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Concept of TCS under GST Law

1. What is TCS under GST? Tax Collected at Source (TCS) under GST means the tax collected by an e-commerce operator from the consideration received by it on behalf of the supplier of goods, or services who makes supplies through operator’s online platform. TCS will be charged as a percentage on the net taxable supplies. 2. Who is liable to collect TCS under GST? Certain operators who own, operate and manage e-commerce platforms are liable to collect TCS. TCS applies only if the operators collect the consideration from the customers on behalf of vendors or suppliers. In other words, when the e-commerce operators pay the consideration collected to the vendors they have to deduct an amount as TCS and pay the net amount. However, the e-commerce operator who are notified for the purpose of Section 9(5) of CGST Act are exempt from the provision of TCS. They are: a. Hotel accommodation/clubs (unregistered suppliers) b. Transportation of passengers – radio taxi, motor cab or motorcycle c. Housekeeping services like plumbing, carpentry etc. (unregistered suppliers) 3. When will the liability of collecting TCS arise? TCS will be collected by e-commerce operators while making a payment to the vendor. This payment will be the consideration collected on the vendor’s behalf for the supplies made by him via the online portal. This tax will be collected on the net value of taxable supplies. 4. What is the rate applicable under TCS? The dealers or traders supplying goods and/or services through e-commerce operators will receive payment after deduction of TCS @ 1%. The rate is notified by the CBIC in Notification no. 52/2018 under CGST Act and 02/2018 under IGST Act. This means for an intra-state supply TCS at 1% will be collected, i.e 0.5 % under CGST and 0.5% under SGST. Similarly, for a transaction between the states, the TCS rate will be 1%, i.e under the IGST Act. 5. Registration requirements under TCS provisions of GST The e-commerce operator liable to collect TCS have to compulsorily register under GST and there is no threshold limit exemption for it. Also, the sellers supplying goods through the online portal of e-commerce players are also mandatorily required to get registered under GST except for a few exceptions. Registration conditions are as follows:   a. Every e-commerce operator who is required to collect TCS must mandatorily register under GST b. Every person who supplies through an e-commerce operator, except those who make supplies notified under section 9 (5) of CGST Act. Section 9 (5) mentions the following supplies – Transporting passengers by a radio-taxi and motorcycle; OR – Providing accommodation in hotels, guest houses, for residential or lodging purposes (unregistered suppliers); OR – Services of house-keeping, such as plumber, carpenter etc( unregistered suppliers). In all three cases, the e-commerce operator shall pay GST, meet the compliances. Therefore, suppliers don’t have to register if they provide these services listed in 9 (5), provided they do not cross the Rs 20 Lakhs threshold for registration. c. Also, note that suppliers of services making a supply through an e-commerce platform are exempt from registration if their aggregate turnover is less than Rs 20 Lakhs (assuming they do not make inter-state supplies). d. Suppliers of goods supplying through an e-commerce platform are not exempt from registration. e. An e-commerce company must register itself in GST in every state it supplies goods or services to. 6. Due date for depositing TCS TCS will be deducted during the month in which the supply is made. It will be deposited within 10 days from the end of the month of supply to the credit of the government. Payment of the tax collected will be made in the following manner: a. IGST & CGST will be paid to the central government b. SGST to respective state governments 7. How to compute taxable value of the supplies for TCS? The value for the collection of the tax will be the ‘Net Value Of Taxable Supplies.’ This net taxable value will be calculated as under : The total value of taxable supplies of goods and/or services                                                                  xxx Less: Taxable supplies returned to the suppliers through the e-commerce operator                       (xxx) =Net value of Taxable Supplies                                                                                                                      xxx For eg – XYZ Ltd, a registered supplier is supplying goods through an e-commerce operator. It has made supplies of Rs. 55,00,000 in the month of Sep 2018. The goods returned were worth Rs. 5,00,000 to XYZ Ltd. during the month of Sep 2018. Here, the net value of taxable supplies for TCS collection will be Rs. 50,00,000 and TCS @ 1%, i.e Rs. 50,000 will be deducted by the e-commerce operator. Hence, the final payment to be made to the supplier is Rs 49,50,000. 8. Which form can one use to file TCS returns? E-commerce operators have to file GSTR-8 by 10th of the next month in which the tax was collected. This return will only be filed once the tax collected has been deposited to the respective credit of the government. For instance, the due date for GSTR-8 for September 2018 is on the 10th of October 2018. Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as legal/official advice on any matter. All the instructions, references, content, or documents are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or

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Understanding the Meaning And Basic Concepts Of Money Laundering

Let us start this article by understanding some basic terminologies. What is illegal money? By the term illegal money, we can understand the money which has been obtained from doing illegal activities ( proceeds of crime ) like Murder, Extortion, bribery, Drug trafficking, Kidnapping, etc. The process of converting such proceeds of crime into legal and white money is known as money laundering. Illegal money can also be referred to as dirty money which can easily be clean by applying various tactics of money laundering. In India, there is a law made for preventing such activities of money laundering known as Prevention of money laundering Act, 2002. This law is enforced by Enforcement Directorate (ED) in India. Money laundering has an adverse effect on the economy. It can erode the nation’s wealth by fluctuating the demand and supply of cash, making interest and exchange rate more volatile. Money laundering involves three distinct processes, namely: 1). Placement: This is the very first stage in which the proceeds of crime is injected into the formal financial system. 2). Layering: In the second stage, the money which is injected in the financial system is spread or moved over the various transactions in different accounts and different countries, thereby it becomes difficult to trace the source and origin of money. 3). Integration: In the last stage, money enters the financial system in such a way that original association with the crime is sought to be obliterated so that the money can then be used by the offender or person receiving as clean money. There are various methods of laundering illegal money; 1. Creating Shell and Bogus companies. 2. Investing in Real estate i.e. Buying land for money and then selling it making the profits legal by paying tax on such profit. 3. Cash smuggling, transferring money to the Swiss bank. 4. Hawala transactions. If left, unchecked money laundering can destroy the nation’s economy by changing the demand and supply of cash. It also affects the interest rate, exchange rates by making it volatile. Article Written By- Pushp Kumar Sahu Want to get your own Article Published? Do send us your article at taxeffectsofficial@gmail.com or alternatively send your story to our Facebook Inbox facebook.com/taxeffects. Share It . .

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GST Appeal Process and Various Levels of Appellate Authorities

In case of any dispute with respect to tax liability, penalty or an order passed by a GST Officer, taxpayers registered under GST have the option to appeal. In this article, we look at GST appeal process and different types of appellate authorities in detail. 1. GST Appellate Authority Appeal By Taxpayers: Appeals under GST is to be filed by the taxpayer within a period of 3 months from the date of communication of order by the GST Officer. While filing an appeal, the taxpayer would be required to pay the GST tax, interest, fine and penalty as accepted  AND deposit a minimum of 10% of the remaining amount in a tax dispute. Once the appeal is filed, an acknowledgment indicating the appeal number will be issued in Form GST APL 02. Appeal By Department: On the same footage as above, if the GST Commissioner is not satisfied with the legality and reasoning of the order passed by adjudicating authority (i.e GST Officers), they GST Commissioner can suo-moto can file an application before the Appellate Authority. This can be done within six months from the date of communication of decision or order in Form APL GST 03 electronically. A maximum of 3 adjournments will be granted to each party on showing reasonable cause to be recorded in writing. 2. Revisional Authority Revisional authority has the powers to stay the operation of any decision or order if he considers that such a decision or order passed by any officer subordinate to him is erroneous and prejudicial to the interest of the revenue. After giving the concerned person an opportunity of being heard and after making a further necessary inquiry, the Revisional Authority can pass an order within 3 years of passing an order, which was appealed to be enhanced, modified or annulled. Revisional authority will not have the power to pass an order if: – Period of six months is not expired; or – Period of three years has been expired; or – Revisionary order has been already passed. The order passed by Revisional Authority would supersede (nullify) the order passed by Appellate Authority or Adjudicating Authority (i.e. GST Officer). 3. GST Appellate Tribunal (GST-AT) Appeal by Taxpayer: An appeal to the Appellate Tribunal can be filed online, within 3 months of passing an order. Appeal to Appellate Tribunal must be filed in Form GST APL 05 along with a fee of Rs.10,000 for every 1 lakh of tax amount in dispute. Appellate tribunals may refuse admission of appeal, wherein the disputed amount of tax, interest, penalty, etc. not exceed Rs.50,000. While filing an appeal, the taxpayer would be required to pay the GST tax, interest, fine and penalty as accepted  AND deposit a minimum of 20% of the remaining amount in a tax dispute. Appeal by Department: If the GST Commissioner is not satisfied with the legality and reasoning of the order passed by Appellate Authority Or Revisional Authority, then GST Commissioner can suo-moto can file an application before the GST-AT within six months from the date of communication of such decision or order. The Appellate Tribunal has powers to confirm, modify or annul a decision or order. The Appellate Tribunal also has the power to remand the case back to the appellate authority or the Revisional Authority or the original adjudicating authority. 4. Appeal to Courts Taxpayers have the rights to appeal an order with the Courts. High Court may admit an appeal if it is satisfied that the case involves a substantial question of law. However, no appeal can be filed with the High Court if an order is passed by National Bench or Regional Benches. To file an appeal before the High Court, an appeal memorandum must be filed, precisely stating the substantial question of law involved, within 180 days from the date of receipt of order appealed against accompanied by prescribed fee. Taxpayers also have the rights to appeal with the Supreme Court in case of any judgement or order passed by National Bench, Regional Benches of Appellate Tribunal or High Court. Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as legal/official advice on any matter. All the instructions, references, content, or documents are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information contained in this article or for any conclusion of the information. Share It . .

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E-Assessment under the Newly Introduced Faceless Scrutiny System

What is the e-assessment scheme for faceless scrutiny of income tax : 1. Under the scheme, the scrutiny notice will be issued to the individual under section 143(2) if he has under-reported his income or over-stated losses. 2. The individual will have to reply within 15 days from the date of receipt of the notice. The notice issued will be sent electronically on the taxpayer’s account on the e-fling website. It will also be sent to the registered email address of the taxpayer or on the mobile app of the income tax department which has the registered mobile number. 3. The individual will be required to respond to the notice or order received through the registered account only. The response shall be considered successfully submitted once an individual has received the acknowledgment from the National e-assessment Centre. 4. Individual taxpayers would not be required to appear either personally or through an authorised representative in relation to the proceedings related to the scheme before income tax authority, National e-assessment center or Regional e-assessment Centre or any unit set up under the scheme. 5. All the communication between the department and the taxpayer would be done electronically. Even all the internal communication within the income tax department will be electronic. 6. The e-assessment scheme will be fully automated. Under the scheme, the National e-assessment center can assign the scrutiny case to any regional e-assessment center through an automated allocation system. 7. If the regional assessment required assistance from the verification unit or technical assistance from the technical unit, then such requests will be processed through the automated allocation system. 8. If the regional assessment unit wants further information or documents from the taxpayer, then such a request first has to be made to the National e-assessment center. 9. The regional assessment unit will make a draft assessment order and send it to the National e-assessment Centre. 10. The National e-assessment Centre will examine the draft received in accordance with the risk management strategy specified by the CBDT. Share It . .

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Precautions to be taken while entering into a Real Estate Transaction

In this article, we will be discussing the precautions to take care while entering into a real estate transaction. Let us understand this article in the form of a short story; There are two brothers namely Pushp Kumar Sahu and Uday Kumar Sahu who have entered into a transaction of immovable property worth 48 lakhs INR in cash (value as per Stamp valuation authority 60 lakhs INR). But being not aware of the income tax provisions, they made a transaction violating the various provisions of the income tax act, 1961. Both brothers jointly sold the said property and thereafter received the whole consideration in cash and the same is deposited in the bank account. The first violation of income tax provision which is made by the Sahu brothers is of Section 269ST, as they have received the entire sale consideration in cash which exceeds 2,00,000/- INR. Therefore the penalty will be levied on them under section 271DA at the rate of 100% of the amount received in cash. The second violation made by them was; they have sold the said property at a rate less than the rate as determined by stamp valuation authority [ section 50C]. As per section 50C, where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, is less than the value adopted or assessed by an authority of a state government ( stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted for the purposes of section 48, be deemed to be the full value of consideration received as a result of transfer. The last mistake made by Sahu brothers was that they have deposited the entire cash received from such sale in a bank account. As they have deposited the cash exceeding 10 lakhs INR in a single saving account. Because of such bulk deposit, bank official filed an annual information return u/s 285BA to the income tax department. Due to such filing of AIR, the transaction has been easily tracked by the department and in order to take such transaction under income tax assessment, the department issues a show-cause notice to assessee that why this transaction has not been reflected in their IT returns. Originally this income has been evaded by the assessee brothers, therefore A.O. has full access to issue income escaping notice to both assessees u/s 148 and completes the assessment as provided u/s 147. Moreover, A.O. can issue a notice under section 271DA for violating provisions of 269ST for levying 100% penalty or can issue a notice under section 271(1)(c) for concealment of income. Happy readings! Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as legal/official advice on any matter. All the instructions, references, content, or documents are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information contained in this article or for any conclusion of the information. Share It . .

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How to Report Pension Income in ITR?

The income tax return (ITR) forms released by the government for the financial year (FY) 2018-2019 mandates detailed reporting. For instance, as compared to earlier years, when only aggregate amounts were to be reported under allowances and perquisites, for FY 2018-2019, details of different allowances, as well as perquisites earned during the FY, are required to be reported separately. Given the detailed reporting requirement, pensioners need to keep the following points in mind while filing their tax return: 1. Pension received – salary income or income from other sources? Pension received by an individual from his former employer is taxable as salary income and therefore will be reported under the head ‘Income from Salaries’ in the ITR. On the other hand, the pension received by a family member of the deceased employee is taxable under the head ‘Income from other sources.’ Pension received can either be uncommuted or commuted pension. Uncommuted pension refers to periodic payments received by the individual while commuted pension means a lump sum payment received by the individual upfront in lieu of the periodic pension. As per the provisions of the Income-tax Act, 1961 (Act), the uncommuted pension is fully taxable. On the other hand, there is tax exemption which can be availed in respect of the commuted pension to the extent of the limits prescribed and subject to specified conditions. LIC/any other approved fund may pay the pension to an individual from the funds contributed by the employer. Commuted pension received from such fund is exempt whereas uncommuted pension from such fund is taxable under the head ‘Income from Salaries’. Taxability in case of income from other sources: If the monthly pension is received by a family member of the deceased employee then it is treated as ‘income from other sources’, 1/3rd of such pension is tax-free subject to a maximum of Rs 15,000 per annum and the remaining, if any, is taxable as income from other sources. Separately, the employee may also contribute from his/her own funds to the LIC/any other approved fund for the purpose of receiving a pension at a later stage. Commuted pension received from such fund is exempt to the conditions specified therein, whereas uncommuted pension from such fund is taxable under ‘Income from other sources.’ 2. Which ITR is to be used in filing a tax return? ITR 1 is to be used for individuals who qualify to be an Ordinary Resident in India, who have net taxable income of Rs 50 lakh or less; and who have income from salary or one house property or income from other sources and their agriculture income does not exceed Rs 5,000. Further, as per the recently notified changes, an individual who is a director in a company or who holds unlisted shares, cannot use ITR 1. If an individual does not qualify to file ITR 1 as per above-mentioned conditions and does not have any business income, then he/she should use ITR 2. Further, if a pensioner has income from business or profession as well, then ITR 3 or ITR 4 will have to be used. The reporting of pension income would depend upon the ITR forms to be used for filing the tax return, which in turn would be determined based on the nature and amount of the other type of income earned by the individual. Generally, ITR 1 and ITR 2 are commonly used for pensioners. 3. How to report pension income in the tax return form? Individuals who are receiving a pension:  Where the individual receives pension income from the fund to which contributions are made by the employer, in case of ITR 2, under the salary schedule, the individual has to report the name, address and tax deduction and collection account number (TAN) (mandatory only if tax is withheld on pension) of the employer/LIC/any other fund. Also, the individual will have to select ‘pensioners’ as a category in the field for the nature of employment in the salary schedule. Commuted pension beyond the limits exempt under the Act and the entire uncommuted pension should be reported as “Commuted pension” or “Annuity or pension” under ‘salary under section 17(1)’ of the Act as taxable. The commuted pension which is exempt from the tax should be entered in the field “Commuted value of pension received under section 10(10AA)” selected from the dropdown available under “Allowances to the extent exempt under section 10”. The reporting of commuted and uncommuted pension in ITR 1 remains the same as ITR 2 except, while reporting the pension income, there is no requirement for the individual to enter name, address of the employer, also this income is to be directly reported under section 17(1) without selecting “Commuted pension” or “Annuity or pension” as applicable under ITR 2. Where the individual receives the pension from LIC/any other approved fund out of the contributions made by the individual from his own funds, he/she needs to report uncommuted pension under section “Any other income” of the schedule “income from other sources”. Commuted pension, if any, will have to be reported under the schedule “Exempt income” as “any other” in ITR 1 and as “any other” under the point “Other exempt income” in ITR 2. Family members who are earning pension will have to report the same under ‘Any other income earned’ in the other sources schedule in ITR 2. For ITR 1, the individual will have to select ‘Family pension’ from the drop-down under Income from other sources. Points to note: In view of the above points, it is important to determine the head under which the pension is taxable and the ITR form applicable to the individual. Apart from this, the following are some other points which should be looked into by pensioners at the time of filing their tax returns: If the employer has issued Form 16 for pension paid, then the individual should ensure that the details of pension received and reported in the tax return matches with such Form 16. If there

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What is Notified Jurisdictional Area in the Income Tax Act?

Notified Jurisdictional Area Section 94A In this article, we will understand why section 94A was introduced and what was the need for invoking such provisions under the Income Tax Act,1961. Section 94A was introduced by the Finance Act, 2011 by the Central Government in order to notify certain jurisdictions from which India has no such agreements or arrangements of Sharing/ Exchanging Tax information of the assessee. Central Government has been trying since long to bring back the black money deposited by Indians in Foreign Bank Accounts. The main reason for introducing this section is to Curb the circulation of unaccounted money and various international transactions that take place between Tax Havens and other tax-oriented countries. And where the Tax information exchange system does not exist. This section empowers the Central Government to Blacklist the countries where such an effective agreement of sharing tax information does not exist. This provision acts as a countermeasure to discourage the transactions between India and Notified Jurisdicted Areas. Till date, only Cyprus has been notified as NJA by Central Government which was rescinded in the year 2016 Vide  Notification No. 114 dated 14/12/2016 and Notification No. 119 dated 16/12/2016. Therefore in the current regime, there is no such NJA exists. Let us better under this provision in the form of an example: There were two brothers named Pushp Kumar Sahu resident of India and another one is Uday Kumar Sahu who is a resident of Country X which is notified by Indian Government as Notified Jurisdicted Area. Mr. Uday, and Mr. Pushp has been entered into a transaction in the nature of lending or borrowing of money, then after entering into such transaction both the parties will be deemed to be an “Associated Enterprises”( within the meaning of section 92A) by virtue of section 94A(2). There would be a liability in the hands of Mr. Pushp Kumar Sahu in respect of any sum received or credited from Mr. Uday in any previous year, then Mr. Pushp has to offer the explanation about the source of the said sum. If he fails to explain the same, then such sum credited in his account would be deemed to be his income and accordingly, tax will be charged on such income. Under the same situation, Mr. Pushp has also made payment to Mr. Uday ( Resident of NJA) then there is a liability of Mr. Pushp to deduct tax on such sum credited to the account of Mr. Uday at the highest of the following rates, namely; 1). At the rate or rates in force; 2). At the rate specified in the relevant provisions of this act; 3). At the rate of 30%. Happy Readings! Author- Pushp Kumar Sahu Article at Saaj & Co., Bhopal M. No. 7694905887. Share It . .

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Best tax saving instruments under section 80C for AY 2023-24

Most of you must have heard about the various tax-saving instruments through which you can save a lot of taxes and at the same time save yourself a good amount for your future. When it comes to tax saving instruments, section 80C of the income tax act, 1961 is the biggest and most important section under which we could get a chance to invest in multiple modes and consequently save taxes. In this post, we are specifically going to discuss the major investment mentioned under section 80C through which you could help yourself to save taxes in the next assessment year 2023-24. The major modes mentioned under section 80C are as follows: (1). Life Insurance Premium payments: Life Insurance Plan is one of the most important investment plans in India. It ensures that one’s family is financially balanced in the case of an event of death. The premium paid towards the purchase of a life insurance policy qualifies for deduction under section 80C up to Rs 1.5 Lakhs. Also, as per section 10(10D), income on the maturity of the policy is tax-free. The income is tax-free if the premium paid is not more than 10% of the sum assured.In a case where the money goes to the nominee of the person insured, the same remains tax-free in the hands of the nominee. Furthermore, the taxpayer can claim 20% of a tax deduction on the premium paid, if the policy is purchased on or before 31st March 2012. The policy should be in Taxpayer’s own name or in the name of their spouse or child. (2). Equity Linked Saving Scheme (ELSS)- ELSS are mutual fund investment schemes that invest a large percentage of their portfolio in equity. The fund has a mandatory lock-in period of 3 years which is the shortest among all investment projects. Both Lumpsum & amount invested through a systematic investment plan (SIP) qualify for the deduction. Since ELSS funds invest a large amount in equity, there is always some inherent risk. ELSS funds provide the dual benefits of capital appreciation & tax saving. It is also one of the most popular tax-saving investments among investors. They invest a minimum of 60% of their portfolio in equity & equity-linked instruments. (3). Public Provident Fund (PPF)– PPF has always been a popular tax-saving scheme amongst taxpayers. PPF Falls under the category of exempt-exempt-exempt status. The maximum amount eligible for deduction is Rs 1.5 lakhs. Since PPF falls under the exempt category, the interest & maturity amount are exempt from tax. PPF account comes with a lock-in period of 15 years & it allows investors to either withdraw the proceeds from the PPF account at the end of maturity or continue for another 5 years. (4). Sukanya Samriddhi Yojana (SSY)- SSY is launched by the government in 2015 as a part of the Beti Bachao Beti Padhao Campaign, especially for girls’ children.SSY comes with a lock-in period of 21 years & will mature after the expiry of 21 years. A minimum amount of Rs 250 is required to be made every year for 15 Years.Failure to the minimum amount in a year will lead to the disconnection of the account. To Reactivate the account, you need to pay a penalty of Rs 50 along with an original deposit of Rs 250. The eligibility criteria to open an SSY account for tax saving option are:- – Only girl children can claim the benefit of this scheme. – Investor must submit age proof of the daughter. – The girl cannot be more than 10 years of age. A grace period of 1 year is provided. (5). National Saving Certificate (NSC)- NSC is a fixed-income investment scheme that aims at small & middle-income investors to invest & earned returns. It is considered a low-risk investment & as secure as the provident fund. Apart from providing the benefit of tax exemption, it provides the investor with complete capital protection & guaranteed interest. Some of the features of NSC, tax saving option are:- – You can claim a tax benefit up to Rs 1.5L under section 80C. – You can invest as low as Rs 1,000 (or multiples of Rs 100). – On maturity, the entire amount received by the investor will be taxable in his hands. – The Interest earned or accrued every year on NSC is taxable every year in hands of the investor as per his income tax slab rates. – An early exit is not available. A lock-in period of 5 years from the date of investment applies. (6). Tax savings Fixed Deposit (FD): FDs are considered one of the safest tax-saving schemes. It is also considered by investors as their Emergency fund in case of any emergency situation arises to them. As the interest rates are fixed, it is safer than equity investments in terms of risk & returns. Some of the features of tax saving FD are:- A minimum lock-in period of 5 years. Premature withdrawal of FD is not available. Senior citizens can get a higher rate of interest on FD investment. In the case of a Joint Account, the primary holder can avail of the benefit of tax deduction while calculating taxable income. The Interest earned or accrued every year on FD is taxable every year in hands of the investor as per his income tax slab rates. (7). Senior Citizen Savings Scheme (SCSS): SCSS is an income tax saving scheme available to senior citizens who are residents of India.Some of the features of tax-saving SCSS are:- Investors can make an investment with a minimum amount of Rs 1000 & in multiples thereof. Investors can invest through cash mode also if the amount of investment is less than Rs 1 Lakh. A minimum lock-in period of 5 years. Premature withdrawal of SCSS is not available. Investors have an option to further extend the maturity period by further 3 years. The Interest earned or accrued every year on SCSS is taxable every year in hands of the

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GST Composition Scheme: Eligibility, Threshold limit, How to opt, Advantage, Disadvantage etc.

Composition Scheme is an alternative method of charging GST. It is a simple and easy scheme under GST for small taxpayers whose turnover is up to the prescribed limit. The purpose of the composition scheme is to bring simplicity and to reduce the compliance cost for small taxpayers. In this article, you would be able to know the complete details about the composition scheme as per the latest updates. So, Let’s get started: 1. Eligibility: Who can opt for the Composition Scheme? Primarily, the composition scheme is available to: Manufacturer; Suppliers of goods; and Restaurant service. Earlier, a composition dealer was not allowed to deal in services. But now, after the CGST (Amendment) Act, 2018, the composition dealers are also permitted to supply services up to a specified limit. A composition dealer can also supply services to an extent of 10% of turnover OR Rs.5 lakhs, whichever is higher. Note: Special Composition Scheme for Service Providers (and other ineligible persons) has now also been provided. As per this scheme, all persons who cannot opt for the normal composition scheme (as above) can opt for this scheme. Under this special composition scheme, taxpayers need to pay tax at the rate of 6% of turnover. To opt for this scheme, taxpayers’ turnover must be limited to Rs. 50 Lakhs. 2. Who is not eligible for the composition scheme? The following person cannot opt for the scheme: – Person engaged in the supply of services (other than Restaurant services) – Manufacturer of ice cream, pan masala, tobacco, aerated water – Person engaged in the supply of non-taxable goods – A person making inter-state outward supplies – A casual taxable person or a non-resident taxable person – Businesses which supply goods through an e-commerce operator 3. Threshold Limit for composition scheme: Threshold Limit means the turnover limit of a taxpayer for being eligible to be a composition dealer. Therefore, If the turnover of the taxpayer crossed above this limit then he cannot opt for the composition scheme. Small taxpayers with an aggregate turnover in a preceding financial year up to Rs. 1.5 crore shall be eligible for composition levy. In the case of certain specified category states*, the threshold limit to opt for the scheme is Rs 75 lakh. *Specified States are; Sikkim, Arunachal Pradesh, Assam, Manipur, Mizoram, Meghalaya, Nagaland, Tripura. 4. Conditions for availing Composition Scheme: There are certain conditions that need to comply to opt for a composition scheme: Composite dealers cannot take the Input Tax Credit (ITC). The taxpayer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism (RCM) The composition dealer cannot supply non-taxable goods, for instance, Petrol, Liquor, etc. Composition scheme applies on PAN WISE. Therefore, all businesses registered under the same PAN have to opt for Composition. The taxpayer has to mention the words ‘composition taxable person’ on every notice/signboard at their place of business. Composite dealers need not issue Tax Invoice. Instead, he will simply issue a Bill of Supply. Composite dealers cannot charge GST in the bill of supply separately. Therefore, ITC cannot be claimed by the recipient on basis of the bill of supply. The Composite dealer has to mention the words ‘composition taxable person’ on every bill of supply issued by him. 5. Rates of GST under Composition Scheme: The rate of tax under composition scheme will be as follows: Type of Composition Dealer Rate of GST Manufacturer 1% of Turnover Restaurant Service 5% of Turnover Traders 1% of  TAXABLE Turnover Special composition scheme (for service providers & other ineligible person) 6 % of Turnover 6. How to Opt for Composition Scheme: To opt for composition scheme a taxpayer has to file GST CMP-02 electronically. This can be done online by logging into the GST Portal. A dealer who wants to opt for Composition Scheme, must intimate GST Deptt. (by filing GST CMP-02) before the beginning of the Financial Year. 7. Return to be filed by Composition Dealers: A composition dealer is required to pay tax in a quarterly statement CMP-08 by 18th of the month after the end of the quarter. Also, a return in form GSTR-4 has to be filed annually by 30th April of next financial year from FY 2019-20 onwards. GSTR-9A is an annual return to be filed by 31st December of the next financial year. It was waived off for FY 2017-18 and FY 2019-20. 8. Advantages of Composition Scheme: Lesser compliance (returns, maintaining books of record, issuance of invoices) Limited tax liability High liquidity as taxes are at a lower rate 9. Disadvantages of the Composition Scheme: A limited territory of business. The dealer is barred from carrying out inter-state transactions No Input Tax Credit available to composition dealers No Input Tax Credit can be taken by the recipient either on the basis of the bill of supply. The composition dealer will not be eligible to supply non-taxable goods under GST The composition dealer will not be eligible to supply goods through an e-commerce portal. Share It . .

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Section 112A of the Income Tax Act – A Complete Summary

Vide Finance Bill 2018, the Government has come up with an insertion to section 112A under the Income Tax Act, 1961. The new section 112A has been inserted in order to levy a long-term capital gain tax on the transfer of equity share, units of equity-oriented funds and units of the business trust. The main object behind the introduction of new section 112A is that the exemption from long-term capital gain tax on the transfer of equity share, units of equity-oriented funds and units of business trust has led to significant erosion in the tax base resulting in loss of revenue and due to abusive use of tax, arbitrage opportunities had been created because of the said exemption. Here is the pointwise summary of the Section: 1. From Finance Act, 2018 the exemption allowed under Section 10(38) has been discontinued and a new section 112A has been introduced to tax such income which was earlier exempt under section 10(38). 2. If Assessee is having any capital gains on Long Term Assets being;  (i) Equity Share in a company (ii) Unit of Equity Oriented Fund (iii) Units of Business Trust          AND: Securities Transaction Tax (STT) has been paid on: * Both Acquisition + Transfer [in case of Equity share in a Co.]; or * Only on Transfer [In case of Units of Equity Oriented Fund/BusinesTrust] Then such capital gains would be taxable at 10%. However, if the value of Capital gains is Up to Rs. 1,00,000 then NO TAX WOULD BE LEVIED and such capital gains would be totally exempt u/s 112A. 3. Further, In case of RESIDENT Individual/HUF, if their total income excluding this capital gains (u/s 112A) is below the maximum exemption limit then the remaining slab benefit would be allowed on such capital gains. However, this benefit would be allowed only for the resident Ind. & HUF and not for any other kind of Assessee. 4. If the above transactions have been made in IFSC, then even if the STT is not paid on such transaction still the benefit of section 112A would be allowed. 5. The balance incomes apart from the above income shall be taxable at normal rates and Chapter-VIA deductions & Rebate u/s 87A shall also be allowed from such balance incomes. Share It . .

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