Tax ALERT

This is normal yearly Quarterly SOP. Nothing new. But sending this reminder only for ready reference.

We all know that we must pay advance tax before the financial year ends in 4 instalments: 15th June, 15th September, 15th December and 15th March.

This is not applicable if your Tax due is nil, of Tax due is less than the TDS already deducted by your customers etc.

Points to remember

1. Is this on estimate basis ? Yes, make your best estimate .
2. For December month, the amount is calculated as follows: (a) Calculate 45% of the Annual Tax payable . And reduce the Advance tax, you have already paid in the instalment of 15th June and 15th September.
3. This is not applicable if your Tax due is nil, of Tax due is less than the TDS already deducted by your customers etc.
4. What will happen if you don’t pay in time ? Government will charge a bit of interest… this is approx 1% p.a. ( for a block of 3 months, in 1 go ). And Note, that interest is “disallowed”. Hence effective interest comes to 15% p.a. And comes to 3 months at a go. So, miss the date by just 2-3 days and pay interest for full next 3 months.
5. How to pay  ? Online only.
6. Site name = either your Bank account will have a link, or
7. Official sites are : https://incometaxindia.gov.in/ and https://incometaxindia.gov.in/Pages/tax-services/pay-tax-online.aspx

Benefits of Paying Advance Tax
1. Avoidance of interest cost
2. Better cash flow management
3. Avoidance of last-minute stress in March ( end of the year )
4. Avoidance of default notice by the tax department

SO
PLS AVOID LAST DATE. and pay in time, as per normal annual SOP.

Monthly EMI scheme ( self made )

Have you paid your Advance tax for FY 23-24 ( AY 24-25 ). Do you know you can pay monthly also. Yes, try it.

So, again, Make your company more “marketable” in Banking Industry.

A Tax paying company is of course better “loan-worthy” .  and if you pay advance taxes in time.,,. you actually end up paying lower taxes… since you save the interest costs

Start go Ahead. And Enjoy the new way of doing business.

Contact us page click here

www.mlgassociates.org and www.mlgassociates.in

Do you know that you can make a Single Challan for TDS –across – All sections, use upto 3 years

Even today, some companies are still depositing TDS, by 5 to 20 challans every month.

Dear Members,

This is an old news for some. But a BIG NEWS for many even now.

TDS compliance has a lot of problems. We know that

But…  Thankfully, Govt has already made that a bit easy.

You can Deposit all your TDS for different sections by one single Challan. That is a good relief for all of you. All Assessees, be it company, Firm, Proprietorship etc

CPC (TDS) has issued an advisory communication to all deductors who have used multiple challans in a month for payment of TDS. In its advisory, CPC (TDS) has discussed about three main points:

Payment of Tax Deducted under different sections of the Income Tax Act, 1961

1. You can deposit TDS-Salary , TDS Contractor and TDS Professional by one single challan
2. You can deposit TDS-Corporate and non corporate by one single challan

Example: The challan used for payment of TDS relevant to Section 192 of the Act can also be used for the purpose of reporting tax deposited under Section 194 of the Act also.

Now, with the new revised software, (Situation after Financial Year 2012-13) is that, Section quoted in Challan, at the time of depositing Tax deducted/ collected is irrelevant for the purpose of consumption in TDS Statement.

Payment of Tax Deducted for different Assessment Years:

In case tax has been deposited more than the required tax deducted at source for a particular Assessment Year, the excess amount of tax can be claimed in the following quarters of the relevant year. The balance amount if any, can be carried forward to the next year for claim in the TDS statement.

Example: If excess payment of Tax has been made in Quarter 1 of financial year 2013-14, the same can be used for Quarter 2, 3 &4 of F.Y. 2013-14 as well as for Q1 to Q4 of F.Y.2014-15. The excess amount of tax paid in Q1 of F.Y.2013-14 can also be used for payment of tax default of Q1 to Q4 of F.Y.2012-13.

Different challans used for the purpose of reporting multiple Deductees associated with different branches with same TAN:

The deductor may have used multiple challans for reporting multiple deductees associated with different branches, in the TDS Statement.

A single challan can be used for the purpose of reporting Tax Deducted for such deductees.

Example: If a company, has multiple branches with same TAN, payment of Tax Deducted can be made by a single challan and all the deductees can be tagged using the same.

So,

Based on the above information, you may use a single challan in a month towards payment of Tax Deposited. For any assistance, you can also write to ContactUs@tdscpc.gov.in or call Income tax dept toll-free number 1800 103 0344.

Situation prior to Financial Year 2012-13

No change was possible, And Consumption of Challan in TDS Statement on the basis of Section quoted in the Challan details

Core Benefits

•No need to make Multiple Payments,

•You can also pay round figure Rs 5 lakhs,

•You can “pay now” and “adjust” later

.

Example

Suppose you have monthly approximate outgo of Rs 5,00,000.

Suppose some vendor bills are yet to be received

Or

Some Bills are yet to be passed

Or

Suppose the accountant in charge is “on leave to his village”

Simply, deposit a lumpsum say Rs 5,00,000 before the 7^th of every month. And you can settle the things during e-filing

Better pay extra, that you can use in next months ( upto 1 next financial year )

That is a good News. Saves a lot of time. Lot of data entry. Lot of online payment time, and a lot of hassles.

Read an article on same topic at: https://taxguru.in/income-tax/single-tds-challan-purposesanalysis.html

CBDT Source :  https://www.voiceofca.in/siteadmin/document/CBDTCircularonSingleTDSChallan.pdf

With Regards, Puneet Gupta and Sangeet Gupta, and all MLG Team members

If you have doubts you can contact us … this will let you know your Risks, your clarity, your safety, what is right, and what is not right, in your kind of business situation, Contact us

Our main site is www.mlgassociates.in , and and other site is : www.mlgassociates.org,

Income earned from providing IT services to Indian customers is taxable in India due to use of service in India: ITAT

The Income Tax Appellate Tribunal (ITAT ) Kolkata held that Income earned from providing IT services to Indian Customers is taxable in India because the service is used in india.

Assessee, Metso Outotec OYJ filed its return of income electronically and declared income of Rs.4,05,940/- and Rs.2,33,61,680/- in A.Y. 2018-19 and 2020-21 respectively. Thereafter, the case of the assessee was selected for scrutiny assessment in both the years and accordingly notice under Section 143(2) was issued and served upon the assessee.

The assessee has provided IT Services to Indian customers during the relevant financial year. During the assessment proceedings assessee contended that income from IT Services in pursuance of a Service Agreement with Outotec India Private Limited.

However, the Assessing Officer was not satisfied with the contention of the assessee and he proposed the addition.

The assessee filed objections before the Dispute Resolution Panel (DRP) and the DRP has rejected the contention of the assessee and upheld the levy of taxation on the alleged receipt for sale of IT Services as FTS.

During the proceedings before the bench KM. Gupta, counsel for assessee submitted that Assessee has no permanent establishment in India and the services were performed outside India in Finland. Therefore, these receipts in lieu of IT Services are not taxable as FTS in the hands of the assessee.

Guru Bhashyam, Counsel for the revenue supported the decision of the lower authorities.

After considering the facts submitted by both parties, the two member bench of Rajesh Kumar (Accountant Member) and Rajpal Yadav (Vice President) observed that assessee has no permanent establishment in India and these services were also rendered outside India but the services has been used in India and, therefore, it is taxable in India.

case : Metso Outotec OYJ vs Deputy Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 2254

Counsel for Appellant: Shri KM. Gupta, & Shri R. Malhotra Counsel for Respondent: Sri Guru Bhashyam

Link :  https://www.taxscan.in/income-earned-from-providing-it-services-to-indian-customers-is-taxable-in-india-due-to-use-of-service-in-india-itat/323483/

Additional Effect : TDS is a MUST in this case / Such cases by the Indian company

TDS : tax deduction at source, is a must, note the DTAA, none the less.

With Regards, Puneet Gupta and Sangeet Gupta, and all MLG Team membersIf you have doubts you can contact us … this will let you know your Risks, your clarity, your safety, what is right, and what is not right, in your kind of business situation, Contact us

Our main site is www.mlgassociates.in , and and other site is : www.mlgassociates.org,

Diwali Expenses – Allowed in Income tax or not ? ITC or not ? What is the Correct accounting SOP ?

this question comes up in accountants mind from time to time, also in minds of entrepreneurs

So, all aspects and practical aspects, covered in this circular… at your service.

Questions we have answered in the circular below

Can I Debit Diwali Gifts in My books ? All ok ? Will it be disallowed ? Will I get the ITC ? Will I face problem in Income tax ? E Circular.

• Do you know that if you purchase sweets for workers and pay cash to the sweetshop over Rs 10000, it will be disallowed ?
• Do you know that if you pay Bonus to workers and pay cash over Rs 10000, it will be disallowed ?
• Do you know that you can get GST modvat (ITC ) in some cases and some not.
• Do you know there is a possibility of TDS as big as 25% effective (Grossing up u/s 194R ) in case of large gifts without PAN.

for our E-Circular in Nice Presentable PDF format

IMSME ECircular –Diwali expenses GST and Income tax dt 6-11-2023

Dont worry, Laws are good, for Clarity, for safety, for standards. Just follow them properly. You can get the Income tax expense, you can get the ITC credit in some situations, you dont have to worry, if you are complying with the law properly.

With Fond regards, Puneet Gupta and Sangeet Gupta, and all MLG Team members

If you have doubts you can Contact us … this will let you know your Risks, your clarity, your safety, what is right, and what is not right, in your kind of business situation, Contact us

Our main site is www.mlgassociates.in

and other site is : www.mlgassociates.org,

AS-7 Construction related Contracts How to do the Costing provisions

We Created this new page to help people who face the problem of
a) Retention Money by customer
b) Long Term Contracts
c) Income and Expense does not happen in same month/Quarter or even same year.

What does the law say ? and how to Follow the correct Accounting Standard. ( AS-7)

This is Useful for all companies in Engineering Construction,
companies in Manufacture of Large Machines,
companies in Delivery of Larger Projects

We all know that Engineering Contract companies face this problem. They always have Retention Money coming after months or years.

How to Follow AS-7 ?

Retention Money cases…

How to make  Provision for Service Costs and Warranty Claim Costs ?

( Example on Future loss, provision… in the excel file attached … link at the bottom of this post )

Decision in short

As per Accounting Standard AS-7, you have to accrue the loss for the financial year, as per percent of completion method

As per Accounting Standard AS-7, you have to accrue the loss future years also , during this financial year, as per percent of completion method

The Income tax authority is also required to allow “all expenses”
that are normal and shall be incurred
There is no requirement that it must be incurred right now

The provision for future expense is allowed

In case your buyer has already asked for and you have made the Tax invoice for any part of the Contract … ( example 100% billing done), or 50% billing done case,
if the income is already booked

there is no doubt what so ever, that all the connected expenses
both already incurred
and yet to be incurred
must be booked in the books

Please note that if you do not follow the AS-7
your Balance Sheet is not True and Fair
your Auditor Report is also incomplete without the mention of this non compliance

Apprehension of Unascertained Expense / Unascertained Liability will not be allowed ??

This doubt or apprehension is not correct. See the link below

Link : https://taxguru.in/income-tax/unascertained-liability-claimed-expense-estimated-mercantile-system-accounting.html

Brief of the Case Delhi High Court held In the case of M/s. Aggarwal And Modi Enterprises (Cinema Project) Co. Pvt. Ltd Vs. CIT that whether a liability is ascertained or contingent is dependent on the facts of each case. Merely because a liability may be contractual or non-statutory would not make it incapable of being ascertained. Where an Assessee follows the mercantile system of accounting it is not necessary that the liability must have actually been incurred during the AY in question to enable the Assessee to claim it as an expense or deduction as the case may be. The crux of the matter is the reasonable certainty with which the liability can be ascertained.

Read more at: https://taxguru.in/income-tax/unascertained-liability-claimed-expense-estimated-mercantile-system-accounting.html
Copyright © Taxguru.in

Want an Excel format to do this properly ? download from the link below

Excel link : AS-7 Construction related Contracts How to do the Costing provisions

We Created this new page to help people who face the problem of
a) Retention Money by customer
b) Long Term Contracts
c) Income and Expense does not happen in same month/Quarter or even same year.

What does the law say ? and how to Follow the correct Accounting Standard. ( AS-7)

This is Useful for all companies in Engineering Construction,
companies in Manufacture of Large Machines,
companies in Delivery of Larger Projects

Contact us page click here

www.mlgassociates.org and www.mlgassociates.in