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E-Filing of return

In the current perspective, filing income tax returns and paying taxes is a social and personal duty for the earning persons. In many ways, it becomes more and more important when someone has one or more sources of income. Then, in such a situation it becomes a little difficult for people to file tax returns and they want to go to an expert. Keeping these facts in mind, we are committed to solve the problems of income tax filing and tax calculation. Hence, if you are entangled in the hurdle of income tax problems, then you should be relieved. We are with you to address these complications. We have a team of experts and well-trained people to help you, who are committed to listen to your tax related problems and resolve them in every situation.

We are providing our services in many categories of tax filing which are as follows

The persons earning salary income from any organisation i.e. government organisation, private organisation, firm or PSU, need to furnish Income tax return for salary income. The income-tax return for salary income is filed once a year. To file the return of salary income one needs to obtain TDS Certificate (Part A) and Form 16 (Part B) from his/her employer.

In general, the income from a fixed deposit, savings account, interest earned on Income-tax refund, Interest on Provident Fund in excess to 9.5%, or long-term investment is considered interest income.

The return filing of interest income becomes mandatory when TDS has been deducted on interest income and one needs to claim the refund of the same. On the other hand, filing the return of interest income is compulsory when income exceeds the basic exemption limit.

In this context, we first need to understand house property.
According to the Income Tax Act, any property such as residential house, commercial house, warehouse, office has been designated as house property.

The rental income from such house properties is called house property income. However, while filing the return of house property income, there is also a provision for the taxpayer to take advantage of a standard deduction as a rule. In special circumstances, TDS is deducted by the tenant on the rental income. In both the circumstances , it becomes mandatory to file a return.

The profit earned after selling a capital asset is called capital gain. There are many things in the category of capital assets such as shares, bonds, mutual funds, residential houses, offices or residential lands.

Classification
Capital gain is divided into two types - Realized Profit and Unrealized Profit.
Released profit is when we sell a share or capital asset at a price higher than the purchase. On the contrary, when the current value of an unsold asset is higher than the cost of acquisition it is said to be unrealized profit. The income tax is levied on realized profit only.

Capital Gain is classified as short-term capital gain and long-term capital gain.
When the holding period of a capital asset is less than 1 year, then the income from it is called short term capital gain.On the other hand, when the holding period of a capital asset is more than 1 year, the income from it will be called long term capital gain. The short- term capital gain attracts 15% tax liability and long term gain is taxed at 10% rate.

Here it is noteworthy that the said tax rate is applicable for sale of shares and mutual funds only. But if we talk in terms of real estate assets, then the situation is completely different here.

For real estate assets such as land and houses, the lock-in period has been fixed at 24 months.Gains from assets sold during the lock-in period are considered short-term gains. Tax on this gain is payable at normal rate. But if an asset is sold after 24 months, then the income arising is treated as long term capital gain and it attracts tax liability of 20% after calculation.

The income from business or profession is said to be presumptive when the total turnover of a business or profession is less than or upto 2 crores and books and accounts are not maintained. The net profit should not be less than 6% of total turnover in case of digital transaction. In the case of cash transactions a taxpayer needs to report a minimum net profit of 8% of total turnover.

But in the context of presumptive Income from some specified professions, the turnover limit is 50 lakhs only. The professionals filing the return in this category will have to report their profit as 50% of total turnover. Books and accounts are not required to be maintained in this category also.

A proprietorship business having the turnover in excess to 2 crores required to maintain books and accounts of purchase, sales, expenses incurred in operation of business, stocks, investments and movable and immovable assets which is being used in the execution of business. Here also the taxpayer is required to show a net profit of 6% of the total turnover in case of digital transaction and 8% in the case of transaction in non-digital mode.

For professionals, the turnover limit is 50 lakhs only. In case a professional is willing to show net profit as 6% or 8% of the total turnover, then maintaining books and accounts becomes mandatory.
In both the cases the applicable filing form is ITR-3.

Also, The individuals having the turnover of their business and profession less than 2 crores (business) and 50 lakhs (profession) respectively, but maintain books and accounts, requires to file ITR-3.

The income derived as remuneration, interest and share of profit by an individual who is a partner in a firm, is said to be income from partnership firm. Remuneration and interest is taxable at normal rates in the hands of individuals as per income tax act. However, share of profit does not attract any tax liability and hence it is exempt. The income from the partnership firm is considered as individual income and the return will be filed as Business Income. The form applicable for this return is ITR-3.

Although the withdrawal of the provident fund is tax free. But, in certain circumstances 10% TDS is deducted on PF withdrawal.

  1. When withdrawal of Provident Fund is done before the completion of 5 years of continued employment and PF amount exceeds 50,000.

  2. The Withdrawal of provident fund by a member of Unrecognized Provident (URPF) fund is also taxed at 10% rate even after the continued employment of 5 years

In this case the person has to file an Income-tax return to claim the refund of TDS deducted. But one thing to be noted here is that if a Provident Fund is released within 5 years of continued service and the amount withdrawn is less than 50,000, it should be offered In Income-tax return filing with other taxable income.

According to Section 2(1A) of Income Tax Act 1961, agriculture income is defined as below:

  1. Any rent or revenue derived from land situated in India and is used for agricultural purposes

  2. Any income earned from such land by
    1. Agriculture Operations
    2. The performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market OR
    3. The sale by a cultivator or receiver of rent in form of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph b

  3. Any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent in kind, of any land with respect to which, or the produce of which, any process mentioned in paragraphs b and c

  4. Revenue Derived from sale of seeds, replanted trees,saplings, cultivating flowers

Tax calculation on Agriculture Income

Agriculture Income in India is exempt under section 10(1) of Income Tax Act 1961. But, if agriculture income earned during the year is greater than 5000 and non agriculture income is exceeding the basic exemption limit then tax will be calculated on the same by a standard method.

Till 31 March 2020, no tax was payable on the dividend earned by a person up to 10,00,000. It was exempt in the hands of taxpayers because of Dividend Distribution Tax (DDT) paid by the company. But in the budget 2020, a new provision of taxation was brought over the dividend income.

From April 1, 2020, the dividend paid on investment or mutual funds will not be tax-free. If annual dividend income earned by a person exceeds 5000, the TDS of 10 % is applicable on the same.

As per Income Tax Act 1961 Trading in Future & Options/Derivatives transactions are non speculative transactions and hence are treated as normal business activity.So all the regulations and requirement of regular business activities like maintenance of books of account / Audit u/s 44AB/44AD are also applicable to Future & Options/Derivatives transactions.

Since single transactions of Future & Options/Derivatives transactions values in crores, we have a different value of calculating turnover for this business.Here turnover is the sum total of all the positive & negative differences (that is profit & losses) of the trades executed by you.For ex. Like in one trade you have suffered loss of Rs.15000 & in other trade you have earned gain of Rs.10000, so here your turnover will be 25000 (10000+15000).

Maintenance of books of account as well as Audit requirement depends upon your total turnover as well as the profit amount shown by you from the business.

As per Income Tax Act 1961, Intraday trading transactions where the transaction is settled same day without actual delivery of scrips are treated as speculative transactions. In speculative business also all the regulations and requirement of regular business activities like maintenance of books of account / Audit u/s 44AB/44AD are applicable.

Determining turnover of speculative business is same as that determining turnover of Future & Options/Derivatives transactions Maintenance of books of account as well as Audit requirement depends upon your total turnover as well as the profit amount shown by you from the business.

One major difference between speculative and non speculative transaction is that losses from speculative business can be set off only against speculative gains and unabsorbed losses can be carried forward for next four years but losses from non speculative business can be adjusted against all head of income except salary and unadjusted losses can be carried forward for next 8 years.

Under Hindu Law, an HUF is a family which consists of all persons descended from a common ancestor and includes their wives and unmarried daughters. Sikkhs and Jains are also treated as HUF under the Act.
According to Hindu law, the HUF (HINDU UNDIVIDED FAMILY) is a family descended from the same person, including their wives and unmarried daughters.
But in section 2 (31) of the Income Tax Act, HUF is considered a person for tax assessment. Although HUF is not taxed on personal income, collective income is taxed.
The PAN of HUF is also different.

If somebody receives money from winning lottery, online game shows or TV game shows, crossword puzzle or horse race, it is taxable under the head "Income from other sources". The applicable TDS rate is 30% on such income and total TDS of 31.2% is deducted including the cess unders section 194B. The TDS is deducted buy the company who pays the winning amount to the winner. The incomes mentioned below fall under such category:

  • Lottery
  • Game Show or any entainment show on electronic media
  • Crossword Puzzle
  • Gambling/Betting
  • All Races including Horse races

Applicability of TDS
In case the prize money exceeds Rs 10,000, the prize money is given to the winner after deducting 31.2% TDS of total payable amount. Here it is worth noting that even if the income is not taxable as per the normal tax rate, the deduction of TDS is mandatory.

Prize received in Kind
If the prize won is in the form of kind such as a car worth Rs 10,00,000/- then in this case the prize distributor will deduct 31.2% TDS of the value of the car which is Rs 3,12,000/-. Here the distributor can bear TDS of 31.2% from himself or collect the same from winner.

If it is said directly that money earned by a person from abroad comes under the category of foreign income.Normally Income earned in abroad is not taxable in India for NRIs.
But sometimes there is a situation where it is seen that the taxpayer is serving for a certain time frame in overseas on some assignments has to pay tax in two countries. In this situation the taxpayer is eligible to utilize the benefit of DTAA (Double Taxation Avoidance Agreement) provision which allows a taxpayer to claim tax relief under section 90, 90A and 91. The applicability of all the relief sections differ case to case which is explained below:

  • The taxpayer can claim relief u/s 90 where DTAA prevails with the country in which the tax has been paid.
  • Relief u/s 90A can be claimed where DTAA prevails with specific associations.
  • In case there is no DTAA, the taxpayer can claim tax relief u/s 91.

To understand the calculation method you are suggested to use our assisted filing services.

To understand the income of NRE and NRO account, we need to know about both accounts. So here you go with quick guide:

  1. NRE account is such an account which is opened and maintained by an NRI to transfer his foreign earnings whereas NRO account is used to deposit the earnings that originates in India.
  2. NRE accounts are exempted from tax and interest earned on savings is not taxable. On the other hand, interest earned from NRO account is subjected to 30% tax deduction according to the Income-tax Act 1961.
  3. The funds (principal and interest) of NRE account can be transferred to foreign accounts whereas the transaction from NRO account is limited. Only interest accrued from NRO account is open to repritated and the remittance from principal fund is limited to USD 1 million in a financial year.
  4. One can withdraw the fund from both the accounts in INR. There is no exchange rate risk from the withdrawal of NRO account whereas currency fluctuations in NRE account may lead you to exchange rate risk.
  5. An NRE account can be opened jointly with NRIs and close relative resident Indians whereas an NRO account can be opened jointly with an NRI as well as any resident Indians.

Employee Stock Option Plan (ESOP) is a contract between a company and its employees.

According to this contract, if some selected employees to whom the ESOP is being offered with some conditions, stay in the same company for the next few years, then they will be given some shares of the company. And this stock is given at a better discount or lower rate than the price of that share going on in the market.

Due to the benefits the employee receives, he works better and longer in the company.

  • His continuous good work increases the profit of the company and due to which the value of the company's share increases.
  • After which he can earn profits by selling the company's stock in the market.
  • The company does not need to give extra incentives in the form of cash to its employees.
  • In this way ESOP benefits both the company itself and its employees.

Restricted stock units can be understood a stock-based compensation typically offered to company employees as incentives. This compensation is presented in the form of shares of the company and gives the employee a quantum of equity ownership in the company.

As restricted shares in a company, you can not only enjoy ownership, but get various benefits such as dividends as well as voting rights, privileges and responsibilities associated with being a share owner.

However, the reason why these stock units are called "restricted" is that they are accompanied by certain provisions that the employee must take into consideration.

These conditions can be that of an employee spending a specific year of the company with the company achieving specific milestones in the future.In any case, restricted shares are implied which means that the employee must meet these conditions to obtain the actual shares.

Sale of RSU are taxed in the same way as STCG and LTCG are taxed.