Goods & Services Tax (GST)
Who should register for GST?
- Individuals registered under the Pre-GST law (i.e., Excise, VAT, Service Tax etc.)
- Businesses with turnover above the threshold limit of Rs. 40 Lakhs* (Rs. 10 Lakhs for North-Eastern States, J&K, Himachal Pradesh and Uttarakhand)
- Casual taxable person / Non-Resident taxable person
- Agents of a supplier & Input service distributor
- Those paying tax under the reverse charge mechanism
- Person who supplies via e-commerce aggregator
- Every e-commerce aggregator
- Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person
Note: *CBIC has notified the increase in threshold turnover from Rs 20 lakhs to Rs 40 lakhs. The notification will come into effect from 1st April 2019.
Penalty for not registering under GST
An offender not paying tax or making short payments (genuine errors) has to pay a penalty of 10% of the tax amount due subject to a minimum of Rs.10,000.
The penalty will at 100% of the tax amount due when the offender has deliberately evaded paying taxes
What are the benefits of registering under GST?
A. For normal registered businesses:
- Take input tax credit
- Make interstate sales without restrictions
- To know more about the Benefits of GST
B. For Composition dealers:
- Limited compliance
- Less tax liability
- High working capital
- To know more about composition scheme
C. For businesses that voluntarily opt-in for GST registration (Below Rs. 40 lakhs*)
- Take input tax credit
- Make interstate sales without restrictions
- Register on e-commerce websites
- Have a competitive advantage compared to other businesses
- To know more about voluntary registrations
When should a business apply for multiple GST registrations?
If a business operates from more than one state, then a separate GST registration is required for each state. For instance, If a sweet vendor sells in Karnataka and Tamil Nadu, he has to apply for separate GST registration in Karnataka and TN respectively.
A business with multiple business verticals in a state may obtain a separate registration for each business vertical.
Income Tax
What is Income Tax?
It is a tax levied by the Government of India on the income of every person. The provisions governing the Income-tax are covered in the Income-tax Act, 1961.
What is the period for which a person’s income is taken into account for the purpose of Income-tax?
Income-tax is levied on the annual income of a person. The year under the Income-tax Law is the period starting from 1st April and ending on 31st March of next calendar year. The Income-tax Law classifies the year as (1) Previous year, and (2) Assessment year.
The year in which income is earned is called as previous year and the year in which the income is charged to tax is called as assessment year.
e.g., Income earned during the period of 1st April, 2019 to 31st March, 2020 is treated as income of the previous year 2019-20. Income of the previous year 2019-20 will be charged to tax in the next year, i.e., in the assessment year 2020-21.
Who is supposed to pay Income-tax?
Income-tax is to be paid by every person. The term 'person' as defined under the Income-tax Act under section 2(3) covers in its ambit natural as well as artificial persons. For the purpose of charging Income-tax, the term 'person' includes Individual, Hindu Undivided Families [HUFs], Association of Persons [AOPs], Body of individuals [BOIs], Firms, LLPs, Companies, Local authority and any artificial juridical person not covered under any of the above.
Thus, from the definition of the term 'person' it can be observed that, apart from a natural person, i.e., an individual, any sort of artificial entity will also be liable to pay Income-tax.
How is advance tax calculated and paid?
A. Advance tax is to be calculated on the basis of expected tax liability of the year. Advance tax is to be paid in instalments as given below:
- Atleast to 15 per cent – On or before 15th June
- Atleast to 45 per cent – On or before 15th September
- Atleast to 75 per cent – On or before 15th December
- Atleast to 15 per cent – On or before 15th June
- Atleast to 100 per cent –On or before 15th March
B. In case of eligible assessee as referred to in section 44AD and 44ADA:
100 per cent – On or before 15th March
Note: Any tax paid on or before 31st day of March shall also be treated as advance tax paid during the same financial year.
The deposit of advance tax is made through challan ITNS 280 by ticking the relevant column, i.e., advance tax.
What is tax on regular assessment and how is it paid?
Under the Income-tax Act, every person has the responsibility to correctly compute and pay his due taxes. Where the Department finds that there has been understatement of income and resultant tax due, it takes measures to compute the actual tax amount that ought to have been paid. This demand raised on the person is called as Tax on regular assessment. The tax on regular assessment-400 has to be paid within 30 days of receipt of the notice of demand .
What is exempt income and taxable income?
An exempt income is not charged to tax, i.e., Income-tax Law specifically grants exemption from tax to such income. Incomes which are chargeable to tax are called as taxable incomes.
What is revenue receipt and capital receipt?
Receipts can be classified into two kinds: A) Revenue receipt, B) Capital receipt.
Revenue receipts are recurring in nature like salary, profit from business, interest income, etc.
Capital receipts are generally of isolated nature like receipt on account of sale of residential building, personal jewellery, etc.