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111 Tax Tips for Aam and Khaas Aadmi !!!
Wednesday June 17, 2015 6:41 PM, CA Manzoorhasan Shaikh, ummid.com

Tax tips

Following points have been summarized in a simple way so that a lay man i.e. Aaam Adami as well as Khaas Aadmi should know what are various taxes which affect them in day to day life and how tax planning is important to save tax & minimize any tax litigation risk. So read & spread as much as you can!!!

Income Tax

  1. Detailed information of Income Tax is available on www.incometaxindia.gov.in
  2. As per Income Tax Act, Income is taxable under five heads- Salary, House
  3. Property, Business or Profession, Capital Gain and Other Sources.
  4. Salaried person must obtain Form 16 from his Employer Every Year by 31st May next year.
  5. Income Tax Return should be filed by considering Form 16 and other Income.
  6. Transport Allowance is exempt up to Rs. 1,600 per month. Rs. 3200 per month for physically handicapped.
  7. Profession Tax paid by salaried employee and by businessmen are allowed as deduction
  8. Medical Expenses of Rs. 15,000/- and Leave Travel Allowance of Rs. 20,000/- are not taxable if proper bills provided.
  9. 30% Standard deduction is available on Income from House Property.
  10. Income to be considered as deemed let out on second House property.
  11. For self-occupied house property, deduction of Interest on Housing Loan is allowed up to Rs. 200,000/- and for other house property actual expenditure of Interest on Housing Loan is allowed without any limit.
  12. Repayment of Principal amount of Housing Loan is deductible u/s 80C up to Rs. 150,000/- alongwith other eligible investments.
  13. Tax Audit is compulsory if sales turnover exceeds Rs. 1 crore in case of business. Penalty is higher of Rs. 1,50,000 or 0.5% of Turnover if audit not done.
  14. Tax Audit is compulsory if the Gross Receipts of Professionals exceeds Rs.25 lakhs. Penalty is higher of Rs. 1,50,000 or 0.5% of Turnover if audit not done.
  15. If sales turnover is below Rs. 1 crore, then net profit of 8% or higher is to be taken as business income otherwise tax audit is required if net profit is shown below 8%.
  16. The Due Date for Tax Audit and income Tax Return is 30th September for non-salaried & pension earners.
  17. The Due Date for Transfer Pricing Audit of International & Domestic Transactions with related parties is 30th November. Penalty for not doing audit is 2% of all international transactions & domestic transactions liable for audit.
  18. Assessee other than Company and those eligible for Tax Audit are required to file Income Tax Return before 31st of July. Extended date is 31st Aug for F.Y. 14-15.
  19. Accurate Stock Valuation should be done on 31st of March.
  20. Cash payment should not be made to a person in single day exceeding Rs.20, 000.
  21. Cash Payment limit for Transporters is Rs. 35,000/-.
  22. Loans, deposits and Immovable Properties transactions should not be carried out above Rs. 20,000 in cash.
  23. Business loss can be carried forward to Next 8 Years.
  24. Tax Audit applicable assesses should deduct TDS on particular transactions.
  25. TDS should be made on the date of Credit or Payment basis of whichever is earlier. Similarly TCS should be collected on certain revenues.
  26. TDS / TCS payment should be made on or before 7th day of Next Month.
  27. TDS / TCS Returns are to be filed Quarterly.
  28. TDS / TCS Returns can be revised any number of times.
  29. TDS / TCS Certificates to be issued on Quarterly basis. Failure to do so attracts penalty of Rs. 100 per day of default.
  30. If TDS is not deducted then deduction of 30% of Expenditure is not allowed.
  31. Late filling of TDS return attracts late filing fees of Rs. 200 per day.
  32. If estimated tax liability is more than Rs. 10,000/-, Advance Tax is to be paid on Quarterly basis by Corporates on or before 15th June, 15th September, 15th December & 15th March of the year. Non-corporates should pay on or before 15th September, 15th December & 15th March of the year.
  33. Long Term Capital Gain will arise if transfer of specified Capital Assets is made after 3 years.
  34. Generally Long Term Capital Gains is taxable @ 20%
  35. STT paid Long Term Capital Gain on Shares etc. is exempt from Tax.
  36. Short Term Capital Gain is Taxable @ 15% if STT is paid.
  37. Capital Gain on Immovable Properties is chargeable at Stamp Duty Value or Selling Price whichever is higher.
  38. TDS is required to be deducted by Purchaser of Immovable Property of more than Rs. 50 Lakhs.
  39. Dividend received from domestic company is exempt from Tax.
  40. Agricultural Income is exempt from Tax.
  41. Gifts received from stranger / not from blood relative of an Amount exceeding Rs. 50,000 is taxable.
  42. Income Tax is not chargeable on Gifts received at the time of Marriage, Will, and in case of Succession and from specified relatives.
  43. Maximum deduction limit u/s 80C, 80CCC and 80 CCD is Rs. 1,50,000.
  44. Deduction of Medical Insurance Premium is available up to Rs. 25,000.
  45. Deduction of Medical Insurance Premium paid for Parents above 60 years is available up to Rs. 30,000.
  46. Deduction limit of Interest earned on Saving Account is up to Rs.10, 000.
  47. Income earned by a Minor child is clubbed in the hands of Parents having higher income.
  48. Every Taxpayer should verify his Form 26AS for understanding TDS deducted by various payers.
  49. Form 26AS provides the Information regarding the TDS, Advance Tax paid, Self Assessment Tax Paid, Details of Refund and TDS Return defaults.
  50. Notice may be sent to the Taxpayer if the Income mentioned in Form 26AS and the Income Tax Return filed is having difference.
  51. Basic Exemption Limit for individuals for F. Y. 2015-16 is Rs. 2,50,000.
  52. Basic Exemption Limit for Senior Citizen i.e. above 60 years age is Rs. 3,00,000.
  53. Basic Exemption Limit for Super Senior Citizen i.e. above 80 years age is Rs. 5,00,000.
  54. 12% Surcharge on Tax is applicable if Taxable Income Exceeds Rs. 1Crore.
  55. Income Tax Return should be filed if Income exceeds Basic Exemption Limit.
  56. 30% Tax is applicable on Income of Partnership Firm, Company, LLP etc.
  57. For Companies – Minimum Alternate Tax (MAT) and for other taxpayers – Alternate Minimum Tax (AMT) rate is 18.5%.
  58. MAT Credit is available for next 10 years.
    58) Details of all Bank Accounts have to be given in Income Tax return alongwith IFSC Code etc.
  59. Passport number is required to be given in Income Tax return.
  60. Detail of Fixed Assets held in Foreign Country is required to be given in Income Tax return.
  61. If taxable income of Individual is less than Rs. 5 Lakhs then relief of Rs. 2,000/- is available in Tax.
  62. Aadhar Card No. is required to be mentioned in Income Tax return.
  63. E-filling of return is compulsory if income exceeds Rs. 5 lakhs.
  64. In Income Tax, E-filling of return can be done for Previous 2 Years only.
  65. Income Tax Acknowledgement is not required to be sent to Banglore CPC if authenticated by Aadhar Card.
  66. PAN Card is essential for Taxpayer and it should not be used as Id Proof.
  67. From FY 2014-15 Depreciation in books is to be calculated as per New Companies Act.
  68. Domestic Transfer Pricing is applicable on transaction exceeding an Amount of Rs. 20 Crores with related parties.

Now let’s understand something about Maharashtra State VAT:

  1. VAT registration is compulsory if Gross Turnover exceeds Rs. 10 lakhs.
  2. Voluntary VAT Registration can be taken with deposit of Rs. 25,000/-
  3. Online Registration has started. No need to visit VAT Department office.
  4. VAT rate is 1%, 5%, 12.5%, and 20% and CST rate is 2% on respective commodities if “C” form is given.
  5. Return Periodicity should be verified every year from the Departments site www.mahavat.gov.in
  6. Periodicities of Returns are Monthly, Quarterly and Half yearly.
  7. Vat payment and return should be filed within 21st of next Quarter, Month or Half Year. 10 days grace period is available if tax payment is made on or before due date i.e. 21st Day
  8. Late payment of VAT will attract Interest @ 1.25% p.m.
  9. A late fee of Rs. 1000 is to be paid if late return is filed.
  10. Late fee of Rs. 5000 is charged if Return filed after 30 days.
  11. Full set off can be taken on Plant and Machinery and Electrical Fitting.
  12. 3% of retention of set-off is to be taken on Office Equipment’s and Computer. Only 97% of set-off is available on these assets.
  13. Setoff of Building and passenger car is not available.
  14. Setoff of intangible rights is available if resold within 6 months of purchase.
  15. Annexure J1 mentioning TIN of sellers has to be filed with Vat return.
  16. Annexure J2 mentioning TIN of buyers has to be filed with Vat return.
  17. Vat Setoff cannot be carried forward to next year if it exceeds Rs. 5 lakhs.
  18. VAT Audit is compulsory if Gross Turnover exceeds Rs. 1 Crore.
  19. Due date for filling VAT Audit report is 15th January.
  20. Dealer can verify the details of return filed and Registration from the “Dealer information System.”
  21. Mis-match report of Annexure J1 and J2 should be verified and should be reconciled.
  22. Composition Scheme is available for Retailers having gross turnover less than Rs. 50 Lakhs.
  23. WCT TDS is to be deducted if Works Contract exceeds Rs. 5 lakhs.
    92) 5% of WCT TDS is to be deducted for non-registered dealers and 2% for registered dealers.
  24. WCT TDS deductor has to file return before 30th June after end of financial year.
  25. WCT TDS Certificates have to be issued within 30 days of deduction.
  26. Declaration forms should be given for reducing tax rate in case of goods purchasing from outside Maharashtra State.

Let’s talk something about Profession Tax in Maharashtra now:

  1. Profession Tax is required to be paid for Employer and Employee.
  2. Every Businessmen and Professional assesse has to pay his Professional Tax before 30th June.
  3. Employer has to pay Profession Tax of employees by deducting from the salary.
  4. If Professional Tax Liability exceeds Rs. 50,000 then monthly Return have to be filed otherwise annually.
  5. A late fee of Rs. 1,000 is to be paid if Profession Tax return in not filed before due date.
  6. Profession Tax is not Applicable to Men if salary does not exceed Rs. 7, 500
  7. Profession Tax is not Applicable to Women if salary does not exceed Rs. 10,000.
  8. Profession Tax is available as deduction from taxable income. So reduces Income Tax as well.

Finally our favorite tax which is Service Tax:

  1. Service Tax is applicable if Taxable Service Provided exceeds Rs. 10 lakhs.
  2. 14% of Service Tax is applicable w.e.f 1st June, 2015.
  3. Company Assesse has to pay Service Tax monthly. Individual, Partnership Firm, LLP assesse has to pay Service Tax Quarterly.
  4. Service Tax is payable on the 6th after end of Month or Quarter. Electronic payment is mandatory.
  5. Interest is payable @ 18% annually if Service Tax is not paid before the due date.
  6. Interest @ 30% annually is to be paid if service Tax is not paid for a Year.
  7. Service Tax Return should be filed Half Yearly before 25th October and 25th April.
  8. If service Tax is not paid of Rs. 50 lakhs then there is imprisonment.

[CA Manzoorhasan Shaikh is a Chartered Accountant practicing in Mumbai & Nashik. He can be contacted at ca.manzurhasan@gmail.com, or 9920792030]

 


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