Is filing Income Tax Return Mandatory? Its Benefits.

In India, an individual may file his or her Income Tax Return (ITR) either voluntarily or compulsorily. Filing of income tax return is mandatory, if annual income of an Individual exceeds minimum exemption threshold. In other cases, one may file his or her income tax return voluntarily. 

Mandatory Filing of ITR

The Government of India notifies minimum exemption threshold limit every year. For Financial Year 2023-2024 (Assessment Year 2024-25), the government has prescribed two exemption limits- Rs. 2,50,000 under Old Tax Regime and Rs. 3,00,000 under New Tax Regime. It implies that an individual is required to file his or her income tax return, if his or her total income earned during the Financial Year 2023-24 (FY 2023-24) exceeds either Rs. 2,50,000 or Rs. 3,00,000. Further, New Tax Regime has been made a default option to file the ITR. But a tax payer has been given an option to choose the Old Tax Regime also. To understand the difference between the two tax regimes, check out our another article here. For the purpose of taxation, the financial year commences on April 1 of a calendar year and ends on March 31 of the next calendar year. 

Voluntary Filing of ITR

In case, an individual's net income is less than the minimum exemption limit for a financial year, he or she may file his or her income tax return voluntarily. 

Benefits of Filing ITR 

Now question arises that if my net income does not exceed the threshold during a financial year, why should I file my income tax return voluntarily. To answer this query, I would say that filing of your income tax return not only makes you feel responsible and good about yourself, but it also brings several other benefits as indicated below.

Loan Approval 

When individuals apply for a vehicle loan (2-wheeler or 4-wheeler) or a home loan, filing of their Income Tax Return can prove to be helpful. Generally, the Banks and NBFCs insist on providing copies of at least 2 year's ITR, before granting a loan of that type. 

Filing Income Tax Return may increase the chances of getting a loan or credit card approved with favorable terms and conditions. Thus, it is imperative for individuals to file their ITR regularly and on time to ensure smooth financial transactions and to have a strong financial profile. 

Tax Refund

On several occasions, tax is deducted from your income at source (called "TDS") or tax is collected at source (called "TCS").  While TDS is deducted when you earn income, TCS is collected when you spend. In certain circumstances, TDS is deducted by your employer. TDS is also deducted from the professional fees paid to you in certain cases. Moreover, when you buy an expensive car, the dealer also charges TCS from you along with the price of car.  The TDS or TCS so deducted is then deposited with the income tax authority and linked to your PAN. 

Subject to fulfilling the conditions prescribed in the Income Tax Act and Rules, you may claim the refund of TDS or TCS so deducted. 

The first and foremost condition to claim tax refund is to file your income tax return within the due date notified for filing income tax return. 

To receive your refund from the Income Tax Department at the earliest, it is advisable to file your Income Tax Return promptly.  If you don't file your income tax return within the due date, you may loose entire TDS or TCS deducted as well as interest thereon. In such  a case, interest or refund amount may not be paid back to you. 

ITR as Income Proof

ITR or Income Tax Return serves as a crucial document for individuals as a proof of their income. It is accepted as valid income proof by financial institutions, such as banks, when individuals apply for loans or credit cards.

Processing of Visa to go Abroad

Of late, most embassies & consulates require visa aspirants to furnish copies of past 2 year's ITRs as proof of income. This is to ensure that the person applying for visa has financial bindings with India and he would return after expiry of visa. Thus, it is imperative for individuals to file their ITR regularly and on time to ensure smooth financial transactions and to have a strong financial profile. 

Timeline for filing ITR

To avail the above benefits, it is essential to file your ITR within the prescribed due date.  

Subject to certain conditions, the ITR filing due dates are different for individuals and business entities.

Generally, the due date of filing ITR for individual is July 31, which may or may not be extended by Income Tax Department.

Consequences of Late Filing

Non compliance of prescribed time limit has its own consequences, as described below: 

Penalty

Failure to file your ITR when required may result in a penalty of minimum Rs. 1,000 to Rs. 5,000 on case to case basis. However, higher penalty can be imposed by the tax officer.

Other Consequences

Apart from the minimum penalty levied by the Income Tax Department, there are other consequences that a taxpayer may face for late filing of ITR. 

It is crucial to understand that filing of ITR is not possible until the taxes have been paid. In case of delayed payment, an additional penalty will be imposed, which will commence from the day after the prescribed due date. Therefore, the longer an individual delays payment, the higher the penalty amount will be. It is important to note that interest payment on the tax due will also be levied, in addition to the late filing penalty.

Conclusion

To conclude, filing of income tax return is mandatory when your total income from all sources exceeds the exemption threshold prescribed for a particular financial year. In other cases, filing ITR is optional. 

When you are liable to file ITR mandatorily, it is prudent to file the ITR within prescribed due date. Although you may also file your ITR after missing due date but belated filing of ITR makes you pay more in terms of tax, interest, late fees and penalty.

Irrespective of the whether the filing of ITR mandatory or not, filing of income tax return has its own benefits.

For more info, contact:

    Mobile No.: 798 69 55 272

    Email: ibs.asr06@gmail.com

    Website: www.bizfiing.in

Disclaimer: The views expressed in this article are personal views of the author, intended solely to provide general information and should not be taken as professional advice or substitute of professional advice. Before acting on the information given herein, please consult a qualified expert or professional for advice on specific issues.

Advantages of GST Registration in India

 GST Registration

GST registration is mandatory for businesses whose annual turnover exceeds a specified limit. The threshold limit for GST registration varies depending on the type of business. For businesses engaged in the supply of goods, the threshold limit is Rs. 40 lakhs, while for businesses engaged in the supply of services, the threshold limit is Rs. 20 lakhs.

For certain special category states, the threshold limit for GST registration is an annual turnover of Rs. 20 lakhs (for the supply of goods) and Rs. 10 lakhs (for the supply of services).

It may, however, be noted that businesses that do not meet the threshold limit may still choose to register for GST voluntarily for the following purposes.

Benefits of GST Registration

Legitimacy and credibility

GST registration adds legitimacy to a business and increases its credibility with customers, vendors, and suppliers. It also helps to establish a formal business identity and facilitates easy compliance with other laws and regulations.

Input tax credit

GST registration allows businesses to claim input tax credit, which means that they can reduce their tax liability by claiming credit for the tax paid on inputs used in the production of goods or services.

Compliance

GST registration makes it easier for businesses to comply with the tax laws and regulations. It helps them avoid penalties and other legal consequences that may arise due to non-compliance.

Export benefits

GST registration enables businesses to claim benefits under the Export Promotion Capital Goods (EPCG) scheme, which allows them to import capital goods at zero or concessional customs duty.

Expansion opportunities

GST registration makes it easier for businesses to expand their operations by facilitating compliance with tax laws and regulations in different states and regions.

To conclude, GST registration is mandatory for businesses whose turnover exceeds a specified limit. However, all businesses may opt to register for GST to avail of various benefits. The process of GST registration is relatively simple. However, it is important to ensure that all the required documents are submitted and that the application is complete to avoid any delays or legal consequences.

For more info, contact:

    Mobile No.: 798 69 55 272

    Email: ibs.asr06@gmail.com

    Website: www.bizfiing.in

Disclaimer: The views expressed in this article are personal views of the author, intended solely to provide general information and should not be taken as professional advice or substitute of professional advice. Before acting on the information given herein, please consult a qualified expert or professional for advice on specific issues.

Is GST Registration Mandatory in India?

Goods and Services Tax (GST) is an indirect tax levied on the supply of goods and services in India. It is a comprehensive tax that has replaced many other indirect taxes, such as central excise duty, service tax, value-added tax (VAT), and others. GST was introduced in India on July 1, 2017, and since then, it has become a major source of revenue for the government. 

Please note that GST is levied on value-addition on the supply of goods and services in India.

Obtaining GST registration is mandatory for certain types of businesses in India, while it is optional for others. To know more, keep reading below. 

Under the GST Act, every supplier of goods or services whose turnover exceeds a specified limit is required to register for GST. The threshold limit for GST registration varies depending on the type of business. For example, the threshold limit for businesses engaged in the supply of goods is Rs. 40 lakhs, while for businesses engaged in the supply of services, the threshold limit is Rs. 20 lakhs.

For the businesses operating in North East states such as Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and Sikkim, the threshold limit for GST registration is an annual turnover of Rs. 20 lakhs (for the supply of goods) and Rs. 10 lakhs (for the supply of services).

In addition to the above, certain types of businesses are mandatorily required to register for GST, regardless of their turnover. These businesses include:

Those engaged in inter-state supply of goods or services

E-commerce operators

Those supplying goods or services on behalf of other registered taxable persons

Those required to deduct tax at source under the GST Act

Casual taxable persons or non-resident taxable persons

However, even if a business's turnover is below the threshold limit, it may still opt for GST registration voluntarily. The benefits of voluntary registration include the ability to claim input tax credit, increased credibility with customers, and easier compliance with tax laws.

In summary, GST registration is mandatory for businesses whose turnover exceeds the threshold limit, as well as for certain types of businesses. Even if a business's turnover is below the threshold limit, it may still choose to register voluntarily for GST to avail of various benefits.

However, it is important to ensure that all the required documents are submitted and that the application is complete to avoid any delays or legal consequences.

For more info, contact:

    Mobile No.: 798 69 55 272

    Email: ibs.asr06@gmail.com

    Website: www.bizfiing.in

Disclaimer: The views expressed in this article are personal views of the author, intended solely to provide general information and should not be taken as professional advice or substitute of professional advice. Before acting on the information given herein, please consult a qualified expert or professional for advice on specific issues.

Business Incorporation in India

India is one of the fastest-growing economies in the world, and as a result, it has become a hub for diverse businesses, from small-scale firms to large-scale corporations. Of late it has been observed that there has been a surge in the number of companies and firms that are being incorporated in the country not only in Tier I cities but also in Tier II or Tier III towns.  

With so many opportunities available, it's no wonder that many entrepreneurs are keen to establish their businesses in India. However, before starting any business, it is important to understand the various types of business entities in India and the procedure to incorporate a company.

In this article, we will discuss the various types of business entities in India and the procedure to incorporate a company.

Types of Business Entities in India

Private Limited Company

A Private Limited Company is the most common type of company in India. It is a privately held business entity that has limited liability for its shareholders. The minimum number of shareholders required to start a Private Limited Company is two, and the maximum number is two hundred. The shareholders of the company cannot sell their shares to the general public.

Public Limited Company

A Public Limited Company is a type of company in which the shares are publicly traded on a stock exchange. The minimum number of shareholders required to start a Public Limited Company is seven, and there is no limit to the maximum number of shareholders.

One Person Company (OPC)

An OPC is a new concept introduced in the Companies Act, 2013. It is a type of company in which there is only one shareholder. The shareholder has limited liability, and the company is treated as a separate legal entity.

Limited Liability Partnership (LLP)

An LLP is a type of partnership in which each partner has limited liability. It combines the benefits of a partnership and a limited liability company. The minimum number of partners required to start an LLP is two, and there is no limit to the maximum number of partners.

Partnership

A partnership is a business entity formed by two or more individuals who share the profits and losses of the business. The partners generally have unlimited liability.

Sole Proprietorship

A Sole Proprietorship is a type of business in which there is only one owner. The owner has unlimited liability, and the business is not treated as a separate legal entity.

Procedure to Incorporate a Company

The procedure to incorporate a company in India is as follows:

1. Name Reservation 

The first step is to apply with Ministry of Corporate Affairs for reservation of company name. The name should be unique and not similar to any existing company name or trademark or service mark. The clear guidelines for selection of name have been prescribed in the rules framed under the Companies Act, 2013.  The guidelines should be strictly followed to select and apply for name reservation to avoid any hassles.

2. Get Digital Signature Certificates (DSC) 

The next step is to obtain DSC for at least two (2) proposed directors of the company. You need to apply for and obtain DSC from authorized Government agencies, especially appointed for issue of DSC. All filings to be done with Ministry of Corporate Affairs/ Registrar of Companies are made under DSC.

3. Apply for Director Identification Number (DIN)

Next, it is mandatory to apply for and obtain DIN from Ministry of Corporate Affairs for each proposed director of the company. As per recent amendments in company rules, DIN is issued at the time of filing incorporation documents including Memorandum of Association (MOA) and Articles of Association (AOA).

4. Incorporation Documents: 

The next step is to prepare and file the incorporation documents, including MOA and AOA.

5. Payment of Fees 

The next step is to pay the fees for incorporation.

6. Certificate of Incorporation: 

Once the Registrar of Companies approves the application for incorporation, a Certificate of Incorporation is issued.

7. PAN and TAN:

The next step is to obtain Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). Nowadays, PAN and TAN of the company are issued along with Certificate of Incorporation.

8. Open a Bank Account: 

The final step is to open a bank account in the name of the company. As per ease of doing business initiative taken by Government of India, a company's bank account is also opened simultaneously with incorporation of a company.

In conclusion, incorporating a company in India can be a complex process, but with the right guidance and assistance, it can be done easily. Understanding the different types of companies in India and the procedure to incorporate a company is essential for anyone who wants to start a business in India.

For more info, contact:

    Mobile No.: 798 69 55 272

    Email: ibs.asr06@gmail.com

    Website: www.bizfiing.in

Disclaimer: The views expressed in this article are personal views of the author, intended solely to provide general information and should not be taken as professional advice or substitute of professional advice. Before acting on the information given herein, please consult a qualified expert or professional for advice on specific issues.

Benefits of PAN Card In India

    As you are aware that PAN card, or Permanent Account Number card, is a unique identification number assigned to individuals and entities in India. It is issued by the Indian government's Income Tax Department. 

    While the PAN card is a mandatory requirement for all taxpayers in India, it is also an essential document for carrying out various financial transactions.

    Let us look at some of the benefits of having a PAN card in India:

Tax Identification

    The primary purpose of the PAN card is to identify taxpayers in India. Every taxpayer, whether an individual or an entity, is required to have a PAN card to file income tax returns. The PAN card helps the government keep track of the taxes paid by individuals and entities, which helps in curbing tax evasion.

Easy Processing of Taxes

    Having a PAN card makes the process of filing taxes much easier. The PAN card contains all the necessary details of the taxpayer, such as name, date of birth, and photograph, which helps in easy identification. Moreover, the PAN card helps in faster processing of tax returns, which means that taxpayers can get their refunds quickly.

Proof of Identity

    Apart from tax-related purposes, the PAN card is also used as proof of identity. It is an accepted form of identification for various purposes such as opening a bank account, applying for a loan, and buying or selling property. Moreover, it is also required for booking an international flight ticket or applying for a passport.

Facilitates Financial Transactions

    Having a PAN card is mandatory for carrying out various financial transactions in India. It is required for investing in mutual funds, shares, and other financial instruments. Moreover, it is also required for opening a bank account, which is essential for carrying out day-to-day financial transactions.

Encourages Financial Inclusion

    The PAN card plays a significant role in promoting financial inclusion in India. It helps individuals and entities, especially those from lower-income groups, to access financial services such as banking, investing, and insurance. Having a PAN card also makes it easier for individuals to avail of various government schemes and subsidies.

    In conclusion, having a PAN card is mandatory for all taxpayers in India, and it offers several benefits. For others, it is an accepted form of identification proof, facilitates financial transactions, and promotes financial inclusion. Therefore, it is essential for every individual and entity in India to have a PAN card.

     For more info, contact:

    Mobile No.: 798 69 55 272

    Email: ibs.asr06@gmail.com

    Website: www.bizfiing.in

Disclaimer: The views expressed in this article are personal views of the author, intended solely to provide general information and should not be taken as professional advice or substitute of professional advice. Before acting on the information given herein, please consult a qualified expert or professional for advice on specific issues.

Having PAN Card in India

    In this article, you will find information on what is PAN Card? Who issues the PAN? When it is essential to get PAN Card and when it is optional? Also you will get an overview of the benefits associated with PAN Card. So let's start the topic.

    A PAN card, or a Permanent Account Number card, is a unique identification number assigned to individuals and entities in India. It is a ten-digit alphanumeric number that contains the cardholder's details such as name, date of birth, photograph, and signature. The PAN card is issued by the Indian government's Income Tax Department and is used primarily for tax-related purposes.

    For Tax Payers in India, the PAN card is an essential document. For others, PAN Card is an optional identification document, which is mandatory to carry out certain financial transactions.

    The PAN card is used as proof of identity for various purposes such as opening a bank account, applying for a loan, buying or selling property, and filing income tax returns.

    It is important to note that having a PAN card does not mean that a person is required to pay taxes. The PAN card is merely an identification number that is used for tax-related purposes. However, if a person's income exceeds the taxable limit, they are required to file income tax returns and pay taxes as per the Indian Income Tax Act.

    Having a PAN card is also beneficial for individuals who are looking to invest in India. The PAN card is mandatory for investing in mutual funds, shares, and other financial instruments. Moreover, it is required for opening a Demat account, which is essential for trading in the stock market.

    Apart from tax-related purposes, the PAN card is also used as proof of identity and address for various non-financial transactions. For instance, the PAN card is required for booking an international flight ticket or applying for a passport. It is also required for buying a house or other immovable property.

    In conclusion, having a PAN card is mandatory for all taxpayers in India. It is a unique identification number that is used for various tax-related purposes, and it is also required for carrying out financial transactions such as investing in mutual funds and shares. Moreover, the PAN card is used as proof of identity and address for various non-financial transactions, making it an essential document for all Indian citizens.

For more info,contact:

    Mobile No.: 798 69 55 272

    Email: ibs.asr06@gmail.com

    Website: www.bizfiing.in

Disclaimer: The views expressed in this article are personal views of the author, intended solely to provide general information and should not be taken as professional advice or substitute of professional advice. Before acting on the information given herein, please consult a qualified expert or professional for advice on specific issues.