Are current liquid fund returns make it worth your while

October 7, 2022
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Are current liquid fund returns make it worth your while? At the moment liquid funds are delivering an annualized return of 5.5%-6%.…

October 7, 2022
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Are Gilt Funds the most secure bet after the Franklin episode? Gilt funds invest primarily in Government securities (G-secs) issued by the…

October 6, 2022
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Limit on Cash transactions in Business Cash is the only source by which tax evasion, Black money and other business frauds happen,…

October 6, 2022
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NEW TAX REGIME OR OLD ? In Budget 2020, our finance minister had announced a new tax regime. The finance minister has…

October 6, 2022
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When you make a plan to apply for ISO certification this question might come in your mind which ISO standard is most…

October 6, 2022
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What is TDS ? TDS stands for Tax deducted at source. The concept of TDS is with the aim to collect tax…

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In my earlier post on TDS Compliances, I have shared what TDS was all about. When it is required to deduct? What are…

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What is Tax Audit & when it is required Before understanding Tax audit, we should first understand the term “Audit” Audit…

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Can Private Limited Company convert into Section 8 company What is a Section-8 Company? According to the Companies Act 2013, Section 8…

Are current liquid fund returns make it worth your while?

At the moment liquid funds are delivering an annualized return of 5.5%-6%. This is lower than the 6.5%-7% seen a year ago. However, it is in line with the downward trending interest rates in the economy. If you are feeling disappointed with these returns and think that it’s better to move to a higher return fund or leave money in the bank itself, first read through the points below and then decide what to do.

Liquid funds are a genre of mutual fund schemes which invest in very short maturity debt and money market securities. These funds are open-ended and allow investors to invest and redeem as required. Given that the funds invest in short term securities, the returns from these schemes reflect the current trend in interest rates.

If you are feeling disappointed with these returns and think that it’s better to move to a higher return fund or leave money in the bank itself, first read through the points below and then decide what to do.

Lower deposit rates

Bank deposit rates too are lower in the current environment. For example, SBI is offering a 4.8% annual interest on a 6-month fixed deposit and around 5.5% interest on a one-year deposit. Similarly, HDFC Bank is offering 5.25% and 5.8% respectively. SBI has lowered its saving bank interest to 2.75% per annum.

Liquid fund provides returns on a broad basis and continues to be better than bank deposits rates with no added pressure of being a bank customer. You can park funds for a couple of days or a couple of months and earn competitive yield in the meantime.

Flexibility

You can buy and redeem funds online and, in some cases, there is an instant redemption facility of up to Rs 2 lakh where the funds can be withdrawn and money is received in the bank within the hours.

Liquid fund returns on a broad basis continue to be better than bank deposit rates with no added pressure of being a bank customer. You can park funds for a couple of days or a couple of months and earn competitive yield in the meantime.

Tax advantage

While there is no benefit in the short term as compared to other options, if you don’t utilize the money and leave it in this option for a long period, after three years, the tax benefits outweigh other short-term investment options.

Higher returns come with more risk

There are funds which can give you higher returns, Ultra short term debt funds and Short term income funds are giving annualized returns of 7%-9% currently which can be tempting sometimes. However, these are not strictly funds meant to part money for a few days to a few months. In these funds, you need to be sure that you have the staying power of 6 months and more.

Some short-term income funds are delivering negative returns too as risk is high in some portfolios.

Given the short-term nature of securities they hold, liquid funds are a good option to park money you may need at any time. In this case you needn’t chase returns, rather look for optimizing returns along with stability. It is in this combination that liquid funds work better than bank deposits. It is this combination that makes liquid funds more attractive than bank deposits.

Are Gilt Funds the most secure bet after the Franklin episode?

Gilt funds invest primarily in Government securities (G-secs) issued by the RBI on behalf of the Government. Since it invests in bonds that are of highest credit quality, capital protection is more or less guaranteed.

With redemption pressures mounting from its investors, Franklin Templeton mutual fund recently announced the closure of its six credit risk funds. Some of them invested in risky corporate bonds that were becoming difficult to sell in this tight liquidity situation.

Under these circumstances, some investors are now contemplating shifting their debt allocation towards gilt funds. Does it make sense for investors?

Let’s, first of all, understand gilt funds.

Gilt funds invest primarily in Government securities (G-secs) issued by the RBI on behalf of the Government. Since it invests in bonds that are of the highest credit quality, capital protection is more or less guaranteed. Unlike corporate bonds, G-secs have a negligible risk of default (or credit risk).

However, gilt funds carry other types of risk that you need to be aware of.

Types of risk

All type of debt funds carry three types of risk – credit risk, liquidity risk and interest rate risk. While credit risk as mentioned is essentially about the risk of default in repayments by the borrower, liquidity risk is about the inability to easily sell securities in the market. Usually, low rated-bonds (AA or below) have higher liquidity risk than that of benchmark G-secs.

Last but not least is the interest rate risk which is the susceptibility of the bond prices to the changes in the interest rates in the economy. Under an increasing interest rate regime, the returns from gilt funds fall, thanks to the inverse relationship between bond prices and interest rates.

Higher the maturity of the government bonds, more volatile their prices. For instance, the price of a five-year government bond falls by five per cent for every one per cent increase in interest rates and vice-versa. With most gilt funds holding bonds with maturity ranging from five to 10 years, they are highly susceptible to interest rate movements in the economy.

Interest rate movements are not unidirectional. It is currently hovering at multi-year lows with higher odds of interest rates going up. With average maturity of G-sec holdings at 8.8 years for gilt funds, there are chances of gilt funds posting negative returns if interest rates rise consistently. Remember, in the calendar year 2017, gilt funds posted a minuscule return of 2.8 per cent, when interest rate rose by about 80 basis points.

Don’t go by past returns

Bond yields of 10-year government bonds – a barometer of the interest rate in the economy – were down from 7.03 per cent a year back to little less than six per cent now. This, in turn, has resulted in a big appreciation of long-term bond prices. Gilt funds, on an average, have given a return of 15.7 per cent in the last one year, which is next only to that of Gold funds.

The track record of gilt funds looks impressive – in the last three, five and 10 years, it gave a CAGR of 8.6 per cent, 9.0 per cent and 8.7 per cent respectively.

Does that make a strong case for investing in gilt funds? Not really.

Investors, therefore, need to proceed with caution without getting lured by past returns. Moreover, there is weak demand for government bonds in the market now. Foreign Portfolio Investors (FPI) on the one hand are selling heavily, while local banks are wary of investing, fearing a rise in yields (and reporting of losses).

Goal orientation

Moreover, choice-making of instruments has to be in sync with the financial goal in mind. Once you arrive at an asset allocation for it, you need to choose from various debt funds in the offing.

As you can see from the above chart, interest rate risk is highest for long duration and gilt funds. For liquid, ultra-short duration and low duration funds, the risks are far lower. For your debt requirements, a combination of investments in these three low-risk debt fund categories should suffice. It will outperform the returns of Bank fixed deposits and protect capital. To beat inflation, however, your portfolio needs the support of equities.

Takeaway

Gilt funds carry negligible risk of default from the borrower, but takes huge interest rate risk. With interest rates seemingly bottoming out, any increase could correct bond and NAV prices sharply. Stick to liquid, ultra-short duration and low duration funds for your debt portfolio allocations.

Limit on Cash transactions in Business

Cash is the only source by which tax evasion, Black money and other business frauds happen, so it is very important for any country to control its Cash transaction. In this line to Control Cash transactions Government of India taken many majors by inserting different clause and different section in many Acts. So I want explain one by one topic where cash transactions happen on daily basis in very brief manner & how our government try to control cash transaction in India.

Limit of Cash transactions in GST:-Now a days as GST is implemented in whole India every businessman want to know how much we use cash in our business what is limit of cash transaction in our business, but as far as from the perspective of GST Act there is no such limit on Cash transaction whether for cash sales or cash purchase, but In income tax there is limit regarding cash transaction.

Limit on Cash transactions in income tax Act:-

Limit for Cash Payments:-In businesses it is very important to incurred expenditure for working capital that is for the operation of Business and in business Capital expenditure also incurred. In income tax act Government impose restriction of Cash expenditure, No Assessee can make cash payment for revenue and capital expenditure exceeding Rs. 10000 in Single day to single person for such transactions.

Note 🙁 In case of Payment made to Hiring, leasing of Good Carriages Limit is Rs. 35,000 instead of Rs. 10,000)

If Payment Exceeds Rs.10, 000 in case of any Expenditure then it is Disallowed it means we cannot claim this as Expenditure.

Limit of Cash Receipts: – As per section 269ST No person shall Receive More than Rs. 2 lakh in aggregate in a single day from single person OR for Single transaction OR in respect of transaction related to one event or occasion from a person.

If violation of law happens then amount of penalty u/s 271 D of Income tax Act will be equal to the amount received by such person.

Limit on Receiving Deposit in cash:-

As Per Sec 269SS any person shall not take any deposit, loan any amount from any other person exceeding 20,000, if any assessee violate the rule then the person shall be liable for penalty equal to loan amount.

Limit on repayment in Cash:-

As per sec 269T any person shall not repay any deposit ,loan , advance to any other person exceeding 20,000 in cash , if the person violate the rule then the person shall be liable for the penalty equal to loan amount.

Following points to be noted:-

The sec 269ST, 269SS & 269T is applicable on every person except the person as mentioned below:-

a) Government

b) Any Corporation established by Central and State Government

c) Any banking Company, Post office & cooperative bank

d) Where debtor and Creditor both person have only agriculture income, neither have any taxable income.

e) Any other notified institutions

f) Any Government Company

Conclusion: – Excess use of Cash is not good for our economy, so we should try our best to make our economy cashless and support government so that day by day our economy strengthen.

Author Name:-CMA Praveen Kumar Tiwari

Websites:- https://www.mycorporation.in/

NEW TAX REGIME OR OLD ?

In Budget 2020, our finance minister had announced a new tax regime. The finance minister has given the taxpayers to choice between the new regime and existing one. The choice is depending on the taxpayers, on what regime they would like to opt for.

The new tax regime is a concessional tax regime with more tax slabs and lower taxes. But to opt for this new tax regime, the taxpayers have to forego certain exemptions and specific deductions and exemptions, which was available to him in the old tax regime.

OLD TAX REGIME – HIGH INCOME TAX RATES BUT LOT OF OPTIONS AVAIALBE FOR DEDUCTION

In current tax regime, the tax rates are high. But there are lot of ways to reduce your tax liability.

In this regime, the taxpayer can reduce his tax liability by claiming some of the exemptions and deductions.

Exemptions: – House Rent Allowance (HRA), Leave Travel Allowance, Leave Encashment, Uniform Allowance, etc.

Deduction: – Standard Deduction of Rs. 50000, 80 C Deduction of upto Rs. 1.5 lakh, Principal and Interest Component of Home Loan, etc.

NEW TAX REGIME – LOWER TAX RATES BUT HAVE TO SACRIFICE THE EXEMPTION/DEDUCTIONS

This new tax regime is much different from the old one.

In new regime, the tax slabs have been increased and the rates of tax has been lowered. But all the exemptions and deductions that was used by taxpayers in existing regime won’t be available in this new tax regime.

The comparison of tax slabs in the old and new tax regime

Tax Slabs (Rs.)	Old Tax Rates	New Tax Rates
0 – 2,50,000	0%	0%
2,50,000 – 5,00,000	5%	5%
5,00,000 – 7,50,000	20%	10%
7,50,000 – 10,00,000	20%	15%
10,00,000 – 12,50,000	30%	20%
12,50,000 – 15,00,000	30%	25%
15,00,000 and above	30%	30%

WHICH WOULD BE BENEFICAL TO OPT?

It is very complicated to decide, for which option one must go? But for the answer, we have to go in a systematic way.

You all need to do is:-

Calculate all the exemptions that you are available with
Also you need to calculate all the deductions that you can claim

Now, combine these exemptions and deductions and subtract the total from your gross salary, so that you are able to reach at taxable income. Now what would be your taxable income if have let go all those exemptions and deductions. This is how, taxpayers can decide what regime they should go for?

The pros of new tax regimes: –

The new tax regime provides for lower tax. Also, as most of the deductions and exemptions are not available, the documents required is lesser and tax filing is easier.
Investor may not prefer to lock-in funds in investment for specified period for tax benefit. Since in this regime, the tax benefit on account of locked-in funds won’t be available. So, the taxpayers can now invest in open-ended funds, and don’t have to invest the funds for a restricted period.
The reduced tax rates will provide more disposable income to the taxpayer.

The cons of the new tax regimes: –

Non-availability of certain specified deductions:

Taxpayer cannot avail the following illustrative list of deductions :-

a) Clauses referred in section 10 as follows:

(i) Leave travel concession;

(ii) House rent allowance;

(iii) Special allowance (such as children education allowance, hostel allowance, transport allowance, per diem allowance, uniform allowance, etc.)

(iv) Allowances to MPs/MLAs;

(v) Allowance for clubbing of income of minor;

(b) Exemption for SEZ unit under section 10AA;

(c) Standard deduction, deduction for entertainment allowance and employment / professional tax as contained in Section 16;

(d) Interest under section 24 in respect of self-occupied or vacant property (loss under the head Income from House Property for rented house shall not be allowed to be set off under any other head and would be allowed to be c/f as per extant law);

(e) Additional depreciation under section 32(1)(iia);

(f) Deductions under sections 32AD, 33AB and 33ABA;

(g) Various deductions for donation or expenditure on scientific research contained in sub-clause (ii) or sub-clause (iia) or sub-clause (iii), of sub-section (1) or sub-section (2AA) of section 35;

h) Deduction under section 35AD or 35CCC;

(i) Deduction from family pension under clause (iia) of section 57;

(j) Any deduction under chapter VI-A (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc.). However, deduction u/s 80CCD(2) and section 80JJAA (for new employment) can be claimed

The choice to opt can be exercised every year and any regime which is beneficial can be adopted by the individual (except for those who have income from business or profession). Iindividuals who have income from business or profession cannot switch between the new and old tax regimes every year. If they opt for the new taxation regime, such individuals get only one chance in their lifetime to go back to the old regime. Further, once switched back to existing tax regime, they will not be able opt for new tax regime unless their business income ceases to exist.

The income tax department has brought out a tax comparison utility, which is available on their web portal and in which, an individual taxpayer can use to evaluate which option is better for him/her.

The link to the same is as under: https://www.incometaxindiaefiling.gov.in/Tax_Calculator/

When you make a plan to apply for ISO certification this question might come in your mind which ISO standard is most relevant for your company’s activity. There are so many ISO standards therefore it creates confusion between ISO Standard Numbers. And for an Organization it is difficult to choose the more suitable standard for its scope. Learn about the most popular standards impacting the business and consumerism.

ISO 9001 QMS (Quality Management System):

To sets off the basic norms for quality management system ISO 9001 was published in 1987, and this update its norms guidelines in every seven years. The current version is 9001:2015 released in September 2015. This standard can be applied by any small or large organization with any scope of business. The standard provides guidelines and measures to achieve effective quality management in an organization. The standard ensures consumers that they receive high-quality product and service.

ISO 14001 EMS (Environmental Management System):

The standard 14001 is applicable to those companies have an impact on the environment while producing a product. The standard governs the guidelines for implementing a systematic framework to manage the environmental impacts of a product produced by an organization. Any organization may use this standard that has a responsibility to maintain, improve, set up and implement an environmental management system to promise that it meets the requirement of environmental policy.

ISO 22000 FSMS (Food Safety Management System):

The food Industries who wish to focus on the development and implementation of the food management system can apply for ISO 22000 FSMS. This ensures the customer that the food processing and the ingredients obtained from their supplier are safe. It improves the control over the food safety activities. It increases consumer and stakeholder confidence in products.

ISO 18001 OHSAS (Occupational Health and Safety Management System)

An International standard to maintain the Occupational Health and Safety Management System. Rather than addressing the safety of the specific product, it addresses Occupational Health and Safety. This is replaced by 45001 and got the recognition as 18001:2007. This is the standard recognized and implemented worldwide. This governs the rules, policies, plans, records and plans that define whether your company takes care of occupational health and safety. The standard ensures that the employer follows the management system for his employee’s health and safety and measure to prevents the injuries at the workplace. This improves the safety culture in an organization, implement effective preventive controls and avoid hazards at the workplace.

ISO 27001:2013 ISMS (Information Security Management System):

This is a standard expand by ISO (International organization for Standardization). The guidelines of this standard provide that how an organization can establish an effective information security management system and to protect data & avoid the possible potential cyber-attack. The standard aids an organization on how to do the best practice to manage and protect the valuable data and information about it. This identifies which risk exists for the information and implement the safeguard and another mitigation method to handle the risk and meet the identified expectation.

ISO 20000 SMS (Service Management System)

The standard is held by service providers and it provides the requirement to plan, monitor, implement, establish, review and maintain service management system. The standard assures that the consumers getting service from a service provider is well qualified and fulfilled the requirement of the service management system. The guidelines of this standard provide how to improve the design, delivery of service.

To get the ISO certificate please click here https://www.mycorporation.in/india/iso-certification-consultant-standard-9001-2008

What is TDS ?

TDS stands for Tax deducted at source. The concept of TDS is with the aim to collect tax from the very source of income. As per the Income Tax Act, any person or company (Deductor) while making payment after the threshold limit defined is required to deduct the tax at source and deposit the TDS with the Government. On the other side the person (Deductee) whose TDS is deducted get the benefit of the same while filling his Income Tax return.

The deductor must have TAN (Tax Deduction and Collection Account Number), 10 digit alphanumeric number allotted to those who are required to deduct the TDS.

When is TDS required to be deducted?

Any person making the specified payments after the limits prescribed in the Sections are required to deduct the TDS while making the payments such as Professional Fees, Interest, Rent, Commission, but in the case where tax audit is not required in those cases individuals and HUF are exempted from deducting the TDS. However, in certain cases, in case of rent payments made by individuals and HUF exceeding 50,000 per month, are required to deduct the TDS @5% even if the individual or HUF is not required for a Tax audit. For most of the payments TDS rates are set in the Income Tax Act and TDS is deducted as per the specified rates mentioned. For example:- In case of Salary Income the employer deducts TDS as per the Income Tax slabs applicable ,Employer after claiming all the investment proofs deduct the TDS if the Net income exceeds the maximum amount not chargeable to tax.

What is the due date to deposit the TDS?

The TDS deducted by the deductor must be deposited to the Government by 7^th of the subsequent month. However, the TDS deducted for the month of March can be deposited till 30^th April.

How to deposit TDS?

Tax deducted at source has to be deposited by visiting on TIN site using Challan No. 281 after filing the prescribed information.

How and when to file the TDS return?

It is mandatory to file the TDS return for all the persons who have deducted TDS.

It is required to be submitted quarterly and various details need to be furnished like the PAN no. of the Deductee, the amount paid, Rate at which the tax is deducted at source and the amount of TDS with the Challan details. Form 24Q is required to filed if TDS is deducted on Salary and other than Salary Form 26Q is required to be filed. Also, Form 27Q is filed in case of payment made to NRIs.

Due date of filing TDS returns

Quarter-1 (Apr-Jun) 31^st July

Quarter-2 (Jul-Sep) 31^st October

Quarter-3 (Oct-Dec) 31^st December

Quarter-4 (Jan-Mar) 31^st May (Extended to 30^th Jun, 2020 for Jan’2020 to Mar’2020)

What is TDS Certificate?

TDS Certificate is required to be issued by the deductor to the deductee from whose income TDS was deducted while making the payment. Form-16 is issued to Salaried employees and Form -16A is issued to other than Salaried. The TDS Certificates should be issued within 15 days from the due date of furnishing of TDS returns.

How to get the credit of the TDS deducted?

TDS deductions are linked to the PAN numbers for both the deductor and deductee. If TDS is deducted the same will be reflected in Form 26AS on Income tax site and the deductee can claim the credit of the TDS credit while filing the Income tax return.

You can also reach at our related topic on TDS Rates on the following suggested articles

Relaxation in TDS Rates in FY 2020-21 as a Tax Reform in Covid-19 package

In my earlier post on TDS Compliances, I have shared what TDS was all about. When it is required to deduct? What are its due dates?

Now, in this post I would like to share the Section wise TDS rates and the threshold limit thereon for TDS deduction in FY 2020-21.

In order to meet out economic situation arising out of Covid-19 pandemic, the TDS rates for certain non-salaried payments made to residents is reduced by 25% for the period from 14^th May, 2020 to 31^st March, 2021.

TDS CHART FOR FY 2020-21

Section	Nature of payment	Threshold Limit	Applicable from 01/04/2020 to 13/05/2020		Applicable from 14/05/2020 to 31/03/2021
		Threshold Limit	Resident	Non-resident *	Resident	Non-resident *
		Rs.	TDS Rate (%)	TDS Rate (%)	TDS Rate (%)	TDS Rate (%)
192	Salaries	–	Normal slab rate	Normal slab rate	Normal slab rate	Normal slab rate
192A	Premature withdrawal from EPF	50000	10	10	10	10
193	Interest on securities – 8% Savings (Taxable) Bonds, 2003 or 7.75% Savings (Taxable) Bonds, 2018 during the financial year	10000	10	–	7.5	–
193	Interest on securities – Interest on securities for money issued by or on behalf of any local authority/statutory corporation, listed debentures of a company(other than demat form), any other interest on securities	5000	10	–	7.5	–
194	Dividends	5000	10	–	7.5	–
194A	Interest (Banking co., co-operative society engaged in banking, post office)	40000	10	–	7.5	–
194A	Interest (Any other person)	5000	10	–	7.5	–
194B	Winning from lotteries	10000	30	30	30	30
194BB	Winning from Horse race	10000	30	30	30	30
194C	Contractor-Single	30000
	transaction-Individual/HUF		1	–	0.75	–
	-Others		2	–	1.5	–
194C	Contractor – Consolidated Payment During the F.Y.	100000
	– Individual/HUF		1	–	0.75	–
	– Others		2	–	1.5	–
194D	Insurance commission	15000	5	–	3.75	–
194DA	Maturity of Life insurance policy	100000	5	–	3.75	–
194E	Non-resident sportsmen or sports association	–	–	20	–	20
194EE	NSS	2500	10	10	7.5	10
194F	Repurchase units by MFs	–	20	20	15	20
194G	Commission-Lottery	15000	5	5	3.75	5
194H	Commission/Brokerage	15000	5	–	3.75	–
194I	Rent of – Plant/Machinery /Equipment	240000	2	–	1.5	–
194I	– Land and Building/Furniture & Fixture	240000	10	–	7.5	–
194IA	Transfer of immovable property not being agriculture land	50 lakh	1	–	0.75	–
194IB	Rent by Individual/HUF	50000 per month	5	–	3.75	–
194IC	Payment under Joint Development Agreements to Individual/HUF	–	10	–	7.5	–
194J	Professional Fees	30000	10	–	7.5	–
194J	Technical Fees (w.e.f. 01.04.2020)	30000	2	–	1.5	–
194J	Payment to call centre operator (w.e.f. 01.06.2017)	30000	2	–	1.5	–
194J	Director’s fees	–	10	–	7.5	–
194K	Payment of any income in respect of	5000	10	–	7.5	–
	(a) units of a mutual fund as per section 10(23D); or
	(b) the units from the administrator; or
	(c) units from specified company
	(w.e.f. 01.04.2020)
194LA	Compensation on transfer of immovable property not being agriculture land	250000	10	–	7.5	–
194LA		250000	10	–	7.5	–	194LB	Income from interest on infrastructure debt fund	–	–	5	–	5
194LBA	Income from units of business trust	–
	– interest received/receivable from a special purpose vehicle (SPV); or		10	5	7.5	5
	– dividend as referred in section 115-O (7)		10	10	7.5	10
194LBA	Distribution of rental income to unit holders	–
	– Other than Comapany		10	30	7.5	30
	– Company		10	40	7.5	40
194LBB	Income in respect of units of investment fund	–
	– Other than Company		10	30	7.5	30
	– Company		10	40	7.5	40
194LBC	Income in respect of investment in securitization fund	–
	– Individual/HUF		25	30	18.75	30
	– Company		30	40	22.5	40
	– Other Person		30	30	22.5	30
194LC	Income from interest by an Indian specified company to a non-resident/foreign company on foreign currency approved loan / long-term infrastructure bonds from outside India	–	–	5	–	5
194LC	Income by way of interest by an Indian specified company on rupee denominated bond / any long-term bonds from outside India, which is listed only on a recognized stock exchange located in any International Financial Services Centre	–	–	4	–	4
194LD	Interest on certain bonds from Govt. securities	–	–	5	–	5
194M	Certain payments by Individual/HUF	50 lakh	5	–	3.75	–
194N	Payment of certain amount in cash	1 Crore	2	2	2	2
194N	Payment of certain amount in cash (first proviso of section 194N)if-
	– Amount is more than Rs.20 lakh but up to Rs. 1 crore		N.A.	N.A.	2	2
	– Amount exceeds Rs. 1 crore (Applicable from 01.07.2020)		N.A.	N.A.	5	5
194-O	Applicable for e-commerce operator	1	–	0.75	–
195	Income of Investment made by an NRI	–	–	20	–	20
195	Long-term capital gain	–
	– Under Section – 115E/
	112(1)(c)(iii)/112A		–	10	–	10
	– Any Other Gains		–	20	–	20
195	Short-term capital gain – 111A	–	–	15	–	15
195	Royalty	–	–	10	–	10
195	Fees for technical services	–	–	10	–	10
195	Interest income payable by Govt./Indian concern (other than section 194LB or 194LC)	–	–	20	–	20
195	Any Other Income – Other than Company	–	–	30	–	30
	– Company		–	40	–	40

196A	Income in respect –	–	–	20	–	20
	– of units of a Mutual Fund specified under section 10 (23D); or
	– from the specified company referred to in the Explanation to clause (35) of section 10
196B	Income from units to an offshore fund	–	–	10	–	10
196C	Income from foreign currency bonds or Global Deposits Receipts (GDR) of an Indian company	–	–	10	–	10
196D	Income of foreign Institutional Investors from securities (other than dividend or capital gain)	–	–	20	–	20

What is Tax Audit & when it is required

Before understanding Tax audit, we should first understand the term “Audit” Audit Means official inspections of books of accounts of any organisation and production of report by an independent body. We also understand as it systematic review of something or we can call it as assessment of something.

There are various types of Audits under different law such as:-

Company Audit/Statutory Audit

Cost audit

Stock Audit

Internal audit

GST Audit etc.

Similarly income tax laws mandate the tax audit, as the name suggest itself tax audit is an examination or review of books of accounts of any business or profession carried out by the taxpayers from income tax point of view.

Purpose of Tax Audit:-

Tax audit conducted to achieve following objectives:-

1. To ensure the correctness of books of accounts and certification by the tax auditor.

2. If there is any error found during the auditing then reporting for the same should be done in audit report.

3. To ensure proper reporting of tax, depreciation and compliance of the other laws of income tax etc.

All the above things are done by tax auditors so it enable the income tax authority in verification of income tax returns and correctness of the calculation and verification of total income.

Applicability of Tax Audit:-

1. A person required to have a tax audit carried out if the sales, turnover or Gross receipt of business exceed Rs 1 Crore in Financial year, there are also certain condition when person require to conduct tax audit of his books of accounts as mentioned below are the examples :-

Note:-Threshold limit for the tax audit from AY 21-22 (i.e. FY 20-21) is proposed to increase to Rs. 5 crore. Condition is that above limit is applicable only if there are cash transaction are limited to 5% of the aggregate cash transactions (i.e. 5% for the cash receipts of gross receipts or turnover and 5% for the cash payment of the total payment).

2. Any Person carrying business (Not opting Presumptive taxation) and turnover crosses the threshold limit that is Rs. 1 Cr. Then they are required to get his income tax audit done by the tax auditor.

3. Carrying business and eligible for presumptive scheme u/s 44AE, 44BB & 44BBB, Claim profits and gains lower than the prescribe limit under presumptive taxation scheme then they are required to conduct tax audit

4. Carrying business under section 44 AD and which is eligible for presumptive taxation but declare profit and gain are lower than as required in presumptive scheme

5.Carrying business under section 44AD and choose to opt out of the presumptive scheme then audit is applicable for next 5 years if income exceed the maximum amount which is not chargeable to tax.

6. Carrying business under sec 44AD and declaring profit as per presumptive scheme & limit of turnover not crossed 2 crore then tax audit not applicable.

7.if person carrying any profession then If gross receipts from profession cross 50 lakh then only tax audit applicable.

8. If person carrying profession & eligible for presumptive taxation u/s 44 ADA and declaring profit and Gain from business and profession is less than as required by presumptive taxation scheme is liable to tax audit.

So above we explain what is tax audit, purpose of tax audit and where it is applicable, we try to cover maximum cases here.

Author: – CMA Praveen Kumar Tiwari

Websites: – https://www.mycorporation.in/

To avoid a fear to copy the goodwill of your business, you must want to protect it. If you have this question in your mind here is the summary all you need to know about how to protect the goodwill of your business. A trademark is a visual symbol that can be used to distinguish a trade, services, or products from other similar goods or services with a word, name, number, label, colour combination, etc. that are created in different businesses. Trademarks in India are listed by the Director-General of Patents, Designs and Trademarks, Ministry of Commerce and Industry, Government of India. Trademarks are registered under the Trademark Act, 1999 and give the trademark owner the power to sue for damages if the trademark is infringed. Registered trademarks are intellectual property for the business; they are used to protect the company’s investment in a brand or symbol. Trademarks are important to get register if it is unique for the products and services you give.

Documents required for the trademark application
•   PAN card of the applicant
•   TM 48 Power of Attorney
•   Logo (jpg format)
•   List of products or services

Process of trademark

Search (optional):
A trademark search for the same or similar mark can be determined online and on the official website of the trademark registry whether the mark is available or not to apply the application.

Filing:
If it is determined that no similar trademark has been identified, a trademark application is filed for the specification of the goods/services for which it is being used or proposed to be used.

Report of Examination:
The trademark application is examined by the Trade Marks’s Office in approximately two to four (2-4) months’ time from the date of filing and objections (if any). These objections can be raised either on the following grounds:
Absolute ground (distinctiveness, devoid of distinctive character, not able of distinguishing goods or services etc.) and/or
Relative grounds (Equality with a trademark already on the trademark register).
If no objection is raised, the mark will be allowed to be advertised direct.

Answer to Examination Report:
If an examination report is issued, which has to be filed within one month of receipt of the examination report? If the Trade Mark Authority agrees with the response filed, the application is advertised in the Trademark Journal. Alternatively, if the examiner has further objections, the applicant will be offered a show cause hearing.

Advertisement:
After the examination, if the examiner is satisfied with the response filed for objection/reply, the trademark application is advertised in the Trademark Journal. The Journal of Trademark is hosted weekly on the official website.

Opposition:
Once the Trademark is advertised, this is open for opposition purposes for four months. If no object is received from any opposition within this time frame, the mark for registration goes ahead.

Renewal:
The application will proceed for registration if it is not opposed if the trademark application within four months from the date of advertisement in the Trade Mark Journal. The Trade Mark Registry will then issue a soft copy of the Certificate of Registration. The mark is registered for 10 years from the date of filing of the application and it can be renewed from time to time on payment of renewal fee. Each renewal period is for 10 years.

For initiating the process of the Trademark Application click here:
https://www.mycorporation.in/india/trademark-application-registration-consultant

Can Private Limited Company convert into Section 8 company

What is a Section-8 Company?

According to the Companies Act 2013, Section 8 Company means a legal entity that is formed as a Non-Government or Non-Profit Organizations with the main object of to promote non-profit objectives such as commerce, trade, arts, education, charity, research, religion, environment protection, sports, social welfare, etc. The profits or incomes of the company can be used only for the purpose of promoting the objectives of the company and not distributed as dividends to its shareholders. These companies were earlier defined under Section 25 of Companies Act, 1956.

According to Section 8(2) of the Companies Act, 2013, Section 8 Company shall enjoy all the privileges and benefits and shall be subject to all the obligations of the Limited Company.

A Private limited company can also convert themselves into Section-8 Company to take the benefits of Section-8 companies.

The benefits of Conversion of Private Co. into Section 8 Company

1. No stamp Duty for Registration.

2. Section-8 Company can avail of some privileges and exemptions under the Companies Act, 2013.

3. A firm can also be a member of Section 8 Company.

4. Tax deduction under Section 12A and Section 80G of income tax to the organization’s income and to the donors.

Stepwise process for Conversion of Private Company into Section 8 Company.

If a company wants to convert itself to section 8 company then has to seek approval from its existing member in by way of passing a special resolution in the meeting of the members.

1. The company needs to file Form MGT-14 within 30 days from the date of the special resolution to the registrar of the company.

2. The company needs to file RUN form (Reserve Unique Name) with the MCA department.

3. To file an application in form RD-1 for seeking the approval for conversion of private limited to section 8 along with the form INC-12 for granting a license under section 8 company, accompanied by the following documents:

Draft of MOA and AOA for proposed Section 8 Company.
Declaration by Advocate, Chartered Accountant, or Company Secretary in practice as per INC-14.
The financial statements, the Board’s Reports & the audit reports relating to the existing company (of 3 yrs preceding the date of application).
Copy of estimation of future expenditure and annual income of the proposed Company for the next 3 years.
The sources of income and the objects of expenditure should be mentioned.
The certified true copy of the resolution passed by the Board in the meeting approving the Company Registration under Section 8 Company.
Declaration of each person making an application for the Conversion of Private Company into Section 8 Company as per INC-15.
The company shall publish a notice in Form No. INC 26 within a week from the date of making the application and a copy of the said notice shall be sent forthwith to the Registrar of Companies,
The license shall be in Form No. INC. 17 or Form No. INC 16, as the case may be, and the Registrar shall have the power to include in the license such other conditions as may be deemed necessary by him.

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