Tax – Page 6 – Finaxis

What Is Form 29B?

Form 29B may be a form employed by Companies to disclose book profits to the revenue enhancement Department. it’s not as simple as it seems. However, we’d like to know the full concept regarding the aim of Form 29B. Let’s start with the fundamentals.

Zero-Tax Company

The company’s books of accounts are prepared as per the businesses Act, and tax payable is calculated as per the revenue enhancement Act guidelines. Moreover, the profits shown within the Profit & Loss statement are thought of as book profits – the income of the corporate. Many of the businesses had book profits; however, they reported nil tax as per the Income-tax provisions. We call such companies “zero-tax” companies. they’d substantial book profits but claimed deductions & exemptions under the IT Act. This way, they were ready to reduce their liabilities to zero tax.

MAT – what’s the Minimum Alternate Tax?

Section 115JB of the Finance Act 1987 was enacted to bring zero-tax firms under the IT act’s jurisdiction. As per Section 115JB, Companies would force to pay a Minimum Alternate Tax (MAT) of 18.5%. However, this implies the book profits are subject to a tax of 18.5%.

Let’s see an example. The book profits of the corporate before claiming any exemptions (depreciation and others) under the IT Act is Rs. 10 lakhs. The MAT required to be paid is 18.5% of 10 lakhs, which is Rs. 185000/-

Companies into life assurance businesses are exempted from MAT.

More about Form 29B

All companies that constitute the purview of Section 115JB must file this manner 29B report. The company’s accountant should fill it. The statement confirms that the book profit is following Section 115JB. the outline should be obtained before filing the taxation. you wish to submit the report electronically.

The format of the shape 29B is straightforward. It contains the subsequent information:

- Name and address of the corporate

- Pan card number

- Nature of business

- Assessment year

- Amount of the Book profit

What is MAT Credit?

All companies must file the report in Form 29B, per Section 115JB. Basis of the story, the corporate must pay the Minimum Alternate Tax. Indeed the corporate can avail of MAT credit basis the tax paid. The MAT amount paid in one year are often used as a “credit” within the subsequent years. However, there may be a difference within the amount paid between the tax paid under MAT and also the Tax Payable under Regular Tax. the surplus MAT amount paid is thought as MAT credit. Therefore, this credit is carried forward for 15 financial years.

To simplify, let’s study an example of MAT carry over mechanism.

The MAT paid in excess in the first year is Rs. 2 lakhs. Year 2 – The surplus mat is Rs.1 lakh. In 3rd year the surplus tax paid is Rs. 4 lakhs. Hence this company at the tip of 4 financial years has the whole MAT credit of Rs. 7 lakhs.

Now within the 4th year, the corporate pays Rs. 5 lakhs as MAT; however, the particular tax to be paid is Rs. 9 lakhs. However, during this scenario, the corporate can use the MAT credit of Rs. 4 lakhs from the overall credit amount available. therefore the company within the 4th year saves a considerable amount of latest spending. Now within the next year further, the MAT amount is a smaller amount as compared to the particular payable amount. Here too, the corporate makes use of the balance of the MAT credit available to the extent of Rs. 1.50,000.

Purpose of Form29B

The company must calculate the tax amount under MAT furthermore because the tax to be payable as per standard tax provision. Indeed the corporate has to pay whichever amount is more. So in case, the MAT amount is relatively higher i.e. over the regular tax payable amount. the corporate has to pay MAT amount.This figure is based on the book profit reported on Form 29B.The company’s controller audits this report. However, Form 29B becomes a critical report back to claim MAT credit. Hence filing of Form 29B is mandatory as per IT Act and is useful for the businesses to say the MAT credit in addition.

Conclusion

Every company that incorporates a book profit must pay a Minimum Alternate Tax. The book profit amount is disclosed within the audited report of the corporate under Form 29B. However, it assumes to be the income of the corporate for tax calculation purposes. Therefore, the premise of this MAT is calculated and paid. Form 29B is important to say MAT credit in subsequent years. Moreover, Form 29B is of utmost importance for the corporate.

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Income Tax Slabs	Tax Rate	Wellbeing and Education Cess
Upto Rs. 2.5 Lakh	Nil	Nil
Rs.2,50,001 to Rs.5 lakh*	50%	4% of Income Tax
Rs.5,00,001 to Rs.10 lakh	20%	4% of Income Tax
Above Rs.10 lakh	30%	4% of Income Tax

Income Tax Slab	Tax Rate	Wellbeing and Education Cess
Upto Rs. 3 lakh	Nil	Nil
Rs.3,00,001 to Rs.5 lakh	5%	4% of Income Tax
Rs.5,00,001 to Rs.10 lakh	20%	4% of Income Tax
Above Rs.10 lakh	30%	4% of Income Tax

Income Tax Slab	Tax Rate	Well-being and Education Cess
Up to Rs. 5 lakh	Nil	Nil
Rs.5,00,001 to Rs.10 lakh	20%	4% of Income Tax
Above Rs.10 lakh	30%	4% of Income Tax

Category of Taxpayer	Due Date FY 2020-21 for Tax Filing
Individual/Hindu Undivided Family/AOP/BOI (no auditing required)	31st July 2021
Businesses that require auditing	31st October 2021
Businesses that require TP Report	30th November 2021

Taxable Income Range (in ₹)	Tax Before 2020 (Existing)	Tax Post Budget 2020
Up to 2.5 lakhs	Exempted	Exempted
Between 2.5 and 5 lakhs	5%	5%
Between 5 and 7.5 lakhs	20%	10%
Between 7.5 and 10 lakhs	20%	15%
Between 10 and 12.5 lakhs	30%	20%
Between 12.5 and 15 lakhs	30%	30%
Above 15 lakhs	30%	30%

Title	Pvt Ltd Co.	OPC	LLP
Income Tax Rate	30%	30%	30%
Surcharge	7% when total income exceeds INR 1 cr but less than INR 10 cr.12% when total income exceeds INR 10 cr.	7% when total income exceeds INR 1 cr but less than INR 10 cr.12% when total income exceeds INR 10 cr.	12% when total income exceeds INR 1 cr
Taxed as	Domestic Company	Domestic Company	Partnership Firm
salary	Director’s salary is allowed as an expense	Director’s salary is allowed as an expense	Partner’s salary allowed as deduction
Interest and Remuneration	is taxable income	is taxable income	Allowed as deduction
Loans	Loans to the directors are taxable when repaid	Loans to the director are taxable when repaid	Loans to the partners are not taxable when repaid
Tax burden	moderate	moderate	low
MAT	Applies	Applies	AMT applies
Distribution Dividend Tax	Applies	Applies	Does not apply

Basis	194-IA	194-IB
Applicability	On payment for the transfer of Immovable Property.	On payment of the Property’s rent.
Condition on Payer	Any person who is not the person referred to in 194LA.	All Individuals and HUFs (not subject to audit under section 44AB).
Condition on Payee	Must be a Resident.	Must be a Resident.
Condition on Asset	Immovable property (other than agricultural land) of Rs.50 lac or more. Immovable property is defined as land or a building.	TDS is levied on the following items when rented or leased (if the rent exceeds 50,000 per month): – Building, land, land appurtenant to structure (including factory building), machinery, plant, furniture, equipment, and fittings.
Rate of TDS	TDS rate is 1% of payment.	TDS rate is 5% of payment.
Time for Deduction of Tax	When such sum is credited to the transferor’s account or when payment is made, whichever comes first.	When such cash is credited to the payee’s account for the last month of the previous year (or when a house is vacated during the year), or when payment is made, whichever comes first.
Application of TAN	It is not necessary to obtain TAN.	It is not necessary to obtain TAN.
Deposit of Tax to Govt. Account	Within 30 days of the end of the month in which the deduction was made.	Within 30 days of the end of the month from which the deduction was made.
Challan Cum Return Form	Form 26QB.	Form 26QB.
Certificate of TDS	The payee must get a TDS certificate in Form 16B within 15 days of the due date of the challan in Form 26QB.	The payer must provide the payee with a TDS certificate in Form 16C within 15 days of the due date of the challan in Form 26QC.

Category: Tax

What Is Form 29B?

Zero-Tax Company

MAT – what’s the Minimum Alternate Tax?

More about Form 29B

What is MAT Credit?

Purpose of Form29B

Conclusion

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Registration Of A Business

Registration For Taxes

Import Export Code Registration Is Required

To Apply For IEC Registration, You’ll Need To Gather The Following Documents:

China’s Top Products To Ship

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Importing Products From China: Typical Documents Are Required

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How Are Sole Proprietorship Business Taxed In India

Getting Sole Proprietorship

Advantages of Sole Proprietorship In India

Disadvantages of Sole Proprietorship in India

Sole proprietorship income tax calculation

Sole proprietorship charge rates for AY 2019-20 (FY 2018-19)

What Happens If I Don’t File My ITR?

What are the dates for filing income tax?

Is it Compulsory to File Income Tax Returns?

What Happens If Individuals Fail to File Their ITRs?

Penalty

Reduced Time For Updating Your Income Tax Returns

Interest At The Tax Amount

No Carry Forward Of Losses

Delay In The Method of Return Of Income

What Are the Current Income Tax Rates for Taxpayers?

Rules changed because of COVID

Mandatory Compliances For A Private Limited Company In India

What are The Mandatory Compliances for Private Limited Company?

Compliance With Statutory Audits

Annual ROC Filings

Annual General Meeting

Board Meeting

Directors Report

Income Tax Compliances

Maintenance of Statutory Registers And Records

Event-Based Compliances

Examples of such events include:

Non-compliance

Benefits of Mandatory Annual Compliances:

Why Does A Private Limited Company Need To File ROC Compliance?

Conclusion:

Private Limited Vs. LLP Vs. OPC – Which One Is Right For You?

Features of Private Limited company:–

For Businesses Raising Funding:

Requires Greater Compliance:

Few Tax Advantages:

Start-up Cost:

Features of an LLP:–

For Non-Scalable Businesses:

Fewer Compliances:

Tax Advantages:

Number of Partners:

Startup Cost:

Features of an OPC:-

For Solo Entrepreneurs:

High Compliance Requirements:

Minimal Tax Advantages:

Start-up Costs:

Tax Liability Comparisons:

Types Of Income Exempted From Income Tax In India

What Is Exempt Income?

Income Exempted From Income Tax:

Agricultural Income Under Section 10(1)

Share Of Profit From Partnership Firm Under Section10(2A)

Compensation On Account Of Any Disaster Under Section10(10BC)

Educational Scholarships Under Section 10(16)

Pension To Gallantry Award Winners Under Section 10(18)

Family Pension Received By A Family Member Of Armed Force Under Section 10(19)

Income Of Minor Under Section 10(32)

Section 10(38) Long-Term Capital Gain from the Transfer of Listed Securities

Declaration Of Exempt Income