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Wednesday, 25 February 2015

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Knowledge About All Kind Of Tax Procedure In India..!!

If you have knowledge, let others light their candles with it.
Winston Churchill
The purpose of this Post is to give an insight of overall knowledge of all types of taxes that are prevailing in India. This Post is to educate those people who want to get a basic knowledge of what is the tax structure of india. The readers of this post will be able to know the structure of each and every taxation department and the remedies available to them against these authorities. I hope this post'll help you to undersrtand the tax procedure of India.

Doing Business in India 1

Political Profile of India    2
Government Type    2
States & Union Territories    2
Constitution    3
Business vehicles in india 4

Types of Business Vehicles    4
Company    4
Limited Liability Partnership (LLP)    7
Partnership Firm    9
Proprietorship Firm    11
Non-Profit Organization (NPO)    12
Branch Office    15
Liaison Office    16
Project Office    16
Comparative Summary    16

Foreign Direct Investment

Foreign Direct Investments in India (FDI)    18
Automatic route    19
Approval route    19
Who can invest in India?    19
Some Sector Specific Guidelines has been described below    20
FDI in Multi-Brand Retail Sector    23
Foreign Investment Promotion Board (FIPB)    24
Levels of Approvals for Cases under Approval Route    24
Foreign investments under Portfolio Investment Scheme (PIS)    24
Foreign Venture Capital Investments    25
Other Foreign Investments    25
Funding to the Business    26
Equity Share Capital    26
Preference Share Capital    26
Debentures/ Borrowing    26
ECB    27
Repatriation of Funds    28
Repatriation of Dividends    28
Repatriation of Capital    28
Repatriation of Royalties and Technical Knowhow    28
Repatriation of Consultancy Services    28
Remittance of Pre-incorporation Expenses    28
Types of accounts which can be maintained by an NRI / PIO in India    29
Industrial Undertakings    30
Categories of Industrial Undertaking
List of Industries Reserved for manufacture of Items    30
Exclusively in the Public Sector    30
List of Industries In Respect of which Industrial Licensing is Compulsory    30
Industrial Entrepreneur Memorandum (IEM)    31

Income Tax Procedure

A Quick Glance on Amendments made
Income from Salary    55
Section: 15 Charging Section of Salary    55
Taxable value of all allowances    55
Perquisites    58
Retirement benefits    59
Income from House Property    61
Section 22: Charging Section    61
Section 27: Deemed Owner    61
Method of Computation    62
Calculation of Gross Annual Value (GAV)    63
Income from Capital Gains    64
Section: 45 Charging Section    64
Section 2(14): Definition of Capital asset    64
Types of Capital Assets    65
Cost of acquisition of an asset is the sum total of   
amount spent for acquiring the asset    65
Cost of improvement    66
Section 2(47): Transfer    66
Section 47: Transactions not regarded as transfer    66
Section: 48 Computation of Capital Gain    68
Section 51: Advance Money Forfeited    69
Section 10(38) Exemption of LTCG from listed equity shares    69
Section 111A Tax on STCG from listed equity shares    69
Section 50B: Computation of capital gain in slump sale    69
Section 45(1A): Insurance Claim on Destruction    69
Section 45(2): Conversion of Capital Asset    70
Section 45(3): Transfer of a Capital Asset by a partner to firm    70
Section 45(4): Dissolution of firm    70
Section 45(5): Compulsory Acquisition    70
Section 10(37): Exemption of compulsory Acquisition of Agricultural land    70
Section 50C: Special provision for full value of consideration in certain cases    71
Section 50D: Fair Market Value deemed to be the full value of consideration    71
Exemption Chart For The Head Capital Gains    71
Income from Profits and Gains from Business and Profession (PGBP)    73
Income from Business and Profession (PGBP)    74
How we compute Income under head PGBP    74
Charging Section: Section 28    74
Section 145: Method of accounting    75
Section 145A: Method of accounting in certain cases    75
Section 30: Rent, Rates, Taxes, Repair and Insurance for Building    75
Section 31: Repairs and Insurance of Machinery, Plant and Furniture    75
Section 32: Depreciation    75
Block of Assets    76
Rates of Depreciation    76
Unabsorbed Depreciation    78
Section 43(6): Written down Value    78
Section 43(1): Actual Cost    78
Section 35: Expenditure on scientific research    80
Section 35ABB: Telecom license Fees    82
Section 35CCA: Deduction for payment for carrying out   
Rural Development Program    83
Section 35D: Amortization of certain Preliminary Expenses    83
Section 35DD: Amortization of Amalgamation or Demerger Expenses    84
Section 35DDA: Expenditure on Voluntary Retirement Scheme (VRS)   
Compensation to employees    84
Section 35CCC: Expenditure on Agricultural Extension Projects    85
Section 35CCD: Expenditure on Skill Development Projects    85
Section 35AD: Specified Business    86
Section 35E: Amortization of Expenditure on prospecting   
Minerals or Development of Mine of Minerals    88
Section 36: Expenses allowed    89
Section 37: General Deduction    90
Section 37(2B): Payment made to Political Party    90
Section 38(2): Assets not exclusively used for Business/Profession    91
Section 40(a): Disallowance of expenses    91
Section 40A: Expenses not deductible under certain circumstances    91
Section 43B: Deduction on actual payment basis    92
Other miscellaneous provisions relating to Business and Profession    92
Section 33AB: Tea / Coffee / Rubber Development Account    94
Section 33ABA: Site Restoration Fund    94
Some Important Sections    95
Income under Head of Other Sources    95
Section 56 (1): Charging Section    95
Section 56(2): Specific incomes taxable under the head other sources    95
Profits chargeable to tax Section 59    97
Taxability of Interest income Section 56    97
Interest income exempt from tax Section 10(15)    97
Method of Accounting Section 145    97
Interest or dividend income from UTI or Mutual Funds Section 10(35)    98
Casual Income Section 56    98
Section 14A: No deduction on Exempted Income    98
Income from Owning and Maintaining of Race Horses Section 56    98
Income from owning and maintaining of any other animal    99
Income from letting out of Buildings along with Plant & Machinery,   
Furniture & Fixtures etc. provided they are inseparable Section 56    99
Dividend Income Section 56    99
Meaning of domestic company    99
Meaning of prescribed arrangements for declaration and   
payment of dividends within India Rule 27    99
Meaning of Dividend [Section 2(22)]    100

Charitable Trust    102
What is charitable trust?    102
Registration of Trust under Income Tax Act 1961    102
How to compute Income of trust?    102
When Income from property held under trust will be exempt?    103
Restrictions applicable on trust    103
Agricultural Income    104
What is Agricultural Income?    104
How we compute Agricultural Income?    104
Exempt Income under Section 10    105
Clubbing of Income    107
Transfer of income without transferring the asset (Section 60)    107
Transfer of asset through revocable transfer (Section 61)    107
Transfer of an asset through irrevocable transfer (Section 62 and 63)    107
Meaning of Revocable Transfer    108
Salary income from a concern in which the spouse has   
substantial interest [Section 64(1)(ii)]    108
Asset held by Minor Child [Section 64(1A)]    109
Transfer of the asset by the member of Hindu Undivided Family   
to the Hindu undivided family [Section 64(2)]    110
Transfer of Assets to Spouse [Section 64(1)(iv)]    110
Set-Off Losses    111
Chapter VI-A (Deductions from Total Income)    113
Deduction from Income    113
Area based deduction    114
Common provisions under all the sections    115
Tax Deducted at Source
TDS Rate Chart for the Financial Year 2013-14    116
and assessment  year 2014-15    118
TCS Rate Chart    119
Minimum Alternate Tax    121
What is the objective behind the introduction of MAT?    121
What is the origin of MAT?    121
Income Tax Act provisions and tax computed under Sec 115JB.    121
How we calculate Book Profits on which Mat is to be calculated?    121
What is MAT Credit?    122
Working for claiming MAT credit and carry forward   
of balance unutilized MAT credit    123
International Taxation    125
Who is Non Resident / Foreign Company?    125
What Type of Income is taxable for Non Resident / Foreign Company?    125
What is Permanent Establishment?    126
Special Provisions applicable for Non Residents    127
What is Specified Assets?    127

What is Foreign Exchange Assets?    127
How we compute Income of NRI’s?    128
Tax Rate Applicable on Non-Resident Sports Men or Sports   
Associations  or other person    128
Section 115JG: Conversion of an Indian branch of   
Foreign Company into subsidiary Indian company.    129
Double Tax Avoidance Agreement    130
What is Double Taxation?    130
Powers given under DTAA    130
Why there is need of DTAA?    130
What are the key benefits that derived after coming DTAA?    131
What is the relief given under section 91 to the assessee?    131
With Holding Tax Rates    132
Section 92CC: Advance pricing agreement    143
Section 92CD: Effect to advance pricing agreement    144
Section 163: Agent of Non Resident    145
Transfer Pricing    147
What is Transfer price?    147
What is Transfer Pricing?    147
When Indian Transfer pricing provisions come into effect?    147
What is the Scope and Application of transfer pricing provisions?    147
Section 92A: Definition of Associated Enterprises    149
Section 92B: Definition of International Transaction    150
Section 92BA: Meaning of Specified Domestic Transactions    150
Section 92C: Computation of Arm’s Length Price    151
Report of Chartered Accountants (Form 3CEB)    152
Selection of Most Appropriate Method    152
Maintenance and keeping of information and document by   
persons entering into international transaction (Section 92D)    153
Filing Return of Income    154
Section 139A: Permanent Account Number (PAN)    154
PAN – Legal Framework    154
What is PAN?    155
Why is it necessary to have PAN?    155
Types of Income Tax Return    156
Return of Charitable or Religious Trust or Institution    156
Return of Political Party    156
Return of Income of Certain Specified Institutions    156
Section 139(4D): Obligation of Universities, Colleges and   
other such Institutions to file return of income    157
Section 139(6A): Details are to be furnished by person   
engaged In business and profession    158
Section 139B: Tax Return Preparers    158
Section 139D: Filing of Return of Income in Electronic Form    159
Prescribed Forms for filing Income Tax Return    160

Advance Tax    160
Due dates in case of Assessees other than Companies    160
Due dates in case of Companies    160
Mandatory & Penal Interest under Sections 234A, 234B, & 234C    161
Penalties    163
Assessment    166
What is Assessment?    167
Procedure of Assessment    167
Types of Assessment    167
Intimation U/S 143(1)    168
Rectification of Mistake U/S 154    169
Notice Under section 142(1)    169
Time Limit for Issuing Notice    170
Appeals and Appellate Authorities    170
Settlement Commission    171
Section 94A: Notified Jurisdictional Area    172
Advance Rulings    173
Annual Information Return    175
Furnishing of Annual Information Return    175
Section 271FA: Penality for Failure to Furnish Annual Information Return    176

Wealth Tax

Introduction of Wealth Tax    178
Constitution of Wealth Tax    179
Administration of Wealth Tax    180
Constituents of Wealth Tax    180
To whom Wealth Tax is applicable? [Section 3 Charging Section]    181
Entities exempt from Wealth Tax [Section 45]    181
Scope of Taxation    182
Computation of Net Wealth    182
Note 1 – Meaning of Assets [Section 2 (ea)]    182
Note 2 – Meaning of Deemed Assets [Section 4]    184
Note 3 - Exemption in respect of certain assets [Section 5]    185
Note 4 - Debts [Section 2(m)]    185
Valuation of Assets    186
How to determine value of immovable property?    186
What are Business Assets?    189
How to determine value of Business Assets?  [Rule 14]    189
What is value of interest in a firm or association of persons?    190
How to determine value of interest in a firm or   
association of persons? [Rule 15 & 16]    190
How to determine value of Jewellery? [Rule 18 &19]    191
Valuation of other assets [Rule 20]    191
Filing of Wealth Tax Return [Section 14]    191

Due dates for filing return                                                                                                191
Interest on delay in filing of return                                                                                  192

Custom Law

Introduction to Customs Law    194
Objective of Custom Law    194
Constitution of Customs Law    195
Need of Custom Law    195
Administration of Customs Law    195
Constituents of Custom Law    196
Scope and coverage of Customs Law    196
Types of Custom Duties    197
Basic Concepts and Definitions    200
Registration    201
Application for Grant of IEC Number    201
Valuation of Goods for the purpose of Assessment    202
What is the Taxable Event under Custom Act?    202
What is Assessable  Value?    202
What rate of Basic Custom Duty shall be taken?    204
Import Export Procedure    205
What is Bill of Entry?    205
What is Import General Manifesto?    205
Import Procedure    206
Export Procedure    207
Assessment System    208
Special Cases    209
Refund under Customs Act, 1962    209
Foreign Trade Policy (FTP)    210
Duty Entitlement Pass Book (DEPB)    211
Duty Free Replenishment Certificate (DFRC)    211
Duty Free Import Authorisation (DFIA)    211
Deemed Exports    211
Served from India Scheme (SFIS)    212
Manufacture under Bond Scheme    212
Export Promotion Capital Goods Scheme(EPCG)    212
Export Incentives    213
Free Trade Zones (FTZ)    213
Electronic Hardware Technology Park / Software Technology Parks    213
Advance Licence / Duty Exemption Entitlement Scheme (DEEC)    213
Duty Drawback    213
Summary    217
Special Additional Duty Refund (SAD)    218
Transit & Transhipment    219
Baggage    219

Central Excise Law

Introduction to Central Excise    224
Constitution of Central Excise    225
Administration of Central Excise    225
What is Excise Duty?    226
Where the Excise Act is Applicable?    226
Organizational Hierarchy of Excise/ Custom Department    226
Administration of Central Excise    227
Constituents of Central Excise    227
Basic Concepts and Definitions    228
Basic Condition for Excise Liability    228
Goods    228
Movable    228
Marketable    229
Factory    229
Manufacture    229
Production    229
Manufacturer    229
Assembly    230
Dutiability of Waste & Scrap    230
Removal of goods    230
Registration – Procedures and Issues    231
Persons liable to register    231
Type of Assessee  liable to Register    231
Person not liable to register    232
Procedure for registration    233
Documents required for registration (Self Attested copies)    233
Issues    234
Validity of Registration Certificate    234
Penalty for failure to get registered    234
Separation of premises by a public road    234
Registration of same premise with different Assessee    234
Excise registration number    234
Separate Excise registration number    234
Invoices and Records    235
Invoice    235
Use of more than one set of invoices    237
Authentication of Invoices    237
Rounding off of duty in the invoice    237
Cancellation of the invoices    237
Procedure for cancellation of invoices online    237
Records to be maintained under Central Excise    238
Following is the whole List of Documents required   
to be maintained under Central Excise Act    238

Valuation of Goods    240
What is Valuation?    241
Valuation as per section 4 (AD VALOREM)    241
Valuation based on Maximum Retail price (Section 4A)    241
What is meant by MRP?    241
What does MRP Include?    241
What is Definition of Retail Sale Price?    242
To which Goods does section 4A apply?    242
What is Transaction Value?    242
Who is Related Party?    242
What is Place of Removal?    242
What is Time of Removal?    242
Valuation    243
Due Date and Manner of Payment    243
Due Dates of Payment    243
Manner of Payment    244
Account current and Cenvat account    244
Personal Ledger Account    244
Procedure for Payment    244
What is Cenvat Credit?    245
As per Rule 3(5) of Cenvat Credit Rules-2004   
(Removal of Inputs, Capital goods AS SUCH)    246
Removal of Capital Goods as waste and scrap i.e. “After Use”    246
Documents Required for Availing Cenvat Credit
Supporting Documents Required for Taking Credit of    246
Duty Paid Credit of duty paid on DOMESTIC inputs or capital goods    247
Credit of duty paid on IMPORTED inputs or capital goods    247
Credit of Tax paid on input service    247
Duties eligible for Cenvat Credit    247
Following Duties shall not be eligible for Cenvat Credit    248
Yarn ➯ Readymade Garments    248
What are Final products?    248
What is Input?    249
What are Capital Goods?    249
What is Input Service?    250
What is Output Service?    250
What are Exempted services?    250
Who is Input Service Distributor?    250
Export of Goods    251
What is Export?    251
Rebate of Duty (Rule 18 of Central Excise Rules 2002)    251
Conditions for claiming Rebate under above Rule 18    251
Documents required for filing Rebate Claim under Rule 18    251
Export without payment of duty (Rule 19 of Central Excise Rules)    252
Conditions for export without payment of duty (Rule 19 of Central Excise Rules)    252
Refund of duty paid for export under bond (Rule 18)    252
Refund of Cenvat Credit    253

Partial manufacture/provision of exempted products/

To what extent and commencement, CETA is applicable?                                           267
Constituents  of Central Excise Tariff Act, 1985                                                            268

Service Tax

Introduction to Service Tax in India    272
Selective Approach/Comprehensive  Approach to Service Tax    272
Constitution of Service Tax    272
Administration of Service Tax    273
Constituents of Service Tax    274
Note on Extent, Commencement and Application of Service Tax    275
Concept of Service    276
Registration    276
Centralized Registration under Service Tax    276
What is the procedure for registration?    277
Following documents are required for Registration    277
Amendment of Registration Certificate    278
How to make amendments with regard to changes in particulars?    279
Cancellation of Registration Certificate    279
Invoice & Records under Service Tax    279
Issue of Invoice/Bill by Service Provider    279
Issue of Invoice/Bill by Input Service Distributor    280
Records under Service Tax
What Type of records to be kept and whether there    281
are any statutory records to be maintained?    281
Determination of Rate for Service Tax    281
Concept of consideration and valuation    282
As per Rule 5 of the Service Tax (Determination of Value) Rules, 2006    282
Pure Agent    282
What is works contract and in what manner it is taxable?    282
Service portion in execution of Works Contracts    283
Valuation in Works Contract Service    283
Valuation Part I    283
Valuation Part II    284
Point of Taxation    284
Determination of Point of Taxation in case of Change of Rate of Tax    286
What is “Reverse Charge”?    286
What is Joint Charge Mechanism?    287
What is covered under Reverse Charge?    287
What is covered under Joint Charge?    288
Point of Taxation in Reverse Charge Mechanism    290
Place of Provision of Service Rules, 2012    291
Manner and Due Date of Payment    295
Manner of Payment    295
Due Date for Payment    295
Mandatory Electronic payment    296

Treatment of Payments under Service Tax
A brief note on “Adjustment of Excess payment of service tax” under different situation    296

Advance payment of Service Tax    297
Refund of Service Tax / Issue of Credit Note    297
Negative List    297
Mega Exemption Notification    299
What is meant by Declared Services?    303
Filing of Returns    304
Note on Revision of Service Tax Return    304
Note on Delay Furnishing of Service Tax Return    304
Documents to be submitted along with Service Tax Return    305
E-Filing of Service Tax Return    305
Assessment    305
Provisional payment of Service Tax    305
Self adjustment of Service Tax    306
Demand, Appeals, Recovery and Penalties    306
Rectification of Mistakes    307
Appeals    308
Appeal to Appellate Tribunal    308
Fees for appeal to Tribunal    309
Appeal to High Court    309
Appeal to Supreme Court    309
Penalties    310
Section 77: General Penalty    310
Section 78: Penalty for Suppressing etc.    311
Section 80: Penalty not to be imposed in certain cases    311

Value Added Tax

Introduction of VAT in India    314
Historical Background    314
VAT in India    315
Concept of VAT    315
Tax implication under Value Added Tax Act    316
Constitution of VAT    316
Administration of VAT    316
Value Added Tax Authorities    316
Constituents of VAT    317
Rules on VAT    317
Circulars on VAT    317
Notifications on VAT    317
Trade Notices    317
Registration    317
Eligibility for Registration    317
Compulsory Registration    318

Voluntary Registration    318
Documents Required for VAT Registration    318
Cancellation of Registration    318
Tax Payer’s Identification Number (TIN)    319
VAT Invoice    319
Importance of VAT Invoices (Tax Invoices)    319
Records    320
Input Tax Credit (ITC)    320
Scope of input Tax Credit    320
Input Tax Credit available on capital goods    321
Procedural requirements for claiming set off    321
Purchases not eligible for Input Tax Credit    321
Carrying forward of Tax Credit    322
Refund to Exporters within Three Months    322
Exemption or Refund to SEZ and EOU Units    322
Reimbursement of tax to UNO and Embassies    322
Composition Scheme    322
Threshold exemption limit    323
State law to provide for composition scheme    323
Features of Composite Schemes    323
Eligibility for the Composition Scheme    323
Exercising of Option    324
VAT Chain under Composition Scheme    324
Returns    324
Audit    325
Account to be Audited in certain cases    325
Assessment    325
System of cross checking    326
Central Sales Tax [CST]    326
Meaning of CST    326
Features of CST ACT    326
Registration    327
Compulsory Registration    327
Voluntary Registration    327
Benefits of Registration    327
Security    327
Amendment of Certificate of Registration    328
Cancellation of Registration    328
Meaning of Inter State Sale (ISS)  [Section 3]    328
Stock Transfer    329
When Stock Transfer is treated as Inter-State sale    330
Works Contract Tax    330
Divisible Contract    330
Indivisible Contract    330

Levy of VAT on Indivisible Contracts    331
General Negative list Items for Works Contracts under State VAT Act & Rules    333
Tax Deducted at source under Works Contract Tax (TDS)    333
Delhi    335
Haryana    338
Punjab    341
Uttar Pradesh    344
Uttarakhand    346
Jammu & Kashmir    348
Himachal Pradesh    350
Maharashtra    352
Gujarat    356
Rajasthan    359
Goa    361
Madhya Pradesh    363
Bihar    366
Chhattisgarh    369
Jharkhand    371
Odisha    374
Andhra Pradesh    376
Karnataka    379
Kerala    383
Tamil Nadu    387
West Bengal    390
Assam    394
Sikkim    397
Arunachal Pradesh    399
Manipur    401
Meghalya    403
Mizoram    405
Tripura    407
Nagaland    410
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Thank You~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


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