How to file Income Tax Returns

In this article, we will discuss in detail about the documents needed for filing IT Returns in India.

1.  Select the applicable ITR Form.

Taxpayers have to choose the ITR form applicable to them for the A.Y. 2020-21 considering their heads of income & threshold limit of income. If you select an incorrect form, it may be rejected & may be treated as if no return has been filed. Consequently, penalty provisions may be attracted for late filing unless it is rectified before the end of assessment year.

ITR-1 (SAHAJ) :- For Resident Individual having Income from Salary/Pension, One House Property & from other sources( excluding winning from lottery & from Race Horses) and Agricultural Income upto Rs. 5000. But following cannot use. ITR 1 form :-

• Total Income exceeding Rs. 50 Lakh.
• If the Assessee is a Director in a company.
• Have made any investments in unlisted equity shares of a Company at anytime during the previous year.
• Has any assets including financial interest in any entity located outside India
• Have signing authority in any account located outside India.
• In cases where loss is brought forward in house property from previous years.
• Having any foreign assets or foreign income.

ITR-2 :-  For Individuals & HUFs not having Income from Profits& gains of Business/Profession.

ITR -3 :- ForIndividuals & HUFs  having Income from Profits&gains of Business/Profession.

ITR-4 (SUGAM) :- For Individuals & HUFs (other than LLPs), being a Resident having total income up to Rs. 50 lakhs and having income from Business/Profession which is computed on presumptive basis  u/s 44AD, 44ADA, 44AE but not for Individual who is either a Director in company, or has invested in unlisted equity shares.

ITR-5 :- For Firms, LLPs, AOPs, BOIs, Artificial Juridical Person(AJP), Estate of deceased, Estate of insolvent, Business trust & Investment Fund.

ITR-6 :- For Companies other than companies claiming exemption u/s 11 of IT Act, 1961 i.e. for charitable purposes.

ITR-7 :- For persons including companies required to furnish return u/s 139(4A) or 139(4B) or 139(4C) or 139(4D). Any Person who derives income from property held under trust or other legal obligations wholly or partly from charitable or religious purposes & partly for voluntary contributions, assessable as representative assessee.

2.  Prepare the statements of accounts i.e. B/S & P/L in the respective format prescribed in the return which is very similar to format under schedule VI of the Companies act, 1956.

3. Compute the income under each source first and than each various head of income and arrive Total Income and ascertain Tax liability / refund as the case may be and get it checked with a tax preparer.

4. Collect the necessary information to fill the return.

List Of Additional Information to be kept ready for Form ITR-1

Name, Address, Pan No, Mobile No, Pin Code of the Assessee.

1. Area/Locality
2. Alternate Mobile Number & Email Address.
3. Aadhaar number / Aadhaar Enrolment ID.
4. Return U/S 139(1) i.e. if income exceeds taxable limit of Rs. 250000 / 300000/  500000 for Normal Assessee, Senior Citizen super senior citizen as applicable else complies with any one or more of the following condition.

• Whether occupied one house property or
• Whether owner/lessee of motor vehicle or
• Whether incurred expenditure for himself or for any other person for travel to a foreign country.
• Whether he is a holder of a credit card issued by any institution.
• Whether he is a member of a club and entrance fee exceeds Rs. 25000 or more.

5. Whether he has incurred any expenditure on consumption of electricity exceeding Rs. 100000 in a year (Form No.2 & others)

6. Whether he has incurred any expenditure on consumption of electricity exceeding Rs. 100000 in a year (Form No.2 & others)

7. Whether he has incurred any expenditure on consumption of electricity exceeding Rs. 100000 in a year (Form No.2 & others)

8. Income from house property whether (Form No.2 & others):-

• self occupied
• let out or deemed let out.
• Corporation tax paid
• Interest payable on capital borrowed from bank/any institution upto Rs. 200000
• Arrear rent received during the year less 30%

9. Other Information:-
Details of all bank accounts held in India at any time during the previous year.
IFS code of the bank, name of the bank, account number
Minimum one account should be selected for refund credit
IT details of advance tax and self assessment tax payments
– BSR Code
– Date of deposit
– Serial number of challan
– Tax paid 

TDS / TCS details:-

 Tan of deductor / collector

 Pan / Aadhar number of the tenant

 Name of deductor / collector / tenant

Gross Payment / receipt which is subject to tax deduction / collection

Year of Tax deduction / collection

Tax Deducted / collected

TDS / TCS credit claimed this year

Verification:- 

Name

Fathers name

Pan No:

Capacity in which Signing

Mode

Two ways of filing

1. Electronically on E-filing web portal of Income tax Department

-Digitally Signing the verification part or

-Authenticating by way of Electronic Verification Code(EVC) or

-By sending duly signed paper Form ITR –V to CPC within 120 days of filing

2. In paper form at the designated office of Income Tax Department alon with duly signed ITR V

10. Documents :

• Form 16 (salary certificate) & 16A
• 26AS
• Proof of house rent paid
• Proof of claiming exemption u/s 10 if any(all forms)
• Receipt for corporation tax paid.

11. To claim deduction under chapter VI A, details &information:-

• LIC
• PPF
• Tuition fees, education fees
• Mediclaim amount paid
• payment to National pension scheme
• House rent paid
• Donation under section 80G
• Medical expenses for specified diseases under section 80DDB
• long term investment in bonds up to rRs.20,000
• Money spent for a disabled person by a resident under section 80U
• Interest on loan for higher education for himself or relative under section 80E
• Interest on loan for residential house up to Rs.150000 under section 80EEA and eligibility information
• Interest for electric vehicle loan upto Rs.150000 Under Section 80EEB

In case of revised return original return filing acknowledgement slip and date. 

 In case of Return under………………………….Notice- Unique No, / Document Identification Number DIN, date of notice

12. Documents :-

• LIC receipt
• PPF passbook
• Receipt for school fee
• Receipt paid for NPS
• Donation receipt and appeal, if any with PAN, Reference number and exception grant number under section 80G of Donee
• Evidence for medical expenses received form insurance company
• Loan schedule for repayments on education loan and residential house
• rent receipt to claim deduction under section 80GG
  In case of other deduction- proof of payment

 Additional information forForm No. 2

1. Residential status country of residence and TIN number
   Specially in case of non- resident – whether citizen of India or POI holder  Total period of stay in India in the previous year. 
2. In case of filing by representative Assessee-  Name, capacity, Address, PAN number 
3. If the Assessee is  Director in a company –Name of the company, PAN No: DIN No,  whether listed/ unlisted 
4. Whether held any share of unlisted Company, if yes – Opening balance, number of shares purchase, number of shares, amount, transfe of shares ………………………………
5. Salary – Name of the employer

New procedure for registration, approval, etc. of certain entities deferred to 1st October, 2020

In view of the unprecedented humanitarian and economic crisis, the CBDT has decided that the implementation of new procedure for approval/ registration/notification of certain entities shall be deferred to 1st October, 2020. Accordingly, the entities approved/ registered/ notified under section 10(23C), 12AA, 35 and 80G of the Income-tax Act, 1961 (the Act) would be required to file intimation within three months from 1st October, 2020, i.e, by 31st December, 2020. Further, the amended procedure for approval/ registration/ notification of new entities shall also apply from 1st  October, 2020.

The necessary legislative amendments in this regard shall be proposed in due course.

Various representations were received in the finance ministry expressing concerns over the implementation of the new procedure from 1st June, 2020 due to the outbreak of novel corona virus (COVID-19) and consequent lockdown. There have been a number of requests to defer the applicability of the new procedure.

 

It may be noted that The Finance Act, 2020 rationalized the procedure relating to approval/ registration/ notification of certain entities referred to in sections 10(23C), 12AA, 35 and 80G of the Act, with effect from 1st June, 2020. As per the new procedure, the entities already approved/ registered/ notified under these sections would be required to file intimation within three months, i.e, by 31st August, 2020. Further, the procedure for approval/ registration/ notification of new entities has also been rationalized with effect from 1st June, 2020.

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Source URL :  https://pib.gov.in/PressReleasePage.aspx?PRID=1622387

 

Why Questioning Forms an Important Part of Internal Audit?

There is a lot that goes into the process of an audit. The auditor acquires and analyses a lot of things before giving out a final report. Apart from looking into the accounts, the client interview also plays a valuable role in the process. An auditor in Kolkata interviews some of the top position holders in the company for insights. But this is not received very well. Auditors are often discouraged from asking too many questions. It is believed to ruin the relationship between the client and the auditor. But is this true?

Questioning Leads to Solution

Well, the reality is far from this statement. Questions are fundamental in an internal audit. The more questions the auditor asks you, the better he or she will understand your company. The auditor is an expert in the field, no doubt. But every company works differently, and the auditor will need real and honest inputs from your side to decode discrepancies if any. You shouldn’t challenge the expertise of an auditor if they ask a lot of questions. Every question is important. The thought of an issue being stupid or irrelevant shouldn’t cross your mind. If, in any case, some items make you uncomfortable, be open about how you feel.

Another tip for you is that when you are answering questions, do not lie. Auditors in Kolkata will know when you lie. They have many tricks rolled up their sleeves to determine whether you are telling the truth. Being dishonest will only put you in trouble. A small mistake will harm your reputation, which is the last thing you want during an audit. Many clients also discover new threads of thought when they are answering questions. Some questions help you in looking at some shortcomings from a different perspective, which makes a massive difference in the long run.

An auditor is strongly familiar to the industry but that strength arises from questioning. As it grants you the option to attain adequate knowledge. So, it is always wise for an auditor to analyse data, interview clients to evaluate the situations and facilitate changes. Questioning makes the process smooth and perfect.

ECONOMIC SURVEY 2020 PLACED IN LOK SABHA TODAY 31ST JAN 2020

ECONOMIC SURVEY 2020
PLACED IN LOK SABHA TODAY 31ST JAN 2020

• Wealth Creation: The Invisible Hand Supported by the Hand of Trust
• Entrepreneurship and Wealth Creation at the Grassroots
• Pro-Business versus Pro-Crony
• Undermining Markets: When Government intervention hurts more than it helps
• Creating jobs and growth by specializing to exports in network products
• Targeting ease of doing business in India
• Golden jubilee of bank nationalisation: Taking stock
• Financial fragility in the NBFC sector
• Privatization and wealth creation
• Is India’s GDP growth rate overstated? No!
• Thalinomics: The Economics of a plate of food in India

• Preface
• State of the Economy in 2018-19: A Macro View 
• Fiscal Developments
• External Sector
• Monetary Management and Financial Intermediation
• Prices & Inflation
• Sustainable Development and Climate Change
• Agriculture and Food Management
• Industry and Infrastructure
• Services Sector
• Social Infrastructure, Employment and Human Development

Long Term Goals That Will Boost Your Small-Scale Business

Small businesses are flourishing in the Indian economy today. You might be experiencing growth or activity might be slow, setting the right goals this year might be the extra push your business needs to establish itself. It is essential to set goals like budgeting, auditing services, cutting expenses or hiring an employee so that you can work on them throughout the year. While most of the small business owners skip this step because they think it isn’t significant enough, this will set you apart in this competitive age.

Setting a goal is practical and motivational, reminding yourself to work harder every day. But what are some goals that will be useful to the business?

Top 6 Goals You Must Accomplish for Your Business

• Decide where you want to see yourself in the coming year. This requires practicality and calculation of the resources available, keeping the condition of the market in mind. This can act as a basic plan of action.

• Make a budget. Don’t compromise on this step. Please don’t make a rough estimate; let it include all the details. Make room for taxes, emergency funds, insurances and employee benefits. You will be amazed at the amount you will be able to save once you know you require capital.

• Get professional help in auditing services. Most small business owners don’t bother about this because the law doesn’t enforce it. This can be a total game-changer. An audit can uncover frauds, act as security to banks and insurance companies, improve efficiency and be helpful while paying taxes.

• Plan a digital marketing campaign. If you are a local, offline business, take a small step and put yourself on the web. Make a website, be on social media and take advantage of the enormous benefits the digital marketing sphere has to offer. These can be done at a basic price these days.

• Outsource jobs. Are there aspects of your business that can be handled by automation? For example, chatbots are an excellent way to provide 24*7 customer service. You can also hire an employee to ease the load if your business requires it. This will help you focus on the other essential aspects of your business.

• Increase margin. One of the most neglected parts of a small business is its margin. Owners often think of ways to expand their businesses and deem it the only way for growth. But, one of the most efficient ways to grow is by improving the margin. Strategize ways to improve your services or switch suppliers to get more margins on the products r services that you offer.

These goals should apply to most businesses, and while others can be done individually, audits should be performed by professionals in the field like S.M. Gupta, who are experts in the field of auditing services and tax. The robust internal structure sets them apart from others. Trusting them will mean never worrying about these services again and focusing on your primary business.

India lacerates Corporate Income Tax by 10%

India lacerates Corporate Income Tax by 10% — It is the brilliant and boldest Move to Stimulate Economy Since1991

On 20 September 2019, Government of India announced the biggest tax cuts (0.7% of FY20 GDP or INR 1.45 tn in value terms) for corporates and rolled back most tax-related amendments made in the Union Budget 2019. This tax cut in the backdrop of challenges on fiscal deficit front and need for a massive boost for government expenditure speaks volumes about the appetite for bold reforms of Modi 2.0.

The measure is expected to improve corporate savings, attract private investment (both Domestic and Foreign Direct Investment), bolster the competitiveness of India as a manufacturing hub, and support domestic demand as tax benefits are passed on to the end-consumer.

Making the announcement, Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.
and she also said that the government is working on more steps to revive the sagging economy. When asked if the government is considering rationalisation of the personal income tax rate for putting more money in the hands of people, she said, “One among many things that we are thinking of.”

The Gross Domestic Product (GDP) growth slowed down to more than six-year low of 4.5 per cent in the second quarter of the current fiscal from 5 per cent recorded in the first quarter.

The government has taken several measures during August and September to boost the economy, Nirmala Sitharaman said at the HT Leadership Summit in New Delhi.

B. Corporate Income Tax Rates in India

Government of India now allows corporates to choose between two tax rates highlighted in the table above as Option I and Option II. This step will help everybody transition to lower effective corporate taxation regime without any hiccups and will offer enough flexibility to avail old schemes.

C. Some of the highlights of the recent Direct Tax changes are:

Lower Tax Burden for Corporates: Corporate tax slashed for existing domestic corporates by ~10% (34.94% to 25.17%), inclusive of Surcharge and Cess

Base Corporate Tax rate to be 22% (25.17% including Surcharge and Cess) for existing domestic companies without exemptions/tax holidays

No Minimum Alternate Tax (MAT) applicable on such companies

C.Booster Shot for Make in India:

 Domestic companies incorporated after 1 October 2019 to pay a base rate of 15% (17.16%  including Surcharge and Cess) provided they:

• Make fresh investments in manufacturing, related activities such as Distribution and R&D
• Commences operations by 31 March 2023
• Don’t set-up by splitting up, reconstruction, or by using old Plant & Machinery (Old imported machineries are allowed upto 20% of the total value), or by using old building used in past as a hotel or convention centre
• No Minimum Alternate Tax (MAT) applicable on such companies

D.Flexibility for Choosing New or Old Rates:

• Companies enjoying tax holidays/incentives resulting in effective corporate tax rates lower than 25.17% can continue to avail these benefits:
• These companies can switch to concessional tax regime (i.e. 22% base rate) after the expiry of tax holiday/exemption period. The option once exercised cannot

E.Improvement in Corporate Profitability:

As per data from CMIE, Corporate profitability in India has dipped from its peak of 7.4% of GDP in FY08 to 2.7% of GDP in FY19. The Corporate Tax Rate cut will

• For BSE 500, the effective tax rate in FY19 was 33.7% and it was 31.3% for Nifty 50. The new effective corporate tax rate at 25.17% will bring relief to domestic
• Improved corporate profitability will help achieve:
• Faster break-even for corporate
• Reduction in prices of products in some industries. E.g. FMCG
• Fresh capital expenditure, to tap both domestic and export demand

F.Enhancing India’s Competitiveness as a Manufacturing Destination:

India is one of the most attractive markets for investments owing to large domestic market and fast-improving doing business environment. However, Global MNCs’ decisions are often driven by profitability and they are naturally biased to choose countries with lower tax rates and efficient value chains.

• The new corporate income tax rates in India will be lower than Brazil (34%), Germany (30%), and is like China (25%) and Korea (25%). New companies in India with an effective tax rate of 17.16%% is equivalent to what corporates pay in Singapore (17%).
• It is a well-known fact that global value chain has disrupted owing to the trade conflicts. Several countries in South East Asia have leveraged their lower Corporate Income Tax rates to attract foreign companies. With a 17.16% tax rate, India is well-placed to attract these companies with new vigour.

• “Services firms are expected to be major winners while manufacturing companies in the consumer goods, capital goods and steel sectors will also reap significant benefits as many of them have an effective tax rate of around 30 per cent,” it said.
  When the BJP-led NDA took office, India was ranked 142nd out of 189 countries in the World Bank’s Ease of Doing Business ranking for 2015, which reflected results from the annual survey undertaken during 2014.

Know The Various Types Of Accountants Before Approaching One

If you are looking for a professional who can advice you on your tax affairs, it’s time you start looking for an accountant in your city. Not only will they help you to make your financial things run smoothly but also spot potential issues and solve them. If you think that you need them only for tax filing, it’s high time you debunk the myth. Approach the right professional and they can provide a host of services.

What Are The Benefits Of Hiring A Chartered Accountant In Kolkata?

Do you know that chartered accountants (CAs) can be a valuable addition to your finance team? Well, hiring a qualified professional can be the key to your business success. Wondering what makes working with a CA so beneficial? Keep reading to learn the key benefits.

Why Do MNCs Prefer Indian Chartered Accountants?

Though any accountant or financial worker can crunch the numbers, this is only the Indian Chartered Accountants (CAs) who have special expertise and undergone special training to become a noteworthy and valued addition to any organisation. Besides businesses, Chartered Accountants also help individuals with their financial issues. But how do they differ from other financial professionals across the world? Well, let’s have a quick look at them.

They Are More Experienced – A person wanting to become a Chartered Accountant has to appear for 3 exams – Common Proficiency Test (CPT), then Integrated Professional Competence Course (IPCC) and finally Chartered Accountancy (CA). After passing 10+2, the students with aspire to become CA have to appear for CPT and after passing the exam, they can appear for IPCC. Once IPCC is cleared, they need to undergo a 3-years Articleship under the supervision of an established CA and during the last 6 months of this, they can appear for Final exam. So you can see the total years of study and thus experience of the CAs in India are more than any CA-equivalent course across the world. So it may be assumed that Indian CAs are more skilled and of course experienced than people from other countries with equivalent qualification.

They Can be Multi-tasker – From basic financial planning to tax filing, from business evaluation to auditing – the Chartered Accountants in India can handle any type of finance related jobs efficiently without requiring you to hire any other professional from the same field. Be it a start-up, an established firm/organisation or an individual – a reputed chartered accountant Kolkata can help any client, irrespective of their niches. Chartered Accountants also assure that your assets are safe from any legal issues. They give you a clear picture in the business and keep you safe from any type of legal risks.

They can Handle Different Projects at a Time – Indian Chartered Accountants are quite efficient in handling more than one project at a time. Such projects may belong to an individual, firm or multiple clients. During the course of Articleship, they learn how to handle multiple projects at a time and that surely makes them a pro as they become a licensed chartered accountant Kolkata.

They Are Advisor and Consultant – As already discussed, a person becomes a licensed Chartered Accountant only after years of studying, passing difficult exams and doing strict Articleship for as long as 3 years. During this period of studying and practicing, they literally become master of different finance services. And that comes handy as they become licensed. They use their expertise, knowledge and experience to handle any type of financial difficulties of their clients. They also give them proper advice and direction on dealing efficiently with economic matters.

So you can see how hiring a chartered accountant Kolkata ensures peace of mind that you can expect only from a highly trained, educated and experienced professional. Go ahead and hire a chartered accountant to handle all financial issues related to you, your business and your asset.

What to Look for when Choosing an Auditor

The key to building a strong, healthy and long-term relationship with an auditor is trust. In fact for a business, an auditing firm is almost like a business partner. They are someone businesses work with for years so they become almost an integral part of the business and its success. And as such, it is utmost important to select the auditor wisely. This is something that shouldn’t be considered to be easy and light.

To ensure which auditor you want to choose for your company requires you to go through a tedious assessment procedure as it directly involves your business’ financial stability. The stakes in choosing the best auditor for your company is quite high and thus some tips are compiled here so you can follow them to ensure the best hiring.

Transparent Communication – Good and transparent communication is absolutely important for a win-win audit and auditor relation. A good auditor will always allow you to communicate easily and freely. They are likely to entertain any question you ask and will try to reply satisfactorily. Accounting is quite tricky, drab and complicated subject for the non-accounts people. So make sure your chosen auditor explains everything in a lucid and non-technical way so you can understand.

Industry Experience – An auditor must have required industry experience. They must make you understand things with references of their existing clients similar in scope and nature to your company. The world of accounting is a changeable one. You can ask them how they manage to go with the tide while staying on top of new assertions by modifying and updating themselves. They must be able to communicate any changes with their clients in an understandable manner. A dependable auditing firm will surely have their own plan to cope with accounting amendments.

Market Reputation – This is essential that you consider the reputation of the firm or the individual auditor during the hiring process. You can always ask them for references and accordingly call the references and request to share their experience with that firm. Ask the auditor about the awards they have received for outstanding financial statements. Awards are the means for weighing up the auditor’s reputation and worthiness.

Fees – Though this shouldn’t be considered as a qualifying criterion while hiring the right auditor, fees they charge influence the selection process. To get the best rate against the best services, you may collect a few bids from different auditors to check if the potential auditor’s rate is really competitive. But while comparing the bids, make sure you not only compare the price but also other important factors. Some auditors may charge a multi-year fee at a reduced rate against a single year fee. You may accept such an offer as this would be beneficial for both the parties. But if your company is in a growth period or at the threshold of substantial changes, this arrangement may not be suitable for you.

While hiring an auditor in Kolkata, these are some important factors that you may consider to ensure the right selection.