Importance and differences between direct and indirect taxes?

Taxes are implemented by the administrations on their residents, it is an automatic charge imposed on companies or people by an administration element, regardless of whether national, provincial or neighborhood so as to back government exercises with funds.

Taxes are a money related weight laid upon people or land owners to loan their help to the administration. The taxes are not a deliberate installment rather they are an upheld commitment towards the administration.

Taxes gathered are used by the administration for different costs, for example, safeguard, medicinal services, training and distinctive foundation offices, for example, streets, dams, thruways, etc.

The Two types of taxes:

Fundamentally, there are two types of taxes to be specific Direct and Indirect taxes. Indirect taxes really can move the weight to the end taxpayer. Direct taxes, then again, enable the administration to gather the taxes directly from the purchasers. Indirect taxes enable the legislature to get steady and guaranteed returns by means of the general public.

Distinction between Direct Tax and Indirect Tax:

There are various ramifications of direct and indirect taxes on the nation. Notwithstanding, the two kinds of taxes are significant for the legislature as taxes incorporate the significant piece of income for the administration.

Key contrasts among Direct and Indirect Tax are:

A direct tax is demanded and paid by the people, firms, Hindu Undivided Families (HUF), organizations and so forth though the indirect tax is at long last paid for by the end-customer of products and enterprises.

If there should be an occurrence of direct taxes, the weight of tax can't be moved while weight can be moved the extent that the indirect taxes are concerned.

Tax avoidance is conceivable in the assortment of direct taxes while tax avoidance is beyond the realm of imagination to the extent the indirect taxes are worried as the taxes are charged on products and enterprises.

A direct tax is instrumental in decreasing expansion, while indirect tax may build swelling

Direct taxes have better allocative impacts when contrasted and indirect taxes as direct taxes put a lot lesser weight over the assortment of indirect taxes. This is the place the assortment is dispersed over the different gatherings and purchasers' inclinations of merchandise are mutilated on account of the value varieties in light of indirect taxes.

Direct taxes helps in diminishing disparities and are undeniably more dynamic than indirect taxes which improve imbalances and are thus viewed as backward.

Indirect taxes include far lesser managerial costs inferable from the steady and advantageous assortments, while direct taxes incorporate various exclusions and furthermore bring about higher regulatory expenses.

Indirect taxes are veer towards development and progress as they debilitate utilization and help increment reserve funds. Direct taxes, then again, lessen reserve funds and furthermore demoralize ventures.

Indirect taxes have a bigger inclusion as various individuals from the general public are taxed on the closeout of merchandise and enterprises, while direct taxes are gathered uniquely from explicit individuals in separate tax sections.

Extra indirect taxes are imposed on adverse to-wellbeing wares, for example, cigarettes, liquor, etc. This deters over-utilization and consequently helps the nation in a social setting.

Both the direct and indirect taxes are significant for the nation as they sway the general economy. Direct tax incorporates personal tax, riches tax, partnership tax and so on. Indirect taxes, then again, are applied to the deal and production of merchandise and ventures. Both direct taxes and indirect taxes are gathered by the focal and individual state governments and it relies upon the sort of taxes to be required.

Budget 2020 – Key Takeaways and Highlights

The Budget 2020 in India has been presented by the Finance Minister Nirmala Sitharaman who presented the Union Budget 2020 in the Parliament today. Sitharaman’s Budget speech included many key announcements. At the start of her speech, Sitharaman paid her respects to late Finance Minister Arun Jaitley. She mentioned, “GST resulted in Rs 1 lakh crore gains to consumers, removed inspector raj and helped transport sector.” Talking about employment, Sitharaman reiterated: “Our people should be gainfully employed, our businesses should be healthy; for all minorities, women, and people from SCs and STs, this Budget aims to fulfill their aspirations.” The Finance Minister was all for a Budget 2020 that would mean boosting income and increasing the purchasing power of people. Sitharaman further said that Modi govt is trying its best to doubling farmers’ income by 2022. She listed out key initiatives that the Centre took for farmers in the last few years and that included the PM Kisan.

Finance Minister Nirmala Sitharaman came up with a long speech in six years of the Narendra Modi government. She went on to announce several reforms that tried to address both the economic and social aspects of the country. See more details visit: https://www.vramaratnam.com/

Key Budget takeaways

·         Govt will help raise funds via a listing of LIC.

·         Deposit insurance raised up to Rs 5 lakh.

·         FY21 fiscal deficit target is pegged at 3.5% of GDP.

·          FY20 fiscal deficit pegged at 3.8% of GDP as against the earlier target of 3.3%.

·          Companies Act will be amended to decriminalize civil offenses.

·         FY21 nominal GDP growth pegged at 10%.

·         To introduce new education policy; allocating Rs 99,300 crore for the sector in FY21

·         Initiating the development of 100 more airports by 2025 to support UDAN scheme

·         To introduce a new simplified personal tax regime aiding the middle class.

·          No income tax levied for income up to Rs 5 lakh.

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.