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Different Taxes in India – All about Direct and Indirect Tax

Every year at the end of the month of March, every company, organization, institution and the Government sector offices and even the employees working in the organizations etc. have so many questions revolving in their mind that- Do we need to Pay Tax? Are there any changes in the rates and schemes? Well, Taxes are mandatory. Every eligible citizen of India has to pay taxes.

What is Tax

Tax is a charge that is levied by the Central Government or the State Government of India. The tax charge is implemented for the betterment of the country’s economy and improving the standards and welfare of the country. The tax rules and the types of taxes are constituted by the Ministry of Finance’s Department of Revenue.

Different Types of Taxes in India

The Various types of taxes in India are

  • Direct Taxes
  • Indirect Taxes
  • Other Taxes

Direct Tax

Direct Taxes are the taxes that are directly paid or imposed to the Government of India. These taxes are controlled by the Government body, Department of Revenue named as Central Board of Direct Taxes (CBDT). The different types of direct taxes in India are

  1. Income Tax– Income Tax in India is levied on anybody who earns an income in India, whether they are resident and non-resident. They are classified into some categories like- individual person, Hindu Undivided Family (HUF), Association of Person (AOP), Body of Individuals, Corporate Firms, Companies, Local Authorities and another artificial jurisdictional person who have earned an income and they are eligible to pay the income tax. The Income tax is charged on the total income of the previous year at the rates prescribed for the particular assessment year. According to the assessment year of 2017-2018 the income tax rates are categorized on the basis of income slab.

The income tax rates are distributed in 5%, 10%, 20%, and 30% on the basis of the total income. A Surcharge of 10% of the income tax is added for the income between Rs 50 Lacs to 1 Crore. A surcharge of 15% is charged if the total income exceeds Rs 1 Crore.An Educational Cess of 3% is also charged in case of every individual.

For more details regarding the Income Tax rates for FY 17-18 please click here

  1. Capital Gains Tax– It is a tax gain on capital. If you are selling a property, bond or dealing any contract and you are gaining a profit in it, then you need to pay Capital Gains Tax. This type of tax is of two types- short term and long term. The long term Capital Gains Tax is charged if the capital assets are charged for more than 1 year in a shared case and 3 years in the case of contract whereas short term Capital Gains Tax is charged if it is less than the certain period mentioned above for the long term.
  2. Securities Transaction Tax– This type of tax is applicable, on the platform of stock exchange. If you are buying or selling equity shares, derivative instruments, equity oriented Mutual Funds, then the Security Transaction Tax is implemented.

The Current Security Transaction Tax Rates

Market Type Current Rate
Future and Options 0.017%
Capital Market (Delivery) 0.125%
Capital Market (Intra-Day) 0.025%

 

  1. Wealth Tax- This tax was imposed on one individual if their net wealth exceeds 30 lacs at the rate of 1% on the amount exceeding 30 lacs. Wealth Tax is no longer leviable from assessment year 2016-17.
  2. Corporate Tax- Corporates are the annual or the yearly taxes that are payable on the income of the corporate organization operating in India. These are broadly classified as Domestic and Foreign Companies.

Indirect Taxes

Indirect Taxes are the taxes that are not directly levied on the tax payer or the individual, but indirectly imposed on the expense incurred by the individual. Like for an example, when we buy any product, we pay GST (Previously VAT or Service Tax in case of Services). Following are the types of the indirect taxes

  1. Good and Services Tax (GST)– It is a type of Indirect Tax which is charged on the sale, consumption, manufacture of Goods and services at the National Level. GST was amended by the Constitution of India (122nd Amendment Bill) 2014. GST is implemented for country’s economic growth and reduce the overall tax burden on the goods in the country. The other taxes that are included in the umbrella of GST are
    1. Value Added Tax (VAT)– The Sales Tax is complimented with Value Added Tax to make it uniform across the country. These taxes are applied when the goods are sold completely and finally to the customer. VAT is now a part of Goods and Service Tax (GST)
    2. Excise Duty– Excise duty is the type of indirect tax that is levied by the Government on the goods and commodities that are manufactured in India. These goods are meant for the domestic consumption. Ex- Salt, sugar, newspapers, Tobacco, Gasoline, Alcohol etc. Excise is also a part of GST now.
    3. Service Tax–  The Service providers are the connected to the service tax. The service tax is charged on the aggregate amount that is received by the service provider. Example- leasing, The INTERNET, transportation etc. are subjected to the service tax. Service
    4. Customs Duty– These are the indirect taxes that are imposed on the goods that are imposed on the goods that are exported from India and imported to India.
    5. Sales Tax– These taxes are imposed by the Government on the sale and purchase of the goods in the Indian Market. These are charged on the movable goods. Anything you purchase in the market, you pay sales tax for it. Examples are- telephone, salon, the advertising company, health centre etc. The last rate of the Sales tax is 14.5%. It is now replaced by GST as is the case with all above stated taxes.

GST is divided into 3 parts

  1. Central GST (Levied by Union Government of India)
  2. State GST (Levied by Various State Governments)
  3. Integrated GST (Levied by Union Government when there is a movement of Goods or Services across state lines.

GST Rates comprises of CGST + SGST which are equal and half of below given rates. GST Rate Slabs are given below

The GST Rates are distributed on the basis of the product category

GST RATES PRODUCTS
GST (0%) Milk, jaggery, fresh vegetables, unbranded honey and paneer, coconut water, prasad, salt
GST (5%) Kerosene, Coal, tea, spectacles, cashew nuts, mat flooring, raisin, LPG, Footwear (<Rs 500), Apparels (<Rs 1000).
GST (12%) Butter, ghee, almonds, umbrellas, mobiles, packed coconut water, preparations of vegetables, fruits like (Chutney, Jam, Jelly, Pickle)
GST (18%) Hair Oil, toothpaste, computers, CCTV, cornflakes, staplers, ice cream, computer monitor (<17 inches), printers.
GST (28%) Luxury Products, Betting, Horse Racing, 5 Star Hotels, Cinema Tickets etc.

 

  • For the restaurants serving alcohol, the tax charged will be 18%.
  • Education, Healthcare are going to be exempted from GST.
  • GST charges on the services on Non-AC Restaurants will be 12%.
  • GST on Gold and Jewelery will be 3%
  • GST on Diamond and Precious Stones will be 0.25%
  • Petroleum Products and Liquor is not a part of GST regime and is still under the VAT and Excise Model.

Other Indirect Taxes

  1. Professional Tax– It is the tax that is charged on the income on the basis of the profession or employment. An individual earning an income or anyone holding a profession such as a lawyer, doctor, interior or fashion designer etc.
  2. Municipal Tax– This tax is imposed by the local authority called as Municipality of the country. These are the local taxes that are paid to the Municipal Corporation if he or she owes a house property. These taxes are paid for the maintenance of sewage, road, civic services.
  3. Entertainment Tax– This tax is imposed by the State Government on the financial transaction that is related to the Entertainment. These taxes are imposed on the movie tickets, stage/ theater shows, broadcasting, DTH and cable services. This tax is no longer active and covered under the umbrella of GST from July 1st, 2017 Onwards.
  4. Stamp Duty, Registration Fees, Transfer Tax–  When you are purchasing a property then you have to pay additional charges like the stamp duty, registration fees, transfer tax etc. This tax is levied by the Government for preparing the legal documents of the property. This is the tax is imposed over the handling of the title of the property ownership from one person to another. The amount varies from property to property.
  5. Education Cess and Surcharge– The Education Cess is divided into two types – Primary Education Cess and Higher Secondary Education Cess. This tax is levied by the Government to improve the education quality in the public schools and colleges. It comprises of the 3% of the income tax. The Cess charges are also included under the GST family structure. Whereas, the surcharge is an extra charge that is clubbed to your existing tax calculation. This tax is applied on the tax amount.
  6. Gift Tax– If you receive the gift from someone, it is merged with your income and you need to pay tax on it. This tax is called Gift Tax. This tax is applicable if the amount is more than Rs 50,000/- in a year.
  7. Swachh Bharat Cess – This tax is recently imposed by the Government. The tax is applicable to all the taxable services from 15th November 2015. The effective rate of Swachh Bharat Cess is 0.5%. Swachh Bharat Cess is abolished after the introduction of GST.
  8. Krishi Kalyan Cess– This tax is levied for the welfare of the farmers. The effective rate of the Krishi Kalyan Cess is 0.5%. This tax came into effect in the year June 1st, 2016. Krishi Kalyan Cess has been abolished after introduction of GST
  9. Entry Tax– This tax is levied or charged on the goods that are bought within the state or from outside the state. Entry Tax is separately charged by the State Government of India. This tax is also known as the Octroi Tax. Octroi is no longer levied after the introduction of GST.

Some other forms of taxes are

  • Dividend tax
  • Infrastructure tax
  • Property tax
  • Luxury tax
  • Toll tax.

The above Cess mentioned like -Swachh Bharat Cess, Krishi Kalyan Cess and the Entry Tax are no longer active now and they are clubbed with GST.

Latest Update- The latest report on tax says that after the introduction of the GST all the indirect taxes are merged under GST. So, the above taxes are removed due to the arrival of GST in the queue of Taxes. So, the taxes are reduced from number 25 to 10.

GST Composition Scheme

In every tax system, there are certain actions which need to be taken to validate the statutory provisions like filing timely returns and maintaining prescribed records, periodic payment of taxes. However, the small business enterprises (SMEs) constantly combat while dealing with such requirements due to lack of knowledge and expertise. Hence, to reduce the burden of compliance for small businesses, a composition scheme has been introduced where the enterprises can pay tax at a minimum rate based on their turnover.

Composition scheme is an extension of current Value Added Tax (VAT) law scheme where taxpayers are mandated to file summarized returns on a quarterly basis, instead of three months returns.

Key Features of GST Composition Scheme

  • A tax rate under GST composition scheme is expected to be 1% to 3%.
  • Enterprises come under GST composition scheme do not qualify for Input Tax Credit under section 16.
  • Local suppliers, who supply goods within the state, are eligible for GST Composition Scheme. Enterprises dealing in interstate supply of goods will fall under regular tax scheme.
  • Getting registered under GST composition scheme is voluntary and optional.
  • Under GST composition scheme, tax payers need to submit a bill of supply instead of invoice of the tax to the tax authorities.

Rate of Tax under Composition Scheme

There are 3 different rates under GST Composition Scheme:

Category Rate of Tax
Manufacturer, other than the manufacturer of the goods as notified by the Govt. One percent
Suppliers of Goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption) Two & a half percent
Any other eligible supplier Half percent

Eligibility Criteria for GST Composition Scheme

There are limitations of GST composition scheme. Not everyone can enrol under this scheme. Any enterprise which has a turnover less than 50 Lakh can opt for this scheme, crossing the limit, will be disentitled from the scheme and will register them in a regular scheme.

  • This provision is for suppliers dealing in goods. Service providers are exempted from this scheme. However, restaurant service providers are excluded.
  • The scheme is only for intra state supply of goods.
  • Dealer supplying goods through e – commerce sites are not eligible for the scheme such as (Flipkart, Amazon, e – bay etc)
  • In case the registered person under GST found ineligible for the scheme, then the tax authority can impose a penalty equal to the amount of tax on such person along with his tax liability.

Registration under Composition Scheme

Any desirable tax payer can enrol themselves under GST Composition Scheme from the beginning of the financial year. The application will have to be filed on or before 31st March of the Previous Year so that returns can be filed accordingly.

Dealers under composition scheme can switch to the regular scheme during the year. However, they cannot switch to composition scheme again during the same financial year.

Returns under Composition Scheme

Under composition scheme, a registered taxable person shall furnish a return for each quarter in a prescribed form in the prescribed manner within eighteen days after the end of a relevant quarter.

Registered tax payer under GST composition scheme should adhere to the GSTR 4, which is a tax return form prescribed by the Government.

Benefits under Composition Scheme

Less Compliance

Under GST, a normal taxpayer is required to file at least 3 returns monthly and 1 return annually. Whereas, in composition scheme, only a quarterly return will be uploaded under GSTR – 4.

Reduced Tax Liability

Under GST composition scheme, the rates are very low from 1% for manufacturers to 2.5% for restaurant service providers and 0.5% for other suppliers of turnover.

Particulars Description Registered as a normal tax payer Description Registered as a tax payer under composition scheme
A Total Sales Value 118000 Total Sales Value 118000
B Sales Value exclusive of taxes 100000 Sales Value exclusive of taxes 115686
C GST @ 18% on sales value 18000 GST @ 18% on sales value 2314*
D Input Purchases 65000 Input Purchases 65000
E GST @ 18% 11700 GST @ 18% 11700
F Total Purchase Value (D+E) 76700 Total Purchase Value (D+E) 76700
G Net GST Liability (C–E) 6300 Net GST Liability (C–E) 2314

Source: http://www.profitbooks.net/gst-composition-scheme/

Restrictions under Composition Dealer

Following are the restrictions on the composite dealer:

  • He is neither a causal dealer nor a Non-resident taxable person
  • He belongs to a place outside India
  • Goods have not been purchased from an unregistered supplier and where purchased he pays tax as per the provisions of the act.
  • He is required to pay central tax under reverse charge for the inward supplies of goods or services or both.
  • He shall mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him.
  • He shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place of business and at every additional place or places of business.

FAQs

What is a Composition Scheme under the GST Act?

The composition scheme allows a registered person, whose aggregate turnover does not exceed Rs.50 lakhs in the preceding financial year, to pay a certain percentage of tax as prescribed by the GST Council

Who can opt for Composition Scheme?

Any business house dealing in goods and having an aggregate turnover not exceeding Rs.50 lakhs in the preceding financial year can opt for composition scheme.

Can a professional be registered under Composition Scheme?

No, any person providing any kind of service cannot be registered under the Composition Scheme. It is only for businesses dealing in goods.

What is the tax rate applicable if you are a composition dealer?

The tax rate applicable for a dealer registered under composition scheme is:

If you are a manufacturer – 1% of turnover.

If you are a supplier of food for human consumption – 2.5% of turnover.

Others – 0.5% of turnover.

Please note that this rate is under the CGST Act and you will have to pay the same in SGST Act as well, so in short, it will be twice the tax rate applicable to you.

What are the transition provisions if a business transits from Composition Scheme under current regime to Regular Taxation under GST?

Taxpayers registered under composition scheme under the current regime will be allowed to take credit of input held in stock, or in semi-finished goods or in finished goods on the day immediately preceding the date from which they opt to be taxed as a regular tax payer.

Income Tax in India

Income tax refers to tax levied on the income or profits. Income tax levied on business is also called corporate tax. All the major tax in India are imposed by the central government and few small ones by local authorities like the Municipality. There are two types of taxes-direct and indirect tax. Direct tax refers to the tax directly levied on a person’s income while indirect tax can be of various forms like service tax, Value Added Tax, Restaurant bill etc. The income tax act is under the mandate of Income Tax Act 1961. The IRS which is the acronym for Indian Revenue Service deals with the collection and administration of various taxes.

The logo of the income tax department “Kush Mulo Dand” is a verse taken from Kautilya’s “Arthashashtra” which means that as citizens of India we should understand the importance of paying taxes and any person not doing so is punishable by law.

Importance of Paying Tax

Regular payment of tax fall under civic duty and not paying taxes is punishable by law and might lead to fine or imprisonment.

The importance of paying taxes are

  • The taxes that we pay goes to a number of places. They are paid for the manufacturing and maintenance of roads, infrastructure, establishment of libraries and public parks etc.
  • Taxes are also a major source of revenue for various government schemes and scholarship meant for the weaker section of the society.
  • Further, part of our income tax also goes to defense sector of the country including police and firefighters.

Eligibility for Income Tax

Salaried people are required to pay a part of their income as income tax. To pay income tax a person should fill form 16. It is a basically a certificate by the employer stating the deduction of TDS on the salary. The form is issued at the end of each financial year. However not everyone is required to file for income tax. In case a person is not eligible than he or she is not required to fill form 16. In such a case, the employer does not provide this form to the employee. The eligibility for taxation for people who are less than 60 years for the financial year 2017-18 are for both men and women are

ANNUAL INCOME TAX RATES
Salary up to 250000 NIL
Salary between 250001 to 500000 5% tax levied on the income
Salary between 500001 to 1000000 Rs 12500 and 20% of income
Above 1000000 Rs 112500 and 30%of income

 

Taxation for people (both men and women) above 60 years and less than 80 years

ANNUAL INCOME TAX RATES
Salary up to 300000 NIL
Salary between 300000 to 500000 5% tax levied
Salary between 500001 to 1000000 Rs 1000 and 20% tax is levied
Above 1000000 Rs 110000 and 30% is levied

 

Taxation for people above 80 years (both men and women)

ANNUAL INCOME TAX RATES
Salary upto Rs 500000 NIL
Salary between Rs 500001 to 1000000 20% of tax is levied
Above 1000000 100000 and 30% of tax is levied

 

Income tax for business or corporate tax criteria are

INCOME SLABS TAX RATES
If income is less than 10,000 10% of the income
Between 10,000 and 20,000 20% of the income which exceeds 10,000
More than 30,000 30% of the income which exceeds 20,000

Documents Required

The list of documents required for tax deduction should be collected beforehand so as to avoid last minute haste.

The list of documents required are

  1. ID Proof: PAN card, passport, Aadhaar card
  2. Salary proof: Form 16 (part A and part B and 12 BA)
  3. Proof of income in the form of interest
    • Bank passbook or interest certificate on saving account
    • Interest certificate for all fixed deposits
    • Income from other sources like commission, dividend etc.
  4. Proof of tax saving investments like NSC,life insurance,PPF etc
  5. Proof of income from property
    • Certificate of possession of the property
    • Receipts of municipal taxes
    • House loan certificates
    • Form 16A on rent
  6. Proof of capital gain
    • sale of property sale deed
    • sale related expenses
    • expenses relating to purchase
    • reinvested property’s sale deed
  7. Other claims from employers
    • Rent Receipt
    • Travel cost

Form 26AS: it deals with all the incomes earned during the year and the tax deducted on the spot.

In case a person has worked outside India in the previous year than he or she will have to present the foreign salary slip as well as foreign tax returns slips

Income Tax Returns

Tax returns are basically the various income and refund to be earned by a person from the Government like tax liability,details of tax paid etc. Income tax returns are basically forms that every salaried person is required to file every year to the Income Tax Department.If excess tax has been paid in a year then the person is liable for refund depending upon the interpretations and calculation of the income tax department. Income Tax returns requires the correct form to be filled.

ITR 1: This is a very easy and simple form.Here the details regarding salary/pension or income income from property and other sources must be mentioned. However, this form need not be filled by a person whose income is more than 50 Lakhs, have taxable capital gain, foreign assets, income from business or other profession, income from more than one house property and if income from agriculture exceeds Rs 5000.

ITR 2: This form is to filled if a person gets income from salary or pension, income from capital gains, income from house properties, income from foreign assets and other sources of income and if agricultural income is more than Rs 5000. This form should not be filled if a person gets income from business or profession.

ITR 3: This form is to be filled by an individual or Hindu Undivided Family when the source of income is from a business or profession, house property, pension/salary or other sources. This form should not be filled if a person has opted for resumption taxes.

Things to be kept in mind while filing IT returns

  • A person should mention in their tax returns regarding deposits which have been more than 2 lakhs after demonetization.
  • The cash deposited should match with the information provided while filing an ITR. In case of mismatch a person can face a penalty.
  • Income from interest should also be mentioned like income from interest on tax saving schemes and deposits.
  • Aadhaar must not only be linked with PAN but an individual should also mention Aadhaar details while filing tax returns. Not doing so might invite prosecution or fine under section 277
  • Income from previous employer should also be mentioned
  • If a person is working abroad then he or she is required to give details of the foreign bank account,date of opening,interest incurred and field number.
  • The Tax department also asks for information about financial assets if the earning is more than 50 lakhs
  • Lastly a person should keep in mind the last date of filing tax returns.

Income Tax Refund

If a person pays more taxes then he or she is liable for income tax refunds based on the calculations and interpretation of the Income Tax Department. The refund can be filed both online as well as physically. Normally the refund takes place within 2 to 6 months. The status of the refund can also be checked online. It will be paid either directly to the bank account or via cheque. The following steps should be taken while filing for a refund

For the online filing the following steps should be taken

  1. Visit the official website of income Tax Department
  2. Enter your user id and password
  3. After logging in select the “my account”tab and then select “refund reissue request” option in the drop down menu
  4. After this a form will appear on the screen.The tax payer is required to fill the form and then click on”validate” for the successful submission of the claim.

Procedure of Paying Income Tax

Income Tax can be paid both offline as well online. If a person wants to pay offline these steps should be taken.

  • Download the ITR-V document. To download one should visit the income tax department official website.
  • After downloading the form, PAN number and date of birth must be used as password to open the form. It must be noted that the password should be written in the appropriate box,should not have any space in between and should be written in small letters.
  • The ITR-V comprises of one page and it should be signed with blue ink by the tax payer
  • The form should be sent via post to the following address:

Post Bag No 1, Electronic City Post Office,

     Bengaluru, Karnataka-560100

For online tax submission the following steps should be taken

  • Visit the official website of Income tax department for income tax e-filing
  • Click on “register yourself” in the top right hand side corner of the page
  • After this a registration form will appear, select the user type as either “individual” or “HUF” and then click on “continue”
  • After selecting the user type, a basic details form will appear. It is mandatory to fill all the boxes where the asterisk is provided and then click on “continue”
  • After filling in the basic details, a registration form will appear on the screen.All the asterisk marked boxes are mandatory and the user should provide the current mobile number and e-mail id.
  • After filling up the registration form click on “submit” . After successful registration a mail will be sent to the registered email id confirming the registration and an OTP will be sent to the registered mobile number.
  • The mail sent by the Income Tax department will consist of an activation link.
  • When the activation link is clicked it will get redirected to the activation page where the user is required to provide the OTP received in his or her registered mobile number and then hit the “submit” button
  • The registration process gets completed after submitting the OTP.

Another way of online tax payment

  • Visit the e-filing website of the income tax department
  • Go to e-file and click on “prepare and submit ITR online”.(user can fill only ITRs1 or 4s online)
  • Select the ITR form and the assessment year
  • After filling the ITR form click on “submit”
  • The digital signature certificate must be uploaded if applicable and then click on “submit”
  • If the Digital signature certificate is not uploaded then the ITR-V link will be displayed.After clicking on the link the user is redirected to the ITR-V form.The form will be sent to his or her email id.If the digital signature certificate is uploaded then the return filling process is complete.

Tax Saving Instruments

There are a number of tax saving schemes and deposits like PPF, NPS, NSC, ELSS, Fixed deposit etc. that can be used for reducing income tax burden.Some of the major tax saving schemes and deposits in India are:

Public Provident Fund: It is also commonly known as PPF. It is a tax saving cum pension scheme. It acquires maturity after completing 15 years. The minimum deposit per year is Rs500 and maximum deposit is Rs 1.5 lakhs per annum.

Fixed Deposit: It does not have a fixed maturity period. The deposit can be opened after 10 years or even after 7 days. There is no upper limit on the maximum investment

Mutual fund/ELSS: The minimum maturity period of mutual funds is three years. The minimum investment is Rs 500 and there is no upper limit on the maximum investment. However tax is deductible only on a maximum of 1.5 lakhs per annum.

NSC: The NSC can be bought with the denomination of Rs100, Rs500, Rs1000, Rs5000 and Rs10000. There is no limit on the maximum amount of investment that a person can invest. However it tax is deductible only till 1.5 lakh rupees per year. There are maturity period, one for 5 years and one for 10 years.

Recurring deposit: the term period varies from 1 year to 10 years. The minimum deposit should be 1000 but tax will be exempted if the interest earned is more than 10000.

Linking Pan with Aadhaar

The government of India has made it mandatory for all taxpayer to link their PAN cards with their Aadhaar cards. This step is taken to prevent fake PAN cards. Infant in a recent report it has been stated that the government has deactivated multiple PAN cards due to there multiple presence so as prevent tax circumvention. As many as 11.44 lakhs PAN cards has been deactivated. This has been done to prevent fake identities and illegal purchase of properties. The PAN and the Aadhaar can be linked with the following steps:

  • Visit the official e-filing website of Income Tax department
  • Click on “link Aadhaar” in the left hand side of the page
  • After this a form will appear whereby the user is required to fill in the details of his PAN number, Aadhaar number, Name as per Aadhaar, date birth. The user can verify either by entering the captcha code or request for an OTP.
  • The OTP will be sent to the registered mobile number.
  • After verifying, click on link Aadhaar.

The Government has decided to mandate linking Aadhaar with PAN for income tax filing and also the deadline for linkage has been extended to 31 Aug,2017.

Check out the procedure to link Aadhaar with Pan using this Link.

Know All about GST Returns

The country is currently going through a taxation reconstruction phase which is Goods and Service Tax (GST), the largest indirect taxation reform of the country since 1947. GST is a single tax levied on the supply of goods and services from the manufacturer to the end consumer. It has replaced all the major indirect taxes such as Value Added Tax (VAT), Excise Duty, Service Tax, Central Sales Tax (CST), Custom Duty etc. This step towards making India ‘One Nation One Market’ will make the economy of the country more transparent, systematic and organized.

What are GST Returns

Goods and Service Tax (GST) returns are the documents which contains all the information of income filed by the taxpayers with the tax administrative authorities. Every person who has registered themselves on the GST portal is supposed to share their business information by filing GST returns online. Business information that includes:

  • Tax paid
  • Tax collected
  • Sale
  • Purchase
  • Output GST (On sales)
  • Input Tax Credit (GST paid on purchase)

Eligibility to Get Registered Under GST

Below is the list of some of the eligibility criteria who are required to register themselves under GST:

  • Any business with a turnover of Rs. 20 lakhs in a financial year (1st April to end of March). For north eastern or hilly states, the turnover has to be more than Rs. 10 lakhs.
  • Any business person who is registered under earlier law of Value Added Tax (VAT), Excise Duty, Service Tax etc. are required to register under GST.
  • Anyone who drives inter – state supply of goods
  • Casual taxable person
  • Non-Resident taxable person
  • Agents of a supplier
  • Input Service Distributor
  • E – Commerce Distributor or Aggregator
  • Person who supplies via e-commerce aggregator

Different Types of GST Returns

GST returns to be Filed by ‘Normal Tax Payer’ / ‘Casual Tax Payer’

Normal Tax Payer / Casual Tax Payer – A Casual or a Normal Taxable person are those who supply goods and services in a territory where GST is applicable but does not have any fixed place of business.

  • GSTR 1 – GSTR 1 contains information of all the outward supplies i.e. sales. Any registered dealer is supposed to pay a monthly return i.e. GSTR 1. “The GSTR 1 filed by a registered dealer is used by the government to auto populate GSTR 3 for the dealer”.

Note the following registered person is exempted from filing GSTR 1:

(a) Input Service Distributor

(b) Composition Dealer

(c) Non – resident taxable person

(d) Taxpayer liable to collect Tax Collected at Source (TCS)

(e) Taxpayer liable to deduct Tax Deducted at Source (TDS)

  • GSTR 1A – GSTR 1A contains the details of auto drafted supplies of goods or services.
  • GSTR 2 – Under GSTR 2, registered taxable recipient should file details of inward supplies of taxable goods and services claiming input tax credit. Due date of filing GSTR 2 is 15th of the subsequent month.
  • GSTR 3 – Under GSTR 3, the monthly return has to be paid on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax. Due date of filing GSTR 3 is 20th of the subsequent month.
  • GSTR 9 – Under GSTR the return has to be paid annually. Due date of filing GSTR 9 is 31st December of next financial year.
  • GSTR 3B – GSTR 3B is a simple return that businesses need to file in the first two months of GST (July and August, 2017).

GST returns to be Filed by Composition Tax Payers

In composition scheme under GST, a taxpayer is required to file summarized returns on a quarterly basis, instead of three monthly returns.

  • GSTR 4 – Taxpayers with small business or a turnover of up to Rs.75 lakh can opt for the Composition Scheme. Taxpayers under composition scheme will not have input tax credit facility. Due date of filing GSTR 4 is 18th of the subsequent month.
  • GSTR 9A – GSTR 9A is an annual return form for composition taxpayers. Due date of filing GSTR 9A is 31st December of next financial year.

GST Returns to be filed by Foreign Non-Resident Taxpayer

Non – resident taxable person is someone who does not have a fixed place of business in India. However, he occasionally sells goods and services in a territory of India where GST applies.

  • GSTR 5 – This form contains details of imports, outward supplies, input tax credits and other related information. Due date of filing GSTR 5 is 20th of the subsequent month.

GST Returns to be filed by an Input Service Distributor

  • GSTR 6 – GSTR 6 is generated when the Input Service Distributor confirms the details mentioned in GSTR 6A. Due date of filing GSTR 6 is 13th of the subsequent month.
  • GSTR 6A – The details in GSTR 6A are auto-populated by the information provided by the inward suppliers. The due date of filing GSTR 6A is 10th of the subsequent month.

GST Returns to be filed by a Tax Deduction

  • GSTR 7 – GSTR 7 contains the details of tax deductions made during the month. Due date of filing GSTR 7 is 10th of the subsequent month.
  • GSTR 7A – GSTR 7A contains the details of the total tax deducted and amount paid in a month. Due date of filing GSTR 7A is 10th of the subsequent month.

GST Returns to be filed by an E-Commerce Portal

  • GSTR 8 – This form contains the data of goods supplied by E-commerce portals as well as the amount of tax collected. The due date of filing GSTR 8 is 10th of the subsequent month.

How to File GST Returns Online?Follow the below steps to file GST Returns online

  • Visit the GST official site https://www.gst.gov.in
  • One will receive a 15 – digit identification number based on their State Code and PAN Number.
  • Upload invoices such as outward return, inward return and cumulative monthly return. Note: [An invoice reference number will be issued against each invoice].
  • In case of any error, one will have the option to correct it refile the return.

How to File Income Tax Return for Previous Year

Income Tax is an annual tax which every earning individual, corporate firms, local authority and company has to pay. And the tax depends on the annual income of a person or entity where the cycle starts from 1st April in a year and ends on 31st March of the next year.

And every individual, firm or a company should file their income tax returns for a financial year on or before the 31st of July of the next financial year. Under section 139 (1), the normal due dates for filing of income tax return is:

Particulars Due Date
Where the taxpayer is

1.     Company

2.     Any person mandatorily required to get his tax audit done

3.     A working partner of a firm whose accounts are required to be audited

30th September of the Assessment Year
In case of any other category of taxpayer i.e. Salaried / self-employer who are not required to get their tax audit done 31st July of the Assessment Year

However, if you have missed your due date for filing your income tax return, you can do so belatedly under section 139 (4).

Belated Return of Income Tax

As discussed if a taxpayer fail to file income tax returns on or before above-mentioned date under section 139 (1) can still pay it belatedly, or

If the taxpayer receives any notice under section 142 (1) from the income tax officer in case income tax return is not filed stating to file the required tax within the time specified in the notice and he has missed the due date of the notice as well can still file the income tax return. Such income tax returns which are filed after the due date are called “Belated Return”.

And one can file the belated return at any time of their convenience before the end of the relevant assessment year.

Also, ponder upon following points regarding Belated Return:

  • Considerable Assessment date means the due date on which the order of assessment is passed and not on which the taxpayer has received the order
  • If the return is filed after the assessment which gets cancelled, the return would still be considered as valid
  • Belated return of loss from business/profession is not applicable after the normal due date
  • Under the Finance Act 2016, Belated Returns filed under section 139 (4) can be revised, which is applicable from Assessment Year 2017 – 18 onwards.
  • The taxpayers are required to pay interest of 1% (simple interest) per month along with tax under section 234 A in case the return is filed after the income tax due date.

What are the penalties for late filing Income Tax Return?

Late filing income tax return is subjected to penalty i.e. penalty of Rs. 5000. Although this penalty has to be paid once the taxpayer receives a notice from the income tax officer, else the penalty is not automatically levied. Hence this penalty depends on the assessment officer.

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