Options for setting up business in India and the due process

While starting the business, an entrepreneur has many options on the choice of business entity that he should start with and larger the number of options larger the chances of confusion. In India, you can register a  Pvt. Ltd. Company, Limited Liability Partnership, One Person Company, or Partnership firm for purpose of carrying your business. This decision of selecting the right entity is very crucial and depends upon certain factors like liability, nature of business, number of owners, scale of business, taxation, estimated tenure of the business, future plans, closing etc.

A brief of entities as mentioned aforesaid is given below:

Company

1. Company is the oldest & renowned business Structure in India.

2. There are 2 types of company

Private Limited Company in India:

It is a closely held company with minimum requirement of at least 2 shareholders and maximum 200 shareholders, 2 Directors, and minimum paid up share capital of Rs 1,00,000.

Public Limited Company: A which is not a Private Limited Company in known as Public company. There should be at least 3 Directors and 7 shareholders with a minimum paid-up capital of Rs 5,00,000 . There is no limitation on the maximum number of shares and therefore such company can offer its shares to the  .. 

3. The entire capital of the company is divided into small units known as shares. Each member hold shares in the company are called as shareholders and the ownership is defined by number of shares in the total capital held by any shareholder

4. A company is run by Board of Directors, consisting of directors, which are appointed by the shareholders. Shareholders can themselves become director or they can also appoint any other individual as shareholder. Directors take all the decision related to company

5. Company is treated as an artificial person so that all assets and liabilities are owned by it and not its shareholders.
6. The liability of the shareholders is only limited to the capital to be paid on their shares

7. Registration 

a. Registering authority is Registrar of Companies
b. Minimum registration cost for private company is Rs 5200 and for public , it is Rs 24600
c. Time to Register : 15-20 working day

One Person Company

1. The concept of One Person Company (OPC) has been introduced in India in 2014. A company which has only one shareholder is called as One Person Company.

2. This is a new concept which has come up by the enactment of Companies Act, 2013.

3. This form of business entity is a Private Limited (OPC) in nature.

4. The shareholder must be the Citizen  of India

5. OPC shall have one shareholder, director and minimum paid capital of Rs 1,00,000

6. The shareholder of the OPC has to nominate a nominee who will the shareholder in case of death of the main shareholder or he is unable to enter into any contract.

7. As compared to normal company , OPC have lesser compliances

8. The remaining features of a OPC are similar to the company

9. Registration 

a. Registering authority is Registrar of Companies
b. Minimum registration cost is Rs 4800
c. Time to Register : 15-20 working day

LimitedLiability Partnership (LLP)


1. After company, the world's most recognized form of business i.e. Limited Liability Partnership.

2. A Limited Liability Partnership, popularly known as LLP is a hybrid form of company and partnership. It takes in the advantages of both but leaves disadvantages out.

3. A LLP should have minimum 2 partners and there is no minimum requirement of capital. So you can start with Rs 100 also.

4. In a LLP one partner is not responsible or liable for another partner's misconduct or negligence, this is an important difference from that of an unlimited partnership.

5. Registration 
5. Registration 

a. Registering authority is Registrar of LLP
​b. Minimum registration cost is Rs 1750
c. Time to Register : 10-15 working days

For tax and other financial info visit link Tax consultancy in Mumbai

How to save more taxes, restructure your income to cut tax -Tax consultancy in Mumbai

Patrick Francis earns a good salary, but more than 8% of his gross income goes in tax. If he rejigs his salary structure and avails of the deductions he is eligible for, his effective tax can come down to about 5.5%. Here's how he can save Rs 36,000 a year in tax.

Francis should ask his employer to reduce the fully taxable special allowance by Rs 61,000. Instead, 10% of his basic pay should be put in the New Pension Scheme (NPS) under Sec 80CCD(2). Another Rs 8,000 should be given as meal coupons. Also, the tax-free transport allowance should be enhanced to the maximum Rs. 1,600 a month.

These three steps will cut his tax by Rs 12,600. Francis' senior citizen mother suffers from a neurological disease. Assuming that it is among the diseases specified under Sec 80DDB, he is eligible for a deduction of Rs 60,000.




This will reduce his tax by Rs 12,360. Given that he can invest more, Francis should open an NPS account. If he puts Rs 50,000 in the NPS under Sec 80CCD1b, he can save Rs 10,300. He should also shift from FDs to debt funds to save around Rs 1,000 in tax. 

For more information on tax filling and know how to save tax on your earning please visit by clicking on Chartered accountant in Mumbai  and Tax consultant in Mumbai

source: http://economictimes.indiatimes.com/

Today is last date for payment of advance tax---Tax consultancy in Mumbai

Don’t miss your date with taxes: 15 March 2015!

What is Advance Tax?

Advance Tax is part payment of one’s tax liability before the end of the fiscal year i.e. 31 March. The provisions of theIncome Tax Act make it obligatory for every individual, salaried/ self-employed professional, businessman and corporate to pay Advance Tax, on any income on which TDS is not paid.

Do I need to pay Advance Tax?

An individual is liable to pay advance tax if he has income from interest, commission, rent, business or profession, etc, on which no tax has been deducted at source (or tax has been deducted at a lower rate). Advance tax liability arises where the balance tax liability is Rs 10,000/- or more.

If you are salaried person with only salary as the sole source of income, Advance Tax would not be applicable as tax deducted at source would be taken care of by your employer. If you have other sources of income, such as, income from capital gains, shares and mutual funds, income from house property, etc.; Advance Tax is mandatory.

How to calculate Advance Tax

While calculating Advance Tax payable, a taxpayer needs to make only a projection or estimate of his income, as the actual income could be calculated only by the fiscal year end.

- Using the projected income for the fiscal year, the tax payable is to be calculated as per the tax slabs applicable for the current financial year.

- From the tax so computed, subtract the tax deducted at source, if any.

- Include educational cess while calculating advance tax.

- The amount arrived at is the advance tax payable, in instalments.

When do I have to pay Advance Tax?

For Non-Corporate Assessee- Individuals

•    On or before 15 September - not less than 30% of tax payable

•    On or before 15 December - not less than 60% of tax payable

•    On or before 15 March - not less than 100% of tax payable

Which means that if your income tax liability for a year is Rs 1,00,000/- then you should pay advance tax of Rs 30,000 by 15 September, another Rs 30,000 by 15 December and rest Rs 40,000 by the end of 15 March.

What is the penalty if I don’t pay Advance Tax?

If during the year, you have not paid advance tax instalments or have paid lesser than the percentage specified, you will be required to pay interest of 1% per month under section 234C of the IT Act. If you have not paid any advance tax during the year or advance tax paid was less than 90%, then you will be liable to an additional interest of 1% per month under section 234B of the IT Act.

Penalty under Section 234C

In case if you don’t pay your due advance tax installment in time then you will be charged a simple interest of 1% for the next 3 months on the amount of shortfall,this penalty is purely due to the delay in paying the due advance tax amount.

Penalty under Section 234B

If the total advance tax paid on the last due date i.e. 15 March is less than 90% of your total advance tax liability then you will be charged an interest rate of 1% on the balance amount for every month till the time you complete the payment. It means let’s say if your total income tax liability is Rs 1,00,000/- and if you have not paid anything on or before 15 March then you would be charged 1% on the entire outstanding balance of Rs 1 lakh in this case each month, unless you pay it, so if you pay in June, then you will be charged for 3 months penalty and it would be Rs 3,000 in total other than penalty under sec 234C.

How to Pay Advance Tax

You can pay Advance Tax as per the following process:-

- Challan no ITNS 280 should be filled out with all the correct details of the taxpayer

- The filled challan along with amount should be submitted to any bank accepting tax payments.

-  Keeping in view your convenience, you can also pay tax online through any bank facilitating e-payment of taxes. You can visit this site, select the Advance Tax option and after filling the other required fields and details, proceed to make online payment.

In case you have missed out on the earlier two due dates and have not paid your due advance tax, then please do it right away as it is just a click away!

For more information on tax filling and know how to save tax on your earning please visit by clicking on Tax advisor firms in India and Tax consultant in India

Benefits of filing Income Tax Returns in India

Anil Kumar started working for an information technology major a year back. During the induction process, Kumar and his peers were told to save up and invest to save on tax outgo. With no liability behind him, Kumar was easily able to save Rs 87,000 over the last one year with some guidance from his father. His annual salary is Rs 3.50 lakh. 



As the basic exemption limit for financial year 2014-15 was Rs 2.50 lakh, Kumar's taxable income stood at Rs. 1 lakh. 

Kumar's father advised him to invest Rs 3,000 a month (Rs 36,000 a year) in Public Provident Fund and Rs 1,500 a month (Rs 18,000 a year) in equity mutual fund. Kumar was also made to buy a term plan of Rs 18 lakh for an annual premium of Rs 3,000. Towards the end of the last financial year, Kumar was made to open a fixed deposit account of Rs 30,000. Between April 2014 and March 2015, his Employee Provident Fund account had collected Rs 15,000. Thus, Kumar saved a total of Rs 102,000 in tax-saving instruments. 

After saving on his taxable pay, Kumar thought there was no need for him to file income tax returns (ITR) this July. But that is not true. Anyone earning a taxable salary, exceeding the basic exemption limit has to compulsorily file ITR even if the tax liability was reduced to zero post deductions. Only those who earn up to or less than the basic exemption limit of Rs 2.50 lakh need not file tax return. 

And there are advantages of doing so. An ITR receipt is an important document as it is more elaborate than Form 16. While Form 16 shows salary and the tax deductions by only one employer, ITR shows income from other sources also. 

Here are some advantages of filing ITR: 

Loans 

Having filed the ITR will help individuals, like the one in the example above, when they have to apply for a vehicle loan (two-wheeler or four-wheeler). All major banks can ask for a copy of tax returns. 

State Bank of India asks vehicle loan applicants for the latest salary-slip showing all deductions, TDS certificate / Form 16, copy of ITR for last two financial years. 

Additionally, showing a copy of ITR receipts also comes handy if your loan application is rejected or if you are not getting as much loan as you want. 

"Even while applying for a housing loan, many banks ask for Form 16 or even ITR receipts," says chartered accountant Arvind Rao. 

To claim refund 

If you have a refund due from the Income Tax Department, you will have to file returns, without which you will have to forgo the refund. 

Some taxpayers may be primarily investing through fixed deposit. On such investments tax is deducted at source (TDS) at 10 per cent. If the individual's total taxable income is less than the threshold of Rs 2.50 lakh, they can file returns and claim a full refund, says Vaibhav Sankla, director at tax consultancy firm, H&R Block. 

To carry forward losses 

If you do not file returns, you will not be able to carry forward capital losses (short-term or long-term), if any, in a financial year to be adjusted against capital gains made in the subsequent years. 

A long-term capital loss in one year can be carried forward for eight consecutive years immediately succeeding the year in which the loss is incurred. Long-term capital loss can be adjusted only against a long-term capital gain in the year. But short-term capital loss (STCL) can be adjusted against long- as well as short-term capital gains. 

Visa processing 

If  you are traveling overseas, foreign consulates ask you to furnish ITR receipt of the last couple of years at the time of the visa interview, says Rao. Some embassies may ask for ITR receipts of previous three years, while some others may ask for the most recent certificate. 
This is especially true if you plan to travel to the US, UK, Canada or Europe, not so stringent for South East Asia or Middle East. 

"Producing ITR receipts show that one has some source of income in India thus, strengthening your case as someone who will not leave the country for good but will return," explains Rao. 

When traveling to foreign countries, whether on a business or leisure trip, experts suggest you always carry income-related proofs along --- salary slip, Form 16 and ITR receipts. Consulates specify these requirements in most cases. 

Buying a high life cover 

Buying life cover of Rs 50 lakh or Rs 1 crore has become commonplace. However, these covers are available against your ITR documents to verify annual income. "Life insurance companies, especially LIC, ask for ITR receipts these days if you opt to buy a term policy with sum insured of Rs 50 lakh or more," says Sankla. 

The sum insured one can get with a term cover depends on many factors one of which is the income of the insured. If an insured does not have a very high salary, he doesn't need a higher insurance cover. 

Government tender 

Experts say that if one plans to start their business and need to fill a government tender or two for the same, they will need to show their tax return receipts of the previous five years. This again, is to show your financial status and whether you can support the payment obligation or not. 

However, this is no strict rule. It may vary depending on the internal rules of the government department. Even the number of ITRs required can vary. 

Self-employed 

Businessmen, consultants and partners of firms do not get Form 16. Hence, ITR receipts become an even more important document for them, provided their annual income exceeds the basic exemption limit of Rs 2.50 lakh. 

For all sorts of financial transactions, ITR receipts will be the only proof of income and tax payment for the self-employed.

For more information on tax filling and know how to save tax on your earning please visit by clicking on Chartered accountant in Delhi  and Tax consultant in India

source: http://economictimes.indiatimes.com/

New Rules for filing Tax Returns in India

New forms, additional information, completely paperless filing.... the Finance Ministry has introduced several changes in the way taxpayers will file their returns this year. As a taxpayer you need to be aware of these changes lest you file an incorrect return that gets rejected or results in a scrutiny notice.

This week's cover story looks at the changes in the tax filling process and documentation and explains what taxpayers need to do. There is also a smart step-by-step guide to tax filing that will ensure an error-free return.

Many taxpayers tend to believe that if they have no tax liability or have already paid all taxes, they need not file their returns. "It does not really matter whether you have paid any taxes or not.

Even if all your taxes are paid through TDS by the employer and bank or you have paid an advance tax, you still need to file returns if your annual income exceeds Rs 2.5 lakh, .But before we get there, let's look at the major changes in this year's tax filing rules

Extended deadline

The filing deadline has been extended to 31 August so you have about six weeks to file your return. But it's best not to delay the process unnecessarily. If you have got all your documents (Form 16 from employer, bank statement, TDS details, capital gains statement) in place, file your return as soon as possible and get over with it. Why delay something that you cannot avoid.

New tax forms

The massive outcry against the mandatory disclosures of foreign trips and dormant bank accounts in the new ITR forms has forced the government to revise them. The revised forms are much simpler and taxpayerfriendly. But though you won't have to fill a 14-page return, the new forms have retained some of changes proposed earlier.

A new three-page ITR 2A form has been introduced for individuals and HUFs who may own more than one property, but do not have any taxable capital gains, income from business or profession or foreign asset and income outside India.

ITR-1 (Saral) can now be filed by individuals even if they have exempt income. Earlier, individuals were not allowed to use this form if they had exempt income exceeding Rs 5,000. However, individuals having agricultural income exceeding Rs 5,000 will still not be able to use Form ITR-1.

E-filing scope widened

One major change is that e-filing is now mandatory for taxpayers who are claiming a refund. Even if their income is below Rs 5 lakh, they still need to take the online route. However, this rule does not apply to super senior citizens above 80 years. They can still file their taxreturns in the physical mode.

However, e-filing has its own benefits. "E-filed tax returns get processed much faster and the refunds gets credited early and go directly into your bank account. The taxpayer can also track the status of processing of his tax return online".

If you are familiar with tax forms and rules, you can file for free on the Income Tax Department website. Some portals also allow free tax filing. Others charge a small fee for guiding you. Take professional help if not sure. It costs a little, but will ensure that your tax return is error-free.

For more information on tax filling and know how to save tax on your earning please visit by clicking on Tax consultancy in Mumbai