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Jun 26 2023
Mastering Income Tax Filing Forms: Your Guide to AY 2023-24 FY 2022-23″

CHOOSE THE RIGHT ITR FORMS WHILE FILING THE RETURN

Income tax filing can be a daunting task for many individuals. With changing regulations and evolving tax laws, it’s essential to stay updated on the latest requirements to ensure accurate and timely filing. In this blog post, we will discuss the income tax filing forms to be used for the Assessment Year (AY) 2023-24, covering the Financial Year (FY) 2022-23. By understanding the purpose and significance of these forms, you’ll be better equipped to navigate the process with confidence.

Form ITR-1, also known as SAHAJ, is primarily designed for individuals having income from salary, one house property, or other sources like interest. It is one of the most commonly used forms by salaried individuals or pensioners who have a straightforward income structure. ( For individuals being a resident (other than not ordinarily resident) having total income upto Rs.50 lakh, having Income from Salaries, one house property, other sources (Interest etc.), and agricultural income upto Rs.5 thousand.

Form ITR-2 is applicable for individuals and Hindu Undivided Families (HUFs) not eligible to file Form ITR-1. It includes individuals with income from multiple sources, such as salary, house property, capital gains, and more. If you have earned income from foreign assets, or you are a director in a company, or have invested in unlisted equity shares, this form is suitable for you. (For Individuals and HUFs not having income from profits and gains of business or profession)

Form ITR-3 is specifically meant for individuals and HUFs having income from business or profession. If you are a self-employed professional or a partner in a partnership firm, this form is suitable for reporting your income, deductions, and business-related details.(For individuals and HUFs having income from profits and gains of business or profession.)

Form ITR-4, also known as SUGAM, is applicable for individuals, HUFs, and firms (other than LLPs) having a presumptive income from business or profession. This form simplifies the process for small taxpayers who opt for the presumptive taxation scheme under Section 44AD, 44ADA or 44AE and agricultural income upto Rs.5 thousand.)

Form ITR-5 is for individuals, HUFs, firms, Association of Persons (AOPs), and Body of Individuals (BOIs) who are not eligible to file forms ITR-1 to ITR-4. It is suitable for reporting income from partnership firms, LLPs, or income from multiple sources for which other forms are not applicable. (For persons other than- (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7

Form ITR-6 is specifically designed for companies, excluding those claiming exemption under Section 11 (Income from property held for charitable or religious purposes).

Form ITR-7 is for individuals, companies, and entities that are required to furnish a return under Section 139(4A), Section 139(4B), Section 139(4C), or Section 139(4D) of the Income Tax Act. This form is applicable for reporting income of trusts, political parties, institutions, and more.

Choosing the right income tax filing form is crucial to ensure accurate reporting of income and compliance with tax regulations. By understanding the purpose and applicability of each form, individuals can effectively file their returns for the Assessment Year 2023-24, covering the Financial Year 2022-23. Stay informed, seek professional assistance if needed, and fulfill your tax obligations seamlessly.

Contact a Professional for Error-Free Income Tax Returns

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Jun 25 2023
“Understanding Advance Tax in India: A Crucial System for Ensuring Timely Tax Payments”

a comprehensive understanding of advance tax in India,

Advance tax in India is a system under which taxpayers are required to pay a portion of their tax liability in advance, throughout the financial year, rather than paying the entire tax liability at the end of the year. The purpose of this system is to ensure that taxpayers have sufficient funds to pay their tax liability when it becomes due.

In India, advance tax is applicable to individuals, HUFs, firms and companies. The advance tax liability is calculated based on the estimated tax liability for the financial year. Taxpayers are required to pay advance tax in instalments, as per the following schedule:

15% of advance tax liability on or before 15th June of the financial year

45% of advance tax liability on or before 15th September of the financial year

75% of advance tax liability on or before 15th December of the financial year

100% of advance tax liability on or before 15th March of the financial year

If a taxpayer fails to pay the advance tax as per the above schedule, they may be subject to interest under section 234B and 234C of the Income Tax Act.

It’s important to note that the rules and regulations regarding Advance tax in India may change from time to time, and it is recommended to consult with a Chartered Accountant or Tax professional for the most accurate and up-to-date information.

In case of non-compliance of advance tax in India, the taxpayer may be subject to interest under section 234B and 234C of the Income Tax Act.

Under Section 234B, if a taxpayer fails to pay the advance tax as per the due dates specified, they will be charged interest at the rate of 1% per month on the unpaid amount of advance tax.

Under Section 234C, if a taxpayer fails to pay the advance tax as per the due dates specified, they will be charged interest at the rate of 1.5% per month on the unpaid amount of advance tax.

It’s important to note that if the taxpayer can prove that there was reasonable cause for not paying the advance tax on time, the interest may be waived by the tax authorities.

It’s important to note that the rules and regulations regarding interest for non-compliance of advance tax in India may change from time to time, and it is recommended to consult before paying with tax professionals like us. It’s always important to comply with the tax laws to avoid any penalties or interest.

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Jun 25 2023
Unveiling Effective Estate Planning: Three Essential Tips for Advisors

Navigating the world of estate planning can often feel like wandering through a complex maze, filled with unfamiliar terminology and intricate strategies. I, like many advisors, faced these challenges when I first began my journey. I encountered obstacles, made errors, and gained valuable lessons along the way.

Today, I am thrilled to share three simple yet impactful tips that I wish I had known from the start. Let’s delve into them:

Tip #1: Prioritize Liquidity and Income Accumulation During the early stages of my career, I often emphasized asset accumulation to my clients. However, I later discovered that insurance products primarily aim to create liquidity. This realization struck me: as advisors, we should encourage our clients to focus on income accumulation and liquidity. Why? Because assets such as property can become burdensome, particularly in old age. The true objective of estate planning is to ensure a steady income for your clients.

Tip #2: Identify Risks Within the Estate Consider the potential risks that could affect the estate. Could illness strike? What happens if retirement arrives without a reliable income? Will the children require funds for their education? Identifying these risks allows you to demonstrate to your clients how financial products can provide coverage during unforeseen circumstances.

Tip #3: Recognize Multiple Generations Within a Family With the prolonging of life expectancy, multiple generations often coexist within a single family. This dynamic presents unique challenges, especially regarding the equitable distribution of inheritance. Effective estate planning can establish a harmonious balance among all family members, mitigating the potential for conflicts.

Now, I want to emphasize an element that is frequently underestimated in estate planning: insurance. It extends far beyond being a mere safety net. When strategically integrated into an estate plan, insurance becomes a powerful tool for income accumulation, tax planning, and the creation of liquidity.

Insurance serves as a shield against unexpected life events, and it can even function as a financial asset in itself. Moreover, it acts as a catalyst for seamless wealth transfer. As we navigate the complexities of estate planning, let us not overlook the versatility of insurance and its capacity to enhance the impact of our strategies.

By keeping these tips in mind, my advisory practice underwent a transformative shift, and I am confident that they can yield similar results for you. These insights will empower you to provide your clients with the most effective and personalized advice possible.

Are you ready to delve deeper into estate planning and explore additional strategies? Secure your lifetime access to the three-hour estate planning for advisors course here: https://chat.whatsapp.com/9qndS5YIuq5GumkJHfvC7K. It’s an opportunity to expand your knowledge and refine your expertise in estate planning.

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Jun 23 2023
Understanding the Taxability of Cryptocurrency in India

Cryptocurrencies have gained significant popularity in recent years, and their taxability has become a topic of interest, especially in India. While the Indian government did not have an official stance on the categorization and taxation of crypto assets until 2022, the landscape has changed. In this article, we will explore the current tax regulations surrounding cryptocurrencies in India and shed light on key considerations for taxpayers.

Taxes on Cryptocurrency in 2023:

When it comes to cryptocurrency trading, selling, or spending earnings in India, a 30% tax is applicable. Additionally, a 1% Tax Deducted at Source (TDS) is imposed on sales of cryptocurrency assets exceeding ₹50,000 in a single fiscal year. Individuals engaged in other forms of cryptocurrency income, such as mining or staking, may also be subject to income tax at their individual tax rates upon receipt.

How Cryptocurrency is Taxed in India:

Under Section 2(47A) of the Income Tax Act, cryptocurrencies are classified as “Virtual Digital Assets” (VDAs). This definition encompasses various crypto assets, including cryptocurrencies, NFTs, tokens, and more. The 2022 budget introduced Section 115BBH, imposing a 30% tax (plus surcharge and cess) on gains from cryptocurrency trading starting from April 1, 2022. This tax rate is equivalent to the highest income tax band in India, irrespective of the type of income or its duration. Furthermore, a 1% TDS is applicable on the transfer of cryptocurrency assets from July 1, 2022, if the transactions exceed ₹50,000 in a financial year (or ₹10,000 in specific cases).

Key Points to Note about Crypto Tax in India:

  • Cryptocurrency asset profits are subject to a 30% tax rate (plus surcharge and cess).
  • Section 115BBH of the tax code governs cryptocurrency profits.
  • No option for a lower long-term capital gains tax rate is available.
  • Deductions other than purchase costs are not permitted.
  • A 1% TDS is levied on the transfer of VDAs.
  • The 30% tax rate is effective from April 1, 2022, and the 1% TDS rate from July 1, 2022.

When are Taxes Due on Cryptocurrencies in India?

You may be liable to pay the 30% tax rate whenever you engage in the following transactions:

  • Purchasing cryptocurrency using Indian rupees or any other fiat currency.
  • Trading stable coins and other cryptocurrencies.
  • Using cryptocurrency to make purchases.

However, there are instances where the 30% tax rate may not be applicable. In such cases, tax will be due upon receipt at your individual tax rate. Examples include:

  • Receiving cryptocurrency as a gift (refer to gift section for details).
  • Coin mining (refer to mining section for details).
  • Using cryptocurrency for payments.
  • Earning stake benefits.
  • Receiving airdrops.

TDS on Crypto Assets:

A 1% TDS is charged on the transfer of crypto assets. TDS is collected at the time of the transaction or source. The primary purpose of this 1% TDS is to ensure transaction reporting and track investments made by Indian investors in cryptocurrency. It is important to note that a transfer refers to a change of ownership, such as a sale, exchange, or expenditure, and not merely transferring funds between wallets.

Set Off of Losses

Losses from cryptocurrency investments cannot be offset against cryptocurrency profits or any other gains or income, as per Section 115BBH. Furthermore, apart from the acquisition cost or purchase price, no deductions other than purchase costs are allowed for cryptocurrency investors

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Jun 22 2023
Form DPT-3 Due Date Can be filed till 31st July 2023.

The announcement was made through General Circular no. 06/2023 issued by the Ministry. The extension in the due date provides relief to companies, allowing them more time to comply with the filing requirements for the Financial Year ended on March 31, 2023. By extending the deadline, companies can avoid paying additional fees that would have been applicable for late filing. This decision acknowledges the challenges posed by the transition of the MCA-21 Portal and aims to facilitate a smoother filing process for businesses.

Now for the Financial Year 2022-23 Extended-

Due date for filing Form DPT-3 (Return of deposits) is 30th of June 2023 for the Financial Year ended on 31st March 2023. Keeping in view the transition of MCA-21 Portal from Version-2 to Version-3, it has been decided to allow companies to file Form DPT-3 for the financial year ended on 31st March 2023 without paying additional fees up to 31st July 2023.

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      Jun 19 2023
      Presumptive Taxation in India: Simplifying Taxes for Small Businesses

      Taxation is an essential component of any country’s economic system, providing the necessary revenue for the government to fund public services and infrastructure. In India, where the small business sector plays a significant role in driving economic growth and employment, the concept of presumptive taxation has emerged as a simplified tax regime. Designed specifically for small businesses, this system aims to reduce the compliance burden and promote ease of doing business. In this article, we will explore the concept of presumptive taxation in India and its benefits for small business owners.

      Presumptive taxation is a method of calculating and paying taxes based on a presumed income or profit percentage. It offers an alternative to the traditional system of maintaining meticulous accounting records and undergoing complex tax assessments. Introduced under Section 44AD, 44ADA, and 44AE of the Income Tax Act, 1961, presumptive taxation primarily targets small businesses and professionals with a turnover below a specified threshold.

      Eligible businesses include individuals, Hindu Undivided Families (HUFs), and partnerships with a total turnover or gross receipts of up to Rs. 2 crore in a financial year. These businesses can opt for the presumptive taxation scheme and declare their income as a percentage of total turnover, thereby avoiding the need for detailed bookkeeping.

      Professionals such as doctors, lawyers, engineers, architects, accountants, and other specified professionals can avail of the presumptive taxation scheme under Section 44ADA. They can declare 50% of their gross receipts as their taxable income, eliminating the requirement for maintaining books of accounts. Gross Turnover upto Rs. 50 Lakhs and From FY 2023-24 Rs.75 Lakhs Per Annam.

      Section 44AE is applicable to owners of goods carriage vehicles who can determine their income based on the number of vehicles owned and utilized for business purposes. A fixed presumptive income per vehicle is calculated, taking into account the load capacity and distance covered, thereby simplifying the tax calculation process. applicable for upto 10 Vehicles Owned Per year

      Benefits of Presumptive Taxation

      1. Reduced Compliance Burden: Presumptive taxation significantly reduces the compliance burden for small businesses and professionals. By eliminating the need for maintaining detailed accounting records and undergoing extensive tax assessments, this system saves valuable time and resources.
      2. Simplified Tax Calculation: Under the presumptive taxation scheme, taxpayers can determine their taxable income based on a predetermined percentage of their total turnover or gross receipts. This simplicity makes tax calculation more straightforward and less prone to errors.
      3. Presumptive Income Benefits: The presumed income percentage set by the government is generally lower than the actual profit margins earned by small businesses and professionals. This implies that taxpayers can enjoy the advantage of a lower tax liability, enhancing their overall profitability.
      4. Cash Flow Management: By opting for presumptive taxation, small businesses can manage their cash flow effectively. The tax liability is calculated based on turnover, eliminating the need to wait for actual realization of payments before paying taxes.
      5. Increased Taxpayer Base: Presumptive taxation has encouraged more small businesses and professionals to enter the formal tax system. The simplified compliance requirements make it easier for previously unregistered entities to join the mainstream economy, fostering transparency and accountability.

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      Jun 16 2023
      Changes in Tax Rates Budget 2023 Applicable for FY 2023-24:-

      • In the alternate tax regime under Section 115BAC(1A), the basic exemption limit shall be INR 3,00,000 and for every additional INR 3,00,000 of income, the next slab rate will be applicable. The highest slab rate of 30% shall continue to apply to income above INR 15,00,000.

      • The alternate tax regime of Section 115BAC shall also apply to Association of Persons (AOP)[(other than a co-operative society], Body of Individuals (BOI), and Artificial Juridical Persons (AJP).

      • Under the new tax regime, the highest surcharge rate of 37% on income above INR 5,00,00,000 has been reduced to 25%.

       • The threshold limit for total income eligible for rebate under Section 87A has been increased from INR 5,00,000 to INR 7,00,000 for assessees opting for the new tax regime.

      • Standard deduction from salary income and deduction from family pension is extended to employees who opt for New Tax Regime.

      • The new tax regime under Section 115BAC is the default tax regime.

      • Marginal rebate under section 87A shall be allowed in the new tax regime under Section 115BAC(1A) where total income marginally exceeds INR 7,00,000.

      • Tax rate under Section 115A has been reduced from 20% to 10% on the dividend income received by a non-resident or a foreign company from a unit in an IFSC as referred to in section 80LA(1A).

      • Tax rate on royalty income and fees for technical services has been increased from 10% to 20%.

      • A new section 115BAE has been inserted to provide a reduced tax rate of 15% (plus surcharge of 10% and cess) to manufacturing co-operative societies established on or after April 1st, 2023, and commencing production on or before March 31st, 2024 [provided that specified incentives or deductions are not availed].

      • Section 115BBJ has been inserted to levy the tax at the rate of 30% on any winning from online gaming. A consequential amendment has been made to Section 115BB to exclude winning from online games from its scope.

      • Consequential amendments have been made to Section 115JC and Section 115JD to provide an exemption from the provisions of AMT on opting for the new tax scheme of Section 115BAE or Section 115BAC(1A).

      • A consequential amendment has been made to Section 92BA to give a reference to the new tax scheme of Section 115BAE.

      No surcharge and health and education cess shall be levied on the tax calculated on income from securities held by the specified fund referred to in Section 10(4D).

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      Financial Planning: Your Path to a Secure Future
      Jun 16 2023
      2FA Mandatory for E-waybill/E-invoice login: Taxpayers with AATO over Rs 100 Cr

      In a recent update dated June 12, 2023, the e-Way Bill/e-Invoice System has introduced a significant security enhancement called 2-Factor Authentication (2FA). This measure is aimed at ensuring the safety and integrity of the system. Starting from July 15, 2023, all taxpayers with an Annual Aggregate Turnover (AATO) above Rs 100 crore will be required to mandatorily use 2FA when accessing the e-Way Bill/e-Invoice System.

      What is 2-Factor Authentication?

      2-Factor Authentication (2FA) adds an extra layer of security to the login process of the e-Way Bill/e-Invoice System. In addition to the regular username and password, users will now need to authenticate themselves using a One-Time Password (OTP) to access the system.

      Registration for 2-Factor Authentication

      To register for 2-Factor Authentication for accessing the e-Way Bill/e-Invoice System, follow these steps:

      i) Log in to the e-Way Bill System;

      ii) Go to the ‘Main Menu’ and select ‘2 Factor Authentication’; and

      iii) Confirm the registration process.

      Once the registration is complete, the system will prompt for the OTP along with the username and password during login. It’s important to note that OTP authentication is linked to individual user accounts. Sub-users of GSTIN will have separate authentication based on their registered mobile number in the e-Way Bill/e-Invoice System. Once registered for 2-Factor Authentication, it will apply to both the e-Way Bill and e-Invoice systems.

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      Jun 16 2023
      e-Invoicing for B2B transactions has been applicable with effect from 1st August, 2023 for turnover 5 crores on-wards

      It is to inform that as per Notification No. 10/2023 – Central Tax dated 10th May 2023, the threshold for e-Invoicing for B2B transactions has been lowered from 10 crores to 5 crores. This change will be applicable from 1st August 2023.

      2.   To this effect GSTN has enabled all eligible taxpayers with an Aggregate Annual Turnover (AATO) 5 crores and above as per GSTN records in any preceding financial year for e-Invoicing. These taxpayers are now enabled on all six IRP portals including NIC-IRP for e-Invoice reporting.

      3.   You can check your enablement status on the e-Invoice portal at https://einvoice.gst.gov.in .

      4.   It would be in the interest of trade to register and utilize the sandbox testing facility available at the IRP portals. This will help taxpayers to familiarize themselves with the invoice reporting mechanism and ensure a seamless transition to the e-Invoice system.

      5.   Please note that the enablement status indicated on the e-Invoice portal does not indicate a legal obligation on taxpayers to use e-Invoicing. However, actual liability to generate IRN shall be checked by taxpayers with respect to applicable notification in the light of facts pertaining to them.

      6.   While the listing of enabled GSTINs is purely based on the turnover criteria reported in GSTR-3B, it is essential for taxpayers to confirm whether they fulfil the conditions outlined in the notification/rules. Thus, it is the legal responsibility of the concerned taxpayer, both buyers and suppliers, to ensure compliance.

      7.   In case, a taxpayer who is otherwise but not auto enabled on the e-Invoice portal, can self-enable for e-Invoicing using the functionality provided on the portal.

      8.   GSTN once again emphasises that all eligible taxpayers should familiarize themselves with the e-Invoicing requirements and take the necessary steps to ensure compliance with the new threshold.

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      INCOME TAX FORM 10 IE WHO SHOULD FILE AND WHEN SHOULD FILE
      Jun 15 2023
      WHO SHOULD FILE FORM 10 IE BEFORE FILING IT RETURNS AY 2023-24 (FY 2022-23)

      Any individual with business or professional income should submit Form 10-IE to inform the IT department if they wish to switch from the old tax regime to the new one on or before July 31st 2023, and only then file their income tax return

      Q; When should I file Form 10E?
      Ans: Form 10E has to be filed before filing your Income Tax Return.

      Q; Is Form 10E mandatory to file?
      Ans; Yes, it is mandatory to file Form 10E if you want to claim a tax relief on your arrear / advance income.

      Q; What will happen if I fail to file Form 10E but claim relief u/s 89 in my ITR?
      Ans; If you fail to Form 10E but claim relief u/s 89 in your ITR, your ITR will be processed, however the relief claimed u/s 89 will not be allowed.

      Q; How do I know that ITD has disallowed the relief claimed by me in my ITR?

      Ans; In case the relief claimed by you u/s 89 is disallowed, the same shall be communicated by the Income Tax Department through an intimation u/s 143(1) after the processing your ITR is complete. 

      Q; I am unable to add income details for while filing Form 10E for the FY 2019-20. What should I do?

      Ans: Ensure that you are filing Form 10E for Assessment year 2021-22. In order to file Form 10E for Assessment year 2021-22, click e-File>Income Tax Forms>File Income tax Forms. Scroll down to find the tab “Persons without Business/Professional Income” Click on File now. Select Assessment Year as 2021-22 and click on Continue.

      Q; I am filing ITR for the AY 2021-22. What should I choose as the AY while filing Form 10E?

      Ans; If you are filing Income Tax Return for Assessment Year 2021-22, you need to select Assessment Year 2021-22 while submitting Form 10E.

      Q: While filing Form 10E, I am unable to view the taxes applicable in the Assessment year. How should I proceed?
      Ensure that you have filled in all income details (including previous year income details in Table A). The taxes will be automatically displayed based on the slab rate. Verify if the income as per the details available on the portal matches with your calculation and insert the amount of tax in the respective table.
       

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