CERTIFICATION WORK UNDER VARIOUS LAWS

One of the most rigorous & significant service of professional is issuance of certificates to its client required for various purposes under different relevant rules & regulation. Broadly, following types of certificates are being needed by the business houses based upon their constitution/ the privileges being be pleased by them under the law, financial arrangement with the financial institution, benefit & deductions to be claimed under statue and periodical compliance of relevant rules & regulation.

Commonly, following types of certificates are needed to carry on business activities in India:

• Certificates on the support of financial books of accounts and annual financial statements.
• Certificates on the grounds of statutory records being maintained under Indian Companies Act, 2013 and other applicable laws.
• Certification of statutory liabilities.
• Certification of Fare Values of Shares of Company for the scope of merger/de-merger, Buy Back, Allotment of further shares and transfer of shares from resident to nonresident.
• Certificates for foreign remittance to be made by resident in India to foreign entity outside India u/s 195 of the Income Tax Act, 1961.
• Net worth Certificates needed for the purpose of Bank finances, furnishing of Bank guarantee and issuance of Visa by Embassy.
• Certification of arms length price u/ 92 of the income Tax Act, 1961.
• Utilization certificates of various grants being discharge by Govt. of India to NGO’s, Statutory Bodies, Autonomous Bodies, and charitable organizations.
• Certificates for claiming various deductions & exemption under various rules & regulation.
• Certification under the Income-Tax laws for various deductions, etc.
• Certification for Transfer Pricing.
• Certification under the Indirect Taxes.
• Certification under Exchange Control legislation for imports, remittances, ECB,DGFT,EOU, etc

Tax Deduction At Source (TDS)

What Is TDS?

TDS is one of the technique of collection of taxes in which a person making or crediting payment to someone has to deduct a certain percentage of amount from that amount. TDS is like a prepaid tax which is paid to govt. in advance. TDS amount is deposited by the Deductors to govt. account by the 7th of following month in which such amount is deducted. Since TDS is deposited by the Deductors to govt. accountant on regular interval, it ensures regular inflow of cash resources to the Government.

Who Is Liable To Deduct Tax At Source (TDS)?

• Income Tax Act requires specified persons to deduct tax on particular types of payments being made by them. The list of such persons requiring making TDS is incorporated in TDS provision listed here. The following are the specified person who is liable to deduct TDS.
• An Individuals or an H.U.F. is not liable to deduct TDS on such payment except where the individual or H.U.F. is carrying on a business/profession where accounts are enforce to be audited u/s 44AB, in the immediately preceding financial year.
• A person is liable to get its accounts audited u/s 44AB if during the relevant financial year its gross sales, turnover or gross receipts exceeds Rs. 2 crore (Rs.60 Lacs for A.Y.2012-13) in case of a business, or Rs. 50 Lacs (Rs. 15 Lacs for A.Y. 2012-2013) in case of a profession.

TAX DEDUCTION AND COLLECTION ACCOUNT NUMBER (TAN)

TAN is an alpha numeric 10 digits number. Every person who is accountable to deduct tax at source must obtain TAN no. from the department in form no. 49B within one month from end of the month in which tax was deducted. TAN is needed to be mention on every transaction related to TDS. There is a penalty of Rs. 10000 on failure to apply TAN

Procedure to pay TDS

Due Date of deposit of Challan 281 and filling quarterly return of TDS

Every person who is accountable to deduct TDS shall deposit the TDS deducted by him by 7th of following month in which TDS is deducted however Due date of deposit of TDS for the month of March is 30th April

Due date of filling quarterly TDS return is 15th of the following month of each quarter however this date is 15th may in case of quarter ended march 20XX.

TDS Defaults

• Failure to deduct whole or part of TDS
• Failure to deposit whole or part of TDS
• Failure to apply TAN within prescribed time
• Failure to furnish various certificates/forms/return within prescribed time
• Failure to mention PAN no. of the deductee
• Variation between amounts mentioned in TDS return and amount as per TDS Challan u/s 281.

Penalties and Interest in case of non-filling/non-deduction and late deposit of TDS amount.

Residential Status

An individual is considered resident in India if he is in India in tax year for:

• 182 days or more
• 60 days or more where the period of 60 days stands changed to 182 days or more for – Indian citizens/persons of Indian origins on visit to India
• For citizens of India leaving India for employment abroad as members of crew of Indian ship during tax year
• A resident is “not ordinarily resident” in India in any tax year if he:
• Has been “non-resident” in India in nine out of 10 previous years preceding that year
• Has during previous seven years, preceding that year been in India for total period of 729 days/less

HEADS OF INCOME

Income is categorized under five broad heads/classes where the taxable component of income is ascertained as per the rules for particular head/class of income followed by aggregation for determining total taxable income. These include:

• Salaries – Received against services rendered and include wages, pension, fees, commission and taxable value of perquisites.
• Income from house properties that comprise income that arises from use of residential/commercial properties. Here, only two prescribed deductions are permitted while computing income.
• Profits and Gains from Business/Profession that covers income earned from business/profession that is net of permissible deductions, against revenue earned.
• Capital Gains that covers gains which arise from transfer of capital assets and the period of holding determining classification of asset, which then determines manner of taxation. The gains comprise short-term assets and long-term capital assets.
• Income from Other Sources that are residuary head/class of income covering any income not specifically dealt with under other heads.

RULES GOVERNING FOREIGN NATIONALS –

For foreign nationals, Indian tax law provides exemption of income earned subject to prescribed conditions. This is based on conditions like –

• Individual’s stay in India does not exceed 90 days
• Payment made is not deducted in computing income of employer
• Remuneration received by person employed on foreign ship provided his stay in India not exceeding 90 days
• Remuneration of foreign diplomats, consular staff, trade officials and their staff and family
• Income of employee/consultant of government approved foreign charitable institutions

Tax Rates For Individuals For Financial Year 2017-18 (Assessment Year 2018-19) Is As Per Follows:

*For FY 2017-18, the Finance Minister has provided a maximum Rebate of Rs. 2,500 under Section 87A who are a RESIDENT INDIVIDUAL & Total Income Less Deductions (under Section 80) is equal to or less than Rs 3,50,000. If both the above conditions are satisfied, rebate of Rs 2,500 will be available under Section 87A. The rebate is limited to Rs 2,500. Which means if the total tax payable is lower than Rs 2,500, such lower amount of tax will be the rebate under section 87A. This rebate is applied on total tax before adding Education Cess(3%). This rebate is also available to Senior Citizens who are 60 years old but less than 80 years old.

Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh but up to Rs.1 crore and 15% of income tax, where the total income exceeds Rs.1 crore.

COMPANIES

Domestic Company – Turnover upto Rs. 50 crores

Income Tax: 25% of taxable income

Surcharge:

• At the rate of 7% of such income tax, provided that the taxable income exceeds Rs. 1 crore.
• At the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores.
• Education Cess: 3% of the total of Income Tax and Surcharge.
• Domestic Company – Turnover exceeding Rs. 50 crores
• Income Tax: 30% of taxable income

Surcharge:

• At the rate of 7% of such income tax, provided that the taxable income exceeds Rs. 1 crore.
• At the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores.
• Education Cess: 3% of the total of Income Tax and Surcharge
• Firms Foreign Company
• Income Tax: 40% of total income

Surcharge:

• At the rate of 2% of such income tax, provided that the taxable income exceeds Rs. 1 crore
• At the rate of 5% of such income tax, provided that the taxable income exceeds Rs. 10 crores
• Education Cess: of 3% of total of Income-tax and surcharge

Kinds of Taxes

Annual Tax which is levied on income earned in a financial year and is based as per the rates declared in annual budget. With rates varying with each budget, the tax is payable in advance by way of quarterly installments during financial year.
Minimum Alternate Tax (MAT) is tax levied @ 18.5% of book profit. Here, the surcharge is at the rate of 7% of such income tax provided that the taxable income exceeds Rs. 1 crore and at the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores Further, the Education Cess is @ 3% of total Income-tax and Surcharge.

Firm

Partnership Firms and LLPs (Limited Liability Partnerships) are to be taxed at the rate of 30%.

Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.

Education Cess of 3% of total of Income-tax and surcharge