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!

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Can I file my returns of income after the due date? - Tax consultant in India

In case you’ve not been able to file your income tax return before the prescribed due date, you can still file a belated return of income tax after the due date as well. Under Section 139(1), the normal due date of filing of income tax return is

Particulars	Due Date
Where the taxpayer is 1.    Company 2.    Any person mandatorily required to get his tax audit done 3.    A working partner of a firm whose accounts are required to be audited	30th Sept of the Assessment Year
In case of any other category of taxpayer i.e. Salaried/ Self employed who are not required to get their tax audit done	31st July of the Assessment Year

However, in case you have missed the above deadline for filing of income tax return, you can still submit a belated return of income tax after the due date under Section 139(4)

Belated Return of Income Tax after Due Date

If a taxpayer fails to submit his income tax return

1.    On or before the due date mentioned under Section 139(1), or

2.    If the income tax return is not filed before the due date and the income tax officer has issued a notice under section 142(1) directing the taxpayer to file his income tax return within the time specified in the notice and he has not even filed his return as required in the notice

he can still file his income tax return even after the due date. Such an income tax return filed after the due date is called Belated Return.

Belated Return can be filed at any time before the expiry of 1 year from the end of the relevant assessment year or before the completion of assessment whichever is earlier. This can be explained with the help of an example.

EXAMPLE OF BELATED INCOME TAX RETURN AFTER DUE DATE

The income tax return due date for the financial year 2012-13 is 31^st July 2013/ 30^th September 2013 (for the Financial year 2012-13, the Assessment year would be 2013-14).

If due to any reason, the taxpayer is not able to file his income tax return, he can still submit a belated return before the end of the assessment year i.e. before 31^st March 2015. However, in case you have not filed your income tax return and the income tax officer has himself started conducting the assessment, the taxpayer can file his income tax return any time before the completion of assessment or before 31^st March (whichever is earlier)

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Source: http://www.charteredclub.com/

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.

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

How to save tax in India - Tax Consultant in India

File your tax returns before August 31

It’s time to pay more attention as the income tax department seeks more disclosures to catch tax evaders.

THIS is the time of the year when people run around for filing their income tax return. This year the deadline has been extended to 31st August. The controversial and cumbersome provisions for mandatory disclosure of expenditure on foreign trips and bank balances have been dropped.

New provisions have also been introduced, but in a much simpler form.

Although the new forms have done away with detailed disclosures, they still ask for information on your foreign trips and bank account but in an indirect way.

For example instead of foreign trips you took last year the new form simply asks for your passport number. Experts say the onus will now be on the income tax department to find out how much one spent on foreign trips using the passport number, which will not be a very difficult process for them. The intent is to catch tax evaders and curb the flow of black money in the country. Experts, however, dislike the idea of frequent changes being made in the tax laws.

"Every year there are some or other changes, which makes the common taxpayer confused. There are number of tax notices now being sent due to wrong selection of ITR form/ invalid returns." There are many more changes that have been brought out in ITR forms. Here is a guide to help you understand what these changes are: NEW FORM ( ITR 2A) Considering that a majority of taxpayers have more than one house property but do not have capital gains the finance ministry has proposed a new Form ITR 2A to simplify the process.

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The form is for an individual or HUF who have two house properties but does not have capital gains, income from business/ profession or foreign asset/ foreign income.

The good news is Form ITR 2 and the new form ITR 2A will not be more than 3 pages, and information will be captured in the schedules if applicable.

The positive aspect is you no more require giving details of foreign trips or expenditure thereon to the income tax department. But you still need to give your passport number, if available, in Forms ITR- 2 and ITR- 2A. For common tax payer there is nothing to be worried about but people who take more than 5 or 6 trips from unaccounted money need to be worried. It was earlier a loophole which was exploited by many people." Earlier you used to give details of only one bank account for refund purposes. From now onwards you will be required to give bank details of all your bank accounts which are held at any time during the previous year. You will need to fill the IFS code and account number of all the current/ savings. Experts say the move was needed as people used to hide income received in their other bank accounts.

If you have any confusion over filing your income tax return you can take the help of experts to avoid tax notices later.

POSTING OF ITR- V Earlier after filing the return online you needed to post acknowledgment separately to the income tax office. Now under the new provisions you do not need to post ITR V if the Aadhar number is provided in ITR form.

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Direct Foreign Direct Investment (FDI) in India

After hearing enough rambling on FDI’s and its urgent need to stop Indian rupee fall, one is very curious to know about FDI and trying to understand what qualifies as FDI and what routes are available for them to invest in our country.

Foreign Direct Investment (FDI)

FDI as the name suggests, it is an investment directly made by a foreign company into business in another country. Such investment could be either in the form of business expansion in another country or could be a result of buyout of the company.

Direct Foreign investments in India were introduced by the then Finance Minister Dr. Manmohan Singh in 1991 under Foreign Exchange Management Act to promote such investments thereby increasing supply of domestic capital & increase the economic growth.

As per Foreign Exchange Management Act, ‘FDI’ means investment by non-resident entity/person resident outside India in the capital of an Indian company under Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000.

In India, foreign investments can be made through any of the following methods:

1.       Incorporate a wholly owned subsidiary (WOS) or a company

2.      Result of merger or an acquisition of an unrelated enterprise

3.      Acquire shares in an associated enterprise

4.      Participate in an equity joint venture with another investor or enterprise

    Who can invest in India?

1.       A Non-resident entity means a person resident outside India

2.      Non Resident Indian or Person of Indian Origin (PIO holder) or Overseas Citizen of India (OCI holder)

3.      A body corporate means a company incorporated outside India

4.      Foreign Institutional Investor (FII) means an entity established or incorporated outside India which proposes to make investment in India and which is registered as a FII in accordance with the Securities and Exchange Board of India (SEBI) (Foreign Institutional Investor) Regulations 1995.

5.      Foreign Venture Capital Investor (FVCI) means an investor incorporated and established outside India, which is registered under the Securities and Exchange Board of India (Foreign Venture Capital Investor) Regulations, 2000 {SEBI(FVCI) Regulations} and proposes to make investment in accordance with these Regulations

ENTRY ROUTES FOR INVESTMENTS

There are two important routes specified by Government of India through which an investor can apply for FDI. These are “Automatic route” and “Government approval route”.

“Automatic route” means Non Resident entities can invest in the capital of resident entities without the prior approval of Government i.e. Foreign Investment Promotion Board (FIPB), Department of Economic Affairs (DEA), Ministry of Finance or Department of Industrial Policy & Promotion, as the case may be.  Some of the major sectors in which Automatic route is permitted: Agriculture, mining, petroleum and natural gas, manufacturing, information services, trading, e-commerce activities. The investment percentage under Automatic route is permitted depending upon the nature of business.

“Government approval route” means that investment in the capital of resident entities by non-resident entities can be made only with the prior approval of Government i.e. Foreign Investment Promotion Board (FIPB), Department of Economic Affairs (DEA), Ministry of Finance or Department of Industrial Policy & Promotion, as the case may be. The sectors which are not covered under automatic route shall require approval of Government before any investment.

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Non-salaried ITR forms are out, All NRI Pay Attention

The Central Board of Direct Taxes (CBDT) has notified the revised income tax (I-T) return forms for non-salaried individuals for the assessment year 2015-16 (financial year 2014-15, which ended as of March 31, 2015). 

Forms ITR-3 to ITR 7 have been prescribed for tax payers such as sole proprietors (businessmen or professionals), limited liability partnerships, partnership firms, Hindu Undivided Families (HUFs) and companies (see table). 

Companies are required to file their tax return using Form ITR-6, which as compared to earlier years calls for a plethora of additional disclosures. Some of these disclosures such as corporate social responsibility (CSR) expenditure relate to new regulations applicable to India Inc for the first time during the FY 2014-15 others have been introduced to enable tax authorities to keep better track of overseas assets and income. The latter, could help tax authorities detect money laundering. 

India Inc has for the year ended March 31, 2015, incurred for the first time, expenditure towards corporate social responsibility. Such expenditure is not treated as a business expenditure under section 37(1) of the I-T Act and is not allowed as a deduction for tax purposes (In other words, it does not reduce the taxable income of the company). Thus if CSR expenditure has been debited to the profit and loss account of the company, it needs to be disclosed separately in Form ITR-6. Investment allowance was another new provision introduced in tax laws. 

If a company invests Rs. 25 crore or more in new plant and machinery during a year, a deduction of 15% of its value was allowed as an investment allowance. Details have to be provided of such investment allowance claimed. ITR-6 also calls for details of all domestic bank accounts, such as name of the bank, IFSC code, account number, and nature of the bank account. No details are required in respect of dormant bank accounts which have not been operational for the past three years. 

To keep better track of foreign income earned by India Inc and identify any possible instances of round tripping or money laundering, a detailed schedule FA has been introduced in ITR-6. 

India Inc has to fill in details of foreign assets including foreign bank accounts, interests in overseas trusts and immovable property held 'at any time during the financial year'. This also includes disclosure of foreign assets which are held as a beneficiary and not just direct ownership. The income from such foreign assets also requires to be disclosed. 

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Tax Consultant in India

Finance Ministry brings out new 3-page income tax forms and Last date of filing returns extended to August 31 

The Finance Ministry today came out with new three-page income tax return (ITR) forms, dropping the controversial provision for mandatory disclosure of foreign trips and dormant bank accounts, while it also extended the last date of filing to August 31.

The new forms - ITR 2 and ITR 2A - will have only three pages and other details will have to be filled in schedules, said a Finance Ministry statement.

A new form ITR 2A has been brought out by the ministry which can be filed by an individual or HUF who does not have capital gains, income from business/ profession or foreign asset/foreign income

The statement also said that the last date for submission of tax returns will be extended to August 31, 2015.

With regard to the controversial provision of disclosing details of foreign visits, the release said that the assessee will be required to disclose only the Passport Number.

"In lieu of foreign travel details, it is now proposed that only Passport Number, if available, would be required to be given in Forms ITR-2 and ITR-2A. Details of foreign trips or expenditure thereon are not required to be furnished," it said.

Further, the Ministry has done away with disclosure of details of dormant accounts which are not operational during the last three years.

"As regards bank account details in all these forms, only the IFS code, account number of all the current/savings account which are held at any time during the previous year will be required to be filled-up. The balance in accounts will not be required to be furnished," the statement added.

The simplified I-T return forms are being brought after the earlier version was opposed by industry, MPs and assessees for its cumbersome disclosure norms.

The salaried individuals and those persons who do not have business/professional income are required to file I-T returns in either ITR-1 or ITR-2 by July 31 every year.

Further, an individual, who is not an Indian citizen and is in India on a business, employment or student visa (expatriate), would not mandatorily be required to report the foreign assets acquired by him during the previous years in which he was non-resident and if no income is derived from such assets during the relevant previous year, the statement said.

At present individuals/HUFs having income from more than one house property and capital gains are required to file Form ITR-2.

Observing that majority of individuals/HUFs who file Form ITR-2 do not have capital gains, the statement said, "with a view to provide for a simplified form for these individuals/HUFs, a new Form ITR 2A is proposed which can be filed by an individual or HUF who does not have capital gains, income from business/profession or foreign asset/foreign income."

Individuals having exempt income without any ceiling (other than agricultural income exceeding Rs 5,000) can now file Form ITR 1 (Sahaj). Similar simplification is also proposed for individuals/HUF in respect of Form ITR 4S (Sugam), it added.

It further said that as software for filing these forms was under preparation, the last date for submission of tax returns will be extended to August 31, 2015.

"As the software for these forms is under preparation, they are likely to be available for e-filing by third week of June. Accordingly, the time limit for filing these returns is also proposed to be extended up to August 31, 2015. A separate notification will be issued in this regard," the release said.

Following the controversy over the ITR forms for Assessment Year 2015-16, which sought details of bank accounts and foreign visits, the revenue department had put them on hold.

The ITR forms, which was notified last month by the CBDT for the current assessment year, had specific columns for banks accounts, IFSC Code, names of joint account holders and foreign visits, including the ones paid by companies. 

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