All About Income Tax Return Form 3

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Introduction

For many individuals, filing their taxes is a difficult and time-consuming chore. However, if done correctly and legally, it may be a simple and well-organized process. The filing of income tax forms is separated into numerous categories, and individuals must file the forms according to the group in which they fall. One of the categories is the ITR-3 form.

What Is ITR-3 Form?

The ITR 3 is an income tax return that must be filed by individuals and Hindu Undivided Families (HUF) who generate income from their businesses or professions.

What Is The Format Of The ITR-3 Form?

The ITR-3 form is divided into two halves, A&B, each comprising 23 schedules.

Part A: consists of general information.

• Part A-GEN: General Information and the Business Environment.
• Manufacturing Account (Part A): Manufacturing Account for the fiscal year.
• Quantitative Details (Part A-QD) (optional in a case not liable for audit under Section 44AB) Part A-BS: The Balance Sheet of the Proprietary Business or Profession as of March 31st. Part A-OI (Other Information) is a section of the application (optional in a case not liable for audit under Section 44AB).
• Part A: Trading Account: Profit and Loss for the Financial Year Trading Account for the Fiscal Year (Part A-P&L).

Part B: Outline the entire income and tax computation based on the total tax chargeable.

• Advance tax, TDS, and self-assessment tax payments are all detailed here.

23 Schedules

• Calculation of revenue under the heading Salaries on Schedule-S.
• Income from House Property (Schedule-HP): Computation of income.
• Schedule-IF: Information on the assessee’s participation in partnership firms.
• Schedule-BP: Calculation of income under the heading “profit and earnings from trade or profession” (salary, interest, and other sources of income).
• GST Schedule: Information on gross receipts and turnover reported for GST.
• Schedule-CYLA: Income statement after current year losses have been deducted.
• Schedule-CG: Income computation for the capital gains section.
• Calculation of income on Schedule-OS under the heading Income from Other Sources.
• Income statement after set-off of unabsorbed loss carried forward from prior years (Schedule-BFLA).
• Schedule- CFL: Loss statement to be carried forward to subsequent years.
• Schedule-VIA: Deductions under Chapter VIA (from total income).
• Schedule SPI: Income from a spouse, minor child, son’s wife, or any other person or group of individuals should be included in the assessee’s income in Schedules HP, BP, CG, and OS.
• A statement of charitable contributions that are qualified for a deduction under section 80G is called a Schedule 80G.
• Schedule-SI: A statement of income that is subject to special tax rates.
• Statement of Income (Schedule-EI) that is not included in total income (exempt incomes).
• Schedule-IT: Payment of advance tax and self-assessment tax statement.
• Statement of tax deducted at source on salary (Schedule-TDS1).
• Schedule-TDS2 is a statement of tax deducted at source on non-salary income.
• TCS (Tax Collection Statement): TCS is a statement of tax collected at the source
• Statement of income accruing or generating outside India (Schedule-FSI).
• TR Schedule: Statement of tax relief claimed under section 90, 90A, or 91 of the Internal Revenue Code.
• Statement of your Foreign Assets (Schedule-FA).
• Schedule-5A: Statement of income allocation between spouses by the Portuguese Civil Code.
• Schedule-AL: At the end of the year, make a statement of your assets and liabilities. If your total income exceeds Rs.50 lakhs, you must file it.

The Procedure For Downloading The ITR-3 Form

• The first step in the ITR-3 download process is to go to the government’s Income Tax Department website: 
• Income Tax Department website. Register as a user to begin the ITR-2 download procedure. After you’ve completed the signup process.
• Go to the Income Tax Department’s website and log in to your account.
• Under the Download menu, select the “Offline Utilities” option.
• Then click the “Income Tax Return Preparation Utilities” button 
• For the Income Tax Return Preparation Utilities, select “Assessment Year.”
• The ITR-3 Form can then be downloaded in excel format by selecting the tab “Excel Utility.”
• The ITR-3 form will be downloaded in ZIP format to your PC or laptop. Fill in all of the essential fields after extracting the file.

In terms of how to file ITR-3, the form is for the assessment year and it pertains to income earned and taxed during the fiscal year.

ITR-3 Online Filing Instructions:

• The ITR-3 form is for people and HUFs (Hindu Undivided Families) that earn their income from a profession or a company, as previously stated. 
• The ITR-3 Form can be downloaded from the government’s Income Tax Department website by these persons or members of the HUF. 
• The form is then uploaded to the income tax system when they have completed it with all of the required information. 
• The digital signature of the company is used to verify the information.
• The user receives an acknowledgment receipt via email on their registered email id after utilizing this. 
• Within 120 days of filing the ITR-3, the user can sign the acknowledgment receipt and mail it to the nearest Income Tax Department office. 
• Because it is an annexure-free form, it does not require any supplementary or supporting documentation at the time of filing.

ITR-3 Offline Filing Instructions:

• There are eligibility conditions for taxpayers who want to file ITR-3 offline.
• They must be people who are at least 80 years old.
• Individuals with an annual income of less than Rs. 5 lakh and who are not eligible for an income tax refund must apply.

These individuals can subsequently submit ITR-3 in either paper or bar-coded form to any of the Income Tax Department’s nearest offices.

For The Fiscal Year, There Are Seven Key Changes In ITR-3

The residential status section has been split into three sub-categories:’resident,’ resident by not typically resident,’ and ‘non-resident.’

Individual taxpayers are required to submit all information on any past dictatorships held in any other company, as well as a list of the shares.

Individual taxpayers who are partners in another firm must reveal the name and PAN of the partner firm with which they are working.

• Partners in partnership firms will be required to file ITR 3 filings rather than ITR 2.
• The specifics of the exempted allowances and salary deductions must be submitted by the taxpayers.
• In the case of schedule OS, the taxpayer must specify any other income that is subject to a specific tax rate. In addition, complete and accurate information on other sources of income must be submitted.
• Individuals must provide information about their turnover/GST under Schedule GST.

Filling Out The Necessary Paperwork For Verification

All information recorded on the income tax return, as well as the information in the ITR 3 form, must be correct and accurate, and the taxpayer must also complete the verification along with completing the income tax returns.

Conclusion

Under Section-277 of the Income Tax Act of 1961, any person who makes a false declaration or is detected doing wrong activities when submitting the return or any of the schedules is liable and can be prosecuted.

The individual will be sentenced to prison as well as a fine, and he or she may face further penalties.

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Process For Winding Up   of a Company

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Introduction

To resolve the organization’s financial arrears, the firm winding-up procedure in India includes the cessation of all business activity, exchanges, and auctioning. As a result, once the debts have been resolved, the remainder of the organization’s advantages will be distributed among investors in proportion to their capital contributions. The organization’s closure can be accomplished in one of the ways are:-

• Compulsory Closing Down
• Willful or Voluntary Winding-Up of a Company
• Compulsory Company Winding-Up
• When Court-Ordered Dissolution
• Compulsory Company Dissolution Due To Mental Instability
• As A Result Of Misconduct

General Checklist & Procedure For Company Dissolution

• For the permission of a company’s closure, executive meetings must be held.
• For establishing a regular gathering to pass a goal on the closing down process, a written notification should be delivered.
• It is necessary to appoint an official liquidator or a bankruptcy expert.
• The personal tax office should be informed about the objectives that were passed at the meeting for the voluntary winding up of a business.
• Meanwhile, the Income-tax division should be contacted for a No Objection Certificate (NOC).
• Given that creditors are owed 2/third of the organization’s duties, the loan lenders meeting should be directed to favor the goals that were passed in the normal gathering if the lenders are in the majority.
• An application must be sent to the Insolvency and Bankruptcy Board of India (IBBI) within 7 days of the aims being approved before the procedure may be shut down.
• Within 14 days of moving the resolution, a statement should be published in one official publication, one English paper, and one neighborhood paper in the area where the enrolled organization is located.

The full process of liquidating the corporation should be completed within a year of the start of the liquidation.

Winding-up A Private Limited Company’s Procedure

There are three different ways to dissolve a Limited Company. 

They are as follows:

Buying And Selling Company Stock: 

The investors will keep a strategic distance from the weight of liabilities by selling the majority of the organization’s shares to someone else or substance. As a result, the bought individual or substance will be given voting powers, rights, and responsibilities.

Winding-up Procedure – Willful Or Voluntary:

This might be started by setting unusual goals or setting goals during a general body meeting. The winding can be carried out by misusing any of the terms and conditions of the Memorandum of Association (MOA). An organisation can also be wound up if it lacks financial assets or is unable to meet its financial responsibilities.

A Method For Willfully Closing A Business

According to the Companies Act, the executive meeting’s objectives are critical for setting off the winding-up procedure.

• A majority of 3/fourths of the organization’s investors should vote in support of the organization’s closure in a special resolution.
• Furthermore, the organization’s loan lenders should favor the aims set for closure without any ambiguity.
• The “Statement of Solvency,” which should be delivered to the ROC alongside the examiner report, should include special duties relating to the organization’s whole assets (Registrar of Companies).
• From the date of passing the targets, the official liquidator will be delegated to carry out the closing process.
• After the objectives have been met, the liquidator must open a financial account within one month.
• The liquidator should open a financial account in any planned bank with the prefix “the name of the organization” followed by “deliberate liquidation.”
• The liquidator will gather all of the solid records and compile a report on specific records, which he or she will present at a regular meeting for approval. The majority of people should vote in favor of the same resolution.
• Requires the collection of all vital documents, and the final report will be given to the council for review.
• After an examination of the report’s legitimacy, the court will issue an order for the organization’s disintegration.
• The vendor will send a copy of that announcement to ROC within 30 days of the requested date.
• Currently, the ROC will order the organization’s closure and the removal of the organization’s name from the vault.
• Simultaneously, the ROC will publish this request in India’s official journal.

Any organization registered in India can be forced to close down by the action of the council or the court if the organization has engaged in any misleading or illegal activities. The request can be taken down by:

• The organization can keep track of the request.
• The Registrar of Organizations is who is in charge of keeping track of (ROC)
• The organization’s loan lenders
• The central and state governments
• The Beneficiaries

Procedure For Compulsory Company Winding Up

• The court appeal should be filed at the same time that the contested organization’s difficulties are announced.
• Following an investigation into the veracity of the appeal, the council may accept or reject the previously indicated request.
• The court will choose the outlet in this case.
• The liquidator will carry out all of the organization’s benefits, examine the books of records, and compile them into a draft/report.
• These reports will be forwarded to the court after the board of trustees has closed down and accepted the equivalent.

Agreement On Dissolution

Common assent or mutual understanding is the simplest and most trouble-free method of dissolving a partnership firm. An organization can come to an end if a large number of accomplices consent to it or if the accomplices agree to it. An agreement defines the structure of a company and can also be used to terminate it. As stated in the partnership contract’s Dissolution of Partnership Firm by Mutual Consent clause, it is necessary for all partners in an association firm to agree on dissolving an organization.

Notice Of Dissolution

Where an association is voluntary, an accomplice of the firm may close the organization firm by sending a paper copy of the communication to the numerous accomplices of his or her intention to dissolve the organization firm. Without the consent of the numerous accomplices, a note of disintegration can’t be withdrawn once it’s been delivered. After proper notification, any individual accomplice may initiate such disintegration.

Dissolution As A Result Of Unforeseen Circumstances

A firm may be broken up under specified statements/circumstances, subject to an agreement between the partners of an organization firm:

• When an organization’s period ends or expires. Some nonprofit organizations are founded with a specific perspective on the community in which they will operate. When the association’s time is over, these types of organizations will generally come to an end.
• At the end of the day, an organization firm may be disintegrated by the completion of a venture that the firm was originally formed to attempt if it is set up to complete at least one undertaking or effort and may be broken up at the end of it.
• As a result of the death of one of the firm’s associates.
• As an arrear, by the arbitration of an accomplice or more than one accomplice.

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Duties Of Director Of A Company

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Introduction

Certain obligations and responsibilities must be fulfilled by a director of the company, a limited company, or a one-person corporation. A new director may be unaware of these responsibilities. The tasks of a director are vital for the functioning of a firm, which in turn will have a strong board of directors, as you will learn in this article.

A list of functions and responsibilities for a company’s director may be found in the Companies Act of 2013. However, before we go any further, it’s important to grasp the director’s responsibility in a corporation.

A director is an individual who, by the Companies Act of 2013, executes the duties and obligations of a director.

They operate as trustees for the company’s assets and act as an agent in the company’s transactions.

The Number Of Directors Required By Law In Various Types Of Businesses Is As Follows:

• A one-person company has a minimum of one director and a maximum of fifteen.
• A private limited company (PLC) has a minimum of two directors and a maximum of fifteen.
• A public limited company has a minimum of three directors and a maximum of fifteen.

In any of the following instances, however, the number of directors may be increased by enacting a Special Resolution.

Director’s Duties

• To accomplish the tasks of a director, most directors must rely on their abilities and expertise. A director may be required to serve as an officer, a trustee, or an agent in the corporation if necessary.
• All directors of various firms registered with the ROC of India must meet certain requirements. The reality is that many startup directors are unaware of their responsibilities. As a result, they make some costly blunders at the end of the day.
• Many people will neglect to educate themselves on these topics, but any director of a firm, whether private or public, should be aware of his or her responsibilities before taking the position. Nothing that follows will be revolutionary. 
• After all, you should be aware that as a director, you must act in the company’s best interests. Nonetheless, below is a list of the director’s responsibilities.

Best Interests

The director must always act in the best interests of the firm, putting the company’s interests ahead of personal considerations. Even if a director is acting honestly, he or she is not acting in the best interests of the organization.

Asset Management Is A Process Of Maximizing The Value Of A Company’s Assets

A director is in charge of the company’s assets and is the signatory in any of the company’s assets that are transferred. This power must not be abused by the director.

Maintain Confidentiality Of Information

As a director, you have access to all pertinent information regarding a company’s activities and finances. This information should be kept private and not shared with anyone unless it is for the company’s advantage.

Participate In Meetings

A board member is required to attend as many meetings as feasible. Any director who misses more than three board meetings in a calendar year shall be removed from the board.

Powers Not To Be Exceeded

A company’s Memorandum of Association (MOA) describes what it can do, while its Articles of Association (AOA) spell out the rights granted to its directors. The board of directors must guarantee that it stays within each of these parameters.

As a director of a corporation,  keeping all information about it is discreet. If your company is listed on one of India’s stock exchanges, confidentiality is even more important. For unethical conduct and omissions that are prohibited by law, you could be punished with insider trading.

Who Is Ineligible To Serve On A Board Of Directors?

The following individuals are ineligible to serve on a company’s board of directors:

• A person of unsound mind, a bankrupt/insolvent who has not been discharged, or a person who has been convicted of a crime
• A person who has been declared ineligible for nomination as a director by a court or tribunal.
• A person guilty of the offense of dealing with related party transactions 
• A person who has not paid any calls in respect of any shares of the firm held by him/her and six months have passed after the final day for payment of the call.

What Is The Distinction Between Non-Executive And Executive Directors?

A company’s directors come in a variety of shapes and sizes, but they can be divided into two categories: executive and non-executive. An executive director is a full-time employee of the company who is involved in the day-to-day operation of the organization. A non-executive director is a member of the board of directors who is not in charge of the company’s management.

What Are The Directors’ Responsibilities?

The following are the directors’ responsibilities:

• Identifying the company’s strategic goals and policies.
• Monitoring progress in fulfilling the company’s policies and objectives.
• Making senior management appointments.
• Accounting to relevant parties, such as shareholders, for the company’s activities.

Conclusion

A company’s director is known as the Agent of the Firm, and it is his or her job and responsibility to act to the best of his or her ability and in the best interests of the company. A director cannot be held personally accountable for a board of directors’ error of judgment. A director, on the other hand, can be held accountable for fraud and mismanagement.

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Difference Between GSTR-2A And GSTR-2B

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What is GSTR-2A?

GSTR-2A could be a purchase-oriented dynamic return. it’s automatically generated for every business. this manner usually fetches information from the GSTR-1, which means; it retrieves details of products and/or services that are purchased in an exceedingly particular month from the GSTR-1 form. As a registered buyer, you will take the reference from GSTR-2A for ITC details while filing GSTR-3B and GSTR-9. But, for preparing GSTR-3B, the taxable person must confer with GSTR-2B which acts as a static version of a GSTR-2A.

GSTR- 2A shall be automatically populated from the subsequent returns of the counterparty or sellers:

Return	Filed by
GSTR 1	Registered seller star
GSTR-5	Non-resident taxable person GST
GSTR 6	Input Service Distributor
GSTR 7	Individuals accountable for deducting TDS
GSTR 8	e-Commerce operator

What Is GSTR-2B?

GSTR-2B provides eligible and ineligible Input reduction (ITC) for every month, the same as GSTR-2A but remains constant or unchanged for a period. In other words, whenever a GSTR-2B for a month is accessed on the GST portal, the information in it remains identical without being changed for subsequent changes by their suppliers in later months.

GSTR-2B is obtainable to any or all normal, SEZ, and casual taxpayers. Every recipient can generate it on the premise of the GSTR-1, GSTR-5, and GSTR-6 furnished by their suppliers.

The declaration will truly display document-sensible information about ITC eligibility. ITC information is going to be covered from the filing date of GSTR-1 for the preceding month (M-1) up to the filing date of GSTR-1 for the present month (M).

The data in GSTR-2B is reported in an exceeding manner that permits taxpayers to conveniently reconcile ITC with their books of accounts and records. it’ll help them in easier identification of documents to make sure the following:

• The input diminution isn’t availed twice against a selected document.
• The decrease is reversed as per the GST law in their GSTR-3B, wherever required.
• GST will be paid correctly  on a reverse billing basis for related documents, including imports of services
• The statement indicates the respective tables or columns of GSTR-3B under which the input reduction of an invoice/debit note must be taken.

You Can Also Click Here To Get Your GST Registration Today.

Key Differences Between GSTR-2A And GSTR-2B

The differences between GSTR-2A and GSTR-2B exist on the subsequent grounds:

Type Of Statement

Form GSTR-2A is usually recognized as a dynamic[1] statement. the main points about inward supplies about input diminution shall be updated continually. Conversely, the GSTR-2B form references a static bank statement form. the main points under this kind are going to be updated regularly.

The Basis For The Manifestation Of Details

In the case of Form GSTR-2A, the data associated with the inward supplies shall be manifested within the statement on a real-time basis. Simply put, the small print will get updated as soon because the suppliers submit the small print regarding the outward suppliers either via Invoice Furnishing Facility (IFF) or Form GSTR-1.

Let’s say a registered taxpayer while filing GSTR-1 for Feb 2021 did not disclose some supplies. The missed supplies were provided by the taxpayer while filing Form GSTR-1 for March 2021. Correspondingly, the small print of said missed supplies are manifested in Form GSTR-2A in March 2021.

But, within the case of Form GSTR-2B, the small print regarding the inward supplies shall be manifested statically. it’ll manifest the outward suppliers’ details disclosed by the suppliers between two dues of both Invoice Furnishing Facility and GSTR-1.

For instance, let’s say the taxpayer discloses the main points associated with outward supplies for Feb 2021 after the day of the month. Under such a scenario, the corresponding details associated with inward supplies & the input decrease are disclosed in Form GSTR-2B in Feb 2021. In such a case, the corresponding details of inward supplies and therefore the input decrease won’t be reflected in Form GSTR-2B in January 2021.

Bifurcation Of Eligible & Ineligible Input Tax Credit

Form GSTR-2A lacks bifurcation of eligible ITC and ineligible input decrease. Meanwhile, form GSTR-2B extensively bifurcates the eligible & the ineligible input decrease.

Data source

Form GSTR-2A gathers/compiles data supported returns filed by the suppliers in Form GSTR-1; GSTR-5, GSTR-6, GSTR-7and GSTR-8. In contrast, GSTR-2 forms compile data from GSTR-1, GSTR-5, and GSTR-6 submitted by the supplier.

GSTR-2A Vs GSTR-2B: At a Glance

2a and GSTR-2B with ease.

Grounds of Comparison	GSTR-2A	GSTR-2B
Nature of Statement	Dynamic as its changes in tandem with documents uploaded by the suppliers remain remains	Remains static as the GSTR-2B for a single month cannot be subjected to change based on future actions of the supplier.
Frequency of Availability	Monthly	Monthly
Information source form	Form GSTR-1, Form GSTR-5, Form GSTR-6, Form GSTR-7, Form GSTR-8	Form GSTR-1, Form GSTR-5, Form GSTR-6, ICEGATE system input input
Input Tax Credit on Importation of Goods	Doesn’t entails such details	This entails Input tax credit on the importation of goods as availed from the ICEGATE system

The difference between GSTR-2A and GSTR-2B revolves around some grounds as mentioned in the table above. It’s important to notice that GSTR-2A seeks frequent reconciliation thanks to its dynamic nature. But, the identical isn’t true with GSTR-2B. Claiming ITC at the GST portal might be daunting now and then.

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How Is Residential Status Of A Individual Or A Company Determined In Income Tax Act?

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Introduction

To determine a person’s liability to pay income tax in any country, we must first determine the residency of such person, based on which tax liability will be determined, and if a particular person fits into the criteria decided by the laws of that country, he will be deemed to be a resident of that country for such laws.

When determining an individual’s or a company’s residence status in India for any given year, the provisions of the Income-tax Act, 1961 are used. A person may be deemed to be a resident of one or more countries due to the tax rules of those countries, and in such a circumstance, that person may be required to comply with the tax laws of those nations.

What Is The Residential Status?

The term “residential status” is stated in the Income Tax Act, however, it has nothing to do with a person’s nationality or residence. An Indian citizen can be a non-resident for income tax purposes, but an American citizen can be a resident of India for income tax purposes.

How To Determine Your Residential Status For Income Tax Purposes?

Residential status criteria differ for different people, i.e., individuals’ residential status will be based mainly on their criteria, while a company’s residential status will be decided on their criteria, and residential status will be determined every year, which means a person may be a resident for the current year but become a non-resident the following year.

 

How To Determine An Individual’s Residence Status?

1st CONDITION: 

To determine whether the taxpayer is a resident or non-resident in India, he must meet one of the two conditions listed below. If this is not the case, the individual will be considered a non-resident of India.

• He is in India for 182 days or more in that year, or He is in India for 60 days or more in that year and for a time total of 365 days or more in the four years preceding it.

2nd CONDITION: 

Resident and ordinarily resident (or) resident but not typically resident (This step is performed only if an individual turns out to be a resident in India). If a resident individual meets both of the following qualifications, he will be classified as a resident and ordinarily resident in India:

• He has lived in India for at least two years in the ten years preceding the relevant year.
• His stay in India is for 730 days or more in the seven years before the relevant year.

A resident who does not meet any of the above-mentioned qualifications, or who meets only one of the conditions in CONDITION 2, is deemed a resident but not ordinarily resident under income-tax law.

How Can The Hindu Undivided Family (HUF) Residential Status Be Determined?

A Hindu undivided family (HUF) is stated to be resident in India unless the control and management of affairs are located entirely outside of India.

CONDITION 1: HUF, Resident Or Non-Resident

If the HUF’s control and administration are located (partially or entirely) in India, the HUF will be recognized as a resident in India.

CONDITION 2: Whether The Person Is A Resident And An Ordinarily Resident, Or A Resident But Not A Ordinary Resident

To be deemed a resident and ordinarily resident in India, the individual of a HUF must meet both of the qualifications listed below.

• He has lived in India for at least two years in the ten years preceding the relevant year.
• His stay in India was for 730 days or more in the seven years before the relevant year.

If the HUF’s control and administration are entirely outside of India, the HUF will be considered a non-resident.

How Do You Determine A Company’s Residential Status?

• A firm that is incorporated in India is always deemed to be a resident of India.
• A company that is not an Indian company (i.e., a foreign company) and has a place of effective management (POEM) of business in India for that year is said to be a resident in India. The POEM idea is in force from 2017 to 2018.
• The term “place of effective management” refers to a location where essential management and business decisions are made to run an entity’s business. POEM is an internationally recognized test for determining a company’s residence.

How Do You Determine Your Business’s Place Of Effective Management (POEM) In India?

• Identification of a person or people who make all critical managerial and commercial decisions to do business in India.
• The next step is to choose a location where all of these decisions will be made.

How Can The Residential Status Of A Person Other Than An Individual, HUF, Or Company Be Determined?

Other than an individual, HUF, or company, everyone is a resident of India if the control and management of business operations are entirely or substantially located in India throughout the financial year.

Taxation Based On Residential Status:

Types of Income	Resident and Ordinarily Resident	Resident But Not Ordinarily Resident	Non-Resident
Income generated in India	Taxed	Taxed	Taxed
Income deemed to accrue or arise in India	Taxed	Taxed	Taxed
Income derived from a firm controlled in India but earned outside of India.	Taxed	Taxed	Not taxed
Other than the above sources of income (I.e., income that has nothing to do with India)	Taxed	Not taxed	Not taxed

What Is The Significance Of Residence Status In Terms Of Income Tax?

• If a person is a resident of India, his global income, i.e., income generated anywhere in the world, is subject to income tax in India, whereas, for non-residents, only income gained in India is liable to income tax.
• As a result, to ascertain whether a person’s total worldwide income or income received in India is subject to tax, they must first determine their residency status.
• However, if a person is a resident of India and gets income from other nations, he may be subject to taxes in both countries, depending on the rules of each.
• But, to prevent double taxes, the Indian government has reached an agreement with several countries known as the Double Taxation Avoidance Agreement (DTAA).
• The DTAA is extremely favorable to anyone who gets income from two or more countries.

Conclusion

As a result, a taxpayer must carefully examine their residential status to avoid any legal complications and income tax payments. Payment of income tax is simple and free of legal ramifications for a person who permanently resides in the state of domicile. Special considerations are made for those who are moving in and out of the country. To prevent double taxation on their income, one must check all of the conditions and whether they qualify for it or not before paying the taxes.

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GST Show Cause Notice

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To eliminate the duplication or cascading effects of taxes, such as a tax on tax, India introduced GST in July 2017 and repealed many indirect taxes. GST essentially combines a number of indirect taxes into one. In 2021, four years from now, there are a number of difficulties with GST that taxpayers and professionals should be aware of.

SCNs (Show Cause Notices) under GST:

For short-levy, non-levy, short-paid, non-paid, erroneous refund, inappropriate availment, and inaccurate use of input tax credit, demand and recovery can be initiated. The issue of a show-cause notice kicks off all demand and recovery actions under GST. What is a Show Cause Notice (SCN)? What is its significance, and when is it considered to be served? We delve deeper into the GST show-cause notice in this article.

What is the meaning of a show cause notice (SCN)?

A show-cause notice is a formal communication to a person requesting that he or she explain his or her side of the issue raised in the notice. It is usually issued in the event of a breach or misbehaviour on the recipient’s part. A notice must be given telling the assesses of their wrongdoing. Demanding that the person who is liable for tax show cause why the stated amount of tax should not be collected from him.

What is the aim of a show cause notice (SCN)? 

It is given to the recipient to permit him to precise his side of the story. The principle of natural justice gives it its potency. Before any action is taken against an individual, he or she has the proper to be heard. 

Issuing an SCN – What are the Statutory Provisions?

Section 73-

Determination of tax not paid, underpaid, incorrectly reimbursed, or input reduction wrongfully availed or utilized for any reason aside from fraud or willful fabrication or suppression of facts. 

The cut-off date for issuance of a piece 73 SCN is three months before the issuance of an order, and also the deadline for passing order is three years from the day of the month for filing an annual return for the yr that tax wasn’t paid or was underpaid or 3 years from the date of an erroneous refund.

Section 74-

Determination of tax not paid, underpaid, incorrectly refunded, or input tax credit improperly gained or used as a result of fraud, deliberate fabrication, or suppression of facts.

The time limit for issuance of a Section 74 SCN is 6 months prior to the issuance of an order, and the time limit for passing order is 5 years from the due date for filing an annual return for the financial year for which tax was not paid or was underpaid or 5 years from the date of an erroneous refund.

Conclusion 

Except for applicability, limitation period, and penalty amount, the provisions of sections 73 and 74 are nearly identical. The provisions have been created in such a way that the taxable person has the option of settling the dispute by paying the tax, interest, and relevant penalty before or after the ruling is issued. It is possible that actions taken under these sections will not always result in the passing of the order. If the order is u/s 74, the taxable person has the opportunity to make payment of dues within thirty days after serving the order to avoid a penalty of 50%.

However, where the ruling is based on Section 73, no such reduction in the penalty amount is permissible. An aggrieved taxable person has the option of filing an application u/s 161 for rectification of an error obvious on the face of the record or filing an appeal u/s 107 to the Appellate Authority within three months. Otherwise, after three months, dues will be available for recovery, and the proper officer will begin the recovery process.

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All About Income Tax Return Form 1 

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To make tax compliance easier, the taxation department has categorized taxpayers into many groups of supported income and its source. So, you’d like better to file your returns accordingly. ITR-1, also called Sahaj Form, is for somebody with an income of up to Rs.50 lakh.

Aadhaar Card is Mandatory for taxation Return Filing

The tax department has made it mandatory for all taxpayers to link their Aadhaar card with PAN on the tax department website.

Who Is Eligible to File ITR-1 for AY 2021-22?

ITR-1 Form is additionally a simplified one-page form for people having income up to Rs 50 lakh from the subsequent sources: 

• Income from Salary/Pension
• Property Income from a Single House (excluding cases where loss is brought forward from previous years) 
• Other sources of income (excluding lottery winnings and racehorse earnings)

In the case of clubbed Tax Returns, where a spouse or a minor is included, this might be done as long as their income is proscribed to the above specifications.

Who is unable to file an ITR-1 for the fiscal year 2020-21? 

• This form is not available to anyone with an annual income of more than Rs 50 lakh. 
• This form cannot be used by anyone who is a director of a firm or who has ever held unlisted equity shares during the financial year.
• Non-residents and residents not ordinarily resident (RNOR) are unable to file returns using ITR-1. 
• Individuals who received income in the following ways are also unable to file Form ITR-1:

Lottery for more than one house, racehorses, legal gambling, and so on. Capital gains that are taxable (Short term and Long term). Agricultural income of more than Rs. 5,000 in the business and professions. A person who is a resident of India who has assets (including financial interests in any entity) or signing authority in an account outside of India. Sections 90/90A/91 apply to anyone who wants to avoid double taxation or get overseas tax relief.

What is the ITR-1 Form’s structure?

Part A – General Information

Part B – Total Gross Income

Part C – Taxable total income and deductions

Part D – Calculation of Taxes Due Other Information

Part E – Bank account details

•  Make IT a priority (Details of advance tax and self-assessment tax payments)
•  TDS-Schedule (information on TDS/TCS)
•  Verification

What is the procedure for submitting my ITR-1 Form?

You have the option of submitting your ITR-1 Form online or offline.

Offline 

Only the people listed below have the option of filing the return on paper. 

• A person who was 80 years old or older at any point in the preceding year 
• A person or a HUF with an annual income of less than Rs 5 lakhs and no refund claim on their tax return 

The return is provided in tangible paper form for offline returns. When you submit your physical paper return to the IRS, you will receive an acknowledgment from them.

 Online/Electronically

• By sending the data electronically and then submitting the return’s verification in the form of an ITR-V to the CPC in Bengaluru.
• By e-verifying the ITR-V through net banking/aadhaar OTP/EVC and filing the return online. 

The acknowledgment will be sent to your registered email address if you submit your ITR-1 form electronically. You can also choose to directly download it from the IRS website. Within 120 days of e-filing, you must sign it and transmit it to the Income Tax Department’s CPC headquarters in Bangalore. You can also e-verify your tax return.

Changes to the ITR-1 for AY 2021-22 that are significant 

The ITR form has been updated to include the following changes:

• If TDS is deducted under section 194N, the taxpayer is unable to file an ITR-1. If non-filers of the income tax return withdraw cash in excess of Rs.20 lakh, the tax would be deducted at source under section 194N. In other circumstances, when cash withdrawals exceed Rs.1 crore in a financial year, the tax must be deducted. 
• Under section 194N, there is no opportunity to carry forward TDS. TDS credit under section 194N is only available for the year in which TDS was deducted. 
• Individuals or HUFs can choose between the old and new tax regimes. If a taxpayer chooses a new tax regime under section 115BAC, he must first file Form 10IE before filing Form 139 (1). 
• New schedule DI has been added to the ITR forms for the assessment year 2020-21. It permitted taxpayers to deduct expenses incurred during the extended time in the fiscal year 2020-21. In AY 2021-22, the schedule DI is eliminated.

What is the procedure for completing the ITR-1?

Before filling out your ITR-1 form, make sure you have the following documents:

• Form 16: This is a document issued by all of your employers for the current fiscal year.

• Form 26AS: Make sure the TDS listed on Form 16 is the same as the TDS listed on Part A of your Form 26AS.

• Receipts: If you haven’t been able to provide documentation of certain exemptions or deductions (such as HRA allowance or Section 80C or 80D deductions) to your employer in a timely manner, keep these receipts on hand so you can claim them directly on your income tax return.
• PAN card
• Bank investment certificates: Interest from bank account details – bank passbook or FD certificate.

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Section 44AE Of Income Tax Act

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Section 44AE is covered under the Presumptive Taxation Scheme of Income-tax act, 1961. The presumptive taxation was introduced to grant relief to small businesses or professions from the issue of maintaining books of accounts and getting their accounts audited.

The Presumptive Taxation Scheme includes 3 different Sections – Section 44AD, Section 44AE Section 44ADA. 

Any business person acquiring presumptive taxation can declare income at a prescribed rate. they will get complete relief from maintaining books of account and getting their accounts audited. 

In this blog, we are visiting to learn the specifics of Section 44AE of the Income-tax act. 

The law designed Section 44AE to allow relief to taxpayers. they’ll be people who own less than 10 goods carriages at any time during the previous year. they’ll even be those who are engaged in the business of leasing or plying of such goods carriages.

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Who Is Eligible Under Section 44AE? 

The following persons are eligible 

1. A Individual. 

2. Hindu Undivided Family. 

3. Firm. 

4. Company. 

A person who is engaged in the business of plying, hiring or leasing goods carriages will adopt this scheme. they have to not own quite 10 goods vehicles at any time during the year. 

1. A part of the month is calculated as a full or whole month. 

2. If the income is on top of the presumptive rate of Rs.1000 (Heavy Vehicles) / Rs.7500 (Other than heavy vehicles), then such income is declared. 

3. Heavy goods vehicles are those vehicles that weigh quite 12 thousand Kilograms. 

Who Is Not Eligible For Presumptive Taxation Scheme Under Section 44AE?

The one who holds quite ten goods vehicles at any time during the year isn’t eligible and can’t benefit from this scheme. 

Calculate presumptive taxation under Section 44AE. 

If someone is willing to choose the presumptive taxation scheme of Section 44AE, the income is computed on an estimated basis. 

How tax is calculated on a significant goods vehicle?

Tax is calculated at the speed of Rs 1000 / ton of total vehicle weight for each month or a part of the month during which the vehicle is owned by taxpayers. 

How Tax Is Calculated On Vehicles Aside From Heavy Goods Vehicles?

Income is going to be calculated at the speed of Rs 7500 for each month or a part of the month during which the product’s vehicles are owned by the taxpayer. 

Note: A part of the month is calculated or determined as a full month. 

If the income is over the presumptive rate of Rs.1000 (Heavy Vehicles) / Rs.7500 (Other than heavy vehicles), then such income will be declared. 

Heavy goods vehicles are those vehicles that weigh over 12 thousand Kilograms. 

Can taxpayers claim deductions as per Section 44AE?

In the case of someone choosing the presumptive taxation scheme of Section 44AE, the provisions of deductions won’t apply and income is calculated at a presumptive rate. 

For partnership firms: the owners can claim deduction on 2 bases. They are the account of remuneration and Interest paid to partners. 

No separate deduction is allowed on the account of depreciation. However, the written down value (WDV) of any asset employed in such business shall be claimed and has been actually allowed.

Maintaining books of accounts: 

A person engaged in business/profession needs to maintain books of accounts of his business as per section 44AA.

But, if someone declares income at a presumptive rate, then the supply regarding the upkeep of books of account won’t apply. 

1. The business owners needn’t maintain books of accounts under Section 44AA. The business owners needn’t audit their accounts under Section 44AB. 

2. If an individual opts for presumptive tax under Section 44AE, then they’re at risk of paying advance tax from the business covered under Section 44AE. 

3. And, if someone declares income at a lower rate than the prescribed one, then they have to take care of books of accounts. They audit as per Section 44AA and Section 44AB respectively.

4. Other Provisions of Section 44AE. There are cases where the haulers don’t own a vehicle for an entire month. they may only own it for a selected time.

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Different Types Of ITR Forms To File

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What Is ITR?

ITR stands for Income Tax Return. The Income Tax Act of 1961 governs all forms and procedures RTI must follow. An Income Tax Return (IRI) is a form in which a taxpayer submits information about their earned income and applicable taxes to the Income Tax Service. The ministry has announced 7 different forms, i.e. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6, and ITR 7 so far. Each taxpayer must file their ITR no later than the stated due date. The applicability of ITR forms varies depending on the taxpayer’s source of income, the amount of income earned, and the type of taxpayer such as individual, HUF, corporation, etc.

 

Why file an ITR?

An Income Tax Return (ITR) is required to be filed in India if any of the conditions mentioned below apply to you:  

 1. If your gross annual income is above the basic exemption ceiling as set out below 

Particulars	Amount
For individuals below 60 years	Rs 2.5 Lakh
For individuals above 60 years but below 80 years	Rs 3.0 Lakh
For individuals above 80 years	Rs 5.0 Lakh

 2. If you want to receive an income tax refund from the National Tax Service.

 3. Whether you earned or invested in foreign assets during the year. 

 4. If you want to apply for a visa or a loan 

 5. Taxpayers are corporations or companies, regardless of profit or loss. 

Additionally, you are required to show an ITR even if your income is below the basic exemption ceiling but you meet one of the following conditions: 

Have deposited a total amount of more than Rs.1 crore into one or more checking bank accounts; Where 

Have incurred a total cost of more than Rs 2 lakh for travelling abroad for yourself or any other person; Where 

Has incurred a total expenditure of more than Rs 1 Rs for electricity consumption.

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Types of ITR forms to file 

ITR-1 

This tax return is for residents whose total income for  2021-22 includes: 

•  Income from salary/pension; 
•  Income from one-house properties (except when losses from the previous year are carried forward). Also 
•  Income from other sources of income (excluding lottery prizes and racehorse income) 
•  Agricultural income up to Rs.5000.  

ITR 2 

 ITR 2 is intended for use by individuals or Hindu undivided families (HUFs), and the total income for  2021-22 includes 

•  Income from salary/pension; 
•  Income from homeownership; 
•  Income from other sources of income (including lottery prizes and racehorse income). 

 (The total income from the above must be at least 50,00,000 rupees) 

•  For individual directors of the company 
•  If you invest in the unlisted stock at any time during the fiscal year 
•  resident not ordinarily resident (RNOR) and non-resident 
•  Income from capital gains; 
•  Foreign assets / foreign income 
•  Agricultural income of over 5,000 rupees 

You can also use this tax return if you want to pool the income of another person, such as your spouse or child,  with the income of the assessor, and if that income falls under any of the above

ITR3 

The current ITR3 form is used when an individual or an undivided Hindu family earns income from their business or is engaged in a profession. Those with income from the following sources of income are eligible to submit ITR3. 

•  Exercise trade and profession 
•  For individual directors of the company 
•  Investing in unlisted stocks at any time during the fiscal year 
•  Revenue may include income from homeownership, salary/pension, and income from other sources of income 
•  Income of a person as a shareholder of a company. 

ITR4 

Current ITR4 applies to individuals, HUFs, and partnerships (excluding LLPs) who are residents and whose total income includes: 

•  Business income according to an estimated income schedule based on Section 44AD or 44AE 
•  Section 44ADA  Employment Income According to Estimated Income Schedule Based on 
•  Income from salary or pension up to Rs.50lakh 
•  Rs.50  Income from homes (excluding loss carried forward or loss carried forward) 
• Income from other sources whose income does not exceed 50lakh (excluding lottery and racehorse income) 

Please note that individuals who are freelancers who earn from the above sources of income can also choose an estimation scheme if their total income is less than 50 lakh 

Estimated income systems based on Sections 44AD, 44AE, and 44ADA exist if an individual or group chooses to withdraw income on an estimated basis. About ownership of commercial vehicles. However, taxpayers are required to submit ITR3 if the business sales exceed 2 crores. 

ITR5 

ITR 5 is for companies, limited liability partnerships (LLPs), AOPs (Association of Persons), BOIs (Body of Individuals), Artificial Juridical Persons (AJP), deceased estates, managers’ estates, business trusts, and mutual funds. 

ITR6 

For companies that are not claiming tax exemption under section 11 (income from property held for charitable or religious purposes), this declaration must be submitted electronically. 

ITR7 

For individuals, including individuals who need to make a declaration under Section 139 (4A) or Section 139 (4B) or Section 139 (4C) or Section 139 (4D) or Section 139 (4E), or Section 139 (4F). .. 

The tax return for Section 139 (4A) must be filed by a person who receives income from a trust or other legal obligation held in whole or in part for charitable or religious purposes. If the general receipt exceeds the maximum amount not due to income tax without applying the provisions of Article 139A, the Article 139 (4B) Declaration must be submitted by a political party.

Returns under Section 139 (4C) must be submitted by each person – 

Scientific Research association; 

News agency; 

An association or institution as defined in Section 10 (23A). 

Section 10 (23B) Institution referred

A fund or institution or university or other educational institution or hospital or other medical institution. 

The statement in Section 139 (4D) must be submitted by a university, university, or other entity that does not need to submit a statement of income or loss under the other provisions of this section. 

Statements under Section 139 (4E) must be submitted by a certified accountant who does not need to submit an income statement under the other provisions of this section. 

The Declaration of Section 139 (4F) must be submitted by each mutual fund mentioned in Section 115UB. The other provisions of this section do not require the submission of a refund of income or loss.

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