filed by the ultimate parent organizations of multinationals in respect of jurisdictions, pertaining to the years commencing on or after January 1, 2016. Since there was no agreement between India and U.S before which resulted in a situation where CbC reports are required to be filed locally in India, even if the ultimate parent entities of the international group that were in U.S. had filed the CbC reports … Read more

Capital Gain tax reliefs for exiting startup investors

Capital Gain tax reliefs for exiting startup investors

After giving investors and entrepreneurs relief from angel tax, the government now wants to encourage startups and is examining regulatory issues, including taxation, which need to be eased.

With the commerce and industrial ministry taking steps to support budding entrepreneurs, government considers exempting investors from tax on capital gains accrued while exiting a startup so as to attract more funds in the sector. DPIIT (The Department for Promotion of Industry and Internal Trade) considers a limited exemption from capital gains tax to investors similar to tax benefits offered in the United Kingdom which helps in minimizing fraud and deploying more … Read more

income

Embellish additional details in New Income Tax forms

Income tax assessees are set to come across certain impediments while selecting the income tax return (ITR) forms to be used for assessment year (AY) 2019-20. However, some sections in the forms have been rationalized and reporting requirements has been increased. Individuals and businesses both are liable to file their ITRs for the income earned in financial year 2018-19 using these forms: ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7. These seven forms were notified by the Income Tax Department in the last month.

Various changes in the ITR forms for AY 2019-20 are as below:

  1. If the taxpayer is
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Refurbishing the tax provisions

Refurbishing the tax provisions

The enactment of tax reform legislation will have far-reaching consequences for businesses and individuals. Finance budget is changed every year in the month of February by the government which are generally applicable to the next following financial year beginning from April 1st unless otherwise specified. As we are stepping ahead towards the beginning of a new financial year (“FY”) 2019-20, various amendments and provisions under Income- tax and GST (Goods and service tax) laws are regulated which shall be applicable from April 1, 2019.

Emendations to Income tax Act

  1. Section 87A rebate
    An amount of INR 2,500 is raised
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Tax Evaders – Be cautious

Tax Evaders – Be cautious!

Tax is the primary compulsory public contribution of government revenue where finance data may have a direct impact on taxes triggering a company’s operations, risks or opportunities. Taxation could change radically as with effect from April 1, 2019 of the financial year, the taxman will begin looking into 360-degree profiles of Indian taxpayers. Tax evasion is an unethical action which results biased income distribution and a halt to the stability of economy. It is usually associated with informal economy. But now, life will be a change for the taxpayers whose spending patterns don’t match their earning declarations.  A range of … Read more

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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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