Do Taxpayers in India is Getting any Benefits from the Government?

The income tax department gives out detailed data on tax return filers each year. It has been going on from the assessment year 2012-13, or AY13, onwards. The data for AY1 has been recently published. AY19 dabbles in income earned during the fiscal year 2017-18, or FY18, (i.e. the period between the months of April 2017 and March 2018).

The data provides a number of key insights about the great Indian taxpayer.  You can get the details of the same from the auditors in Chennai. As per the data, only around ₹37,400 crores is generated as far as income from house property in a year (via rents after adjusting for home loan interest and so on) in the entire country, which shows that most of the transactions are still cash-based and outside the paradigm of the tax net. The declared salary income, however, is more than double the size of the declared individual business income, which puts a wrench in the theory about the purview of the salaried middle class.

When it comes to individual income tax, there are different types of income that are taxed. This includes salaried income, the income coming from the house property, business income, and interest income. The individual-declared total income during the AY19 stood at Rs.34.1 trillion. Of this RS 20 trillion, or the bulk of the income was declared by the salaried income. 

The government announced an income tax rebate for the salaried people to be Rs 12,500 under Section 87A of the Income Tax Act. Earlier, the rebate was Rs 2,500. This available rebate is Rs 5 lakh a year.

This spells out zero tax for annual income up to Rs 5 lakh. There is an exemption from income tax on annual income amounting to Rs 2.50 lakh. This exemption can extend up to Rs 3 lakh in the case of senior citizens.

The standard deduction by the government was up to Rs 40,000 to Rs 50,000 and it increased the income tax rebate under Section 87A income-tax Act.

Besides, there is another deduction up to Rs 1.5 lakh under section 80C for investments made in instruments such as Public Provident Fund and the expenses incurred on children's education fees and stamp duty paid for the house registration.

Investment up to Rs 50,000 in the national pension scheme makes for additional tax deduction Section 80CCD(1B) of the Income Tax Act.

However, the income tax slabs were not changed until February's interim budget. There is zero tax on income amounting to Rs 2.5 lakh, beyond this tax rate it is 5 percent on income up to Rs 5 lakh amounting to Rs 12,500.

But with the government providing a rebate of the exact amount, there is no tax payable on income up to Rs 5 lakh. But such assessees are required to file their income tax returns every year. If they don't, the Income Tax Department may send notices for the same.

Twenty percent income tax is levied if the amount comes to Rs 5 lakh but not exceeding Rs 10 lakh a year. Income tax liability may turn out to be Rs 1 lakh in this slab.

An annual income of more than 30 lakhs calls for a 30 percent income tax. Plus, four percent cess on income tax is levied.

Changed jobs? How to Deal With Multiple Form 16s

Changing jobs is a common thing among individuals. People change jobs either for a better pay scale or for acquiring new skills, and when you continue to do this for one financial year (FY), you will have more than one Form 16. This may create confusion and whether your income taxes are in order or not. Try out the best-chartered accountant firms to sort out issues.

1. Inform your current employer about the previous employment

There are several individuals who do not inform their new employer about the previous salary structure. As a result, the new employer has to calculate income tax based on the income earned from him in the FY. This results in a miscalculation of taxes for the financial year. To avoid this confusion you must declare your previous salary structure to your current employer with the help of the Chartered accountants in Chennai.
To avoid this miscalculation of taxes, you should declare your previous salary to your new employer as soon as you join the new company.

2. Include all the information of every employer in your tax return form

Ensure you receive your Form 16 from all the employers you have worked in the previous financial year. Form 16 is the most important document you require to file your income tax returns. You require name, PAN of the employer, TAN of the employer, and the address must be reported for each employer in your tax return.

3. Consolidate salary from all employers

You will need to consolidate the salary earned from all the employers while you file your tax returns. In case you miss reporting any such salary, the department may send you a notice about the non-reporting of income.
Remember your salary is taxable irrespective of whether TDS is deducted or not, so remember to include this amount in your return.

4. Adjusting exempt allowances

Usually, when it comes to job change, the salary structure must change. This may lead to changes in your allowances specifically your house rent allowance (HRA). Do remember to claim HRA exemption from all your employers. You must submit the rent receipts, in case stay rented apartment.
If you have missed submitting the rent receipts to your employers on time, you can claim the HRA while you try to file your income tax returns. In such a case, you can recalculate your HRA exemption for the entire year, adjust your salary accordingly and get a refund if the excess tax is deducted.

5. Claim all the tax deductions

The employers begin the exercise of collecting proof of tax-saving deductions around February or March every year. Many individuals quit their job before the stipulated period and the employers fail to provide them with a slew of various deductions.

6. Check your Form 26AS

Form 26AS is the tax credit statement that involves the details of TDS by various deductors. A salaried individual can get all details of his salary credited every month and the tax deducted thereon from each employer in Form 26AS. This form is very important for filing your income tax returns as you can take the credit of all the tax deducted against your total tax dues in a financial year.
One can cross-check the TDS entries appearing in the Form 26AS with his payslips or bank statements. In case there is a mismatch of entries, he must report to the employer and resolve it before filing the tax returns.

What Is Payroll Outsourcing? What is the Use?

Businesses sometimes hire an external firm to manage all payroll functions which helps save time and money and helps reduce the requirement for in-house trained payroll staff,  buying and maintaining the appropriate software package and catering to updated PAYE legislation. Whether payroll outsourcing is a cost-effective solution is dependant on a lot of complexity of the organization’s payroll requirements. 

The payroll outsourcing in the service role differs some suppliers provide a barebones service while others will manage with other things such as liaising with HMRC and maintain complete compliance without the main organization ever having to manage with payroll. 

 Business consultants have long condoned outsourcing non-core functions.

A non-core function is not a profit center. A non-core function is integral but it does not differentiate between your business strategically from competitors.In most businesses, administrative and back-office activities such as payroll are known as non-core functions. So, they are key candidates for outsourcing.

 Business owners and managers require several answers to the questions,  what do you tend to gain from outsourcing payroll? Is it worth investing all the time and effort to investigate and find out all the appropriate outsourced service providers?  Then there’s the work which helps in the changing of the function outside to the third party service.  Are the benefits of outsourcing more than the effort?

Ideally, outsourcing has three key goals to fulfill.

It frees up time and resources and helps concentrate more on your core business.

It reduces costs and risks.

It gives you leeway to more technology and expertise for greater performance well, such as payroll.

Tips for Choosing an Outsourced Payroll Provider

If you are considering outsourcing payroll, it’s a given that you should look at three points you’d look at when choosing any kind of provider: 

price

service

reputation

But when it comes to payroll, you can consider other points,

Depending on the requirements for a company may cater to the payroll services that they outsource while retaining control of other aspects. The payroll functions usually outsourced to a third-party provider include:

• Running payroll and making any employee pay and withholding calculations
• Depositing funds directly or in issuing checks to employees
• Calculating state & federal payroll taxes, & making tax withholding payments
• Filing required government reports
• Withholding social security and pension contributions
• Administering employee benefits

What Payroll Functions Can Be Outsourced?

Depending on their needs, a company may cater to the payroll services that they outsource, while they retain control of other aspects. The payroll functions are typically outsourced to a third-party provider such as,

Running payroll and making the employee pay and withholding calculations

Calculating state and federal payroll taxes, and making tax withholding payments

Depositing funds directly or issuing checks to employees

Filing required government reports

Administering employee benefits

Withholding social security and pension contributions

Benefits of Outsourcing Accounting Tax Services to Us

In today’s position of globalization and technology convergence, the process of carrying out business has been restructuring. It takes astute business sense to outsource the right business processes. Most businesses and large companies are doing the right type of outsourcing their accounting, financial reporting and payroll processes for ensuring efficiency and cost savings to the business. 

 Our accountingoutsourcing services in Chennai are always structured to suit an individual client’s needs and requirements. Some of the accounts outsourcing services of note are as follows:

Bookkeeping and General Accounting Outsourcing Services

Vrmaratnam and company’s outsourcing services team can deliver complete finance and accounting solutions to companies located in different parts of the world.

The function as complete outsourced partners and take complete responsibility of the client’s routine processes allowing the management the freedom to focus on the key strategic needs of your business by our accountants in Chennai. 

Best Range of Services

The range of our varied accounting services include

Book Keeping
Vramaratnam and company pride itself in keeping a trained staff who uses technology to carry out transactions on a regular basis. This methodical process of keeping track of all financial transactions diminishes chances for any glitches in the accounting process.

Financial Statement preparation
The competent team takes care of all different financial statement preparation such as balance sheet, income statement or profit, and loss statement, statement of retained earnings and cash flows.

Management accounts
They prepare management accounts ensuring that all essential information for company executives are available. 

Payroll Outsourcing

Preparation of the monthly payroll based on the inputs received from the organization. This would include all statutory and other relevant deductions.

Ensure deductions of all different amounts and according to statutory laws such as Income Tax, Provident Fund, and Professional Tax and so on.

Checking Form 16 for the Employees and file Qty. such as returns for e-TDS with Income Tax authorities.

Deposit TDS and provide proof of deposit.

Taking care of redressal of any issues.

Reconciliation of payments or statutory deductions and so on with books of accounts on a quarterly basis.

Tax Planning & Returns

The service includes aiding the clients to make necessary periodic income tax, sales tax, and other key returns. It also incorporates helping the client make the right investment decisions and helping them avail of different rebates and deductions.

Cash Forecasting

The services incorporate analyzing the cash requirements of the business and making the right cash forecasts for planning the future.

What are the mandatory auditing and compliances, taxations required for a newly Pvt. Ltd. company in India?

Although Private Limited Company is one of the more popular ways of starting a business, there are various compliances which needs to be followed once you continue with your business.

Looking the day to day operations of your business and complying with the corporate laws is a little too much for the entrepreneur. Hence, it is essential to get a professional on board also look after the legal requirements and ensure timely fulfillment of compliances, without levy of interest and penalty.

Statutory Audit Compliances

The chief aim of a statutory audit is almost similar to other audits. This helps find out whether an organization is an exact replica of a financial position as it examines information such as bank balances, bookkeeping records, and other financial transactions. 

 

Annual RoC Filings

Private Limited Companies need to file its Annual Accounts and Returns giving it details of its shareholders, directors and so on to the Registrar of Companies. Such compliances need to be made once in a year.

As a part of Annual Filing, the following forms need to be  ROC:

Form MGT-7 (Annual Return): Every Private Limited Company is required to file its Annual Return within a time frame of 60 days of holding of Annual General Meeting. Annual Return is from the period of 1st April to 31st March.

Form AOC-4 for Financial Statements: Each and every Private Company needs to file the Balance Sheet along with a statement of Profit and Loss Account and the Director Report in this form has to be submitted within 30 days of holding of Annual General Meeting.

Annual General Meeting

Every Private Limited Company needs to go into a meeting of its shareholders once every year within a period of six months starting from the date of closing of the financial year.

The primary agenda of an AGM is including the approval of financial statements, declaration of dividends, and the appointment or re-appointment of auditors and the remuneration of directors, etc.

Board Meetings

 

The First meeting of the newly appointed Board of Directors of a Private Limited Company shall be conducted within days starting from the date of Incorporation of the company.

Further, minimum Four Board Meetings shall be held in a calendar year (a meeting every 3 months). In case of a Private Limited Company which is known as  a “Small Company”, at least two Board Meetings shall be held in a calendar year (one meeting quarterly)

Most of the startups fall within the category of “Small Company” and need to follow  certain compliances such as follows, 

1.       Income Tax Compliances

Calculation and Quarterly Payment of Advance Tax

Filing of Income Tax Returns (Tax is payable at a flat rate of 30% plus Education Cess)

Tax Audit – It is mandatory in case sales, turnover or gross receipts of a business exceed Rs. 1 Crore in the previous year that is relevant to the assessment year.

Maintenance of Statutory Registers and Records

Other Event Based Compliances

Filing of Tax Audit Report

Maintenance of Statutory Registers and Records

Besides Annual Filings, there are various other compliances which need to be done as and when an event takes place in the Company. Instances of such events are:

transformation in Authorised or Paid-up Capital of the Company.

Giving Loans to other Companies.

Giving Loans to Directors

Allotment of new shares or transfer of shares

Loans to Directors

Appointment of taking care of the position of whole time Director and payment of remuneration.

Opening or closing of bank accounts or change in signatories of Bank account.

Change or Appointment of the Statutory Auditors of the Company.

Different forms need to be filed with the Registrar for different events within the specified time periods. In case, it is not done the additional fees or penalty must be levied. Hence, it is mandatory that such compliances are met on time. 

Non-Compliance

If a Company is unable to comply with the rules and regulations of the Companies Act, then the Company and all the responsible officers who are in default shall be punishable with fine.

If there is a delay in any filing, then additional fees are required to be paid, which keeps on increasing as the time period of non-compliance changes.

What is the audit? And what is the relationship between accounting and auditing?

The audit is the systematic examination or inspection of various books of accounts by an auditor and then it is followed by physical checking of inventory to ensure that all departments are following a documented system of recording all transactions. It is done to find out the accuracy of the financial statements provided by the organization. Audit firms from Chennai and other cities can help you in this process. 

The Chief Differences and Relationship between Accounting and Auditing

These are some of the points that differentiate between accounting and auditing, in detail:

·     Accounting is an orderly way of maintaining the records of the monetary transactions and then preparing the financial statements of the company. Auditing is largely an analytical task which evaluates the financial information and independently expresses an opinion which is fair and true.

·        Accounting Standards presides over accounting, whereas the standards on Auditing preside over the auditing.

·        When compared to auditing, accounting is far simpler as a task. Accounting is as the name suggests is performed by the Accountants. Auditing is a much complex task and the task of auditing is performed by auditors.

·        Accounting helps in revealing the financial position, the profitability position and the performance of the organization.  Auditing, on the other hand, helps check the correctness of the financial report.

·     Accounting, unlike auditing, is a continuous activity. Auditing, on the other hand, is a periodic activity.

·        Where the accounting ends the auditing begins.

Conclusion

Accounting and Auditing are both important in their own ways and specialized fields, but the scope of auditing is much more than accounting as it is a thorough and painstaking process. You need to consider several things including various tax rules, acts. Also, knowing all about both accounting standards and auditing standards fixed by auditors in Chennai, as having proper communication skills is very important.

Apart from all the above points, there are several other points to consider and are required like integrity, confidentiality, honesty, and independence they are all to be maintained while you undergo the auditing process. When the auditor submits the financial report, it becomes helpful for a host of people such as investors, creditors, investors, debtors, suppliers, customers, government and so on for proper decision making.

Though auditing is considered more important, it would be foolhardy to consider accounting any less than auditing. There are several things which you need to keep in mind while conducting accounting. It requires you to have complete and in-depth knowledge of all the accounting standards, conventions, principles, and assumptions too along with Companies Act rules and tax laws. The truth is auditing cannot be conducted alone, the procedure of auditing can only to be conducted when accounting outsourcing services are conducted properly by accountants in Chennai and other major cities, so, accounting cannot be neglected by hook or by crook.