Sep 212019
 

The announcement of the finance minister regarding the reduction of rate of Income-tax in respect of Domestic Companies to 22% has created lot of interest amongst all entrepreneurs to go into corporate form of business considering the tax benefits. The below table is a comparison of tax liability for various types of Organisations for different types of Income :-

Net IncomeIndividual
Income-Tax
Firm
Income-tax
Company
-Income-tax at New rates
Beneficial
status
25000007800057200Individual
30000009360068640Individual
5000000156000114400Individual
75000065000234000171600Individual
1000000117000312000228800Individual
1500000273000468000343200Individual
2000000429000624000457600Individual
2200000491400686400503360Individual
2300000522600717600526240Individual
2400000553800748800549120Company
2500000585000780000572000Company
2600000616200811200594880Company
5000000136500015600001144000Company
7500000235950023400001716000Company
10000000321750031200002288000Company
11000000372255038438402768480Company
20000000695175069888005033600Company
21000000794625073382405285280Company
50000000192562501747200012584000Company
60000000253792502096640015100800Company
100000000424768503494400025168000Company
110000000467512503843840027684800Company

Note :-

The turnover is assumed to be less than 400 Crores

The income as specified here for Individuals is after considering the 80C,80D and other eligible deductions.

The above table shows the tax payable by various types of organisations for different income levels. But wait, please consider the following also before taking a decision on moving to Corporate form of organisation (Domestic companies) :-

 

Profit withdrawl from Business

In case of Proprietorship/Partnership/LLP firm, withdrawl of Profits from the business is easy. Just write a Cheque/Transfer the funds. But in case of domestic company, its not easy like that and also involves additional cost. If you want to withdraw as a Director Remuneration, TDS as applicable has to be deducted and declared as Income in your personal hands. On the other hand, if you want to take the profits as Dividends, Dividend Distribution tax (around 18%) has to be paid and also dividend is taxable in personal hands if it exceeds Rs. 10 Lakhs.

 

Withdrawl of money as a Temporary/Long term Loan

In respect of Proprietorship/Partnership firms, there is no restriction in Proprietor/Partner taking a loan from the firm. Its very simple. But when it is a Corporate entity, Directors / their relatives /interested people cannot take loan from the Company.

 

Borrowing of Money required for the Company from outsiders

If the business is in need of funds, the Proprietors/partnership firms can borrow amount either temporarily or for a long term from the outsiders/friends. But in case of Corporate entities, borrowing from outsiders if not allowed. The directors/relatives of directors/Shareholders can lend to the company but with some restrictions on the same.

 

Privacy of Financial Information

In case of Proprietorship/Partnership firm (Not LLPs) , your financial statements (Balance sheet/ Profit & Loss account, Share holder/director information) are a private one. Unless approved/provided by the Proprietors/Partners, it will not be available to public/outsiders. But in case of corporate entities, your financial statements and other information will be available in the Public portal , which will be accessible by all without any control from your side.

 

Borrowing/Lending within Group companies

If you have more than one business entity, borrowing/lending between the entities is very easy and no major restriction is imposed on the same, if it is either Proprietorship or Partnership firm. But in case of a corporate entity, lending to other group companies Inter corporate loans is subject to restrictions , conditions and Compliance.

 

Meetings and Documentation

In case of Corporate entities, you need to conduct Annual General Meetings and Board meetings at periodic intervals. The proceedings in the meeting are to be maintained in a Minutes book mandatorily. In case of Proprietorship/Partnership firms, there is no such requirement.

 

Ease of Changes in organisation

There might be situations where you may change your main place of business (registered office) or change your partners or change in the profit sharing ratio or increase your Capital in your company, etc…,. In case of Proprietorship/Partnership firms, these are very easy and does not require any approval. But in case of corporate entities, all the changes require approval from Registrar of Companies and involves compliance cost for the same.

 

Basic Exemption & Differential tax slabs

In respect of Proprietorship firms, the Income is chargeable @ 5%,20% or 30% as applicable with basic exemption. The final effective rate in case of Proprietorship firms (say Income upto Rs.23 Lakhs) may be beneficial compared to Fixed Corporate tax rates.

 

Audit of accounts

In case of Proprietorship/Partnership firms, only if your turnover exceeds certain limit, you are required to get your books of accounts audited. But in case of corporate entities, irrespective of your turnover, you need to get your books of accounts audited every year.

 

Additional Compliances

In case of Corporate companies, some of the additional compliances to be done on a regular basis are :-

  • Annual return filing with ROC
  • Financial statements filing with ROC
  • DIR KYC Compliance – KYC for directors
  • TDS applicability irrespective of your Turnover/Income
  • Digital signature for directors
  • Certification/Report from professionals like CA/CS

These compliances will involve time & additional cost.

 

Cost of Compliance

In case of Proprietorship/Partnership firms, the cost of Compliance is very less compared to Corporate entities, where cost of Compliance is relatively high. Cost of compliance includes, filing fees, Interest/Penalties, Professional fees for compliance , etc.,

The corporate form of entity comes with a lower taxation compared to others but with the above

restrictions/requirements. If you can skilfully navigate through these hardships, the destination (Lower tax rate) is enjoyable.

Jul 242019
 

The Central Board of Direct Taxes (CBDT) vide its Order u/s. 119 of the Income-tax Act,1961 , dated 23rd July 2019 has extended the due date for filing the Income-tax returns in respect of all taxpayers who are liable to file Income tax returns. The extended due date is 31st Aug 2019 (earlier due date was 31st July 2019).

The relevant order is provided below

Download (PDF, Unknown)

Source :- www.incometaxindiaefiling.gov.in

 

 

Jun 082019
 
Apr 032018
 

The following are the statutory obligations for the month of April 2018

ActComplianceDue Date
GSTGSTR 1 (For Feb 18) filing for taxpayers with more than 1.5 Crores Turnover10-04-2018
ESIESI Payment for the month of March 201815-04-2018
PFPF Payment for the month of March 201815-04-2018
GSTGSTR 4 (For assessee's opted for Compounding Scheme) - Jan-Mar 201818-04-2018
GSTGSTR 3B Return filing for the month of March 201820-04-2018
GSTGSTR 1(Jan-Mar 2017) filing for Taxpayers with Less than 1.5 Crores turnover30-04-2018
Income-taxDeposit of TDS deducted during the month of March 201830-04-2018
Income-taxFiling of Form 61 containing particulars of Form 60 during the period 1st Oct to 31st March 201830-04-2018
Income-taxDue date for uploading declarations received from recipients in Form. 15G/15H during the quarter ending March, 2018.30-04-2018
Dec 082017
 

As per Section 139 AA of the Income-tax Act,1961 , all the taxpayers are mandatorily required to link their PAN with their Aadhaar Numbers. The earlier due date was 31st August 2017, which was extended to 31st December 2017.

In view of the representations received and also on account of the difficulties faced by the taxpayers, the time limit for linking of PAN and Aadhaar has been further extended upto 31st March 2018.

The relevant press release of the CBDT dtd 08th December is reproduced below :-

=======================================================

Ministry of Finance08-December, 2017 12:21 IST

CBDT extends date till 31.3.18 for linking of Aadhaar with PAN

Under the provisions of recently introduced section 139AA of the Income-tax Act, 1961 (the Act), with effect from 01.07.2017, all taxpayers having Aadhaar Number or Enrolment Number are required to link the same with Permanent Account Number (PAN). In view of the difficulties faced by some of the taxpayers in the process, the date for linking of Aadhaar with PAN was initially extended till 31st August, 2017 which was further extended upto 31st December, 2017.

It has come to notice that some of the taxpayers have not yet completed the linking of PAN with Aadhaar. Therefore, to facilitate the process of linking, it has been decided to further extend the time for linking of Aadhaar with PAN till 31.03.2018.

*****
DSM/SBS
(Release ID :174189)

========================================================

 

May 162017
 

The Income-tax Department had recently made linking of Aadhaar & PAN madatory for assessees. A facility for the same was also introduced in the income tax efiling website www.incometaxindiaefiling.gov.in.

Now the Income-tax Department vide its Notification No S O 1513(E) dtd 11th May 2017 has exempted the following assessees :-

  1. Persons residing in the States of Assam, Jammu and Kashmir and Meghalaya;
  2. A person who is a non-resident as per the Income-tax Act, 1961;
  3. persons of the age of eighty years or more at any time during the previous year;
  4. a person who is not a citizen of India.

The relevant notification is attached below :-

Download (PDF, Unknown)

May 132017
 

The Government of India had recently announced that the PAN numbers shall be linked to the Aadhaar mandatorily. Accordingly, the Income tax department had provided a facility in online efiling account , a facility to link aadhar card to the PAN. In most of the cases, as the Name of the Assessee as per PAN data base and Aadhaar card are different/spelled differently, assessees were facing difficulty in linking the Aadhar to PAN. Considering this , the Income -tax department has provided a new facility in www.incometaxindiaefiling.gov.in to link the Aadhaar to PAN.

As per this new facility provided in the www.incometaxindiaefiling.gov.in , the assessees need not log in to the website. In the home page itself a link (Link Aadhaar) has been provided and the adhaar can be linked to PAN using this facility.

The following are the steps to link aadhaar :-

Visit the income-tax efiling website www.incometaxindiaefiling.gov.in.

In the left pane, you can find link named “Link Aadhaar”

 

 

 

 

 

Click the link and it will take you to the following page :

 

 

 

 

 

In the fields provided, fill the following :-

1) Type your PAN

2) Type your Aadhaar Number correctly

3) Type the Name as per Aadhaar card (Exactly as per Aadhaar, with same spelling and Uppercase/Lower Case as the case may be)

4) Type the Captcha

5) Finally after ensuring all the data typed are correctly, click “Link Aadhaar”

You have to ensure that the following fields are same as per PAN & Aaadhar :-

(i) Date of Birth

(ii) Gender

If Date of Birth & Gender is fully matched and Name as per Aadhaar Card is not exactly matched then the assessee has to additionally provide Aadhaar OTP to proceed with partial name match.

The above facility is available after log in also under the Profile settings-> Aadhaar Linking.

Feb 202017
 

If you have habit of making high value cash purchases (including jewellery/bullion) its time to shell out more money for your purchases.

As per the recent Finance Bill 2017 (which is yet to be passed by the Parliament), you may have to pay TCS (Tax Collected at Source) @ 1% on your Cash purchases exceeding Rs. 200000/-.

Currently, Section 206 C (1D) of the Income-tax Act, 1961 mandates sellers for TCS as follows :-

1) 1% TCS if the sale consideration is in cash for bullion purchases exceeding Rs. 2 Lakhs

2) 1% TCS if the sale consideration is in cash for Jewellery purchases exceeding Rs. 5 Lakhs.

3) 1% TCS if the sale consideration is in cash for any goods other than bullion & jewellery.

The proposed provision in the Finance Act, 2017 (Budget) the classification of “Cash purchases of Jewellery exceeding Rs. 5 Lakhs” is being removed and as a result, any goods purchases exceeding Rs. 2 Lakhs in cash will attract TCS @ 1%

The amendment , if approved by the Parliament will be effective from 1st April 2017.

Apr 272016
 

In view of the difficulties faced by the assessees in accessing the ACES website, the last date for submission of the Half yearly return for the period from Oct-2015 to Mar 2016 has been extended from 25th April 2016 to 29th April 2016. Now, assessees who have missed their deadline can make use of this opportunity and file the Service tax returns within the extended due date.

The relevant CBEC order is attached below :-

Download (PDF, Unknown)

B S Sridhar & Co., Contact us @ 91-44-45540180 / 91-90804 33131. 

For Quick Response email :- sridharca@gmail.com

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