Compliance & Legal
India offers a well-structured tax system for its population. Taxes are the largest source of income for the government. This money is deployed for various purposes and projects for the development of the nation.
Taxes are determined by the Central and State Governments along with local authorities like municipal corporations. The government cannot impose any tax unless it is passed as a law.
Taxes are classified under two categories namely direct and indirect taxes. The largest difference between these taxes is their implementation. Direct taxes are paid by the assessee while indirect taxes are levied on goods and services.
Direct Taxes
Direct taxes are levied on individuals and corporate entities and cannot be transferred to others. These include income tax, wealth tax, and gift tax. As per the Income Tax (IT) Act, 1961 every assessee whose total income exceeds the maximum exempt limit is liable to pay this tax. The tax structure and rates are annually prescribed by the Union Budget. This tax is imposed during each assessment year, which commences on 1st April and ends on 31st March. The total income is calculated from various heads such as business and profession, house property, salaries, capital gains, and other sources. The assesses are classified as individuals, Hindu Undivided Family (HUF), association of persons (AOP), body of individuals (BOI), company, firm, local authority, and artificial judiciary not falling in any other category.
Income Tax
Income Tax services for residents and non residents:
Levy of income tax in India is dependent on the residential status of a taxpayer. Individuals who qualify as a resident in India must pay tax on their global income in India i.e. income earned in India and abroad. Whereas, those who qualify as Non-residents need to pay taxes only on their Indian income. The residential status has to be determined separately for every financial year for which income and taxes are computed.
Defining Income: Income has been very widely defined in the Income-tax Act. In simple words, income includes salary, pension, rental income, profits out of any business or profession, any profit made out of the sale of any specified asset, interest income, dividends, royalty income etc.
The law classifies income under 5 major heads as mentioned below:
- Salary Income
- House Property income
- Profits and Gains from Business or Profession
- Capital Gains
- Income from other Sources
Indirect Taxes
As a significant step towards the reform of indirect taxation in India, Government has introduced the GST & TDS Etc...
Goods & Services Tax (GST)
Goods & Services Tax (GST) is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India and will subsume many indirect taxes levied by the Central and State Governments. GST will be implemented through Central GST (CGST), Integrated GST (IGST) and State GST (SGST).
Four laws (IGST, CGST, UTGST & GST (Compensation to the States), Act) have received President assent. All the States & UT expected to pass State GST Act, by end of May 2017. GST law is expected to take effect from July 1, 2017.
It is mandatory to register GST when annual turnover exceeds ₹20/10 lakhs or supply goods and services inter-state or through e-commerce platform. The Tax rates of GST are varying from 0% to 28% depends on the type of goods & nature of services you are selling. Every GST registrant requires filing monthly/quarterly returns and one annual return. GST registration will help you for getting your business recognized as a legal registrant but also opens a number of opportunities for your business. You will become more competitive in comparison to your unregistered competitors since you will carry valid tax registration.
Features:
- Registration, modification or amendment under GST Act
- Filing GST returns on monthly & Quaterly Basis
- Obtaining Letter of Undertaking (LUT) for export of services or goods
- Consultation and advise on GST matters
- Assisting in obtaining GST Refunds.
Tax Deduct at Source (TDS)
Tax Deduct at Source (TDS) is a way of collecting indirect tax by The Government of India, as per the Income Tax Act, 1961. TDS that comes under IRS (Indian Revenue Service) is directly managed by CBDT (The Central Board of Direct taxes). TDS is collected in order to keep the revenue source stable for the govt.
TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.
The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deductee. It is the deductor’s responsibility to deduct TDS before making the payment and deposit the same with the government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is linked to the PAN of the deductor and deducted. However, individuals are not required to deduct TDS when they make rent payments or pay fees to professionals like lawyers and doctors.
TDS is one kind of advance tax. It is tax that is to be deposited with the government periodically and the onus of the doing the same on time lies with the deductor. For the deductee, the deducted TDS can be claimed in the form of a tax refund after they file their ITR.
TDS is deducted on the following types of payments:
- Salaries
- Interest payments by banks
- Commission payments
- Rent payments
- Consultation fees
- Professional fees