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GST Amnesty Scheme U/S 128A

GST Amnesty Scheme U/S 128A

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  • GST Amnesty Scheme U/S 128A
GST Amnesty Scheme U/S 128A

The Financial Bill released on July 23, 2024, introduces a significant new provision Section 128A to the Central Goods and Services Tax (CGST) Act. This section specifically addresses the waiver of interest or penalties, or both, related to demands raised under Section 73 of the CGST Act for certain tax periods. This change aligns with discussions from the 53rd GST Council meeting held onJune 22, 2024, which highlighted the need for a more flexible approach to tax compliance and
enforcement. Section 128A aims to offer relief to businesses by reducing the financial burden of interest and penalties, thus fostering a more supportive tax environment.

June 24 2024

GST Council Meeting

June 23 2024

Financial Bill

March 31 2024

Deadline forTax Payment as per 53rd GST Council Meeting

Note: ThePressReleaseissuedafter the 53rdGSTCouncil Meeting initially specified a cut-off date of March 31, 2025. However, lawmakers have granted the Government the authority to extend this deadline if necessary. Therefore, the Government may notify an extended deadline as deemed appropriate, though it is yet to be formally notified

What is an Amnesty Scheme ?

  • An amnesty scheme in taxation refers to a limited-time opportunity offered by the government to taxpayers to settle their outstanding tax liabilities with reduced penalties and interest.
  • Theseschemesaredesignedto encourage voluntary compliance, clearbacklogs of disputed tax demands, and increase tax revenue by providing a more lenient settlement option comparedtostandard enforcement measures.
  • Benefits in an Amnesty Scheme include: 
    • Significant reduction or waiver of penalties
    • Encourages regular tax compliance.
    • Resolveslong-standing disputes.
    • Restores blocked ITC for better cash flow
    • Helps avoid legal proceedings

Is this the first ever Amnesty Scheme?

Previously (as examples shown below) are amnesty schemes under the CBIC which have typically addressed issues related to the late submission of GST monthly and Annual Returns. These initiatives aimed to alleviate penalties and encourage compliance among taxpayers. Similarly, The latest scheme, discussed in the 53rd GST Council meeting and
detailed in the financial bill, 2024, introduces Section 128A in CGST Act to provide conditional waiver of interest or penalty or both relating to demands raised under section 73 years 2017-18, 2018-19 and 2019-20 , in cases where demand notices have been issued under section 73and full taxliability is paid by the taxpayer before a date to be notified.

amnesty scheme

What is Covered in the Proposed Scheme?

Scope: Applies specifically to demands under Section 73, which generally deals with non-fraudulent tax discrepancies and refunds.
Time Frame: Relief applicable for tax periods from FY2017-18 to FY2019-20.
Due Date for Payment: All taxes must be paid on or before March 31, 2025 as per the 53rd GST Council meeting. However, currently the law remains silent and an official notification from the government is yet to be issued.
Relief: Complete waiver of interest and penalty.

What is Not Covered in the Scheme?

While the proposed GST Amnesty Scheme under Section 128A offers significant relief to taxpayers, it is important to understand that certain cases are noteligible for this scheme. This exclusion aims to maintain the integrity of the tax system and ensure that the scheme benefits those who comply with the law in good faith. The following are the key
exclusions:

  • Demands raised under Section 74, i.e., cases involving fraud, willful misstatement, or suppression of facts to evade tax.
  • Erroneous refunds received by the assesses.
  • No refund will be issued for interest and penalty already paid by the taxpayers.

Advantages of the Scheme

  • Reduction in Litigation: By offering a waiver of interest and penalties, the scheme incentivizes taxpayers to settle disputes without further legal proceedings, reducing the burden on tax tribunals and courts.
  • Revenue Generation: The scheme encourages the payment of outstanding taxes, leading to immediate revenue generation for the government.
  • Relief for Taxpayers: Provides significant relief to taxpayers who faced difficulties during the initial years of GST implementation, offering a chance to settle their dues with a reduced financial burden.

Is Excluding erroneous refunds justified?

  • Unlike income tax refunds, delayed GST refunds do not receive the benefit of delayed interest. Many taxpayers have approached High Courts seeking interest on delayed refunds and have GST authorities.
  • Erroneous refunds typically involve the utilization of Input Tax Credit (ITC), which should not attract interest unless it pertains to ineligible credits. Denying amnesty benefits solely because the credit was utilized through are fund is unjustified.
  • Penalties for erroneous refunds, especially those obtained through specific applications like RFD-01 and verified by an officer, are not warranted. Extending penalty waivers to erroneous refunds would help resolve disputes and litigation

Is the Scheme Applicable at all stages of Litigation?

The applicability extends to:

  • Notice issued under section 73 of the CGST Act: The scheme covers cases where a notice has been issued under Section 73 for recovery of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilized.
  • Notice issued under section 74, deemed as issued under section 73 due to the absence of elements of fraud/suppression/ wilful misstatement: If a notice initially issued under Section 74 is later deemed to be issued under Section 73 because it lacks elements of fraud, suppression, or wilful misstatement, it falls under the purview of this amnesty scheme.
  • Order issued under section 73 of the CGST Act, where no order under sub-section (11) of section 107 [Appellate Authority] or sub-section (1) of section 108 [Revisional Authority] has been issued: If an order has been issued under Section 73, and there is no subsequent order from the Appellate Authority (Section 107) or the Revisional Authority (Section 108), this situation is also covered by the amnesty scheme.
  • Orders issued under section 73(9) and further no orders have been passed from high court/ supreme court under sections 117 or 118 respectively: The scheme is still applicable, subjective to withdrawal of appeal before high court/supremecourt.
  • Appeal Order or Revisional Authority Order: The scheme also includes cases where orders have been issued by the Appellate Authority or the Revisional Authority.

If the Litigation is initiated by a Taxpayer

Litigation is initiated by a Taxpayer

If the Litigation is initiated by the department

If the Litigation is initiated by the department

Suggestions for Different Cases

  • ASMT-10(It is often used to issue an assessment order, which might result in a demand for tax liability. Once the assessment is complete and if any tax dues are identified, the GST officer may issue DRC-01 to formally demand the payment of the assessed tax amount.)
  • DRC-01 (i. It is a formal show cause notice to the taxpayer indicating the amount of tax, interest, and penalty issued after the taxpayer does not respond satisfactorily to the DRC-01A or does not comply with the intimation provided therein.

ii. Issued right afterward if there is a need to formally demand the payment of the tax assessed in ASMT
10.)

  • DRC–07 (issued after the adjudication of the show cause notice (DRC-01) when the tax authority has made a final determination.)
  • GSTAPL– 01 (An Appeal to Appellate Authority by a taxpayer or an unregistered person aggrieved by any decision or order passed against him by an adjudicating authority.)
  • Or when a writ petition is filed.

For all the above cases , there can be three possible outcomes:

A. Acceptance of all allegations – Pay the demanded tax amount and avail benefits of section 128A i.e– waiver of interest and penalty.
B. Acceptance of some of the allegations – Pay tax, interest and penalties attracted towards accepted allegations.
C. Declination of all the allegations – Go for further proceedings or pay the pre-deposit for further appeals.

Is Excluding cases related to Section 74 of the CGST Act Justifiable?

  • The government’s decision not to extend this scheme to Section 74 cases is understandable, given the association of fraudulent intentions with taxpayers falling under this section.
  • However, numerous notices are issued under Section 74 without sufficient grounds, often after the expiration of the time limit for issuing show cause notices under Section 73.
  • In such cases, taxpayers who wish to settle disputes based on their merits face the imposition of interest and penalties.
  • Extending the benefits of the scheme to these cases could potentially resolve a significant number of disputes.
  • Moreover, when Section 74 notices are issued within the timeframe set for Section 73 notices, Section 75(2) considers these notices as being issued under Section 73.
  • However, delays in making these decisions beyond March 31, 2025, would mean that taxpayers miss out on the opportunity to benefit from the amnesty scheme.

Can we avail the scheme benefit for specific issues of a single notice?

  • No, the scheme doesn’t benefit only specific issues of a single notice.
  • Upon reviewing past Amnesty Schemes under income and Service Tax, it becomes evident that the government’s primary aim in introducing these schemes is to effectively reduce and resolve cases in their entirety, rather than offering partial relief.
  • We are pretty much sure that the proposed scheme will continue to do the same, by providing comprehensive solutions without partial measures.
  • Taxpayers facing notices that include both favourable and unfavourable judgements must carefully assess their options under the scheme to ensure they maximize the benefits available to them.

Are Transition Credit Disputes Covered
Under this scheme?

  • The new amnesty scheme under Section 128A of the CGST Act covers certain transitional credit disputes.
  • If there is an ongoing dispute under Section 73 that involves the credit or tax payments related to the previous regime, it should be resolved before claiming transitional credit. This is to ensure that any claims made are accurate and not affected by unresolved issues.
  • Transitional credits refer to the input tax credits that taxpayers were entitled to carry forward from the pre-GST regime to the GST regime under Section 140 of the CGST Act.
  • The Supreme Court, in the case of Filco Trade Centre Pvt. Ltd. vs Union of India, directed the Goods and Services Tax Network (GSTN) to provide a one-time opportunity for all taxpayers to either file or revise Form TRAN-1. This decision allows taxpayers to claim transitional credits that were initially not claimed.
  • Many taxpayers faced technical issues or other difficulties in filing or correctly submitting Form TRAN-1 within the stipulated deadline.
  • Hence, the Supreme Court ordered GSTN to open a one-time window for all taxpayers to either file Form TRAN-1 or revise the previously filed Form TRAN-1 to claim unclaimed transitional credits.
  • Now, for cases were transitional credit claimed post 1st July 2017, we are at a view that the remedy available u/s 128A can be availed.

SBC Takeaways

  • The introduction of Section 128A in the Finance (No.2) Bill –2024 is a strategic move to ease the burden on taxpayers involved in non-fraud cases under Section 73 of the CGST Act.
  • This amendment provides relief through conditional waivers while ensuring that tax collection goals are achieved.
  • The exclusion of erroneous refunds from the waiver scope also serves to prevent revenue losses.
  • Participating in the amnesty scheme can help businesses ensure that their transitional credit claims are accurate and compliant with GST regulations, thus avoiding disputes or penalties.
  • For notices which state multiple issues, the benefit of waiver cannot be claimed for a certain or specific issue.
  • Overall, this amendment benefits taxpayers by creating a supportive and compliant tax environment, while simultaneously maintaining the revenue authority’s focus on genuine tax collection efforts.

How Can SBC help in Amnesty Scheme?

sbc amnesty scheme

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Indian Transfer Pricing Compliances

Indian Transfer Pricing Compliances

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  • Indian Transfer Pricing Compliances
Indian Transfer Pricing Compliances

Local File

TP compliance Applicability Due date Penalty for non compliance
TP Study to be maintained u/s 92D
If aggregate value of International Transactions > INR 1 Crore or If Specified Domestic Transactions (SDT) > INR 20 Crores [transactions with entities/units claiming special tax holiday exemptions or deductions u/s 80IA or 80IB or 10AA or with entities claiming concessional tax rates of u/s 115BAB]
31 October 2024 (1 month prior to Tax Return filing due date)
2% of value of International Transactions or SDT
Form No. 3CEB Report by an Accountant u/s 92E
If International Transactions (irrespective of threshold) are undertaken with foreign Associated Enterprises (AEs) or If SDTs are undertaken with Indian AEs (either of the parties are claiming any tax holiday exemptions or concessional tax rates and the overall transactions value exceeds INR 20 Crores)
31 October 2024 (1 month prior to Tax Return filing due date)
INR 1,00,000

Master File

TP compliance Applicability Due date Penalty for non compliance
Form No. 3CEAA (Part A) – Master File u/s 92D(4) (One Page Form)
Part A is applicable if International Transactions are undertaken during the financial year (Part A is applicable to all MNEs irrespective of threshold)
30 November 2024 (Same as Tax Return filing due date)
INR 5,00,000 Non furnishing of information and documentat ion
Form No. 3CEAA (Part B) – Master File u/s 92D(4) (Detailed Form)
Part B is applicable if below twin conditions are satisfied:-

  • Consolidated Group Revenue exceeds INR 500 Crores and
  • Aggregate value of all International Transactions exceeds INR 50 Crores or the Intangible Property related International Transactions exceeds INR 10 Crores
    		•
    30 November 2024 (Same as Tax Return filing due date)
    INR 5,00,000 Non furnishing of information and documentat ion
    Form No. 3CEAB Master File Intimation u/s 92D(4) (One Page Form)
    It is applicable to MNEs crossing the above Master File filing thresholds and having more than one entity operating in India
    31 October 2024 (30 days prior to Master File filing due date)
    INR 5,00,000 Non furnishing of information and documentat ion

    Country-by-Country Report (CbCR)

    TP compliance Applicability Due date Penalty for non compliance
    Form No. 3CEAD CbC Report u/s 286(2)/(4) (Detailed Form)
    If Consolidated Group Revenue for preceding accounting year exceeds INR 6,400 Crores.

    However, if the bilateral exchange relationship for the automatic exchange of CbC Reports between tax authorities of Parent Entity/Alternate Reporting Entity (ARE) Jurisdiction and Indian jurisdiction is activated, then the Indian entity need not file CbCR in India as per Form No. 3CEAD. Indian entity is only required to file a CbCR Notification via Form No. 3CEAC.

    Link to check activated exchange relationships for CbCR https://www.oecd.org/tax/beps/country-by-country-exchange-relationships.htm
    12 months from the Penalty for non compliance end of group’s accounting year

    31 December 2024 (if Group’s accounting year is ending on 31 December 2023)
    INR 5,00,000 – Furnishing of inaccurate information in CbCR

    INR5,000/15,000/ 50,000 per day – Non-furnishing of CbCR – Depending on the days of delay of violation
    Form No 3CEAC CbCR Notification u/s 286(1) (One Page Form)
    CbCR Notification is to be filed when Parent Entity/ ARE is filing CbCR in its respective jurisdiction and there is an automatic exchange of CbCR activated between Parent/ARE’s jurisdiction and the jurisdiction of Constituent entity i.e., India
    10 months from the end of group’s accounting year

    31 October 2024 (if Group’s accounting year is ending on 31 December 2023)
    INR 5,00,000 – Furnishing of inaccurate information in CbCR

    INR5,000/15,000/ 50,000 per day – Non-furnishing of CbCR – Depending on the days of delay of violation

    Other Important Tax Filings

    Important Tax Compliances Due Dates Applicable for Transfer Pricing Cases
    Income Tax Return (ITR)
    30 November 2024
    Form No. 3CA/3CD – Tax Audit Report u/s 44AB
    31 October 2024 (1 month prior to ITR due date)
    Form No. 29B – Report u/s 115JB for certifying book profits computation
    31 October 2024 (1 month prior to ITR due date)
    Form No. 10ID – One time application u/s 115BAB(7) for exercise of concessional tax rate of 15% in case of new manufacturing domestic co’s
    Before filing ITR which is due by 30 November 2024
    Form No. 10IC – One time application u/s 115BAA(5) for exercise of concessional tax rate of 22% in case of domestic co’s
    Before filing ITR which is due by 30 November 2024
    Form No. 56F – Report u/s 10A/10AA for claiming tax exemptions/reliefs by FTZ/SEZ units/entities
    31 October 2024 (1 month prior to ITR due date)
    Form No. 56FF – Particulars to be furnished under clause (b) of sub-section (1B) of section 10A for claiming tax exemptions/reliefs by FTZ/SEZ units/entities
    31 October 2024 (1 month prior to ITR due date)
    Form No. 10CCB – Audit Report u/s 80I(7)/80IA(7)/80IB/80IC/80IE for claiming tax holiday deductions
    31 October 2024 (1 month prior to ITR due date)
    Form No. 10CCBBA – Audit Report u/s 80ID(3)(iv) for claiming deduction in respect of profits and gains from business of hotels and convention centres in specified area
    31 October 2024 (1 month prior to ITR due date)
    Form No. 10CCBC – Audit Report u/s 80-IB(11B) for claiming deduction in deduction in the case of an undertaking deriving profits from the business of operating and maintaining a hospital in a rural area
    31 October 2024 (1 month prior to ITR due date)
    Form No. 10DA – Report u/s 80JJAA – Additional employee deduction
    31 October 2024 (1 month prior to ITR due date)
    Form No. 67 – Statement for claiming Foreign Tax Credit (FTC)
    On or Before end of AY i.e., 31 March 2025

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    Learn Everything About Tax System & Taxation in India

    LEARN EVERYTHING ABOUT TAX SYSTEM & TAXATION IN INDIA

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    • LEARN EVERYTHING ABOUT TAX SYSTEM & TAXATION IN INDIA
    SBC

    Every government’s important and greatest source of revenue comes from taxes. Tax revenue is used by the government for a number of initiatives aimed at advancing the country. In India, the central government, state governments, and local municipal entities make up the tax structure. The three-tier structure of the Indian tax system is well-designed.

    Major Central Taxes
    • Income Tax
    • Central Goods & Services Tax (CGST)
    • Customs Duty
    • Integrated Goods & Services Tax (IGST)
    Major State Taxes
    • State Goods & Services Tax (SGST)
    • Stamp Duty & Registration
    Local Municipal Taxes
    • Property Tax
    • Professional tax
    Types of Taxes in India

    The two main types of taxes in India are those levied by the Central and State governments:

    1. Direct Taxes

    2. Indirect Taxes

    In India, you pay direct taxes on your income, but spending is subject to indirect taxes. The earning party, whether an individual, HUF, or business, is accountable for depositing the direct tax due.

    Indirect taxes include value-added tax, service tax, goods and service tax, customs duty, etc. whereas direct taxes include income tax, gift tax, capital gain tax etc.

    Direct taxes account for almost 50% of the government’s revenue in India. The majority of indirect taxes are collected by corporations and companies that provide goods and services. These organisations are therefore accountable for depositing indirect taxes.

    Goods and Services Tax (GST)

    A complicated network of indirect taxes has been consolidated into the Goods and Services Tax, or GST tax. India’s tax system consists of three tiers of levies: the central government, the states, and local governments.

    Prior to the implementation of the GST, the following indirect taxes might be applied to goods and services in India:

    a) Excise Duty
    b) Entertainment Tax
    c) Value Added Tax (VAT, State)
    d) Octroi
    e) Service Tax
    f) Central Sales Tax (collected by State)
    g) Purchase Tax
    h) Entry Tax (State)
    i) Luxury Tax (State)

    These interconnected and sometimes overlapping taxes resulted in several drawbacks and disputes for manufacturers and suppliers as well as the governing authorities. Therefore, GST was brought into effect.

    Taxability in India
    Individual

    An individual in India is taxed on the basis of the salary they earn

    SBC
    Company

    The effective corporate tax rate for any corporate house would have the following components:

    • Corporate tax
    • Surcharge (charged for corporates earning higher incomes) and 
    • Education Cess (applied on corporate tax and surcharge above)
    Corporate tax rates For Domestic corporates
    • For a gross turnover of up to INR 400 crores in FY 2020-21, the corporate tax rate is 25%.
    • For a gross turnover above INR 400 crores in FY 20, the corporate tax rate is 30%.

    The domestic corporate houses are also provided with an option to opt for a beneficial tax rate of 15% (if engaged in manufacturing) and 22% (subject to foregoing certain benefits). These rates require the satisfaction of an enumerated list of conditions as given under Indian Income-tax laws.

    For Foreign corporates
    • Interest is charged at 5% or 20%
    • Royalty or Fee for technical services is charged at a 10% tax rate.
    • Any other kind of income is charged at a rate of 40%

    The above rates are subject to rates given in Tax-treaty with the country in which the foreign corporate is domiciled.

    LEARN EVERYTHING ABOUT TAX SYSTEM & TAXATION IN INDIA
    1. Surcharge:–
    2. Health and Education Cess: @4% of income tax plus surcharge
    3. MAT: All businesses, whether domestic or foreign (apart from those in the infrastructure and power sectors), that report zero or a minimal income in order to avoid paying taxes are required to pay MAT at a rate of 15 percent (plus surcharge and cess as applicable)
    Branch Office
    • Project Offices and Branch Offices are both considered as Indian Permanent Establishments of their foreign headquarters. As a result, it is taxed at a rate of 40%* on its Indian profits.
    • A PAN, TAN, yearly income tax return and AAC must all be obtained by the PO/BO.
    • There are no additional taxes due upon repatriation of excess or at the time of closure for POs or BOs.
    Firm/LLP
    • An LLP formed in India is regarded as an Indian tax resident and is subject to a 30 percent* tax on its worldwide revenue.
    • A PAN and TAN must be obtained, and an annual income tax return must be filed.
    Taxation Of Different Foreign Entities As Per Income Tax Act
    A company formed in India (Wholly-owned subsidiary/ Joint Venture)
    • An Indian-incorporated business is considered an Indian tax resident and is subject to a 30 percent tax on its worldwide revenue. However, the appropriate rate of tax is 25 percent if its turnover in FY 2017–18 is up to INR 4,000 mn.
    • A PAN and TAN must be obtained, and an annual income tax return must be filed.
    • The domestic firm is exempt from paying dividend distribution tax starting with the Assessment Year 2021–2022 on any amount declared, distributed, or paid by such a company as a dividend.
    • A domestic company’s dividend is taxable in the hands of the shareholders.
    LLPs

    The profits that LLP distributes to its partners are not subject to tax in either party’s possession. Repatriation of capital contributions is permitted without any thresholds and is not subject to any additional taxes, such as upon dissolution.

    Liaison Office
    • Due to Indian exchange control restrictions, a Liaison Office (LO) is often exempt from income tax in India because it cannot engage in commercial activity or generate profits.
    • Both a withholding tax registration number (TAN) and an Indian tax registration number (PAN) must be obtained.
    • A yearly financial affairs statement and an annual activity certificate must be submitted (AAC) by LO.
    • There are no repatriation taxes due to the fact that a LO often cannot produce any profits. Even if there are any unutilized funds at the time of its closure, it can be repatriated without any exit taxes.

    The whole income tax collection and return filing procedure has been digitalized by India’s income tax department over the last several years. Through the numerous portals of the Income Tax Department, it has become quite simple for both individuals and companies to pay their taxes online, file returns, and finally trace the history of their payments. 

    How Steadfast Business Consulting Helps You With Taxation

    Steadfast Business Consulting’s income tax services keep you informed of the evolving needs of the taxation system in India and overseas while minimizing your exposure to business and personal taxation. We provide a wide range of completely integrated direct tax and regulatory services for thriving firms in both their local and international activities. For major multinational corporations, mid-sized firms, high-net-worth individuals, and company owners wishing to expand, our specialised teams offer the most tax-effective options.

    Frequently Asked Questions

    Who are the taxpayers in India?

    A taxpayer, also known as an assessor, is a person who must pay tax to the government on the basis of the type and amount of income received during an assessment year. In India, a taxpayer is anyone who is earning an income, whether an individual or a corporate.

    What are the different types of taxes in India?

    In India, there are two different forms of taxes: direct tax and indirect tax. Indirect taxes include value-added tax, service tax, Good and Service Tax, customs duty, etc. whereas direct taxes include income tax, gift tax, capital gain tax, etc.

    What is the structure of the Indian tax system?

    The Indian tax system is well structured and has three tiers. The central government, state governments, and local municipal entities make up the tax structure. 

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    Categories

    SBC
    Company

    The effective corporate tax rate for any corporate house would have the following components:

    • Corporate tax
    • Surcharge (charged for corporates earning higher incomes) and 
    • Education Cess (applied on corporate tax and surcharge above)
    Corporate tax rates For Domestic corporates
    • For a gross turnover of up to INR 400 crores in FY 2020-21, the corporate tax rate is 25%.
    • For a gross turnover above INR 400 crores in FY 20, the corporate tax rate is 30%.

    The domestic corporate houses are also provided with an option to opt for a beneficial tax rate of 15% (if engaged in manufacturing) and 22% (subject to foregoing certain benefits). These rates require the satisfaction of an enumerated list of conditions as given under Indian Income-tax laws.

    For Foreign corporates
    • Interest is charged at 5% or 20%
    • Royalty or Fee for technical services is charged at a 10% tax rate.
    • Any other kind of income is charged at a rate of 40%

    The above rates are subject to rates given in Tax-treaty with the country in which the foreign corporate is domiciled.

    LEARN EVERYTHING ABOUT TAX SYSTEM & TAXATION IN INDIA
    1. Surcharge:–
    2. Health and Education Cess: @4% of income tax plus surcharge
    3. MAT: All businesses, whether domestic or foreign (apart from those in the infrastructure and power sectors), that report zero or a minimal income in order to avoid paying taxes are required to pay MAT at a rate of 15 percent (plus surcharge and cess as applicable)
    Branch Office
    • Project Offices and Branch Offices are both considered as Indian Permanent Establishments of their foreign headquarters. As a result, it is taxed at a rate of 40%* on its Indian profits.
    • A PAN, TAN, yearly income tax return and AAC must all be obtained by the PO/BO.
    • There are no additional taxes due upon repatriation of excess or at the time of closure for POs or BOs.
    Firm/LLP
    • An LLP formed in India is regarded as an Indian tax resident and is subject to a 30 percent* tax on its worldwide revenue.
    • A PAN and TAN must be obtained, and an annual income tax return must be filed.
    Taxation Of Different Foreign Entities As Per Income Tax Act
    A company formed in India (Wholly-owned subsidiary/ Joint Venture)
    • An Indian-incorporated business is considered an Indian tax resident and is subject to a 30 percent tax on its worldwide revenue. However, the appropriate rate of tax is 25 percent if its turnover in FY 2017–18 is up to INR 4,000 mn.
    • A PAN and TAN must be obtained, and an annual income tax return must be filed.
    • The domestic firm is exempt from paying dividend distribution tax starting with the Assessment Year 2021–2022 on any amount declared, distributed, or paid by such a company as a dividend.
    • A domestic company’s dividend is taxable in the hands of the shareholders.
    LLPs

    The profits that LLP distributes to its partners are not subject to tax in either party’s possession. Repatriation of capital contributions is permitted without any thresholds and is not subject to any additional taxes, such as upon dissolution.

    Liaison Office
    • Due to Indian exchange control restrictions, a Liaison Office (LO) is often exempt from income tax in India because it cannot engage in commercial activity or generate profits.
    • Both a withholding tax registration number (TAN) and an Indian tax registration number (PAN) must be obtained.
    • A yearly financial affairs statement and an annual activity certificate must be submitted (AAC) by LO.
    • There are no repatriation taxes due to the fact that a LO often cannot produce any profits. Even if there are any unutilized funds at the time of its closure, it can be repatriated without any exit taxes.

    The whole income tax collection and return filing procedure has been digitalized by India’s income tax department over the last several years. Through the numerous portals of the Income Tax Department, it has become quite simple for both individuals and companies to pay their taxes online, file returns, and finally trace the history of their payments. 

    How Steadfast Business Consulting Helps You With Taxation

    Steadfast Business Consulting’s income tax services keep you informed of the evolving needs of the taxation system in India and overseas while minimizing your exposure to business and personal taxation. We provide a wide range of completely integrated direct tax and regulatory services for thriving firms in both their local and international activities. For major multinational corporations, mid-sized firms, high-net-worth individuals, and company owners wishing to expand, our specialised teams offer the most tax-effective options.

    Frequently Asked Questions

    Who are the taxpayers in India?

    A taxpayer, also known as an assessor, is a person who must pay tax to the government on the basis of the type and amount of income received during an assessment year. In India, a taxpayer is anyone who is earning an income, whether an individual or a corporate.

    What are the different types of taxes in India?

    In India, there are two different forms of taxes: direct tax and indirect tax. Indirect taxes include value-added tax, service tax, Good and Service Tax, customs duty, etc. whereas direct taxes include income tax, gift tax, capital gain tax, etc.

    What is the structure of the Indian tax system?

    The Indian tax system is well structured and has three tiers. The central government, state governments, and local municipal entities make up the tax structure. 

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    Tax Implications On E-Commerce Operators

    TAX IMPLICATIONS ON E-COMMERCE OPERATORS

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    • TAX IMPLICATIONS ON E-COMMERCE OPERATORS
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    Online services are becoming more and more well-liked and in high demand, proving that digitalization is the future. The rise of e-commerce companies is one of the most obvious shifts in the digital economy. In this article, we go through the direct tax ramifications for e-commerce operators who may or may not be residents.

    Background

    E-commerce transactions are impacted by several tax laws, including those relating to income tax and GST in India. To avoid taxing transactions and gain tax benefits, the government is adopting several sections in both direct and indirect tax regimes. Small sellers who sold their goods or rendered services through E-Commerce Operators were formerly exempt from taxation and could avoid paying taxes on those transactions since there were no regulations governing them. Additionally, non-resident online merchants gained money in India without paying taxes. As a result, the Government added the following provisions to the GST and Income Tax.

    Under the Income-tax laws, the tax and withholding tax implications vary depending upon the role observed by an entity in the chain of e-commerce transactions.

    Key Terms

    E-commerce consists of the following things that one must be aware of:

    i. Ecommerce Operator: A person who owns, controls, or runs a digital or electronic facility or platform for electronic commerce is referred to as an “e-commerce operator” or an ECO. An ECO in India may or may not be a resident.

    ii. Ecommerce Participant: An “e-commerce participant” or ECP is a resident of India who uses a digital or electronic facility or platform for electronic commerce to sell goods, render services, or both, including digital commodities. 

    iii. E-commerce Supply or services”:

    (a) Online sale of goods owned by the ECO; or
    (b) Online provision of services provided by the ECO; or
    (c) Online sale of goods or provision of services or both, facilitated by the ECOr; or
    (d) Any combination of activities listed in clause (i), (ii) or clause (iii).

    Tax (TDS) to be deducted by E-Commerce Operator on payments made to E-Commerce Participant

    In accordance with the Explanation to Section 194O, any payment made directly to an ECP by a buyer of goods or a recipient of services for the sale of goods or the provision of services, or both, that was made possible by an ECO shall be considered to be the amount credited or paid by the ECO to the ECP and must also be included with the gross amount of these kinds of sale or services for the purpose of TDS.

    Note, no TDS  would be applicable if the ECP is a non-resident.

    What are the Applicable Income Tax Provisions for An E-Commerce Operator?

    Let’s look at the different income tax regulations that you, as an operator of an ecommerce marketplace, need to be aware of:

    For Resident ECO:

    An ECO is deemed to be a resident ECO if it is registered in India, has a permanent establishment there, or satisfies the requirements of Section 6 (the residency test) of Indian Income tax laws. According to income tax regulations, the following compliances must be made by Residents ECO:

    1. Income Tax Return 

    Commission—main ECO’s source of income—is classified under the head “Profits and Gains from Business and Profession.” The following table summarises resident ECO compliance.

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    NOTE: A tax audit is legally required to be conducted if the ECO’s annual revenue exceeds INR 10 crore and more than 95 percent of its transactions are made in an “other than cash” mode. If the “other than cash” requirement is not met, the INR 1 crore threshold for applicability of a tax audit is used instead.

    TDS to be deducted under Section 194-O

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    For Non-Resident E-Com Operators

    An ECO is said to be non-resident if it is not registered in India and does not create a residence as per  Section 6 requirements.

    A non-resident ECO would be subject to following compliances and levy:

    1. Equalisation Levy under Sec 165A:

    Yes, regardless of whether you have a large or small business, the office of the CFO is extremely important to any business. Since costing is always a concern for a business, it is wise to hire a virtual CFO.

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    Who is liable to pay Equalisation Levy under section 165A

    The equalisation levy under section 165A (read with section 166A) shall be paid by the non-resident ECO providing e-commerce supply or services.

    What is the due date of depositing Equalisation Levy under section 166A

    Equalisation Levy according to section 166A is required to be deposited by the e-commerce operator on quarterly basis on challan no. ITNS 285 as follows:

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    What are the returns to be furnished for reporting equalisation levy by an ECO

    • Every ECO liable to pay equalisation levy shall furnish an annual statement containing all particulars, as prescribed in Form No. 1 on or before 30th June immediately following that financial year.
    • The Form should be signed and verified electronically under digital signature or electronic verification code.

    Equalization Levy Vs TDS under Section 194O

    An Interplay

    The main consideration under Equalisation levy is upon  the buyer on the NR E Commerce platform whereas for TDS under Section194-O it is upon the residency of the ECP.

    Following is an instance where both the provisions are applicable .

    A Buyer resident in India purchases goods on an E Commerce platform run by a NR from a seller (ECP) who is a resident in India. In such a scenario, NR ECO would be liable to pay an equalisation levy @ 2% in India (subject to other conditions of the section being satisfied) and deduct tax @1% u/s 194 O of the ITA from the payment to be made to the seller.

    Under GST Act

    The GST implications for an e-commerce operator are broadly outlined below –

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    At Steadfast Business Consulting, we take care of all the Income Tax Laws and GST practices so that you can carry out your business operation in a hassle-free manner without worrying about the compliances your business needs to follow. Get in touch with our experts to know more about our tax services.

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    Why Are Virtual CFO Services Gaining Huge Recognition In The Corporate Industry?

    Why Are Virtual CFO Services Gaining Huge Recognition In The Corporate Industry?

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    • Why Are Virtual CFO Services Gaining Huge Recognition In The Corporate Industry?
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    As the title suggests, a virtual CFO is a financial and organisational expert who performs the duties of a chief financial officer. The virtual CFO, however, works remotely on a contractual, part-time basis rather than rendering such services in person and full-time as a traditional CFO.

    Until recently, most small businesses did not have a CFO who could provide strategic direction since top management preferred permanent, in-house jobs. Because it was hard to identify when a scaling firm is ready for such a commitment, small and medium-sized organisations have failed to meet the requirement.

    However, things are shifting, and small company owners now prioritize this initiative and opting for virtual CFO services.

    Additionally, a majority of businesses and cooperatives strive to run lean since they are under pressure to outsource and reduce employees as much as possible. This drives cooperatives to choose virtual CFO services over traditional full-time CFO services.

    What do Virtual CFOs offer?

    ● A top-tier management accountant is a virtual chief financial officer. They can handle critical financial decisions, regular business operations, high-level planning, and financial management guidance. Numerous remote CFOs now have experience and insight into the difficulties and possibilities that many sectors present due to working with several companies. Their expertise in finance and ability to explain how to work together effectively can benefit the team.

    ● Many policies must be created, and strategic concepts must be put into practise in order to have a clearly defined accounting health check. Correct guidance is examined and studied throughout this procedure concerning current turnover, profit, business goals, and operational and accounting systems. Accounting health checks also consider the firm’s organization, tax effectiveness, and future development opportunities. The organisation will benefit from the VCFO’s areas of experience in regards to all business-related matters.

    ● A CFO offers accounting services that will define and oversee the bookkeeper/controller and provide insight to assist steer the ship towards the defined objectives in order to produce accurate reports and evaluate the results. As a result, you and your business will be able to centralise your team and keep the stakeholders informed with exact knowledge of where, when, and how to do so.

    ● The CFO may be a much-needed sounding board, mentor, or guide. Basically, you can have a team partner that is familiar with your business and can assist and keep you accountable while you work to achieve clearly defined objectives.

    In layman’s terms, a virtual CFO can offer important services:

    ● Elucidate the financial results regularly.

    ● Management of cash and planning.

    ● Strategy

    ● Reporting & identifying metrics

    Besides these, virtual CFO services also include the following to some extent:

    Fundraising: Virtual CFOs may develop the financial narrative and engage in some light pitching.

    Participate in board meetings: The CEO may get preparation and coaching from a virtual CFO, and their attendance in meetings may be desired.

    Mergers and acquisitions: You may often anticipate some light advising and analytical support from a virtual CFO.

    What are the advantages of a Virtual CFO?

    More than ever, startups and companies are looking for possibilities to run efficiently. Where required, there is pressure to reduce staff and outsourcing, which has resulted in a trend towards using virtual CFO providers rather than an in-house full-time CFO, who is more conventional. Below are a few of the many factors contributing to the expansion of virtual CFO services.

    Flexibility: When you hire a Virtual CFO, you may choose the terms and costs that are ideal for your business. For the VCFO, this can entail working full-time hours for a predetermined number of weeks, followed by part-time or on a fractional basis. You may scale up or down as necessary as the specs change. You pay for the time and deliverables unique to your firm without sacrificing the kind of talents and expertise you require.

    Accounting knowledge: A Simulated CFO who is a Designated Accountant may be hired and selected for the position. Dealing with someone who holds a CA qualification, has recent experience, and is actively continuing their practices through Professional Development programmes, you can be confident that they have followed the strict standards their discipline sets.

    External stakeholder and professional services liaison: A Virtual CFO serves as a point of contact for stakeholders, lenders, and expert bodies from outside the organisation. They provide additional assurance for the reporting and evaluation, and an Appointed Accountant’s diligent work and expert guidance give the third party assurance.

    Get Up to Speed Fast: A simulated CFO’s life flies into a situation and resolves things right away. They can go into a conversation mid-stream and quickly analyze what needs to be done in terms of finances, whether it be data gathering, bettering financial statements, or adopting better accounting practices.

    Steadfast Business Consulting Virtual CFO Services

    Steadfast Business Consulting’s virtual CFO services for small businesses, corporates, and big corporate houses provide outcomes in Revenue optimization, Profitability improvement, Cash Flow/working capital improvement, and Enterprise valuation using our services of Office of CFO, Performance Improvement, and Business Transformation.

    A CFO could be crucial in acquiring the finance if your organization is expanding and you soon aim to recruit an investor. If you need to create a solid financial IT system, our skilled and experienced CFO might be a great effective alternative in the planning and transition. When you want to take on any major financial dealings, such as a merger or acquisition, and assign tasks and challenges, our virtual CFO will assist in making sure that everything runs smoothly.

    If you have any other questions, you can write to us at mithilesh@sbcllp.in or call us at +91 95531 11131.

    Frequently Asked Questions

    What is a Virtual CFO?

    A virtual CFO is an entity or an individual who helps you and your company with your finances virtually. The CFO is responsible for the majority of the financial aspects of your company.

    Should you outsource your CFO services?

    Yes, regardless of whether you have a large or small business, the office of the CFO is extremely important to any business. Since costing is always a concern for a business, it is wise to hire a virtual CFO.

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    Checklist To Make Your Business GST Compliant Ready

    Checklist To Make Your Business GST Compliant Ready

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    • Checklist To Make Your Business GST Compliant Ready
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    The introduction of Goods and Services Tax (GST) has changed how business is conducted across the country. The law has been dynamic and more electronic-oriented, with more emphasis on data analysis. However, with the dynamism involved and the ever-changing law of GST, businesses are required to put in more effort to streamline their tax processes and keep track of all the changes happening in the tax laws.

    Ignorance of Law is of no excuse. Every business ought to know the law of the land and has to abide by the same. In case of any violation, the business might have to incur a lot of expenses on interests and penalties.

    Given the above background, every business must have a firm hand on GST and its implications if the company needs to fare better in the market. Compliance with GST laws is important for a business. However, many businesses are yet to adopt the right processes to become GST compliant.

    In this article, we have discussed the necessary checkpoints a business has to follow for complying with GST Laws and grab the business opportunities GST will generate.

    What is meant by being GST compliant?

    The GST provisions has established standards for how various records, invoices, and reports are to be maintained and, subsequently, the manner of filing returns and paying tax. But, being a GST complaint means abiding by all the provisions of the law and rules framed thereunder. Any business may have to incur significant costs as a result of any noncompliance with the provisions of GST.

    GST Compliance Checklist to Follow

    1.GST Registration

    Under Goods And Services Tax (GST), businesses whose aggregate annual turnover exceeds the threshold limit of Rs.40 lakh or Rs.20 lakh or Rs.10 lakh, as the case may be, must register as a normal taxable person. It is called GST registration.

    For certain businesses, registration under GST is mandatory. If the organization carries on business without registering under GST, it is an offence under GST, and heavy penalties will apply.

    Once you are clear that the business is liable to get registered under GST, the business has to make an application for registration under GST Laws in the Online GST portal (www.gst.gov.in). Although the process for registration is relatively straightforward, there are a few things to keep in mind to get the registration under GST. Hence a professional is required to guide through the nuances of registration.

    2. Compliance with Tax Invoices, E-invoicing requirements

    GST-registered businesses must adhere to invoicing regulations in order to distribute input tax credits. Every time a product or service is sold, businesses must generate an tax invoice as part of routine business operations. To be in conformity with compliance regulations, these invoices must contain the following mandatory elements:

    • Date and invoice number
    • Name of the recipient
    • Shipping addresses of the recipient
    • GSTIN of the supplier
    • GSTIN of the recipient
    • Place of supply
    • Billing address
    • HSN code for goods
    • SAC for services
    • Descriptions of items
    • Discounts
    • Tax rates
    • Reverse charge status
    • Signature

    All items must be stated on the GST invoice for a firm to comply with invoicing compliance regulations.

    In addition to the above, for businesses where the turnover exceeds the specified limit, the business should comply with the E-invoicing requirement where the details are to be uploaded to the e-invoicing portal of the government. Once the details are uploaded, a unique number is generated, which has to be printed on the Invoice being issued by the taxpayer.

    3. Filling the Correct GST Monthly Forms

    All registered businesses must file monthly, quarterly, and yearly returns, irrespective of the turnover. The type of economic activity largely determines the frequency of returns. GST returns must be electronically filed using the GST site or software. The following is a list of the GST return forms that regular taxpayers must submit:

    GSTR 1

    A statement which contains details of sales made during the period to be submitted to the government.

    Frequency: Monthly

    Due Date: 11th of the subsequent month

    Concept of Invoice Matching

    Every month for any business claiming Input Tax Credit against the purchases made, a reconciliation of the purchase register and the details appearing in GSTR 2A/2B are to be made in order to be eligible for claim of ITC.

    In this regard, businesses need to adopt a mechanism for reconciling the data in a timely manner before claim of ITC.

    Frequency: Monthly

    Due Date: Before the filing of GSTR 3B for the said month

    GSTR-3B

    A simplified form called GSTR-3B is used to report all of a taxpayer’s GST liabilities during the period. In this return, a description of all outgoing supplies made, claimed input tax credits, assessed tax obligation, and paid taxes must be self-declared. All GST-registered taxpayers are required to submit it.

    Frequency: Monthly

    Due Date: 20th of subsequent month

    GSTR-9

    All GST-registered taxpayers are required to submit GSTR-9 returns once a year. Data on outgoing supplies made, incoming supplies received, and taxes due and paid for the prior year under various tax categories are included in the annual GST return. It is a combination of the data furnished in GSTR-1 and GSTR-3B returns that were submitted on a monthly or quarterly basis during the year. However, currently, this form is applicable only in case the business’s annual turnover is in excess of INR 2 crores.

    Frequency: Annual

    Due Date: 31st December

    GSTR 9C

    Every registered person whose aggregate turnover during a financial year exceeds five crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 of the CGST Act.

    They shall furnish a copy of the audited annual accounts and a reconciliation statement, duly certified, in form GSTR-9C.

    Frequency: Annual

    Due Date: 31st December

    File your GST Returns on Time

    A key component of GST compliance is timely return filing. Even if there is no activity within the designated time, returns must still be filed and submitted electronically. The components cannot be modified after they are filed, but modifications may be made in subsequent filings. Not to add that doing this task without the aid of excellent GST service would be very difficult.

    How to file GST Return?

    The GST returns can be completed online or offline.

    1. Online Mode: Using their PAN number, monthly reports, and inbound and outgoing supply verification, one may submit their GST returns online on the GST portal at https://gst.gov.in.
    2. Using an Offline Utility Tool: By browsing and downloading the offline tool, one may upload the data in the tool to generate a JSON upload file to be uploaded to the GST online portal.

    How Steadfast Business Consulting Can Help

    Our expertise in Indirect taxation and handling the GST transition for different businesses puts us in a prime position to guarantee compliance with the GST law and deliver GST Services in India that is focused on our customers’ needs.

    It is important to keep track of all the updates and analyze the impact of new changes in the law on businesses. Our experts have hands-on experience in performing impact analysis of various notifications. They can help formulate strategies and structure transactions in the best possible manner within the boundaries of the law.

    Now that you know how to become GST compliant, it’s important to keep your business up to date on the most recent rules governing GST compliance and other GST rulings to analyze the impact on your businesses to avoid unnecessary interest and penalties.

    We at Steadfast can help your businesses right from registering your business to planning transactions under GST.

    Frequently Asked Questions

    Is it important to provide and track GSTIN while dealing with vendors and customers?

    It is important to track the GSTN while dealing with vendors, as you can claim ITC on any invoice issued by a vendor who had filed their GST Returns. Further, it is important to ensure the frequency of return filing before getting into business with the vendors as non-filing of GST Returns by the vendor shall result in non-availability of ITC to the business, thereby impacting the working capital of the business.

    Will HSN Codes / SAC Codes have any impact on invoicing?

    If your turnover is above INR 1.5 crores but below INR 5 crores, you must mention HSN Code on the Invoice to the 4-digit level; if it is INR 5 crores and above, you must mention the HSN Code on the Invoice to a 6-digit level.

    HSN Code determines the tax rate on a particular product. Further, the businesses also have to disclose the HSN summary of outward supplies made in their monthly GSTR 1.

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    5 Common Mistakes Taxpayers Make While Filing Their Income Tax Returns

    5 Common Mistakes Taxpayers Make While Filing Their Income Tax Returns

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    • 5 Common Mistakes Taxpayers Make While Filing Their Income Tax Returns
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    Making errors when filing an income tax return can result in penalties and legal action, rendering the return invalid. For some people, submitting an income tax return might be difficult while being simple for others. However, it is quite common to become perplexed because there are so many clauses, exclusions, sections, and restrictions.

    Owing to this, taxpayers are bound to make mistakes. Therefore, we have listed below some of the most common mistakes tax filers make. To prevent similar errors, read the guide.

    Failure to E-Verify ITR V

    The burden of submitting a tax return extends beyond the ITR filing. Within 120 days after filing, you must validate the return; otherwise, the Income Tax Department won’t process your tax return. ITR V can be verified either offline by mailing the ITR V (Acknowledgement) to CPC Bangalore or electronically using the EVC, Aadhar OTP, or Net banking.

    Most individuals fail to do this. Your tax return won’t be regarded as filed if ITR V isn’t verified, and the department will send you a notification that your return is “Invalid.” The income tax authority will assume that you have never filed a return if you don’t E-verify the return within the allotted period.

    Failure to account for more than two properties

    If a person owns more than two house properties, they can choose which two to include as their primary residences, and the other two will be regarded to be “deemed to be rented out.”

    This implies that if a person owns three properties, any one of them will be regarded as taxable even if it is empty for the whole year and does not result in any financial advantages for the taxpayer. The potential for profits by the taxpayer will be taken into account, and tax will be assessed on the yearly value determined in accordance with the legislation.

    Non-Disclosure of Certain Income / Loss

    Over the past several years, many assesses have started investing / trading in listed equity shares and Futures & Options through various online trading platforms. As there is no withholding of tax done by the trading platforms on these transactions, most of the time, assesses fail to disclose the income earned / loss sustained through these activities. This may result in the issuance of notice by the tax authorities asking the assessed reasons for failure to disclose the same.

    Further, where the assessed sustains any loss, it would be pertinent to disclose such loss in the Return, as such loss can be carried forward for set off against future profits.

    Understand ‘Residential Status’ and applicable disclosure requirements

    In case you are a Non-Resident Indian (NRI), or you have recently moved out of / into India, you would need to check your ‘Tax Residential Status’ before you file your Return of Income, as the taxability of your income would largely depend on the same. Further, disclosure requirements also vary from person to person. For example, an NRI who falls under the ‘Resident and Ordinary Resident’ category would need to disclose his worldwide income in India, even though he / she had paid taxes on such income in another country. However, foreign tax credit may be claimed on such income as per the applicable provisions.

    In the event that a person has any assets overseas, even though his income is below the taxable limit, he must nevertheless file an income tax return.

    For instance, opening a bank account in the nation where your education was pursued is essential. Many times, when students return to India, they take money out of their overseas bank accounts but don’t close them. The individual would not be able to file ITR 1 if the bank account was still open; instead, he or she would need to utilise ITR 2 and provide all relevant information regarding the account. Any non-disclosure may bring notice from the Income Tax Department.

    Not mentioning exempted income. 

    A taxpayer is required by law to report all of his income, regardless of whether it is tax-exempt. The baseline exemption level is Rs. 2.5 lakh, and if a taxpayer’s gross income exceeds this amount, they are required to file income tax returns. Although exempt income is not taxed, failing to mention it might result in notifications from the income tax department.

    For Instance –

    • According to Section 54 of the Income Tax Act of 1961, capital gains are excluded if you sell your home and utilise the proceeds to buy a new one. But one must accurately declare this transaction in the ITR.
    • Income from a life insurance policy that is exempt from taxes under Section 10(D) or gifts from close family members, such as a parent, sibling, or parent, are excluded. Nevertheless, the IT act requires the disclosure of all of these incomes.

    Income tax forms should be filed carefully since even a tiny error can get you into serious difficulties with the Income Tax Department. You could be penalized or served a tax notice. If you are also facing difficulties, Steadfast Business Consulting Tax Services are always there to help you navigate the tax filing journey. You can connect with our tax experts for any tax-related concerns.

    Important checkpoints: 

    • Ensure that PAN, e-mail address, and Bank account details are correct
    • Identify the correct return form applicable
    • Study the documents such as

    ­ Form 16, Form 16A’s, as applicable

    ­ Bank statement / passbook

    ­ Interest certificate

    ­ Investment proofs for which deductions are to be claimed along with books of accounts, B/S, and P&L, if applicable.

    • Ensure to have Receipts of eligible deductions (viz. LIC payments, Mediclaim, donations, etc.)
    • Link PAN with Aadhar
    • Pre validate your bank account in the e-filing portal
    • Ensure Disclosure of all Income Sources and appropriate taxes are paid along with interest, if any
    • If Total Income exceeds INR 50 lakhs, disclose assets & liabilities particulars
    • Taxpayer shall go through Form 26AS, Annual Information Statement (AIS)
    • Check for Self-assessment tax payable if any
    • In case of ambiguity / disclosure in return, obtain an opinion from a tax expert

    Frequently Asked Questions

    What if I filed the incorrect ITR form?

    If someone submits the incorrect ITR form, the return may be deemed faulty, or the ITR may become completely invalid. So, it’s important to select the right ITR form. The ITR may be revised and corrected until 31st December of the relevant Assessment Year. Alternatively, correct this as soon as you get the Income Tax Department’s Notice of Defective Return.

    How many times can I revise the return?

    The number of times an income tax return may be revised is not limited, provided the Original Return of Income is filed within the due dates. However, the revised Return of Income can be filed before 31st December of the relevant Assessment Year.

    I have claimed a refund on my tax return, but the same is not received. What to do?

    The tax return is often processed within a few weeks after filing the same. However, in certain circumstances where there are multiple sources of income/deduction claimed, the processing of the return may take time. In such cases, the assesses may raise a grievance with the Centralized Processing Center (CPC) as well as constantly check for status in the e-filing portal for refund failure intimations, if any.

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    10 Steps Businesses Need To Take To Maintain Tax Compliance In 2022-2023

    10 Steps businesses need to take to Maintain Tax Compliance in 2022-2023

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    How does tax compliance affect your business? What steps should you take to ensure that you are compliant?

    The recent changes in the tax laws have led to a number of challenges for businesses across the country. In particular, the new rules have created uncertainty around how companies should report their earnings and pay taxes. This means that businesses need to be prepared to meet these requirements.

    Businesses need to be aware of the new corporate taxation rules and prepare accordingly. They also need to consider whether they need to hire additional staff or purchase software to comply with the new regulations. In this roundup, let’s look at the top 10 essential steps that businesses need to take to maintain compliance in 2022-23 and avoid penalties and scrutiny by the Income Tax Department.

    1. Keep Timely, Complete, and Accurate Records

    You need reliable records in order to produce accurate financial accounts. Due to the legal requirement for tax conformity, accuracy is essential if you wish to avoid paying severe fines. Maintaining accurate records will not only make filing your tax returns a lot simpler, but it will also make it simpler to monitor the development of your company.

    2. Changes in Laws and Regulations

    Your company is not automatically compliant. Monitoring, identifying the areas where it affects your business, modifying policy, and executing the changes are all ongoing processes and you must keep an eye out for changing laws and regulations. Keep track of developments and determine which rules and regulations your firm is subject to for your corporate tax planning. When you are prepared for forthcoming changes, you avoid being stressed when new laws are implemented.

    3. Schedule Regular Internal Audits

    Internal audits conducted on a regular basis are a great way to identify inefficient and ineffective processes that result in noncompliance. Internal audits may concentrate on the company’s financial, operational, technical, or regulatory elements. When examining compliance, an internal auditor’s independence is crucial.

    4. Ensure Everything is Updated

    Another important end-of-year activity is to ensure that all applicable certifications, licences, and permissions are up to date. Some expire and need to be renewed on a regular basis, even though some may be valid for the duration of your business (provided your business doesn’t change).

    5. Evaluate risks

    It’s no secret that every company faces risks of some kind. Risk factors might change based on a number of variables. To avoid being caught off guard when an issue arises, it is critical to keep in the know and spot possible hazards. You may prepare for a solution by evaluating the risks. As a result, you will be all set to handle it when or if it arises without having it have an impact on your business.

    6. Make Employees Follow Procedures

    If employees do not abide by company rules, it has no value. Changes in policy, in particular, may not always be well received by the workforce, and employees may be reluctant to adopt new procedures in their regular workdays. HR must be involved in this procedure.

    Above all, make sure to effectively convey corporate policies and processes. Making ensuring they are well-documented and accessible—both physically and digitally—is a part of this. Additionally, make sure that staff members comprehend the rationale behind any changes to policies and procedures. Employee training on how to correctly adjust procedures may also be required.

    7. Know your Tax Brackets

    Your tax bracket, or the amount of tax you pay on your income, might influence how much income tax you must pay. There are multiple tax-brackets depending on the income a business makes in a year.

    8. Deductions and Exemptions

    You should be aware of what may and may not be deducted from business taxes. There are multiple deductions that you can claim. It is wise to get in touch with your nearest income tax consultant.

    9. Get Some Expert Advice

    You might wish to consult an expert if the person you often turn to for tax guidance has any doubts about how they interpret the law. You can discover if someone has a different view of new regulations by speaking with many specialists. If they do, you might need to go above and above to make sure you’re paying your taxes.

    10. Get your Account Audited from a Third Party

    Make sure that you get your account audited by a third party. This will ensure that you know all your tax liabilities and mismatches in your accounts before the income tax department sends any notice for the inconsistencies.

    How Steadfast Business Consulting Can Help?

    Steadfast Business consulting has set up a customized compliance program design and support to help comply with regulatory requirements or internal policies of a company. In addition, we also provide invoice review programs to monitor compliance with billing guidelines and develop meaningful legal expenditure analytics as a part of our business tax services.

    You may be less willing to make the required adjustments the less prepared you are to adapt to tax rules. Do your best to get ready in advance so that when modifications are required, they won’t seem as tough.

    We hope that this brief article on the most crucial steps you can take to ensure that your tax compliance is as it should be able to provide you with some useful information. If you’ve ever struggled with tax compliance, you understand how crucial it is to stay away from.  Please feel free to reach out to the team of Steadfast Business Consulting at any time if you’d want to learn more about keeping your taxes in order and where to locate professionals that can assist you.

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    Take Charge Of Your Taxes In Legal, & Ethical Ways With Steadfast Tax Planning Services

    Take Charge of Your Taxes in Legal, & Ethical Ways with Steadfast Tax Planning Services

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    • Take Charge of Your Taxes in Legal, & Ethical Ways with Steadfast Tax Planning Services
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    For everyone, including individuals, sole proprietors, and small enterprises, tax preparation may be a cause of frustration. It’s normal to feel disoriented during tax season if you don’t have any experience with accounting or taxes.

    Everyone has options for tax and financial planning. While the majority of people feel that only those with substantial wealth need to plan for taxes, the truth is that everyone may gain from doing so. In this round-up, let’s understand how you can take charge of your taxes in legal and ethical ways.

    What is Tax Planning?

    Tax planning is systematically analyzing finances and assets in order to legally and legitimately lower the tax burden. To develop a suitable investment strategy that enables the achievement of financial objectives while also minimizing tax liability, it is necessary to understand the tax implications of various cash inflows and outflows, including salary composition, property income, home loan, investments, sale or purchase of assets, gifts, and interest-bearing deposits. Careful tax planning is critical for both individuals’ and organizations’ success in an unpredictable and dynamic global economy.

    Tax Planning Benefits

    Businesses that lower their tax obligations through tax planning may pay their employees and investors higher returns. They can also enhance working capital and boost performance efficiency with the money that would otherwise be paid in taxes, or they can spend more on capital expansion to increase market share.

    Why Hire Tax Planning Consultant?

    Every year, tax regulations change, and if you don’t stay on top of them, you might make expensive errors. Therefore, it is important to hire a tax planning consultant so that you can save yourself from all the hassles. You can explore how each investment advances financial objectives with the assistance of a tax planning professional or financial counsellor. You can uncover how each of the investment choices will impact your total tax status from a tax planning specialist.

    Why Choose Steadfast Business Consulting?

    Worldwide Network

    SBC is a member of Prime Global, which has network of over 300 members in more than 100 nations. So, if you are looking for tax consultancy for your MNEs for national and international needs and filings, the firm is your one-stop solution.

    Big Alumni and Team

    The team has Big4 Alumni. They hold direct hands-on experience in handling complicated tax assignments and use the best practices from the expertise and experience of the team to deliver sturdy documentation and standpoint.

    International Benchmarking Team

    Along with Indian Database, Steadfast is well-decked with international databases. The company has abilities to handle end-to-end international benchmarking exercises of corporates spread across different regulations.

    Security

    With ISO 9001:2015 and ISO 27001:2013 certification, SBC ensures its clients that all their corporate data is safe, and it abides by the international confidentiality standards and client data security regulations. From the start, Steadfast has been adaptable to changing dynamics of the taxation realm and the needs of the new-gen clients and businesses.

    Steadfast Range of Tax Planning Services

    Personal/Expat Tax services:

    Our services towards expats include compensation structuring, social security advisory & compliances, filing of tax returns (in India & outside India), tax litigation support in India, family trust set up & maintenance, office management services, and wealth management advisory.

    Domestic Tax Planning:

    We offer a plethora of fully integrated direct tax and regulatory services for dynamic businesses in their global operations as well as local operations. As the ease of doing business in India is increasing, investors are enthusiastic about making investments in the country. Our specialist teams provide the most tax-effective solutions to large multinational companies, mid-size businesses, high-net-worth individuals, and entrepreneurs looking to grow their businesses.

    Tax Litigation & Controversy Services:

    • Faceless Assessment & Appeals Representation (including CIT-A, Tribunal, High Court & Supreme Court)
    • Advance Rulings (new Board for Advance Rulings) & MAP (Mutual Agreement Procedure)
    • NIL / Lower WHT Certificates (Domestic & International transactions)
    • Tax Scrutiny Preparedness (Maintaining effective tax documentation)

    Transfer Pricing:

    We offer Transfer Pricing Advisory on aspects like Pricing Policy & Price Setting, Secondary Adjustments, Transfer Pricing Due Diligence, Economic adjustments computation.; Transfer Pricing Litigation support & Representations before Income Tax Appellate Tribunals (ITAT), High Court, Supreme Court, etc.; BEPS advisory; Valuations for arm’s length determination for Transfer Pricing purposes; Complex inter-company transactions including Planning, Implementation & Compliance

    Goods and Services Tax Support:

    Our subject matter experience in Indirect Taxation and experience in handling GST transition for various businesses puts us in an ideal position to ensure compliance with GST law and in the provision of value-driven services to our clients. We can help our clients with GST Refunds, GST Litigation, GST Health Check-up services, etc.

    Foreign Trade Policy Support:

    We have consistently assisted our clients in optimising the claim of different incentives extended under the FTP.

    Cross Border Taxation:

    Our services under Cross-border taxation include Advisory on WHT applicability for various international transactions, Global Entity Structuring / Re-structuring, Permanent Establishment (PE) implications, etc.

    Transaction Tax Assistance:

    With deep technical skills and practical transactional experience, our Transaction Tax team will support you in achieving your goals in today’s rapidly changing environment.

    Our offerings
    • Acquisition, disposal, merger, spin-off, capital reduction, share buyback, or any other form of organisational or capital structuring/restructuring
    • Acquisition of Distress Assets, and entities covered under Insolvency & Bankruptcy Code, 2016 (IBC)
    • Supporting the Committee of Creditors (CoC) in the evaluation of Resolution Plans submitted by bidders under IBC
    • Project manage cross-border mergers and acquisitions
    • Restructure your diversified businesses
    • Rationalise multi-layered structure or group holdings and facilitate achieving a tax-efficient organisational structure
    • Voluntary liquidation/spin-off under IBC

    Conclusion

    We specialize in taxes. With regard to tax issues, we can assist both individuals and corporations. Our Tax management team encompasses the entire spectrum of direct, indirect, and personal taxes with a multi-jurisdictional approach. We have tie-ups with other member firms’ offices spread across the globe, in ensuring to provide quality national and international tax advisory services.

    Our professionals are drawn from diversified industries. They are specialized in various fields of industry specialization, service line specialization, international exposure and advanced training enable them to work with our clients and be their advisors in a wide spectrum of their business processes.

    Make an appointment for a free consultation with us to find out more.

    CONTACT US

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    Why Your Business Should Get A Corporate Valuation?

    Why Your Business Should Get A Corporate Valuation?

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    • Why Your Business Should Get A Corporate Valuation?
    SBC

    Curious what the value of your company is? Knowing the worth of your company is crucial, particularly if you intend to grow it. If you’re thinking about selling or attracting investors, you’ll need a precise estimate. Knowing how much your business is worth will provide you with a competitive edge when entering a new market, even if you have no plans to sell.

    If you are wondering why businesses should get a corporate valuation, read this blog, and get all the needed information.

    What Is Business Valuation?

    Business valuation establishes the overall economic worth of a business or a specific item inside it. For the purpose of estimating their company’s fair market worth, business owners require this information. Simply said, valuations may help you achieve your goals, and understanding the worth of your company (over its life cycle) can be a valuable and effective management tool. We’ll go over the top 7 factors that make valuation crucial as your company develops and grows in the paragraphs that follow.

    7 Benefits of Getting a Business Valuation

    1. Better Knowledge of Company Assets

    It is considered crucial to obtain an exact business valuation assessment. Your most valuable possession may be best protected if you are aware of its true worth. While running your business, you need to safeguard it. You must protect your company in advance in the event of taxes, legal issues, a death, or divorce when the valuation of the company as an asset would be a topic of discussion.

    2. Understanding of Company Resale Value

    There is no other method to determine how much to expect in the event that you decide to sell your company. A business valuation that is overstated or understated can have negative effects on investments and tax reporting. A company valuation is still necessary for legal and estate tax reasons even if you want to give your entire firm or only a portion of it.

    3. Mergers or Acquisitions

    A merger largely requires both parties to get a valuation, while it may only be one group in an acquisition. Merger or acquisition may create challenges; you will be prepared to show them what the actual value of your company is as a whole, what its asset cover-ups are, how it has expanded, and how it can maintain its growth. In addition, you can refuse the offer if they offer less than your company’s value, and with any luck, you can negotiate a settlement with the information you have.

    4. Access to More Investors

    When you try to find additional investors to fund company growth or save it from financial failure, the investor usually asks for a full company valuation report. You should also provide potential investors with a valuation plan based on their funding. Presenting potential investors with a valuation projection helps make decisions based on the data. Investors feel secure while putting their money into a business when they see a thorough and accurate valuation.

    5. Estate & gift tax

    You may need a business valuation to file an estate tax return and provide support to the representative to comply with the decedent’s will. A well-documented business valuation is often a vital component of efficient tax planning strategies.

    6. Valuations Assist in Finding Gaps

    Key performance indicators (KPIs) are used in a thorough valuation to examine the non-financial facets of a company that are truly the underlying value generators. Examples include organisational structure, clientele, technological preferences, and business operations. KPIs are essential in pinpointing possible areas for business improvement and eventually offer solutions to generate value.

    7. Accountability is Created Through Valuations

    You may now establish discipline around your objectives since you’ve used a valuation to identify gaps and chart a course for the future (with quantifiable targets). In essence, you’ve now held yourself responsible for accomplishing those goals. Remember, if you can measure it, you can manage it, therefore utilise this as part of your strategic business strategy.

    VALUATION METHODS

    The 3 major valuation approaches based on which business assessment is undertaken are:-

    ● Asset-based method
    ● Income-based method
    ● Market-based method

    Asset-Based Approach

    This method is used basis on the fair value of assets and liabilities to determine business value. It’s crucial to bring in only those assets owned by the company and not assets individually owned by the founder.

    Asset Method:

    ● Book value method
    ● Liquidation value method
    ● Replacement value method

    Income-Based Approach

    This Income-based approach evaluates the value of the business based on a firm’s capability to generate cash inflows.

    Using this tactic, the corporate tax consulting firm considers the expected cash flows that the business can make in future years. The valuation may use other metrics, including earnings per share, to assess the value of the business.

    ● Capitalization of Earning method
    ● Discounted Free Cash Flow Method

    Market-Based Approach

    This method considers the value of related businesses that have been marketed in recent times. If the seller owned a home furnishing company, the advisor would consider the recent sales of other manufacturers in a similar industry.

    ● Comparable Company Market Method
    ● Comparable Transaction Method
    ● Market Value Method

    If you are a business owner, you should never overlook or avoid business valuation because it helps you move forward in every aspect.

    We at Steadfast Business Consulting are more than happy to help you with our corporate valuation advisory services. The aim is to educate the businesses about their available options. The experts at Steadfast have worked with thousands of businesses, and they know how hard small business owners work to grow their companies.

    If we can help in any direction, don’t hesitate to contact us through the website or email and see how our corporate valuation team will give an accurate value report to your company.

    CONTACT US

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