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09
Nov
16
Documents Required for Service Tax Registration

Service tax is an indirect tax, which is collected by government from the service providers for the services they provide. Service tax is a burden to be borne by the person who receives services, but it is the responsibility of the service provider to collect and pay to the government.

Service tax is required if you are into business of providing services and once the turnover exceeds Rs. 9 lakhs annually. Service tax levied is deposited to the government account on monthly or quarterly basis.

Any person liable to pay service tax has to apply for service tax registration.

Documents required for Service Tax registration

The following documents are required for filing Service Tax registration in India.

  • PAN card
  • Identity proof such as
    • Copy of PAN card
    • Passport
    • Voter ID card
    • Aadhaar card
    • Driving License
  • Address proof of all Directors
  • Bank account details
  • Memorandum or Articles of Association
  • Business Transaction numbers from other government agencies such as
    • Customs Registration Number (BIN)
    • Import Export Code (IEC)
    • Sales Tax Number (VAT)
    • Company Index Number (CIN)
  • Copy of constitution/partnership deed, etc. in case of Partnership firm
  • Board Resolution assigning a Director to deal with Service Tax related matters in case of Public Limited Company

Once the supporting documents are rightly filed with the Service Tax registration form, the Service Tax registration procedure is completed within ten days from the date of filing.

21
Oct
16
5 things to keep in mind before paying Advanced Tax

As the filing of return’s countdown has started, so we thought to untwist the term advance tax for the taxpayer. There are so many questions hovering in your mind that whether advance tax applicable on you when you have to pay advance tax, what is the proportion of advance tax and much more. Let’s untwist these questions piece by piece.

Advanced Tax is simply as the name implies, pay your taxes in advance as you start earning instead of lump sum payment at the end of the financial year.

You must be trying to find out the logic behind the advance tax, let me just clear; if you think from government point of view then you will be able to figure out that the Government cannot wait until the end the of the financial year to collect your tax because government also needs funds the to run the economy every day, so it is difficult to wait for one cycle of financial year to collect your tax.

Advance tax is paid on the estimated income in a particular financial year like your salary. You can fairly estimate how much salary you are going to get by the end of the year. But as you aware that you always get your salary after deducting tax which is called TDS (Tax Deducted at Source), so in this case you advance tax is taken care of by the TDS. Therefore, most of the time salaried people don’t need to worry about advance tax. Thus, we can say if you have any income other that salary then you must keep in mind the liability to pay advance tax.

Threshold limit for Advance Tax:

Advance tax liability arises only when your tax liability exceeds Rs. 10,000, mark the word tax liability, not the total income. It means first you have to compute tax on your total income, and if the tax exceeds Rs. 10,000 then only you are required to pay advance tax.

Due Dates to Pay Advance Tax:

Advance tax is paid in instalments by the due datesas prescribed under Income Tax laws. Below are the complete details

Payment of advance tax:

 

To calculate your advance tax, you can visit on http://www.incometaxindia.gov.in/Pages/tools/advance-tax-calculator.aspx

Consequences of not paying Advance tax by due dates:

If you forget to pay your advance tax by the due date then you have to pay simple interest @ 1% p.a. on the amount which should have been paid by the due dates.

What happen if you have extra tax to the Government:

If you have paid the extra tax than you are required to pay, then you can claim a refund of that extra amount.

So let’s wrap up this article by giving you tips that you should start computing your income to know whether you are liable to pay advance tax or not so that you don’t fall into the non-compliance pool.

Do I need to pay Advance Tax?

An individual/company is prone to pay advance tax if he has financial gain from interest, commission, rent, business or profession, etc., on that no tax has been subtracted at source like TDS (or tax has been subtracted at a lower rate). Advance liabilities arises wherever the balance liabilities is Rs 10,000/- or a lot of. If you're salaried person with solely regular payment as the sole source of financial gain, Advance Tax wouldn't be applicable as tax subtracted at supply would be taken care of by the person who has hired you. If you have got different sources of financial gain, such as, financial gain from capital gains, shares and mutual funds, financial gain from house property, etc.; Advance Tax is obligatory.

How to calculate Advance Tax?

  • Estimate your Freelancing Income: Add the expected financial gain from your clients. If you have got in progress agreements that lay out payment terms, use those for estimating your income.
  • Subtract Expenses: From this financial gain, you're allowed to scale back expenses that are directly associated with the freelancing work. Rent of your work, internet, telephone prices, depreciation on computers, travel expenses etc.
  • Add up all different Income: Add expected financial gain from alternative heads like House Property, Interest financial gain, etc. Apply the newest tax Rates to calculate your tax due. Do bear in mind to scale back any TDS that may have been subtracted from your financial gain.
  • If the remaining Tax Due exceeds Rs 10,000, you're needed to pay Advance Tax.

Paying Advance Tax is important as failure to pay it would lead you to be penalized. It is important that you should hire a trusted Tax consultant to help drive out the myths and build a strategy to best protect the company.

21
Oct
16
Registration under Delhi Vat is not a nightmare now (8 Simple Steps)

Addition of a step in ease of doing business in India, Delhi government revised the registration process for taking registration under Dvat Act . Information Technology has become a part & parcel in our daily life, so shouldn’t it become a part of our business life? The same idea has been conceptualised by DVAT department in Delhi , and they have launched a mobile app for DVAT registration called as “DVATMsewa”. Now, DVAT registration is just a tap away.

Now anyone who want to sell his products on online platform like snapdeal, flipkart , amazon,paytm etc can easily get their registrations done without any post verification.

Besides registration under DVAT, this “DVATMsewa” app can be used to avail other services as well by Traders. One of the services to be provided through the new app is registration of dealers under the DVAT Act, 2004 and CST Act, 1956.

DVAT registration through “DVATMsewa” app can be done instantaneously because verification of business premises is not required to be done under this process.

Let’s understand the process:

Step 1: Download the DVATMsewa app and register by giving some basic information like name, Adhaar number, date of birth, mobile no. and residential address.

Step 2: Provide further information relating to business like name of firm, constitution of business, dealer type, PAN number, E-mail, business address and also upload image of business.

Step 3: After submitting all these information, the computer system of department shall verify the Adhaar details from Adhaar/UID portal and also verify PAN details of the dealer with Income tax Data maintained by NSDL.

Step 4: After successful verification of PAN and Adhaar details, others details submitted by dealers shall be passed on to the ward VATO (Value Added Tax Officer). The VATO will have to check the address of the business premises and location of business premises on the google map.

Step 5: If the VATO finds that the address matches with the location as per GPS, reference ID and password will be sent to the registered applicant through e-mail on the same day.

Step 6: The Dealer will then file registration application along with required scanned documents re under DVAT and /or CST, and deposit fee online.

Step 7: The application will come to VATO’s account, who will approve or reject it, on his discretion. On approval by the VATO, TIN will be generated.

Step 8: Registration certificate can be downloaded by the dealer.

In the case of an application not received through a mobile app, then existing process of DVAT registration can be followed by the dealer.

30
Jul
16
Requirement of TIN in Sales Business

TIN stands for Taxpayer Identification number which is issued by the Commercial Tax Department of the respective state in which the applicant has applied. The tin number is one of important registration if you are into the business of manufacturing, traders, exporters or dealers. Basically, TIN number is a requirement of Local VAT laws or Central Sales Tax laws. You should need to mention the TIN number on all Quotations/Orders/Invoices by both purchaser and seller.

Normally, people mistakenly understand that TIN or VAT registration number are different, but it is not so. TIN and VAT registration number is the same thing. When Sales are made within the state then only TIN is also called as VAT number. TIN is used to track the transaction of the business enterprise.

"Tax Information Network" is an initiative made by Tax Department of India to make the seamless process of collection, processing, accounting and monitoring of all direct taxes online. Under this network, Govt. of India wants to have a single network of all tax related information, that can be accessed from anywhere in the country. The intent behind TIN is to integrate all tax-related information at a single place.

TIN is the identity of the dealer. TIN is the 11 digit number and unique throughout the country. Let’s understand how this number is formed:

First 2 characters represent the state and the rest 9 characters depend upon state to state.

TIN is the identification number of a dealer in the same way like PAN is used as the unique identity of the assessee under the Income Tax laws.

Documents required to apply TIN number:

Since TIN number is issued by the respective state, therefore documents vary from state to state and there are no standard procedures to apply for the TIN , but there are some common documents which are required in every state to apply for TIN number:

  • ID proof
  • Address Proof
  • Address proof of business entity
  • PAN card business enterprise or sole proprietor (in case of an Individual)
  • Security

Conclusion:

There is no difference in VAT, TIN or CST number. Only one number is required for all type of sales. The tin number can be used for both inter-state sales and intra state-sales. Inter state sales mean the sales made from one state to another state whereas intra state sales made within the particular state.

26
Jul
16
Variants of Audit under Companies Act, 2013

The new Companies Act, 2013 claims to bring more transparency in the companies working through introducing more strict provisions. Various types of audits are prescribed such as statutory audit, Internal Audit, Secretarial Audit, and cost audit which try to cover each and every aspect of a corporate transaction. The audit is like a regular check up which keeps a watch over the health of the companies.

Various audits are prescribed under the companies Act, which are as follows:

  1. Statutory Audit
  2. Internal Audit
  3. Secretarial Audit
  4. Cost Audit

Let’s understand these different types of audit one by one:

  1. Statutory Audit:

Companies Act, 2013 is the source of this audit requirement. Statutory audit is done by the statutory auditor who must be chartered accountant holding a valid certificate of practice. The auditor is appointed at the annual general meeting for the period of 5 years. There are certain qualifications and disqualification which must be kept in mind before appointing an auditor. The company can either appoint Individual or firm as its auditor.

  1. Internal Audit:

Before understanding the concept of internal audit, you must understand its applicability because internal audit is applicable to certain types of the company as follows:

  1. Every listed company;
  2. Unlisted public limited companies:-
  3. whose paid up shares capital is INR 50 Crore or more during the preceding financial year;
  4. whose turnover are of INR 200 Crore;
  5. Whose outstanding loans and borrowing from banks or public financial institution are more than INR 100 Crore or more; and
  1. Turnover of INR 200 Crore or more; or
  2. Outstanding loans or borrowings from banks or public financial institutions exceeding 100 Crore.

Internal audit can be done by CA, Cost accountant or any other professional because there are not as such eligibility criteria to appoint an internal auditor.

  1. Secretarial Audit:

The Secretarial audit is first time prescribed under the companies act, 2013. Again this is not applicable to every type of company. Only certain types of the companies are required to conduct Secretarial Audit, which are as follows:

  1. Every listed company;
  2. every public company having a paid-up share capital of INR 50 Crore rupees or more; or 
  • Every public company having a turnover of 250 Crore rupees or more.

Only Company Secretary in practice can do a secretarial audit and submit a secretarial audit report which must be annexed to the Board’s report.

The Secretarial audit is very comprehensive audit which includes almost every law which applicable on the particular company. Therefore, Secretarial Audit is like a comprehensive report on the compliance status of an entity.

  1. Cost Audit:

Cost audit is normally applicable to the companies which are into production process or manufacturing. The Central government can also order to conduct the cost audit for certain types of the company. Applicability of the cost audit is prescribed under the section 148 of the companies act, 2013 which is very detailed one. So, it would be advisable to check the criteria whether cost audit is applicable to your company or not.  Cost Audit is done by the cost accountant in practice.

These are summary of the different audits under the companies act only, which are core area of the law to regulate the corporate sector.

18
Jul
16
Service tax Applicability on Director’s Remuneration

If you are a director then it is definitely a matter of concern and that will definitely haunt the minds of various companies. The logic which was placed by the department is that what the directors are receiving is nothing but an amount in return for their services.

But, the salary of directors is shown under the head of Salary in the Income Tax Return puts a question mark on the above statement. Therefore, from this point of view, remuneration received by the director to manage the day to day affairs in the company is in fact in the capacity of the employee and can not be considered as a salary of the employee.

In furtherance to the discussion, followings points are worth to note:

  1. Only managing director or whole-time director are considered as employee of the company whereas other directors are considered as non-executive directors. Therefore, the payments made to the non-executive directors or payments made as sitting fees are liable to service tax.
  1. The company if receiving services from their non-executive directors is liable to pay the service tax under the reverse charged mechanism.

One thing which also be keeping in mind that service tax which will be levied that will be part of the salary, so the company must observe the provision of section 197 while fixing the maximum limit on the remuneration of the directors.

Before adieu to you, I just want to make a conclusion that service tax liability is only applicable to the amounts paid to the directors other than in lieu of salary and I stated above that non-executive directors are not paid salary as they are not involved in the day to day management of the company. Further, the amount on which TDS is deducted by the company, those amounts will not be subject to the service tax liability.

12
Jul
16
Auditor| Appointment, Qualification and Disqualification

Auditor plays a vital role in the corporate Governance in region of the world. Auditor in the company is like a doctor who checks the financial health of the company.

Auditor appointment in the company is governed by the Companies Act, 2013. Auditor can be an Individual or firm. There is different time period prescribed for their appointment. The Act states that every company must appoint its auditor in the AGM for a period of five years. It means that the auditor shall hole the office from the date conclusion of the AGM till the 6th AGM of the company.

How appointment of the Auditor is made?

If the Auditor is appointed in the company, which is required to set up audit committee, then such committee will consider the qualification and experience of the proposed auditor whereas a company is not required to set up the audit committee then Board of directors shall consider the above mentioned parameter of the proposed auditor.

After considering the qualification and other parameters, the audit committee recommends the auditor appointment to the board of directors and in cases where such a committee is not required to be set up, the board of directors shall recommend the name of proposed auditor to the shareholders in the AGM.

Though the auditor is appointed for the period of 5 years but such appointment is ratified by the shareholder at the AGM

Conditions for auditor appointment:

There are some conditions which have to be checked before confirming the appointment of the auditor, which are as follows:

  1. The proposed auditor shall submit a certificate with respect to the following points:
  2. The individual or firm is eligible for the appointment and is not disqualified under the Act, the chartered Accountant of India;
  3. The proposed appointment shall be as per the term of the Act;
  • The proposed appointment is within the limit a prescribed by the Act;
  1. The company shall also inform the appointment of the auditor to the ROC in form ADT-1 within 15 days of the meeting in which the auditor is appointed.

Who can be appointed as auditor of the company:

Auditing of the company is not a child play. Because of importance of the audit, only a person who is a Chartered Accountant or a  firm of where majority of partners are chartered accountant can be appointed as auditor of the company.

Who can not be appointed as Auditor of the Company:

Following are the category of the persons who are not eligible to be appointed aa s auditor of the company:

  1. A body corporate except LLP;
  2. An officer or employee of the company;
  3. Any partner or employee of officer or employee of company;
  4. A person who himself or his relative or partner is holding any shares in the company or any other company which its holding or subsidiary company;
  5. A person who or whose relative or partner is indebted to the company or its subsidiary or its holding or associate company or a subsidiary of such holding company, in excess of rupees five lakh shall not be eligible for appointment.
  6. A person who is auditor of more than 20 companies.

A person who is in full time employment elsewhere.

29
Jun
16
First Time to Tax Digital Economy|Google Tax

There is another tax in the Town and it goes viral by various names – the ‘Google Tax’ or Amazon Tax or the ‘Facebook Tax’. All these names are giving one hint that this is something relates to e-commerce companies.

This move has been initiated to tax the incomes accrue to e-commerce companies which are operating outside India.

It was introduced in the budget 2016 that if any person or entity makes any payment which exceeds Rs. 1 lakh in a financial year to a non-resident foreign technology company need to withhold tax @ 6% on the gross payment. This non-resident concept means that those companies which do not have any permanent establishment in India.

Let’s take an example; suppose Mr X is running a successful business in Delhi and pay a certain sum of money to a foreign company, say, 5 lakh to advertise. Now, with the advent of this equalisation levy, Mr X have to withhold 6% of the amount i.e. Rs. 30,000 and pay the balance Rs.4,70,000 to the foreign company, and pay the withhold amount to the Government.

Now, it remains to be seen whether the foreign company is ready to bear the loss by accepting the lower margin or hike the prices of its services.

If the latter happens, which is most likely, then it is going to affect the pocket of Indian businessmen very badly.

This is an equalisation charge or levy. This levy is only applicable on those transactions which will be transacted between B2B.

Equalisation charge or levy only on specified Service:

This Google tax or equalisation levy has been charged on Specified services include only online and digital advertising or services available for digital space which includes the followings as well:

  • For storing or distributing digital content.
  • Use or right to use or download online music, movies games etc.
  • Services related to an online transaction.
  • Online news, online search, online maps, or GPS application

If Indian companies don’t deduct this equalisation levy against the payment made and don’t deposit it with the government, then those companies can not show this as business expenditure, which results in higher tax liability. Besides this, there are some other provisions which penalise the deductor in case of non-compliance such as

  • Equalization levy was deducted but not deposited: The penalty is equal to Rs. 1,000 for each day the failure continues.

 

  • Prosecution: If a false statement has been filed, the person may be handcuffed along with a fine.

Willy-nilly, this new tax has to be digested by the Industries in India along with other plethora of taxes residing in India such as service tax, VAT etc.

25
Jun
16
Why Service Tax is so Expensive

Service Tax as the name suggests a tax levied on services by a service provider. In today’s era, service tax hits our pocket so badly which forced us to ponder – are we being tortured in the name of providing services to us, that always force us to think twice before dining out!

Service Tax as we all know service tax is an indirect tax which is paid by end consumer but deposited by the service provider who has valid service tax registration by the government. Let’s understand the brief history of service tax law so as to educate ourselves why it is becoming toll on financial health.

Service Tax first came into the picture in the year of 1994 and at that time which was applicable only to three services. Till 2012, almost 119 services came under the ambit of service tax laws, but this story does not end here. After 2012 the Government changed its approach from “adding services on which service tax levied” To “taxing all services” except few services. These few services list had been called the “Negative list” on which the service tax won’t be charged.   This negative list has been notified by issuing Mega Exemption notification in June 2012.

Effect of Service Tax on Industries:

Though tax consultants or advisors or CAs keep on reiterating that service tax is ultimately paid by the final consumer and even there is no fallacy in the statement, yet its burden is not only being born by the consumer but on service providers as well. A businessman can comprehend the reason very well because services can never be a basic necessity; it is considered to be an extra benefits or facilities in any form. So, whenever there is any notification regarding the increase in a rate of service tax, the news pinches as fiercely to businessman so to the consumers because consumers find the same thing / services costlier and they start cutting their expenditure to suit their penny pockets, and as a result it affects the revenue of industries.

In the Budget 2016, the government made a further addition to the service tax rate by 0.5% and which makes total effective rate is 15% besides other taxes in India.

One last point, to remind you that if you are going to enter into the arena of service tax industries as a service provider then do obtain service tax registration if the value of your taxable services exceeds Rs. 9 lakh because it is mandatory requirement for Service provider.

 

 

 

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