What is the QRMP scheme?

The Quarterly Reports Monthly Payment (QRMP) program, which is in effect as of January 1, 2021, enables registered taxpayers with combined revenue of up to INR 5 crores in the most recent financial year to file returns every quarter and pay taxes monthly.

Prior to the QRMP scheme, taxpayers had to file GSTR-1 and GSTR-3B every month. Now, they just have to do so once every three months.

For instance, you can now only submit your returns once from April through June, and you can pay your taxes by the May deadline. By this plan, you must pay taxes every month (i.e., the first two months of a quarter) using the fixed sum method (via a pre-filled challan) or the self-assessment method (due tax amount after adjusting ITC).

If you choose this plan, you’ll remain a part of it until you reach the turnover level or decide to leave.

Why is the QRMP scheme important?

• Small business taxpayers need to be aware of this plan since it would reduce the number of returns they must file annually.
• The optional Invoice Furnishing Facility (IFF) is another alternative for qualifying taxpayers under this program.
• Four GSTR-1 returns can be submitted through IFF each year, and you can upload invoices for the first two months of a quarter rather than waiting until the end of the quarter before filing the return. 

Criteria for the QRMP scheme

• This program is only available to those who are required to file Form GSTR-1 and Form GSTR-3B returns.
• Your prior fiscal year’s total yearly income must have been up to INR 5 crores or less. If your turnover exceeds this limit, you will no longer be eligible for the program starting next quarter.
• Your last GSTR-3B return that was due should have been submitted.
• You should not have any data saved in Form GSTR-1 in the portal for the time frame you specify for the scheme. You can choose the plan after wiping the Form GSTR-1’s recorded data.

How to avail the QRMP scheme

• Visit the GST portal to opt-in or out of the QRMP scheme.
• Select Login →Services → Returns.
• Next, select the option to opt-in for quarterly returns.

Payment of taxes under the QRMP scheme

You must submit Form PMT-06 and create a payment challan to pay taxes for the first two months of a quarter. Every month’s payment is due by the 25th of the following month. 

There are two payment options available:

• Fixed-sum approach

If your most recent GSTR-3B was filed quarterly, you could obtain a pre-filled challan for 35% of the tax amount (paid in cash) from the previous quarter. However, you cannot access the 35% challan if you are a new taxpayer, have not submitted your most recent GSTR-3B, or have chosen to forgo the Composition plan.

If your most recent GSTR-3B was submitted every month, you could obtain a pre-filled challan for the entire tax amount (paid in cash) in the final month of the preceding quarter.

• Self-evaluation technique

It is the current approach where a taxpayer can pay the tax due by considering the tax due on both inbound and outbound supply and the available input tax credit.

The taxpayer must manually calculate their monthly tax obligation and submit form PMT-06 with the payment. For establishing the amount of ITC available for the month, the taxpayer might use form GSTR-2B.

There are also other circumstances where no deposit may be necessary, such as:

• For the first month of the quarter, either the electronic cash/credit ledger balance is sufficient to cover the tax bill for that month, or there is no tax liability.
• For the second month of the quarter, either there is enough money in the computerised cash/credit ledger to cover the total taxes owed for the first and second months, OR there are no taxes owed.

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What is Form 16A?

Form 16A is a document every employer of an organisation maintains for its employees. The document states the income sources of the employee and is more like a TDS(Tax Deducted at Source) certificate.

However, Form 16A shows TDS deducted and deposited on all other payments except salary.

The Components of Form 16A 

The Form 16A means a document comprising many components, and they are:

1. Deductor’s Name, PAN and TAN: The deductor can be:

• The bank deducting your TDS 
• The insurance company from where TDS is applicable
• A person or place from whom you receive income on which TDS is applicable

2. Deductee’s Name and PAN- the deductee can be an individual who receives TDS benefits
3. Payment details such as: 

• Payment date
• Payment amount 
• Nature of payment

4. TDS payment’s receipt number

How to Fill Form 16A?

1. Enter the Deductor’s name and address, including their PIN (Postal Index Number).
2. Fill in the Deductor’s TAN (this is an alphanumeric number with the first four digits in alphabets and 5 in digits, and 1 in alphabets).
3. You will also need to enter the Deductor’s PAN (an alphanumeric number with the first four in alphabets, five in digits, and one in alphabets).
4. Enter the data for four acknowledgement numbers.
5. The type of payment follows, whether contractual, professional or otherwise.
6. Enter the corresponding codes for all payments mentioned.
7. The name of the deductee.
8. Enter the PAN number of the deductee in the specified column.
9. Enter the period, which will be the fiscal year. For example, the fiscal year will run from 1 April 2019 to 31 March 2020.
10. After you’ve completed all of these fields, you’ll need to enter the TDS deduction information.
11. State the TDS amount in words.

How to Get Form 16A?

Usually, the deductor issues the form 16A document to an employee for the current financial year and reflects the following:

1. Total earnings
2. Total income taxes deducted for that financial year from other sources of income apart from your salary

You can get the form 16A document by following the below steps:

1. Navigate to the online website of the income tax department.
2. Download the form 16 A document either in the fillable form or pdf.

When is Form 16A Required?

A “TDS Certificate.” is issued by a deductor when payments from non-Salary incomes are made like – TDS Professional fees, Rent, and Bank Interest payments to the IT Department.

As it carries all amounts of TDS deposited with the Income Tax Department, the form 16A document acts like a TDS certificate. Therefore, when filing Income Tax returns, you need all these details in Form 16A.

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To overcome this issue, the government introduced the Online Tax Accounting System or OLTAS in 2004. The system is adopted to minimise human intervention, reduce genuine or deliberate errors, and provide online information on taxes collected or deposited. 

The OLTAS system made it easy for layperson to fill their taxes and for the government to collect them. The system provides a single copy of a Challan, which helps taxpayers to track the status of the taxes filed online. 

3 types of ITNS challans:

1. Challan ITNS 280: This challan is issued when income tax, including self-assessment tax, advance tax, and regular assessment tax, is paid. 
2. Challan ITNS 281: This challan is issued when Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) are deposited. 
3. Challan ITNS 282: This challan is issued for payment of Gift Tax, Wealth Tax, Estate Duty, Expenditure Tax, etc.

The post Different Types of ITNS Challan appeared first on MyBillBook.

What is TDS Challan 281?

A challan is a formal receipt that confirms a payment. As per the Income Tax Act of 1961, businesses must deduct TDS before paying an individual or entity’s income. 

For instance, if a business pays a contractor Rs. 2 lakh, they must first deduct Rs. 20,000 (10% TDS) and then pay Rs. 1,80,000 net.

The taxpayer who received the income should deposit the TDS to the income tax department using Challan 281.

Process of Filing Challan ITNS 281

The two methods for submitting Challan 281 are:

Online Mode

• Visit the tin-nsdl website and choose Challan No./ITNS 281. 
• The following information must be entered into Challan 281 at the time of tax payment:

1. Choose the Deductees: Choose the correct deductee, or the person from whose account the payment has been taken. 

There are two possibilities: 

0020: Company deductee

0021: Non-company deductees

2. Assessment Year (AY): The appropriate AY for which the payment is paid. 

For instance, if the payment is made on June 30, 2018 (i.e., it relates to the fiscal year 2018–2019), the appropriate AY will be 2019–20.

3. Tax Deduction Account Number (TAN): TAN is a 10-digit alphanumeric number given to those who must deduct or collect taxes.

4. Payment Method: 

• If the TDS/TCS is a routine transaction, 200 should be chosen.
• If you are paying for a demand made by the income tax authorities, you should choose 400.

5. Kind of Payment: Choose the category for which TDS/TCS has been subtracted from the drop-down list.

6. Payment Information: Include the income tax, surcharge, and late filing penalties (if applicable), time and bank branch.

After entering all the necessary information, click “submit to bank,” and you will be redirected to the payment page.

A challan counterfoil with the CIN number, payment information, and bank name to make the e-payment is visible when a transaction is completed successfully.

Offline Mode

For the offline procedure, the taxpayer can make the payment by going to the bank in person and submitting a challan.

There are two payment options: cash or cheque.

As proof of submission, the bank will issue a counterfoil receipt after receiving the challan.

Penalties for late TDS payments 

If you do not pay your TDS on time, or you do not file your tax return on time, you will have to pay a fine. This fine is called an interest payment and depends on the type of delay:

• Delayed TDS deduction: 1% of the monthly TDS, or a portion thereof
• Delay in repaying the TDS that was deducted – 1.5% of the TDS per month, or a portion of it.
• TDS return filing delay – According to the TDS amount, Rs 200/day is allowed. Additionally, if the delay lasts for a year or longer, the fine may range from Rs. 10,000 to 1 lakh.

Check Challan 281 status

Deductors can verify the status of Challan 281 online or offline using the CIN number or the TAN number.

CIN based View

1. Visit the TIN-NSDL website and go to Services.
2. Select OLTAS > Challan Status Inquiry
3. Go to “For Taxpayers” and select the CIN-based View.
4. Enter the challan serial number, cash or cheque deposit date, collecting bank branch’s BSR code, challan tender date, and the total amount shown on the counterfoil.
5. Enter the captcha code and select View to check the status.

TAN based View

1. Visit TIN-NSDL website and go to Services
2. Select OLTAS > Challan Status Inquiry
3. Go to “For Taxpayers” and select the TAN-based View.
4. Enter the TAN number, tender challan date, or deposit date.
5. Enter the captcha code and select View to check the status.

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Interest on PF to Attract Tax

Employee Provident Fund (EPF) is quite common among all of us. If an employee’s contribution to the EPF account is more than INR 2.5 lakhs, then the interest earned on the excess amount will attract tax. For such EPF members, the government will open a new EPF account, in which the excess amount and the related interest get credited.

The new regulation is applicable to the PF contributions made in the previous financial year, i.e., FY 2021-22. However, all the contributions up to INR 2.5 lakh will remain tax-exempt, and the interest on the same will be credited to the same EPF account. A new EPF account will be opened for contributions exceeding INR 2.5 lakhs in the previous FY. The interest credited on the excess amount in the new account attracts tax and is payable by the employee.

For government employees and for those not having an employer’s contribution, the threshold is INR 5 lakhs. 

Chance to File Missed IT Returns 

According to the new subsection 139 (8A) of the Income-tax Act, a taxpayer can file an updated income tax return (ITR) in case of any missed filings or errors in the previous filing. 

An updated return can be filed within 3 years from the end of a financial year. Irrespective of whether or not an individual filed an original or belated ITR, the updation can be made. However, a penalty of 25% to 50% on the additional tax will be charged for such corrections. 

Income from Virtual Digital Assets is Taxable

Another new section has been introduced to the Income-tax Act, section 115BBH, according to which any income from virtual digital assets (VDA), including bitcoin, cryptocurrency, non-fungible tokens, dogecoin, etc., is taxable.

The new taxation is effective from the current financial year, FY 2022-23. A flat 30% will be levied on gains from such virtual assets along with 1% TDS, which will come into effect from 1st July 2022. 

For individuals/HUFs, the threshold limit for TDS would be INR 50,000 a year. Also, the cryptocurrency or any other VDAs received as gifts also attract tax in the hands of the receiver. Further, the government also clarified that income from one VDA cannot be used to set off against the losses from other assets. 

No Interest Subsidy on Affordable Home Loan Interest

The affordable housing scheme under the Pradhan Mantri Awas Yojana (PMAY), which provided an interest subsidy on housing loans up to INR 2.67 lakhs is not extended to the current financial year. Only the home loans sanctioned on or before 31st March 2022 under section 80EEA are eligible for the scheme. 

Therefore, taxpayers who are planning to buy affordable homes in the current fiscal will no longer be eligible for any interest subsidies. However, they can still avail of the subsidies on home loan interests under section 24 for a maximum of up to INR 2 lakhs.

Tax Benefit on the National Pension System (NPS) 

As per Section 80CCD(2), state government employees can now claim a tax benefit on the NPS made by the employer. They can avail of a tax benefit of up to 14% of their basic salary and dearness allowance. 

Higher TDS if ITR is not filed

As announced in the latest Budget 2022-23, if an individual fails to file income tax returns for one year, he will be charged with higher TDS and TCS in the next financial year. The higher TDS will be deducted from dividend income, interest income, etc. However, the TDS will not be applicable to salaries and provident fund accounts. 

Senior Citizens Exempted from ITR filing

Senior citizens aged 75 years and above are exempted from filing IT returns starting this financial year. However, besides providing a declaration to the bank, the seniors also need to meet certain criteria to become eligible for the exemption. 

All the above-mentioned regulations become effective from 1st April 2022. 

Vat Value Added Tax
Section 44AD Of Income Tax Act
Section 194A Of Income Tax Act
New Income Tax Portal
Income Tax
Corporate Tax

The post New Income Tax Rules Effective from 1st April 2022 appeared first on MyBillBook.

What is 80TTB

This Section functions as an enhanced version of Section 80TTA, as the tax deduction on interest income, has been increased from INR 10,000 to INR 50,000.  Budget 2018 included a new section 80TTB to the Income Tax Act, allowing seniors to deduct certain interest income from their taxable income. A resident individual who is 60 years of age or older during the fiscal year is referred to as a senior citizen under the Income Tax Act. Section 80TTB allows a senior person to deduct up to Rs 50,000 from total interest income received during a fiscal year from gross total income generated during that fiscal year before tax is deducted.

• Where an assessee’s gross total income as a senior citizen includes any income from interest on deposits with

• A financial firm subject to the Financial Regulation Act, 1949 (10 of 1949) (which includes any bank or banking institution specified in section 51 of that Act);
• A co-operative banking society (which may include a co-operative land mortgage bank or a co-operative land development bank); or
• A Post Office as specified in subsection (k) of section 2 of the Indian Post Office Act of 1898. (6 of 1898),

In determining the assessee’s total income, a deduction shall be granted in line with and subject to the requirements of this section—

• If the entire amount of such revenue does not exceed fifty thousand rupees;
• In all other cases, the amount is 50,000 rupees.

• There shall be no deduction from the total income of any partner or member of the firm, any member of the association, or any individual member of the body in the case where the income mentioned in sub-section (1) is derived from any deposit held by or on behalf of such firm, an association of persons, or body of individuals under this section in respect of such income.

‘In this section, a “senior citizen” is defined as a person living in India who is sixty years old or older at any point during the previous year’

80TTA vs 80TTB

When opposed to Section 80TTA, Section 80TTB provides significantly more benefits to older persons. Section 80TTA is similar to Section 80TTB in some ways, however, it only allows for interest deductions on savings accounts kept in a bank, co-operative bank, or post-office.

The amount mentioned is INR 10,000 from the individual taxpayer’s or Hindu Undivided Family’s gross total income (HUF). As a result, it was open to anybody, regardless of age, who had a deposit. However, once Section 80TTB went into effect in the fiscal year 2018-2019, the advantages of Section 80TTA were no longer available to elderly persons. Section 80TTB is reserved for elderly persons alone; older citizens no longer have access to Section 80TTA. 

The following contrasts between the two parts are discernible.-

• Eligibility

Section 80TTA: Applicable to individual taxpayers and HUF Hindu Undivided Family and Not applicable to resident senior citizen taxpayers

Section 80TTB: Applicable only to resident senior citizen taxpayers

• Maximum Amount of Deduction

Section 80TTA: Rs 10,000 or the actual amount of interest income, whichever is lower

Section 80TTB: Rs 50,000 or the actual amount of interest income, whichever is lower

• Type of Interest Income

Section 80TTA: Interest on savings accounts; does not apply to fixed deposits, term deposits, or recurrent deposits.

Section 80TTB: Interest on deposits, including fixed deposits and savings bank account balances; does not apply to bonds or non-convertible bonds. Interest income as a percentage of a firm’s equity, AOP, and BOI are not covered. Such a business, AOP, or BOI, holds the deposit.

• Type of FD Accounts

Section 80TTA: Includes NRO account and NRI account interest income

Section 80TTB: Not applicable to any type of NRI account

Deduction Under Section 80TTB Of Income Tax Act (Person Eligible, Types Of Income, Maximum Amount)

Not all interest income is deductible. Section 80TTB imposes several limitations and eligibility requirements that must be met in order to reap the advantages.

• Personal Eligibility

An elderly citizen who is a resident of India is eligible for a deduction under section 80TTB. For the purposes of section 80TTB, a senior citizen is a resident individual taxpayer who is over the age of 60 at any point during the fiscal year. Senior citizens having non-resident status (NRI) will not be eligible for this deduction.

• Types Of Income

Interest income generated on deposits by a senior citizen is deductible under section 80TTB. Deposits should be made with one of the following institutions:

• A co-operative society engaged in banking business (this includes a co-operative land development bank or a co-operative land mortgage bank);
• A post office that comes under section 2 (k) of the Indian Post Office Act.
• A financial institute (i.e. a bank) that comes under the Banking Regulation Act (this includes banks referred to in section 51) 

Section 80TTB (2) specifies expressly that interest income generated on savings accounts maintained by a firm, an Association of Persons (AOP), or a Body of Individuals (BOI) is not deductible under section 80TTB for partners of the business, members of the association, or an individual of the BOI.

• Maximum Amount 

The maximum deduction allowed according to section 80TTB is as follows:

• The entire interest income earned during the fiscal year, or INR 50,000

In plain terms, if the amount of eligible interest income is less than INR 50,000, the whole amount of eligible interest income is deductible. However, if the interest income exceeds INR 50,000, only INR 50,000 can be deducted under section 80TTB.

80TTB Deduction for FY 2020-21

The deduction is up to Rs.50,000 in light of the interest earned on elderly persons’ savings. Senior citizens who have FDs, savings accounts at banks, cooperative banks, and post offices who earn interest on their deposits are entitled to the section 80TTB deduction. Individuals can continue to use the old/current tax system in FY 2020-21 by making use of current deductions and tax exemptions. He or she might also choose the new, more favourable tax system without claiming any deductions or tax exemptions. 

Among the tax benefits that are forfeited when one chooses to participate in the new tax regime are deductions under Section 80C for a maximum of Rs 1.5 lakh claimed by investing in specified financial products, Section 80D for health insurance premiums paid, Section 80TTA/80TTB for a deduction on savings account interest earned from a bank or post office, and so on. As a result, taxpayers who choose the new tax system will be unable to make use of the deduction allowed under sections 80TTA and 80TTB.

FAQs on Section 80TTB

1. How do I apply for a deduction under Section 80TTB?

You can claim the 80TTB deduction by completing your income tax return. The income must first be reflected in your income before the 80TTB deduction can be claimed.

2. Is FD interest included in 80TTB?

Yes, section 80TTB includes an interest in FDs. Senior citizens may deduct interest earned on fixed deposits under section 80ttb.

The post Section 80TTB Of Income Tax Act appeared first on MyBillBook.

VAT full form is the Value Added Tax. It is an indirect tax that the national government levies on products and services to customers. The providers of services and products charge VAT, but it is ultimately levied on the customers who pay for it.

The Value Added Tax (VAT) was implemented in India on April 1, 2005. This is a type of consumption tax levied on items and services at various stages of production and sale. This is a multi-step mechanism for collecting tax on value-added at several stages of the sale, including a provision for set-off of tax paid at the stage of purchase. Thus, VAT meaning is a tax that must be paid at each step of the Purchase and Sale process.

From the buyer’s perspective, VAT is the levy on the purchase price; however, when viewed from the seller’s perspective, VAT is the levy on the value added to a product, components, or facility received from the supplier. The manufacturer pays the distinction between the two sums to the government and keeps the remainder to balance the taxes paid on the inputs earlier.

The producer/manufacturer pays this indirect tax to the government and then passes it on to the customer. The final payer of VAT is the consumer. The value added to a product can be estimated by subtracting the sales price from the supply costs and any taxable elements.

How to Calculate VAT Payment:

Taxation is the procedure by which a government imposes a tax on various commodities, services, and transactions. Thus, taxation is one of the essential charges that the government possesses, both at the state and national levels.

To compute the VAT due at each stage, deduct the VAT payment from the VAT due at the latest stage. Thus, it avoids double taxation and guarantees that customers are refunded for any VAT they have already paid at each stage.

When your business expands, you must register for VAT. This means that you will be able to claim back the VAT you have paid on business purchases while also charging VAT on your sales to your customers.

If you are not in a flat-rate plan, while calculating VAT returns, you will compare the amount you spent on purchases with the amount you received on sales.

Before we begin computing VAT, it is essential to understand what VAT is. If you receive a positive figure, you must pay that amount. If the result is a negative figure, you will receive a refund for that amount. Here’s how the equation works:

VAT = The Output Tax – The Input Tax

The output tax is a percentage of the selling price that the seller receives when his finished product is sold. When a buyer purchases raw materials used in the production of his final goods or services, he pays input tax, which is a percentage of the cost price. You can use the formula to calculate your VAT payments and transfer funds to a different bank account.

VAT is calculated in primarily two ways:

• Firstly, tax is imposed separately for purchase and sale. Thus, the VAT is calculated as the difference between the tax paid at the time of purchase and the tax payable at the time of sale as specified on the invoice.
• The second technique collects and charges tax on the total tax due on sales and purchases, using the applicable rate to the products. So the VAT meaning is the differential between the sale and purchase price. This indicates VAT is the tax eventually imposed on customers and collected at every level.

Benefits of Value Added Tax:

(1) Tax evasion is less likely to occur when compared to other types of taxation. Because of the catch-up effect, the value added tax (VAT) helps to reduce tax evasion. VAT’s catch-up effect reduces avoidance.

(2) Unlike other indirect taxes, VAT is easy to administer. 

(3) It is transparent and imposes the smallest possible burden on customers because it is collected in small amounts at different production and distribution phases.

(4) A VAT is calculated based on value-added rather than the total price. So, VAT does not affect the price. Moreover, since VAT is levied in small payments, the burden is reduced for customers.

(5) A large number of taxpayers are actively involved. Since VAT is a consumption tax, the income generated will remain constant.

(6) As a neutral tax, VAT can be levied on all businesses.

Online VAT Registration Process: 

VAT registration is required for all enterprises that are engaged exclusively in the production of goods or services. Registration implies declaring the company as a VAT-returning corporation to the government.

The VAT registration Act mandates that all businesses register for VAT payments. In addition, VAT registrations can now be accessed digitally, which is time-saving and straightforward for business owners.

The following are the fundamental steps involved in VAT registration:

• You must fill out the VAT application fully with the appropriate information and provide it with all the needed documentation to the local VAT authority.
• The VAT administration will perform a thorough assessment of the premises after receiving the documentation and application. This will be completed within three days of receipt of the form.
• A deposit fee must be paid to the VAT administration after approval.
• After payment, a TIN is assigned, and a VAT certificate is provided within one day.

Online Registration Procedure

1. Enter the VAT website’s official login page and select the “Registration” tab.
2. Complete all required fields and include scanned copies of essential documents.
3. A provisional VAT registration number may be provided to the corporation.
4. Following an assessment of your application and supporting documentation, your business will be granted a unique VAT registration number.

VAT vs. Sales Tax

FAQs about VAT

Q1. How long does it take to receive an international VAT number?
Ans. Once the authority gets all of the documentation, it may take 3-10 weeks to register for the VAT number, depending upon the country. Therefore, it’s advisable to plan and return the documentation promptly to submit the registration to the tax office.

Q2. How do I determine which VAT rates to use?
Ans. Standard, reduced, and zero VAT rates differ per nation. The EU Commission has published a general pricing table. If you are still unsure about the VAT rate that applies to your goods or services, please contact the appropriate authority to assist you immediately. 

Q3. How frequently will I be required to file a VAT return?
Ans. This is determined by the country in which you are registered. Certain countries require VAT returns every month, while others require them quarterly or even bi-monthly.

The post VAT – Value Added Tax appeared first on MyBillBook.

Taxes are collected on its inhabitants by governments to produce money for initiatives that increase the country’s economy and enhance residents’ standard of living. The Government’s ability to charge taxes in India is derived from the Indian Constitution that gives Central and State governments the right to levy taxes.

In this post, we cover income tax in India, Indian tax types & income tax slabs.

Basics Of Income Tax Act India

Income tax is a levy applied by the government on an individual’s earnings. It is a direct tax whose liability cannot be transferred to another party. In India, income tax is controlled by the Income Tax Act, 1961. Each financial year, income tax is levied at the slab rates specified in the Union budget. It is assessed differently for different types of persons, including individuals, partnership firms, and corporations. According to income tax, the major sources of income are as follows:

• Salary, income from house property (rent); business or profession profits and gains; capital gains income; and other sources of income

Income tax allows for a variety of deductions from income before calculating the tax due. Income tax returns must give a detailed accounting of a person’s earnings and the income tax owed. An income tax return is a declaration that details a person’s status, all sources of revenue, deductions, and finally, the tax payable or refund (if any). There are several sorts of returns available for each type of person.

Types of Taxpayers

A taxpayer is an individual or corporate entity that owes taxes to the federal, state, or municipal governments. Individual and corporate taxes are a significant source of revenue for governments.

The Income Tax Act categorizes taxpayers in order to apply different tax rates to various taxpayer classes.

Taxpayers are categorized as below:

• Individuals, Hindu Undivided Family (HUF), Association of Persons(AOP), and Body of Individuals (BOI)
• Firms/Companies

Additionally, individuals are divided between residents and non-residents. Individuals who are residents of India are required to pay tax on their worldwide income, which includes money generated both in India and overseas. Non-residents, on the other hand, are only required to pay taxes on income earned or accrued in India. For tax reasons, each financial year’s residence status must be established individually based on the duration of the stay in India. For tax reasons, resident individuals are further divided into the following categories:

• Individuals less than 60 years of age
• Individuals aged more than 60 but less than 80 years
• Individuals aged more than 80 years

Income Tax Slabs – The New Tax Regime

A new tax regime is applicable from FY 20-21 with reduced tax rates and no deductions/exemptions will be available to individuals and HUFs. Individuals and HUF have the choice of continuing with the current regime or switching to the new regime. The new tax regime is elective, and the decision should be made at the time the ITR is filed. If the old regime is maintained, the taxpayer may claim all applicable deductions/exemptions. The new tax regime has the following income tax brackets:

Tax Slab Exceptions

Always remember that not all income is subject to slab taxes. This regulation does not apply to an exemption from capital gains income. Capital gains are taxed according to the kind of asset and the duration of the asset. The duration of the holding time of an asset influences whether the asset is regarded to be long-term or short-term. In addition, the time necessary to determine the type of asset is different from one asset to the next. The holding periods, asset classifications, and tax rates for each investment are given in the table below.

Types of Taxes in India

Oftentimes, the tax system is made up of both direct and indirect charges.

Direct taxes are the ones you pay directly to the government. These taxes cannot be transferred to another company or person since they are imposed directly on individuals. This tax handled by the Department of Revenue is governed by the Central Board of Direct Taxes (CBDT).

Several of the most significant direct taxes are as follows:

• Income tax
• Wealth tax
• Gift tax
• Capital Gains tax
• Securities Transaction tax
• Corporate tax

Indirect taxes are levies that are indirectly placed on the general population. The majority of these are levied through the sale of products and services. These taxes are included in the prices charged by the vendor, and they are subsequently collected by the appropriate government agencies.

Some important Indirect taxes include:

• Sales tax
• Goods and Services tax
• Value Added Tax (VAT)
• Customs duty
• Toll tax
• Octroi duty

In India the central government introduced the Good and Services Tax (GST) in 2017, to incorporate a few taxes in one blanket. GST is a multi-stage location tax that is levied from the acquisition of raw matter to the sale of the final product and then to the end customer at each level of the supply chain. Typically, when there is value-added and ownership transfer in the supply, GST will apply. Some of the taxes replaced by GST are:

• Sales tax
• Service tax
• Octroi
• Central Excise duty
• Entertainment tax
• Purchase tax

FAQs about income tax

What is total gross income?

A taxpayer’s total revenue from all the revenue categories is referred to as Gross Total Income

Can I file income returns even if my income is below taxable limits?

Yes, even though your income is smaller than the basic exemption level, you can file the return of income voluntarily

Should I divulge in return all my income, even if it is exempt?

Yes. Revenues from all sources including exempt revenues must be revealed. The same might be indicated in Schedule EI.

Will my income be taxed if I’m a farmer?

Any revenue earned by agriculture or its associated activities shall not be taxed. However, when computing a tax for any non-agricultural income that you may have, it will be evaluated for tax purposes.

Who may get a Section 87A rebate?

Any resident Indian whose total yearly income is less than Rs. 5 lakh can claim reimbursement under Section 87A. The highest discount allowed under 87A is Rs. 12,500.

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Full form of TAN is Tax Deduction and Collection Number .

What is TAN Application Form 49B

Form 49B is the application individuals can use to apply for a new Tax Deduction and Collection Number (TAN). The form is available at any TIN facilitation centre for receiving e-TDS returns. A new TAN application, Form 49B, can be made by visiting the Income Tax department or creating an online application at the Income Tax official website.

Types of TAN Application

Applications for allotment and applications for change are the two categories of TAN applications.

Applications for allotment of new TAN are available on nsdl website, or one can download them to submit offline. The processing fee is Rs. 55 + 18 % GST.

Applications for change or correction of TAN have a processing fee of Rs. 63 + service tax. For this, details like 10-digit TAN number, address, nationality, and PAN details are necessary.

Guidelines For Filling Application Form 49B

The applicant must carefully complete Form 49B, which contains many sections, for the TAN application to be accepted.

Following are some considerations the applicant should make when filling out Form 49B:

• Form 49B must only be filled out in capital letters in English to make the entries readable.
• The tax deductor or collector must provide information about the assessing officer. You can get these facts from the Income Tax Office if they are unavailable.
• Every text field on the form should have one letter entered for easier reading and comprehension.
• The tax collector or deductor must additionally provide information about the region, area code, district, etc. Before filling out Form 49B, the Income Tax Office can be contacted to get more information.
• A gazetted officer, a notary, or magistrate must certify the signature if the form is signed with the left-hand thumbprint.
• The left thumb impression is only accepted from applicants for TAN. The acknowledgement form printed must be signed by applicants who fall under another “category of deductors.”
• Complete the fields on Form 49B. Any portions that are left empty or unfinished are not taken into account.
• The individual in charge of tax filing and submission must set down their title.
• The applicant must provide a valid Indian address.

The Income Tax Department checks the information after form 49B has been completed and submitted. If the application appears complete and accurate, Protean eGov Technologies Limited will notify the applicant of the new TAN information at the address listed on Form 49B or, if the application was submitted online, by email.

Tan acknowledgement slip

The acknowledgement slip must be provided to Protean eGov Technologies Limited after the TAN application has been filed successfully. The duly executed acknowledgement slip should be sent to:

Protean eGov Technologies Limited

5th Floor, Mantri Sterling 

Plot No.341, Survey No.997/8,

Model Colony, Near Deep Bungalow Chowk, Pune – 411016

Protean eGov Technologies Limited must receive the acknowledgement slip and required documents within 15 days of the online application. TAN application processing will only begin after receipt of the signed acknowledgement and payment is confirmed.

Payment For Availing TAN  

To apply for a new TAN, applicants must pay Rs.65 (Rs.55 application charge + 18% of Goods and Services Tax). 

The applicant can make the payment through any of the following modes:

• Demand draft
• Cheque
• Credit card/Debit card
• Online banking

Required Documents for TAN Application

When submitting a TAN application, the applicant is not needed to provide any supporting documentation. If they submit their request for a new TAN online, they only need to include the acknowledgement slip and the demand draft.

Contact TDS

The following ways can be used to contact Protean eGov Technologies Limited representatives for more information:

• Dial 020-27218080 for PAN/TDS Call Centre or 020-27218081 for faxes.

• Send an email to tininfo@nsdl.co.in.

• To find out the status of the TAN application, SMS the NSDLTANacknowledgement number to 57575.

• Write to: Protean eGov Technologies Limited, Fifth Floor, Mantri Sterling, Plot 341, Survey 997/8, Model Colony Near Deep Bungalow Chowk, Pune 411016
  

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Before learning about tax rates and how they are determined, we need to know about the types of income a company makes. It is as follows:

1. Profits generated by the business firms
2. Capital Gains
3. Revenue from property rental
4. Other sources of income include dividends, interest, and so on.

A corporation is a legal entity distinct from its stockholders. Under the Income-tax Act, both domestic and international corporations are required to pay corporate tax. The domestic corporation is taxed on its total income, a foreign corporation is taxed only on income gained within India, that is, income accruing or receiving in India.

Corporations established under the Companies Act, 1956, and foreign companies producing income in India are subject to the corporate tax rate imposed on their “net income,” which is defined as the amount of money they make after deducting their expenses.

A company earns profit from various sources, including sales, capital gains, commissions, and rent. The government relies heavily on the taxation of these earnings.

Income tax is distinct from corporate tax where corporate tax is levied on an individual’s earnings. As with income tax, corporations are entitled to minimize the taxable amount through several deductions and exemptions.

Additionally, the company tax rate is frequently revised globally. Similarly, India’s statutory corporate tax rate was reduced to 22% from 30% in 2019. However, the 22% tax rate is available solely to domestic corporations that do not seek tax exemptions.

The rates have been updated and lowered to assist companies in development. The corporate can concentrate on business expansion and capital enhancement when they have a significant share of the profits in their possession.

How to Calculate Corporate Tax

India has one of the world’s highest corporate tax rates, but the actual tax rate varies by industry and sector. Whether domestic or international, a corporation is required to pay CIT according to the country’s 1961 Income Tax Act. Unlike resident companies, non-resident (foreign) companies are only taxed on income received, earned, or deemed to be sourced in India.

The term ‘Corporate Tax’ meaning is the taxes paid by businesses on their income. The income tax divides companies into two categories –

• Domestic Business
• A foreign business

Domestic corporations are taxed on their entire income, whereas international companies are taxed on only India’s income received/accrued. The term “domestic company” and “foreign corporation” are defined in the following section of the Income Tax Law.

A domestic firm is an Indian corporation or any other corporation subject to tax under the Income Tax Act that has made necessary arrangements for the declaration and payment of dividends (including dividends paid on preference shares) within India, payable from the said income.

A foreign firm is simply one that is not a domestic one.

Corporate tax in India is the tax levied on the profit earned by registered firms under the Companies Act, 2013, throughout a financial year. The profit of these companies shall be taxed at a fixed rate subject to modification according to the government’s discretion. The revenue earned by the corporation is evaluated and calculated differently from the income calculation for individuals.

Net income is another name for the profit earned from the business over a financial year. You can obtain net income from the entire revenue by deducting the overall expenses. The total expenditure includes the cost of goods sold and other costs such as rent, wages, interest, etc. Total revenue includes revenue plus commissions and capital gains.

The equation and calculation for corporate tax are provided here. The value of company tax is calculated by multiplying the entire profit/net income of a corporate unit by the applicable tax rate.

Corporate tax payable = Net profit obtained under the country’s tax standards × applicable tax rate

Corporate Tax Rates on Different Companies

Corporate Tax Rates for Domestic Corporations in India

Corporate tax is levied on domestic enterprises for the financial year 2019-20 based on their annual revenue. The rates are the following:

• If the company’s yearly revenue reaches Rs. 1 crore in a financial year, a surcharge of 7% shall be applied to such firms. If the income surpasses 10%, the tax shall be 12%.
• A 4% cessation of health and education and a business tax on domestic firms are applied.
• If a domestic corporation has an overseas branch, the same rate is applied to the corporation’s total earnings, domestic and foreign. Therefore it is essential to remember that corporate tax planning in India also considers the foreign earnings of domestic enterprises.

Corporate Taxation of Foreign Corporations

A firm not of Indian origin and management is located entirely outside India. These companies are not registered under the Companies Act, 2013. For these enterprises, therefore, the tax structure differs from domestic companies. For foreign companies, the taxation system focuses on the Indian and foreign corporations’ tax agreements.

When the income lies in between Rs. 1 crore and Rs. 10 crores, a surcharge of 2 per cent is payable on the total income. If it surpasses ten crores, a 5% surcharge is applicable.

Corporate Income Tax Rebates

The income tax legislation has numerous provisions that allow rebates and discounts to businesses when determining their corporate tax liability. Several significant rebates and deductions include the following:

• Domestic corporations may deduct a portion of their interest revenue from their profit for corporate tax purposes.
• If the corporation has invested in new infrastructure or sources of energy, those costs are deducted.
• The corporation may carry forward losses for up to eight years.
• If a domestic business gets a dividend from some other domestic company.
• The capital gains earned by enterprises are not taxed.
• Deductions are permitted in certain circumstances for exports and new ventures.

FAQs on Corporate Tax

Q1. What is the distinction between individual income tax and corporate income tax?
Ans. Individuals are taxed on their income. But, the corporate tax is charged on the profits of businesses that are constituted under the Companies Act, 2013, or any preceding company law.

Q2. What about the MAT (Minimum Alternate Tax)?
Ans. MAT is mandated under Section 115JB of the Act and has been in place for decades. The goal of MAT is to tax businesses at either the MAT rate on book profit or the taxation on taxable income, whichever is greater. MAT was originally 18.5 per cent of book profits but has been cut to 15 per cent.

Corporate taxpayers opting to exercise 115BAA or 115BAB are exempt from the application of MAT under these rate modifications.

Q3. Which businesses prefer to gain the most from the corporate tax rate changes?
Ans. Existing domestic enterprises with less than INR 4,000 million in revenue profit are relatively less because their income tax rate is reduced from 26-29 per cent to 25.17 per cent. Still, they also lose the benefits of some special exemptions or deductions.

New manufacturing businesses formed after 1 October 2019 profit from these reforms, as they qualify for a considerable tax rate reduction.

Large domestic corporations also benefit from the adjustments in corporate tax rates, as they can now choose a rate of 25.17 per cent rather than the prior range of 31-35 per cent.

Q4. Is corporate tax based on gross revenue?
Ans. No, after payment of interest on debts, corporate tax shall be computed on net earnings.

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