INCOME TAX SERVICESResident Companies
According to the Income Tax Law, the Indian resident companies have been made legally responsible to be taxed at 33.66 per cent on net basis. Moreover, companies have also been regulated to pay dividend distribution tax (DDT) at 14.025 per cent on the amount of profits distributed to shareholders.
On the other hand, the Non-resident companies have been made accountable legally to tax at 41.82 per cent on net basis. Such companies may perhaps be taxed on a gross basis or on a presumptive basis in certain cases. Though, income from long-term capital gains might well have to pay at the rate of 20.91 per cent.
KINDS OF TAXES
An annual tax is charged on income earned, for a financial year, as per the rates mentioned by the annual budget. The rates tend to be different with each budget. The annual tax is generally paid in advance through quarterly instalments at some point in the financial year. The quarters may also show a variation according to the taxpayer involved.
Minimum Alternate Tax (MAT)
The domestic tax law has been made in the way to entail companies to pay MAT in lieu of the usual corporate tax, where the usual corporate tax is lower than the MAT. MAT gets calculated on the book profits; at the rate of 8.415 per cent for domestic companies and 7.841 per cent for non-resident companies.
Dividend Distribution Tax (DDT)
The tax payable on the dividend declared, distributed or paid is called as DDT. Dividends at present get exemption from being taxed in India. However, the company paying the dividends has been made liable to pay DDT at the rate of 14.025 per cent on the sum of dividends declared.
BASIC DIRECT TAX SLABS
For other individual i.e. HUF, AOP
Tax slabs are almost the same as individuals for such individuals other than women
and senior citizen. i.e.
o Tax is nil for first INR 180,000
o Rate is 10% for next INR 320,000 (from 180,001 to 500,000)
o Rate is 20% for next INR 300,000 (from 500,001 to 800,000)
o Rate is 30% for taxable Income more than (Above 800,000)
In Case of Corporate Tax
Income is charged at a flat rate of 30% along
with a 3% education cess so total 30.9% for domestic companies with taxable
income less than INR 1 crore (10 million).
- Income is levied taxed at a flat rate of 30% along with
a 5% surcharge on tax and 3% education cess on tax plus surcharge making
it to total 32.445% for domestic companies with taxable income more than
INR 1 crore (10 million).
Company other than a Domestic Company
50% of on so much of the total income as consist of (a) royalties received from
Government or an Indian concern in pursuance of an agreement made by it with
the Government or the Indian concern after the 31st day of March, 1961 but
before the 1st day of April, 1976; or (b) fees for rendering technical services
received from Government or an Indian concern in pursuance of an agreement made
by it with the Government or the Indian concern after the 29th day of February,
1964 but before the 1st day of April, 1976, and where such agreement has, in
either case, been approved by the Central Government.
40% of the balance
ii. Surcharge: The amount of income
tax as computed in accordance with above rates, and after being reduced by the
amount of tax rebate shall be increased by a surcharge at the rate of 2.5% of
such income tax, provided that the total income exceeds Rs. 1 crore.
Cess: 3% of the total of Income-tax and
PARTNERSHIP FIRMS & COMPANIES
A partnership is a widespread mode for India and its people for running business activities on a small or medium scale. According to the Indian laws, a partnership is not deemed as a separate entity distinct from the partners; however a partnership is rated as an entity for tax purposes.
The taxable income of the partnership firm is calculated the same way as the law permits for a company if a partnership is clearly documented by a deed in which the individual shares of the partners are specified. The Salary, bonuses, commissions, and other payment made to involved partners and interest owed to partners by the rules of the partnership deed are exclusively taxable to the given limits in computing the partnership's taxable income and also get added in the taxable income of the applicable partner.
The partnership is made to shell out tax on the balance profits at 40 percent, while 30 percent on long-term capital gains. It is anticipated to lessen the capital gains tax to 20 percent. Moreover, the balance profits do not be put to tax in the hands of the partners.
A partnership is taxed like a joint venture where is the deed has not evidenced the shares of the individual partners.
Taxation of foreign partners
A foreign partner gets taxed the way its Indian counterpart, if permitted by the Reserve Bank of India to being a part of a partnership firm.
INCOME TAX RETURNS
Income Tax Return is an important
part of Income Tax. It is the way by which an assessee process for paying his
tax to Income Tax Department. As per the provisions of Income Tax Act, 1961,
filing of Income Tax return is a legal obligation of every Individual whose
income exceeds the maximum limit of non-taxable income for the full financial year
i.e. from 01 April to March 31 of the following year, for example for the year
2012-2013 (which is also called the Assessment Year) the period is 01 April 2011
to 31 March 2012. In case of salaried class assessee the information about the
income in the particular financial year supported with the form 16 (the
certificate for tax deducted at source), which is issued by the employer at the
end of the financial year.
Transforming itself with the changing times, the Income Tax Department of India
has launched an easy to use online facility for filing Income Tax Returns using
the Internet. The filing of Income Tax Returns Online offers great convenience,
fast in processing and hassle-free option to the assessees. Income Tax Return
has several part or phases which we follow for paying tax. To know Income Tax
Return in an easy way, it is divided into the following sub sections
INCOME TAX COMPLAINTSWe undertake Regulatory compliances viz. statutory returns and documents preparations, compilations and e-filings with the revenue authorities including the following:
- Tax Audits as per the provisions of the Indian Income tax Laws
- Preparation and Review of corporate tax returns to ensure compliances with the Income Tax Act, 1961 and the various judicial pronouncements
- Preparation and Review of the withholding tax (TDS) returns as per the provisions of the Income Tax Act
- Seeking Advance Rulings
Foreign Remittance Certifications
- Undertake tax representations before Revenue authorities for Tax Assessments of Income tax and transfer pricing cases and other tax matters
We undertake consultancy and Certification services needed for making foreign remittances following the provisions of section 195 of the Income tax Act, 1961 or as per Double Taxation Avoidance agreements (DTAA) as per the guidelines of Reserve Bank of India. The services under this category broadly include the following:
- Advising on the applicability of withholding tax on various foreign remittances as per Indian Income tax Act / DTAA
- Issuing Foreign Remittance Certificates under the various provisions of the Income Tax Act, 1961
- Royalty and Technical know-how workings as per Reserve Bank of India guidelines and formats and withholding tax certification on such remittances
- Seeking certificates from the International taxation department for non/lower deduction of tax at source
- Representations before International taxation authorities in connection with any matters arising out of withholding tax on foreign remittances
- Other documentation and remittance support and dealing with authorized dealers in connection with foreign remittances
INCOME TAX DEDUCTION In Case of Donations For Charity
Under section 80-G of the Income Tax Act, there are following relief in case of Donations:
In Case of Physically Handicapped Persons
- Donation to certain funds, approved education institutions of national importance, charitable institutions.
- The deduction will be 50% of the amount.
- Deduction may be 100% if donation is given to Prime Minister Relief Funds, National Foundation for Communal Harmony, Blood Transfusion Council, The Africa Fund, Earth-quake Relief Fund.
Under section 80DD and 80U of Income Tax Act, physical disability must be one of the following:
- A person who is suffering from permanent physical disability or mental retardation is entitled to deduction upto Rs. 40,000.
- Handicapped must be certified by a physician, surgeon or a psychiatrist, working in a government hospital.
In Case of Treatment of Handicapped Dependents
- Permanent or more than 50% disability in limb
- Permanent or more than 60% disability in 2 or more limb
- Permanent loss of voice
- Permanent blindness
- Mental Retardation in which mental intelligence is less than 50% of normal required intelligence
All the persons who are dependent on physically handicapped person comes under this category. There is provision of deduction in tax against expenditure on medical treatment, training & rehabilitation of handicapped dependents or amount paid in an approved scheme of LIC or UTI.
In Case of Repayment of Loan Taken For Higher Education
There is deduction in income tax in respect of repayment of loan taken by a student from a bank or any other financial institutions for higher education in India or worldwide.
In Case of Contribution To Pension Fund
Under section 80CCC there is a provision of deduction to an individual for any amount paid to keep in force annuity plan of the LIC for receiving pension from a fund set up by that corporation, as per section 10(23AAB) of Income Tax Act,1961. The amount received by assessee or his nominee will be taxable. There will be no rebate under section 88 to the persons whose deduction under this section has been approved.
In Case of Amount Paid as House Rent
Under section 80GG of the Income Tax Act there is a provision of deduction in tax on amount paid by a person (not a salaried person getting housing allowance) for residential accommodation. Deduction in tax will be measured under following parameters :-
- The excess of actual rent paid over 10% of the total income (excluding long term capital gain & income, as per section 115A or 115D of Income Tax Act, 1961)
- Deduction will not be allowed to an assessee who owns an residential accommodation at a place where he is temporarily residing
- Deduction will not be allowed to an assessee who owns an residential accommodation at any place and has also claimed for deduction in respect of self occupied property
In Case of Remuneration Received in Foreign Currency by Employer
Under section 80RR an individual resident of India who is an author or writer or photographer or TV/ film cameraman or TV/ film director or musician or actor or sport person or other such artist whose source of income is foreign income and brings income to India according to foreign exchange regulation, then he is entitled to get a deduction of amount equal to 75% of such income as it is brought in India in convertible foreign exchange. This amount will be deducted from his taxable income within the period 6 months or period allowed by Chief Commissioner of Income Tax Department. It is necessary to show the documents in favor of your claim.
In Case of Remuneration Received For Services Rendered Outside IndiaIn Case of Certain Investment
Under section 80RRA of the income tax act, an individual who is getting remuneration in a foreign currency from an employer for his service in outside of India, will get a deduction of 75% of such income brought into India. This amount will be deducted from his taxable income within the period of 6 months or period allowed by Chief Commissioner of Income Tax Department. It is necessary to show the documents in favor of your claim.
Under section of 80L of the Income Tax Act, there are few investments which are a matter of deduction in taxable amount. Here an assessee will get a deduction of amount upto Rs.12,000 - 15,000 from income on certain specified investments in government securities, UTI mutual funds, bonds and other tax saving schemes. An assessee will be entitled for deduction from his taxable income if he is getting interest or dividend on certain investment which are as follows :
- Investment in Securities of central or state government
- Investment in National Saving Schemes
- Investment in Debentures or Bonds of an institution/ authority/ public sector company/ cooperative society or other such organization notified by central government.
- Investment in under National Deposit Schemes as notified by Central Government
- Investment in under other schemes which are notified by central government like national saving schemes, time deposit schemes, recurring deposit schemes.
- Investment in under monthly income scheme of the post office
- Investment in units of UTI and Mutual Funds (under Section 10(23D) of the Income Tax Act)
- Investment in with banking institutions
- Investment in financial institution working for Industrial Development of India
- Investment in a public company limited working for providing long term financing of housing accommodation
- Investment in such authorities which are working for planning & development of cities and villages
- Investment in co-operative societies
Income Tax RETURN FILING Dates
It is very important to file income tax
return before the last date of return filing. Due dates for filing Income for
AY 2011-12 are as:-
Due Date of Filing of income tax return is 31st July if
· Assessee is not a corporate/ cooperative
· Total income includes income through business or other
· There is no need of auditing accounts under any law
Due Date of Filing of income tax return is 30th September if
· Assessee is a corporate/ cooperative
· In case of non corporate: Submitting auditing report under
section 44AB of Income Tax Act. Form No: 3CA, 3CB, 3CC, 3CD, 3CE
· In case of cooperative/ non corporate: filing of income tax
return of the relevant assessment year if it require to get his account audited
under Income Tax Act. Form No: 2
· Date of submission of annual audited account for approved
programs under section 35 (2AA) of Income Tax Act 1961.
Due Date of Filing of income tax return is 30th November if
· In case of a company - filing of Income Tax return
along with Form 3CEB relating to
International Transaction under section 92
TDS RETURN FILING DatES
TDS Return is to be filed in Form 24Q, 26Q & 27 Quarterly. Due Date
for filing the Quarterly TDS return are on or before 15th July, 15th October,
15th January and 15th May
On or before 15th
Upto 15% of Advance
On or before 15th
Upto 30% of Advance
Upto 45% of Advance
On or before 15th
Upto 60% of Advance
Upto 75% of Advance
On or before 15th
Upto 100% of Advance
Upto 100% of Advance
Issue of Form 16 & 16A 30th April
Certificates of such taxes which are deducted due to payment
given to employees as their salary. From No: 16
Certificates of such taxes, which are deducted due to
amount, paid as insurance commissions. Form No: 16A
Certificate of tax deducted other than salary Form No: 16A
TAX DEDUCTED AT SOURCEAll those persons who are required to deduct tax at source or collect tax at source on behalf of Income Tax Department are required to apply for and obtain TAN. TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be quoted TAN in TDS/TCS return (including any e-TDS/TCS return), any TDS/TCS payment challan and TDS/TCS certificates. Current Rates for the Tax Deduction at Source The TDS amount is subject to 3% Education Cess. There is a surcharge if the recipient is:
Example: If the TDS rate is 20% then the TDS rate with edu cess is 20.6%. If the TDS rate is 20% and there is also a surcharge of 2%, then the net TDS rate with surcharge is 22.66% (20% Plus 2% plus 0.66%).
- An individual, HUF, AOP or BOI and aggregate of payment or credit subject to tax deduction exceeds Rs. 10,00,000, and
- An artificial juridical person, a firm/domestic company and the aggregate payment or credit subject to tax deduction exceeds Rs. 1 crore.
From Salaries (section 192). The TDS is based on the tax at the applicable rate on the estimated income of employee for the year. Employer must not deduct TDS on all the non-taxable allowances like conveyance allowance, rent allowance, medical allowance and the deductible investments under sections like 80C, 80CC, 80D, 80DD, 80DDB, 80E, 80GG and 80U. No tax is required to be deducted from source unless the estimated salary exceeds the amount not chargeable to tax. The employer can increase or decrease the amount to be deducted to make the adjustments for any previous deficiency or excess deduction.
Rent of land, building or furniture to a resident (section 194-I). If the annual rent together with advance rent exceeds Rs. 1,20,000 per annum, you must deduct TDS at 15.45% (includes 3% edu Cess) if the rent paid to an individual or HUF or at 20.6% (includes 3% edu cess) in case of others. (Exception: Individuals and HUF whose sales/gross receipts in business is less than Rs 40 lac or professional receipts is less than Rs 10 lac are not required to deduct the TDS).
Surcharge. If gross receipts subject to TDS of an individual or HUF exceed Rs. 10 lac, there is an additional surcharge of 1.5%. In case of others if the gross receipts exceed Rs. 1 crore, there is an additional surcharge of 2%.
Rent of plant, machinery or equipment to a resident (section 194-I). The rate of TDS for all with effect from 1st June 2007 is 10.3%, and the surcharge is 1%.
Winnings from lottery or crossword puzzle or card game or any other game (section 194B). If the payment to a resident or non-resident (in cash or kind or partly in cash and kind) exceeds Rs. 5,000, you must deduct TDS at 30.9% (includes 3% edu cess) of the prize. Surcharge rate is 3%.
Winnings from Horse race (section 194BB). If the payment to a resident or non-resident exceeds Rs. 2,500, you must deduct TDS at 30.9% of the prize. Surcharge rate is 3%.
Payments to resident contractors and subcontractors (section 194C). If any contract value exceeds Rs 20,000 or Rs. 50,000 in the aggregate during the financial year, you must deduct TDS at 2.06% of the payment if payment to contractor (for contracts other than advertising contracts) and 1.03% for the advertising contracts and 1.03% for sub-contractor. (Exception: Individuals and HUF whose sales/gross receipts in business is less than Rs 40 lacs or professional receipts is less than Rs 10 lac are not required to deduct the TDS). Surcharge rate is 0.2% for contractor (other than advertising contracts) and 0.1% for sub-contractor and advertising contracts.
Payment made to a travel agent /or an airline. This payment is not subject to TDS (section 194C(1)). However, provisions of section 194C apply when a plane or bus or any other mode of transport is chartered by one of the entities mentioned in section 194C.
Professional and Technical Services to a resident (section 194J). If the payment by way of fees for professional services, or fees for technical services or royalty exceeds Rs. 20,000 in a financial year, the payer must deduct TDS rate is 10.3%. Surcharge rate is 1%. (Exception: Individuals and HUF whose sales/gross receipts in business is less than Rs 40 lac or professional receipts is less than Rs 10 lac are not required to deduct the TDS).
Interest other than interest on securities (section 194A). If aggregate amount of interest payable or creditable during the financial year exceeds Rs. 5000 (or Rs. 10,000 in case paid by a banking company, cooperative society engaged in banking or post office on notified deposit schemes), you must deduct TDS at 20.6% if payment to a domestic company or at 10.3% for resident other than domestic company. (Exception: Individuals and HUF whose sales/gross receipts in business is less than Rs 40 lacs or professional receipts is less than Rs 10 are not required to deduct the TDS. Also TDS is not deductible when interest is credited or paid by a firm to its partners, and others mentioned in section 194A). The surcharge rate for domestic company is 2% and for others it is 1%.
Interest on securities (section 193). If aggregate amount of interest payable or creditable during the financial year exceeds Rs 5,000, you must deduct TDS at 20.6% if payment to domestic company (10.3% for others). (Exception: Individuals and HUF whose sales/gross receipts in business is less than Rs 40 lacs or professional receipts is less than Rs 10 lac are not required to deduct the TDS). The surcharge rate for domestic company is 2% and for others it is 1%.
From June 1, 2008, tax will not be deductible at source under the provisions of section 193 if the interest is payable on any security issued by a company and if the security is in dematerialized form and is listed in a recognised stock exchange in India issued by a company.
Insurance Commission to a resident (section 194D). If aggregate sum payable during the year exceeds Rs 5,000, you must deduct TDS at 20.6% if payment to domestic company (10.3% for others). (Exception: Individuals and HUF whose sales/gross receipts in business is less than Rs 40 lacs or professional receipts is less than Rs 10 lac are not required to deduct the TDS). The surcharge rate for domestic company is 2% and for others it is 1%.
Commission on sale of lottery tickets (section 194G). If the payment to a resident or non-resident exceeds Rs 1,000, you must deduct TDS at 10.3% of commission. (Exception: Individuals and HUF whose sales/gross receipts in business is less than Rs 40 lacs or professional receipts is less than Rs 10 lac are not required to deduct the TDS). The surcharge rate is 1%.
Commission and brokerage to a resident (section 194H). You must deduct TDS at 10.3% of commission and brokerage. (Exception: Individuals and HUF whose sales/gross receipts in business is less than Rs 40 lacs or professional receipts is less than Rs 10 lac are not required to deduct the TDS). The surcharge rate is 1%.
Income in respect of Units. You must deduct TDS at 10.3%. Surcharge rate is 1%.
Dividend to a resident (section 194). Where payments or distributions by a company to its shareholders are deemed as dividends (under section 2(22)(e)), payment exceeds Rs. 1000, you must deduct TDS at 20.6%, and the surcharge rate is 2%.
For any other dividend TDS rate is nil.
Payment to a non-resident sportsman or sports association (section 194E). You must deduct TDS at 10.3%. Surcharge rate 1%.
Dates for Depositing of the TDS
Tax has to be deposited within one week from the last day of the month of deduction. Tax has to be deposited within one week from the date of deduction in case of TDS on Salary, Dividends, Winnings from lottery or Crossword Puzzles or Repurchase of units by Mutual Funds or UTI. The quarterly statement of TDS is filed on computer media CD/floppy (in case of a company, government deductor, deductor to be audited under section 44AB and deductor with 50 or more deductees in a quarter) and using Form 24Q (TDS salary) and 26Q (TDS other) with acknowledgement form Form 27A. The due dates are 1st Quarter - July 15, 2nd Quarter October 15, 3rd Quarter Jan 15 and 4th Quarter June 15. The TDS returns are accepted by only TIN centres and not by Income Tax Department.
Interest and Penalty on Late deposit of TDS
If the TDS amount is not deposited by the required date, then for each month you must add an interest equal to 1% of the TDS amount. Even if the delay is by one day, you will pay one month's interest. If the TDS return is not filed by the due date, there is a penalty of Rs. 100 per day subject to maximum limit equal to the TDS amount.