Month: May 2018

Income Tax

Filing Income tax returns (Precautions)-Part III

Income tax Return form 4 (SUGAM)

This post is in continuation of our earlier post on precautions while filing ITR for Asst Year 2018-19 . Please refer to them if you wish to read them for filing Income tax Forms ITR 1 ,ITR2, or ITR 3

Post Link
Filing Income Tax Returns (Precautions) -I  Filing Income Tax Returns (Precautions) -I
Filing Income tax returns (Precautions)- Part II Filing Income tax returns (Precautions)- Part II

ITR 1 ,ITR 2 and ITR 3 have already been explained in our earlier posts referred to above.In this post  we will take from ITR4 more popularly called as Sugam

For a ready reference ITR 4 is reproduced below

As one can see that ITR 4 is for those who have presumptive business income and any other income but no income from capital gains 

A brief explantory guide is also given hereunder

 

How to get the maximum from this guide:

Please check which heads are applicable

Also note that following assessee can not file ITR 4

Assessee having 

 (a) Income from more than one house property; or

(b) Income from Winnings from lottery or income from Race horses; or

(c) Income under the head “Capital Gains”, e.g. Short-term capital gains or long-term capital gains from sale of house, plot, shares etc.; or

(d) Income taxable under section 115BBDA; or

(e) Income of the nature referred to in section 115BBE; or

(f) Agricultural income in excess of ₹5,000; or

(g) Income from Speculative Business and other special incomes; or

(h) Income from an agency business or income in the nature of commission or brokerage; or

(i) Person claiming relief of foreign tax paid under section 90, 90A or 91; or

(j) Any resident having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India; or

(k) Any resident having income from any source outside India.

Its important that you get your Balance Sheet and Other schedules ready before filling the return

Also get the receipts bifurcated into receipts from bank and receipts other than from bank as seperate rates are applicable on each one

Keep the details of deductions under chapter VI proofs handy.

The guide presented here is freely downloadable .Do whatever you wish to do with this but please note that with the advent of technology everything has changed.Gone are the days when one earns income and forget to declare in the return either intentionally or unintentionally and the income was seldom discovered by the department.

Now it happens that the department gets information from almost all over the world and to add to it the data mining softwares are analysing the information and also applying all permutations and combinations so be aware and follow the guidelines given in the guide above and sleep a peaceful night and contribute in our nation’s progress.

In next post we will take remaining returns except ITR 7 which requires a separate post so happy reading

 

 

Income Tax

Filing Income tax returns (Precautions)- Part II

This post is in continuation of our earlier post on precautions while filing ITR for Asst Year 2018-19 .At that time ITR 6 was not released now as all return forms have been released we will take them one by one

ITR 1 has already been explained in our earlier post ITR 2 is more or less same as ITR1 We will take from ITR3

As one can see that ITR 3 is for those who have income from any head so the guide presented here is fairly long but it is important that we explain all the sections however generally all heads are not present in all cases so go ahead and look for the relevant sections.

How to get the maximum from this guide:

Just check which heads are applicable to your income .Now go through only those heads and follow the guide in your context

Remember each and every head is in most of the cases never applicable to a single entity

The guide presented here is freely downloadable .Do whatever you wish to do with this but please note that with the advent of technology everything has changed.Gone are the days when one earns income and forget to declare in the return either intentionally or unintentionally and the income was seldom discovered by the department.

Now it happens that the department gets information from almost all over the world and to add to it the data mining softwares are analysing the information and also applying all permutations and combinations so be aware and follow the guidelines given in the guide above and sleep a peaceful night and contribute in our nation’s progress.

For a ready reference ITR 3 is reproduced below

In next post we will take remaining returns except ITR 7 which requires a separate post so happy reading

 

 

GST

Finalisation of accounts in GST Era-Part1

As we all know that GST was implemented wef 01/07/2017 hence during financial year there will have to be prepared two Financial statements one for three months for the period 01/04/2017 to 30/06/2017 and another for the remaining 9 months.Starting from this post we will try to explain various steps required to prepare the accounts under GST era

Preparing the accounts for the Pre GST period of 3 months:

Dealers were required to file trans 1 wherein it was required to declare the amount of direct and indirect taxes involved in the closing stock as on 30/06/2017 which we presume that maximum would have filed and if not filed for whatsoever reason now it is deemed to never have been filed so first thing to be considered is that the figures declared in TRANS 1 must match with the books of accounts .Just to recall we reproduce TRANS 1 below:

Now based upon the columns given in TRANS 1 above we have tried to explain the accounting entries required to be passed as also where no entries have to be passed

Please note that these entries will be passed in the books of accounts starting on 01/07/2017 and no entries will be passed in books closed on 30/06/2017

Reconciliation of GST ITC as on 31/03/2018 with that in system populated GST as on 31/03/2018

Though the GST was meant to tally with that populated by the portal but due to technical glitches the system is yet not fully operational so it becomes even more important that the reconciliation part is looked into with utmost care.

Reversal of Input Tax credit in case of non payment beyond 180 days:

Section 16 of CGST Act, 2017 says:

(1) Every registered person ……………..

(2)  Notwithstanding anything …………………

Provided that …………………………….

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed

that is if  Recipient of goods/services fails to  pay to the supplier (Including Taxes), within 180 days from the date of issue of invoice, the Input Credit shall be reversed.

In terms of accounting it means that one has to observe age wise creditors and then find those whose outstanding is beyond 180 days .The input credit related to them on account of purchases has to be reversed.Not only this interest also has to be paid.

The relevant rules are appended below for reference:

Provisions under Rule 37 of the Central Goods and Services Tax (CGST) Rules, 2017 relating to “Reversal of Input Tax Credit in the case of Non-payment of Consideration”, as per CGST (2nd Amendment) Rules 2017 notified by CBEC on 28 June 2017, applicable w.e.f. 1st July 2017, are as under:

(1) A registered person, who has availed of input tax credit on any inward supply of goods or services or both, but fails to pay to the supplier thereof, the value of such supply along with the tax payable thereon, within the time limit specified in the second proviso to sub-section (2) of section 16, shall furnish the details of such supply, the amount of value not paid and the amount of input tax credit availed of proportionate to such amount not paid to the supplier in FORM GSTR-2 for the month immediately following the period of one hundred and eighty days from the date of the issue of the invoice:

Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16.

(2) The amount of input tax credit referred to in sub-rule (1) shall be added to the output tax liability of the registered person for the month in which the details are furnished.

(3) The registered person shall be liable to pay interest at the rate notified under sub-section (1) of section 50 for the period starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability, as mentioned in sub-rule (2), is paid.

(4) The time limit specified in sub-section (4) of section 16 shall not apply to a claim for re-availing of any credit, in accordance with the provisions of the Act or the provisions of this Chapter,that had been reversed earlier.

The rule also provides such reversed amount is available for re-credit once the payment for the supplies is made.

Accounting entries to be passed if payment not made within 180 days :

Debit the CGST Reconciliation a/c and GST Reconciliation a/c  and Credit the corresponding GST liability account.

Once the payments are made the corresponding entries can be reversed

As is clear from above that a new account by the name GST Reconciliation has to be opened which will carry the figures of GST reversals in any case and further that the balance lying if any in this account should be matched with GSTR 2 for the month in which the balance is created and the reversal should match with the GSTR 1 of the month in which it is reversed subsequently (means in which month the creditor is finally paid)

In next post of this series we will try to analyse finalisation of accounts with manufacturing as activity

 

Income tax return filing in Kanpur Uttar Pradesh
Income Tax

Filing Income Tax Returns (Precautions) -I

Filing of Income Tax Returns

As you know from our earlier post

New Income tax forms Released and their usage

that the ITR 1 is for salaried assessee who other than salary income can have income from House property (maximum one property) and total income should be less than or equal to Rs 50.00 lacs.Some other precautions required while filing ITR 1 are as under

ParticularsExplanation required if anyDifference as compared to earlier year
Total Income from all sources shall be less than or equal to Rs 50.00 lacsNo difference
Only income from one house property can be shown under this formNo difference
File the return after confirming from the deductors that they have filed your details as final in all respect .If possible do the calculations yourselfFor eg in case of salary you can cross check the enties from your bank .Similarly in case of bank interest you can always calculate the interest dueThis is an inbuilt check which was not earlier
obtain all form 16/16A as in case the 26AS is revised by the deductor you can always claim that the difference reported was due to deductor's faultsame as above
Salary Income should contain all details of allowances whether exempt or taxable including perquisitesThe details should match with 26AS and more specifically with the form 16 issued This was not required earlier and the system was also not checking this

Precautions Before Filing Income tax return by the Salaried Class:

As is clear that many new inbuilt checks are there from this year hence one needs to be more cautious while filing the ITR 1 .

Please note that the details to be filled in the return should match with the form 16 issued by your employer .

Also please check beforehand that any allowance you claim exempt should be backed with proper proofs as the department has issued a warning that any wrong exemption allowance or any other allowance if found false the assessee will be heavily penalised.Some of the allowances claimed are as under.Same goes true with the claims of deduction under chapter VIA

  1. HRA
  2. Conveyance Allowance
  3. Telephone Allowance
  4. Medical Reimbursement
  5. Rent Paid
  6. Education Allowance
  7. Deduction for LIC,NSC,NPS,Donation etc

Actually in past many instances have been found where the assessee were claiming allowance/deduction which when verified they were found to be false and the assessee has claimed refund on these accounts so from this year the claims will be verified to a larger extent so please take care.

We will be covering ITR 3 to ITR 7 in next post so keep reading.

Income Tax

New Income tax forms Released and their usage


Starting from this post we will be explaining in a series of posts the various precautions required before filing of returns under Income tax from the year 2018-19 as also the precautions required failing which one may land into trouble with income tax department .

Since from this year viz Asst Year 2018-19 Income tax return filing has gone a sea change which means the assessee has to be very careful while filing the returns.Though the system has started screening from last year but many inbuilt checks will be active from this year.We will try to explain the usage of forms , their intricacies and the possible screens or better known as inbuilt checks that the department will be implementing in processing of the returns.

So first thing first as on date only 4 forms have been released (please see correction below) which are meant for Individuals having salary Income and PGBP income which do not require Audit as the last date for filing the return is 31st July 2018 and further that from this year a penalty is proposed in delay in filing of returns

Correction: Two more forms have been released today viz 21/05/2018

Form NameTo be used byHeads of IncomeLimitationsInbuilt checks
ITR 1IndividualsSalary,Income from House Property and Income from other sourcesIncome Should be less than or equal to 50.00 lacs and only one house property should be earning incomeMore Salary details now asked
ITR 2Individuals and HUFAny head Except PGBPThere should be no Income from BusinessPlease see the details explained below
ITR 3Individuals and HUF having PGBPAny HeadNon Audited casePlease see the details explained below
ITR 4Assessee having Presumptive IncomePresumptive IncomeNon Audited casePlease see the details explained below
ITR 5Assessee other than Individual,HUF,Company and person filing ITR 7Any HeadAudited or Non Audited wherever applicableExplained in our post
ITR 7For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)Any HeadAudited GenerallyExplained in our post

Now regarding inbuilt checks the returns are being screened for following discrepancies:

(Please note that the checks explained below are given on the basis of inputs recieved from various assessees and on the basis of experience gained in field by the writer and in no way these should be considered as provided by the department)

1)The salary and other income reported in 26AS at the time of processing rather than at the time of filing of returns is checked and if any discrepancy found the return is treated as defective.

Now this is a real tricky situation as suppose your bank reports a certain amount of interest on FDR which you declare on the face value as reported by bank and file the return.Suppose bank later on say after 15 days revises its TDS returns which thereby revises your interest income .In that case you will be getting defective return notice based upon the mistake done by the bank on which you have no control.Same goes true with your employer as well if he later on rectifies the income .

Of course there are penal sections that penalise the deductor for reporting wrong income of the deductee but still the deductee being the assessee is at the recieving end as in many cases the refunds are struck due to these notices in earlier year and the same practice is going to be followed this year.

2) Suppose you have declared a bank account which is in joint name of your spouse and there is a refund in the return .Now the system checks that the name do not matches (in those cases where your spouse is first name) then your refund is bound to be delayed as then the department will ask for a reverification

3) In those cases where there is adjustment of any income from other heads the system checks for any variation from the income deducted from any head from that added in another head .If there is any difference say due to rounding off (which is bound to happen in many cases) then the system will flag the return as defective

4) In those cases where there was a notice for any reason and the reply is kept unfiled the return will be kept unproccessed till the time that notice is kept pending

5) The salary details should match with that shown in 26AS inclusive of allowances

As and when new forms are released we will keep you posted and will also explain the checks required before filing the returns .