How GST Calculated in India?

In India, GST (Goods and Services Tax) is calculated based on the value of goods or services provided. The GST rate varies depending on the type of goods or services.

The GST rate in India is divided into four categories: 5%, 12%, 18%, and 28%. Some goods and services are exempt from GST, and some are taxed at a lower rate, such as essential items like food, healthcare services, and education.

To calculate GST in India, you need to follow these steps:

1. Determine the GST rate applicable to the goods or services you are selling.

2. Calculate the total value of the goods or services sold, including any taxes, fees, or charges.

3. Multiply the total value by the GST rate to get the GST amount.

4. Add the GST amount to the total value to get the final price.

For example, if you are selling goods worth Rs. 10,000 and the GST rate is 18%, the calculation would be as follows:

GST amount = (18/100) x 10,000 = Rs. 1,800

Total price = Rs. 10,000 + Rs. 1,800 = Rs. 11,800

Therefore, the final price of the goods would be Rs. 11,800.

2.  Do foreigners or NRI have to pay GST in India?

Foreigners who are visiting India as tourists and Non-Resident Indians (NRIs) who are staying abroad and are not involved in any business in India are not required to pay GST on goods and services they purchase in India. However, if they are conducting any business in India or are involved in any commercial activities, they may be required to pay GST.

Foreigners who are involved in business activities in India, such as setting up a business, exporting goods or providing services in India, are required to register for GST and pay the applicable GST rates.

NRIs who are conducting business or providing services in India are also required to register for GST and pay the applicable GST rates.

It’s important to note that GST rules and regulations are subject to change, and it’s always best to consult a tax expert or Practicing Chartered Accountant or tax consultant for the most up-to-date information specific to your situation.

3. What are the different types of GST in India, and why are they different from each other?

In India, there are mainly four types of GST, which are:

1. Central Goods and Services Tax (CGST): This is a tax levied by the central government of India on the supply of goods and services within a state or union territory.

2. State Goods and Services Tax (SGST): This is a tax levied by the state governments of India on the supply of goods and services within a state or union territory.

3. Integrated Goods and Services Tax (IGST): This is a tax levied by the central government on the supply of goods and services between different states or union territories.

4. Union Territory Goods and Services Tax (UTGST): This is a tax levied by the union territory governments of India on the supply of goods and services within a union territory.

The reason for having different types of GST in India is to ensure that the tax revenue is shared between the central and state governments. CGST and SGST are levied by the central and state governments, respectively, on the same transaction. The revenue collected from CGST goes to the central government, while the revenue collected from SGST goes to the state government.

IGST is levied when goods and services are supplied between different states or union territories. This ensures that the revenue is shared between the central government and the state or union territory where the goods or services are consumed.

UTGST is similar to SGST, but it is levied by the union territory governments instead of state governments.

Overall, the different types of GST in India are designed to ensure that tax revenue is shared between the central and state governments, and that the tax system is efficient and effective in collecting revenue.

5. Which states are under UTGST?

The Union Territory Goods and Services Tax (UTGST) is applicable to the Union Territories (UTs) of India. The following UTs are currently under the purview of UTGST:

1. Andaman and Nicobar Islands

2. Chandigarh

3. Dadra and Nagar Haveli and Daman and Diu

4. Lakshadweep

5. Delhi

6. Puducherry

It’s important to note that the GST rates and regulations may be subject to change, and it’s always best to check with the official GST website or consult a tax expert or practising CA or tax consultant for the most up-to-date information.

The post GST Calculation, GST on NRI and UTGST appeared first on CA ALOK KUMAR NANDAN.

CA certificate in India refers to a certificate issued by a Chartered Accountant (CA) in India. A Chartered Accountant is a professional accountant who is registered with the Institute of Chartered Accountants of India (ICAI) and is authorized to provide a range of financial services in India.

A CA certificate is a document issued by a Chartered Accountant that certifies the financial statements or other financial information of an individual or a business. The CA certificate is generally required for various purposes, such as:

1. Applying for loans or credit facilities from banks or financial institutions.

2. Filing income tax returns (ITR) with the Income Tax department.

3. Applying for various licenses and permits from the government.

4. Verifying the financial statements of a company for shareholders or investors.

The CA certificate is a crucial document that provides assurance about the financial information of an individual or a business. It’s important to note that the CA certificate must be issued by a Chartered Accountant who is registered with the ICAI and is authorized to issue such certificates.

2 Why CA certificate required for NRI in India?

CA certificate may be required by Non-Resident Indians (NRIs) in India for various purposes. Some of the common reasons why an NRI may need a CA certificate in India are:

1. Applying for a loan: NRIs who wish to apply for a loan in India, such as a home loan or a personal loan, may need to provide a CA certificate to the bank or financial institution. The certificate certifies the NRI’s income, tax payments, and other financial details.

2. Filing income tax returns: NRIs who earn income in India or have investments in India are required to file income tax returns in India. A CA certificate may be required to verify the financial details, such as income earned and taxes paid.

3. Applying for a PAN card: NRIs who wish to apply for a PAN (Permanent Account Number) card in India may need to provide a CA certificate to support their application.

4. Applying for a visa: NRIs who wish to apply for a visa to visit or work in another country may need to provide a CA certificate to support their visa application. The certificate certifies their financial details, such as their income and tax payments.

The CA certificate is an important document that provides assurance about an NRI’s financial details in India. It’s important to note that the CA certificate must be issued by a Chartered Accountant who is registered with the Institute of Chartered Accountants of India (ICAI) and is authorized to issue such certificates.

3 Which CA Certificate required for Funds repatriation outside India by NRI

Non-Resident Indians (NRIs) who wish to repatriate funds outside India are required to provide some specific CA certificates as per the guidelines of the Reserve Bank of India (RBI). The following are the CA certificates required for funds repatriation outside India by NRI:

1. Form 15CA: This is a declaration of remittance made by an individual or a business for payments to be made abroad. The form needs to be certified by a Chartered Accountant (CA) and submitted to the bank before initiating the remittance.

2. Form 15CB: This is a certificate issued by a practicing CA certifying the details of remittance, such as the nature of the remittance, the purpose of the remittance, and the tax deducted at source, if any.

Both Form 15CA and Form 15CB are mandatory for repatriating funds outside India. These forms ensure that the remittance is compliant with the relevant tax laws and regulations.

It’s important to note that the CA who issues Form 15CB must be registered with the Institute of Chartered Accountants of India (ICAI) and must have undergone an Information Systems Audit (ISA) conducted by the ICAI. Additionally, the CA must have a valid Digital Signature Certificate (DSC) issued by the Certifying Authority in India.

4. What is legal requirement for remitting money out side India or for foreign remittance

Remitting money outside India (foreign remittance) is subject to various legal requirements and guidelines issued by the Reserve Bank of India (RBI). The following are some of the legal requirements for foreign remittance from India:

1. KYC compliance: The remitter (person sending the money) must complete the KYC (Know Your Customer) process with the authorized dealer (AD) bank, which includes verifying the identity and address proof.

2. Purpose of remittance: The remittance must be for a genuine purpose, such as education, medical treatment, employment, or maintenance of a close relative living abroad.

3. Limits on remittance: The amount of remittance is subject to limits set by the RBI, which may vary depending on the purpose of remittance.

4. Form 15CA and Form 15CB: As mentioned earlier, Form 15CA and Form 15CB are mandatory for remittance of funds outside India. Form 15CA certifies that the remittance is compliant with Indian tax laws, and Form 15CB certifies the details of the remittance.

5. Reporting requirements: AD banks are required to report foreign remittances to the RBI through various reporting formats, such as the Electronic Reporting System (ERS) and the Export Data Processing and Monitoring System (EDPMS).

It’s important to note that the legal requirements for foreign remittance may change from time to time, and it’s always best to consult a tax expert or an authorized dealer bank for the most up-to-date information.

What documents do I need to provide to remit my current income as an NRI/PIO?

To remit your current income as an NRI/PIO, you need to provide appropriate certification by a Chartered Accountant certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for. 

Can I transfer my current income to my Non-Resident (External) Rupee account without maintaining an NRO account?

Yes, NRIs/PIOs have the option to credit their current income to their Non-Resident (External) Rupee account, even if they do not maintain an NRO account. However, the authorized dealer bank must be satisfied that the credit represents current income of the non-resident account holder and income tax thereon has been deducted/provided for. 

What are the eligibility criteria for a foreign national of non-Indian origin to remit their inherited assets from a person resident in India? 

The eligibility criteria for a foreign national of non-Indian origin to remit their inherited assets from a person resident in India are as follows: the foreign national must have retired from employment in India, or inherited assets from a person resident in India, or be a widow of an Indian citizen who was resident in India. The remittance amount should not exceed USD one million per financial year (April-March), and the remitter must produce documentary evidence in support of acquisition/inheritance of assets, an undertaking by the remitter, and a certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their Circular NO.10/2002 dated October 9, 2002. 

Remittance of assets by NRO/PIO

NRIs/PIOs may remit an amount up to USD one million per financial year out of the balances held in their Non-Resident (Ordinary) Rupee (NRO) account/sale proceeds of assets (inclusive of assets acquired by way of inheritance or settlement), for all bonafide purposes, to the satisfaction of the authorized dealer bank, on production of an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their Circular NO.10/2002 dated October 9, 2002. NRIs/PIOs may also remit sale proceeds of immovable property purchased by them out of Rupee funds or as a person resident in India without any lock-in-period. 

Repatriation of sale proceeds of residential property purchased by NRIs/PIO out of foreign exchange

NRIs/PIOs are allowed to purchase residential property in India using foreign exchange received through banking channels. When they sell such a property, they are permitted to repatriate the sale proceeds of that property to the extent of the amount paid for acquisition of immovable property in foreign exchange received through banking channels. This means that if an NRI/PIO purchased a residential property in India using USD 100,000 received through banking channels, they can repatriate up to USD 100,000 from the sale proceeds of that property. 

It’s important to note that this facility is restricted to not more than two such properties. In other words, NRIs/PIOs can only repatriate the sale proceeds of up to two residential properties purchased by them out of foreign exchange received through banking channels. 

NRIs/PIOs are permitted to repatriate the sale proceeds of residential property purchased by them out of foreign exchange to the extent of the amount paid for acquisition of immovable property in foreign exchange received through banking channels. The facility is restricted to not more than two such properties. 

Facilities for students

Under the Foreign Exchange Management Act (FEMA), all facilities available to NRIs are equally applicable to students. This means that students who are NRIs/PIOs can avail of the same facilities as other NRIs/PIOs under FEMA. 

In terms of remittances, authorized dealer banks can allow remittances by students on production of an undertaking by the remitter and a certificate from a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No.10/2002 dated October 9, 2002. 

Students going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities available to NRIs under FEMA.

As Non-Residents, they will be eligible to
receive remittances from India (i) up to USD
100,000 from close relatives in India on self declaration towards maintenance, which could include remittances towards their studies also and (ii) up to USD 1 million per financial year, out of sale proceeds of assets/balances in their account maintained with an AD bank in India.

All other facilities available to NRIs under FEMA are equally applicable to the students.

Educational and other loans availed of by them as residents in India will continue to be available as per FEMA regulations.

Income-tax clearance

The remittances will be allowed to be made by the authorized dealer banks on production of an undertaking by the remitter and a Certificate from a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No.10/2002 dated October 9, 2002. [cf. A.P.(DIR Series) Circular] No.56 dated November 26, 2002.

International Credit Cards

Authorized dealer banks have been permitted to issue International Credit Cards to NRIs/PIO, without prior approval of Reserve Bank. Such transactions may be settled by inward remittance or out of balances held in the cardholder’s FCNR (B) /NRE /NRO accounts.

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I am here to help you with your taxes on income. My objective is to provide you with the necessary guidelines for the proper accounting treatment of taxes on income. 

What is AS22 stand for

AS 22 stands for Accounting Standard 22. It is a set of guidelines issued by the Institute of Chartered Accountants of India (ICAI) that prescribes the accounting treatment for taxes on income.

What is the prime objective of AS 22 – Taxes on Income

The objective of AS 22 is to prescribe the accounting treatment for taxes on income. Taxes on income are one of the significant items in the statement of profit and loss of an enterprise. In accordance with the matching concept, taxes on income are accrued in the same period as the revenue and expenses to which they relate.

What is the Scope of AS 22

The scope of AS 22 is to be applied in accounting for taxes on income. It covers the recognition, measurement, presentation, and disclosure of taxes on income. The standard applies to all enterprises, regardless of their size or nature of business, and it covers all types of taxes on income, including those levied by foreign governments.

What is Deferred Tax as per As22

AS 22 defines deferred tax as the tax effect of timing differences. Timing differences are the differences between taxable income and accounting income that arise because certain items of revenue or expense are recognized in one period for tax purposes and another period for accounting purposes. Deferred tax assets and liabilities arise from timing differences, and they represent the future tax consequences of those differences. The standard provides guidelines for recognizing, measuring, presenting, and disclosing deferred tax assets and liabilities.

What is Timing difference as per AS22

AS 22 defines timing differences as the differences between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods. Timing differences arise because the period in which some items of revenue and expenses are included in taxable income do not coincide with the period in which such items of revenue and expenses are included or considered in arriving at accounting income. For example, machinery purchased for scientific research related to business is fully allowed as a deduction in the first year for tax purposes whereas the same would be charged to the statement of profit and loss as depreciation over its useful life.

What is Permanent Difference as per AS22

• AS 22 defines permanent differences as the differences between taxable income and accounting income that will never reverse in the future. Permanent differences arise because some items of revenue or expense are included in taxable income but are not considered in arriving at accounting income, or vice versa. For example, dividend income received from a subsidiary is exempt from tax under the Income Tax Act but is included in accounting income. Similarly, expenses incurred on entertainment are not allowed as a deduction for tax purposes but may be charged to the statement of profit and loss as an expense. Permanent differences do not give rise to deferred tax assets or liabilities because they do not affect future tax payments.

What is the  difference between Current Tax and Deferred Tax as per AS22

AS 22 defines current tax as the amount of income tax payable or recoverable in respect of the taxable income for a period. It is based on the taxable income computed using the tax laws and rates that have been enacted or substantively enacted at the end of the reporting period. Current tax is recognized as an expense or income in the statement of profit and loss for the period.

Deferred tax, on the other hand, is the tax effect of timing differences. Timing differences are differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities arise from timing differences, and they represent future tax consequences of those differences. Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates and laws that will apply to taxable income in future periods when those timing differences reverse.

In summary, current tax is based on taxable income for a period using current tax laws and rates, while deferred tax arises from timing differences between taxable income and accounting income that will reverse in future periods using future enacted or substantively enacted tax laws and rates.

What is the Recognition process for Deferred Tax Assets as per AS 22

An enterprise recognizes deferred tax assets only to the extent that it has timing differences, the reversal of which will result in sufficient income or there is other convincing evidence that sufficient taxable income will be available against which such deferred tax assets can be realized. In such circumstances, the nature of the evidence supporting its recognition is disclosed.

In other words, an enterprise recognizes a deferred tax asset when it is probable that there will be future taxable profits against which the asset can be utilized. The recognition of a deferred tax asset is based on management’s estimate of future taxable profits and is subject to review by auditors.

If an enterprise has a history of losses or if there are no convincing indications that sufficient taxable profits will be available in future periods, then no deferred tax asset should be recognized. However, if an enterprise subsequently realizes that it has sufficient taxable profits against which a previously unrecognized deferred tax asset can be utilized, then the asset should be recognized in the period in which it becomes probable that sufficient taxable profits will be available.

In summary, an enterprise recognizes a deferred tax asset only when it is probable that there will be future taxable profits against which the asset can be utilized. The recognition process involves estimating future taxable profits and subjecting them to review by auditors.

What is the Presentation and Disclosure Requirements for Taxes on Income under AS22?

AS 22 prescribes the following presentation and disclosure requirements for taxes on income:

1. Presentation of current tax: The amount of current tax should be presented as a separate item in the statement of profit and loss.

2. Presentation of deferred tax: Deferred tax assets and liabilities should be presented as separate line items in the balance sheet.

3. Disclosure of deferred tax: The nature of the timing differences that give rise to deferred tax assets and liabilities should be disclosed, along with the amount of each type of asset or liability.

4. Reconciliation of deferred tax: A reconciliation between the opening and closing balances of deferred tax assets and liabilities should be provided, showing separately the changes arising from acquisitions, disposals, revaluations, and other movements.

5. Disclosure of unrecognized deferred tax assets: The amount of any unrecognized deferred tax assets should be disclosed, along with an explanation for why they have not been recognized.

6. Disclosure of unrecognized deferred tax liabilities: The amount of any unrecognized deferred tax liabilities should be disclosed, along with an explanation for why they have not been recognized.

7. Disclosure of current and deferred taxes related to items charged or credited directly to equity: Any current or deferred taxes related to items charged or credited directly to equity (such as revaluation reserves) should be disclosed separately.

In summary, AS 22 requires separate presentation and disclosure for current taxes, deferred taxes, and unrecognized deferred taxes in the financial statements. It also requires a reconciliation between opening and closing balances for deferred taxes along with disclosure requirements for various types of movements in these balances.

Reassessment of Unrecognized Deferred Tax Assets under AS22 

AS 22 requires an enterprise to re-assess unrecognised deferred tax assets at each balance sheet date. The enterprise should recognise previously unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised. For example, an improvement in trading conditions may make it reasonably certain that the enterprise will be able to generate sufficient taxable income in the future.

The re-assessment of unrecognised deferred tax assets is important because it ensures that an enterprise does not overstate its assets by recognising deferred tax assets that are unlikely to be realised in the future. By re-assessing these assets at each balance sheet date, an enterprise can ensure that its financial statements provide a true and fair view of its financial position.

• In summary, AS 22 requires an enterprise to re-assess unrecognised deferred tax assets at each balance sheet date and recognise them only if it is reasonably certain or virtually certain that sufficient future taxable income will be available against which such deferred tax assets can be realised. This helps ensure that an enterprise’s financial statements provide a true and fair view of its financial position.

Examples of Timing Difference under AS22

AS 22 defines timing differences as differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Some examples of timing differences are:

1. Depreciation: The depreciation charged in the statement of profit and loss may be different from the depreciation allowed for tax purposes. This creates a timing difference that will reverse when the asset is sold or disposed of.

2. Accruals and provisions: Accruals and provisions made in the statement of profit and loss may not be deductible for tax purposes until a later period, creating a timing difference.

3. Revenue recognition: Revenue recognized in the statement of profit and loss may be different from revenue recognized for tax purposes due to different recognition criteria, creating a timing difference.

4. Capital gains: Capital gains may be taxed at a different rate than ordinary income, creating a timing difference.

5. Tax losses carried forward: Tax losses carried forward from previous periods may be used to offset future taxable profits, creating a timing difference.

In summary, timing differences arise due to differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Examples include depreciation, accruals and provisions, revenue recognition, capital gains, and tax losses carried forward.

AS 22 provides several illustrations to help explain the concepts and requirements of the standard. These illustrations are intended to be examples only and should not be considered exhaustive or definitive.

One example of an illustration provided in AS 22 is as follows:

Illustration 1: Recognition of Deferred Tax Assets

An enterprise has a timing difference of Rs. 100,000 at the end of the current year, which will result in a deductible amount of Rs. 120,000 in the future when the timing difference reverses. The enterprise has no other timing differences.

The enterprise estimates that it will have taxable profits of Rs. 150,000 in each of the next two years against which the deferred tax asset can be utilized.

In this case, the enterprise recognizes a deferred tax asset of Rs. 30,000 (Rs. 120,000 x 25%) because it is probable that there will be sufficient taxable profits against which the asset can be utilized.

This illustration demonstrates how an enterprise recognizes a deferred tax asset when it is probable that there will be future taxable profits against which the asset can be utilized.

• In summary, AS 22 provides several illustrations to help explain its concepts and requirements. These illustrations are intended to be examples only and should not be considered exhaustive or definitive. One such illustration demonstrates how an enterprise recognizes a deferred tax asset when it is probable that there will be future taxable profits against which the asset can be utilized.

The post Accounting for Taxes on Income – Accounting Standard 22 appeared first on CA ALOK KUMAR NANDAN.

Who is an NRI: An NRI is someone who is an Indian citizen but resides outside India for a specified period of time, or someone who is a person of Indian origin (PIO) or an overseas citizen of India (OCI) residing abroad.

1. Sale of Property: If an NRI sells a property in India, the buyer is required to deduct a certain percentage of the sale proceeds as TDS before making the payment to the NRI seller.
2. TDS Rates: The TDS rates for NRIs selling property in India depend on the type of property and the total sale amount. As of the current Income Tax Laws, the applicable TDS rate is generally 20% of the sale value. However, the actual TDS rate may vary, and it’s important to consult a tax professional for accurate and up-to-date information.
3. Compliance: The buyer of the property is responsible for deducting the TDS and depositing it with the government within a specified time frame. The buyer is also required to issue a TDS certificate (Form 16B) to the NRI seller as proof of the TDS deduction.
4. NRI’s Tax Obligation: The NRI seller needs to include the sale proceeds and the TDS amount in their Indian income tax return. The TDS amount is considered as a tax already paid, and the NRI can claim credit for the same while calculating their total tax liability.
5. Refund of Excess TDS: If the NRI’s total tax liability is lower than the TDS amount deducted, they can claim a refund of the excess TDS while filing their tax return.

It’s important to note that tax laws are subject to change, and it’s advisable to consult a tax professional or a qualified Chartered Accountant or Tax expert for accurate and up-to-date information regarding TDS on the sale of property by NRIs in India.

As per the current tax laws in India, the following TDS applicability rules apply to the sale of property in India by Non-Resident Indians (NRIs):

1. Residential Property: If an NRI sells a residential property in India, the buyer is required to deduct TDS at the rate of 20% on the total sale proceeds, regardless of the sale amount.
2. Non-Residential Property: If an NRI sells a non-residential property (such as commercial property or land) in India, the buyer is required to deduct TDS at the rate of 20% on the total sale proceeds, if the sale amount exceeds INR 50 lakhs.
3. Agricultural Land: If an NRI sells agricultural land in India, TDS is not applicable on the sale proceeds.
4. TDS Certificate: The buyer is required to issue a TDS certificate (Form 16B) to the NRI seller within 15 days from the due date of depositing the TDS amount with the government.
5. Compliance: The buyer is responsible for deducting the TDS and depositing it with the government within a specified time frame. Failure to deduct or deposit TDS may result in penalties or legal consequences for the buyer.
6. NRI’s Tax Obligation: The NRI seller needs to include the sale proceeds and the TDS amount in their Indian income tax return. The TDS amount is considered as a tax already paid, and the NRI can claim credit for the same while calculating their total tax liability.

How to make tds payment on sale of property in India by NRI –

As per the current Income tax laws provisions in India, the following steps can be followed to make TDS payment on the sale of property in India by a Non-Resident Indian (NRI):

Step 1: Calculate TDS Amount – The buyer of the property (who is usually an Indian resident) needs to calculate the TDS amount based on the applicable rate (generally 20%) on the total sale proceeds.

Step 2: Obtain a Tax Deduction Account Number (TAN) – The buyer needs to obtain a TAN, which is a 10-digit alphanumeric number, from the Indian Income Tax Department. This is mandatory for making TDS payments.

Step 3: Deposit TDS Amount – The buyer needs to deposit the TDS amount with the Indian government within 7 days from the end of the month in which the TDS was deducted. The payment can be made online through the Indian government’s website using the relevant Challan form (Challan 281) and selecting the appropriate code for TDS on sale of property by NRI.

Step 4: File TDS Return – The buyer needs to file a TDS return in Form 26Q within prescribed due date as per the CBDT (Central Board of Direct Taxes). The TDS return can be filed electronically through authorized NSDL TIN-Facilitation Centre.

Step 5: Issue TDS Certificate – After depositing the TDS amount and filing the TDS return, the buyer needs to issue a TDS certificate (Form 16B) to the NRI seller within 15 days from the due date of depositing the TDS amount with the government. The TDS certificate can be downloaded online from the Indian government’s website.

It’s important to note that the above steps are general guidelines, and the specific process and requirements may vary based on the individual circumstances and current tax laws. It’s advisable to consult a tax professional or Tax expert or a practicing Chartered Accountant for accurate and up-to-date information and assistance in making TDS payment on the sale of property in India by NRIs.

How to Reduce TDS applicate rate and TDS amount on Sale of Property in India by NRI –

Form 13, also known as the Application for Certificate of Lower Deduction or No Deduction of Tax, can be filed by a Non-Resident Indian (NRI) seller to reduce their TDS (Tax Deducted at Source) liability on the sale of property in India. The process for filing Form 13 and reducing TDS liability is outlined below:

Step 1: Obtain Form 13 – Form 13 can be downloaded from the website of the Indian Income Tax Department or obtained from the Income Tax Office.

Step 2: Fill in Form 13 – The NRI seller needs to fill in the details in Form 13, including their personal information, details of the property being sold, the applicable sections of the Income Tax Act under which they are eligible for lower TDS, and the reasons for seeking lower TDS.

Step 3: Attach Supporting Documents – The NRI seller needs to attach relevant supporting documents to substantiate their claim for lower TDS. This may include documents such as a copy of the sale agreement, PAN card, certificate of residency, and other relevant documents.

Step 4: Submit Form 13 – The completed Form 13 along with the supporting documents needs to be submitted to the Income Tax Officer (ITO) having jurisdiction over the property’s location. This can be done either physically or online through the Indian Income Tax Department’s e-filing portal.

Step 5: Follow-up with the ITO – The NRI seller may need to follow-up with the ITO to ensure that the Form 13 is processed and the lower TDS certificate under section 197 of Income Tax Act 1961, is issued within a reasonable time frame.

It’s important to note that the approval of Form 13 and issuance of Form 15CB is at the discretion of the Income Tax Department, and it’s advisable to consult a tax professional or tax expert or a qualified Chartered Accountant (practicing CA) for accurate and up-to-date information on the process and requirements for filing Form 13 and reducing TDS liability on the sale of property in India by NRIs.

Procedure for filing application for lower deduction certificate u/s 197 of income tax act ,1961

Steps for Registration on TRACES

• Visit the site https://contents.tdscpc.gov.in/;
• Click on Login and select Register as New User option;
• Select ‘Taxpayer’ from the drop-down list;
• After selecting Proceed, the registration form would be displayed;
• Fill in the appropriate information and submit and the registration in TRACES would be done.

• Steps for filing Form 13 post registration on TRACESLogin in TRACES and under ‘My Profile Tab’, register DSC of the authorized person;
• Under ‘Statements / Form’ tab select ‘Request for Form 13’.
• Form 13 would be displayed and the following appropriate details need to be filled up by the applicant –
• Basic details of the Company and authorized person registered on TRACES portal (The same shall be auto-populated)
• Details of existing liability under Income-Tax Act;
• TAN wise details of estimated income/amount to be received from parties during the subject year (for e.g. FY 2019-20) along with relevant section of TDS (e.g. Section 194C, Section 194J etc.);
• Requested rate of TDS proposed by the taxpayer in respect of the estimated income;
• Details of projected income of the subject year (for e.g. FY 2019-20) and immediately preceding financial year (FY 2018-19);
• Details of estimated tax computation of the subject year (for e.g. FY 2019-20) and immediately preceding financial year (FY 2018-19).
• Further, supporting documents are required to be uploaded which include:
• Final Assessment orders for last 4 assessment years;
• Details/workings for estimated income and tax computation (self attested by authorized person) ;
• Audited Financial Statements of last 3 years;
• Projected Balance Sheet & P/L income of the subject year (for e.g. FY 2019-20) and immediately preceding financial year (FY 2018-19) (self attested by authorized person).
• Acknowledged copy(s) of TDS returns filed for last 2 financial years.
• Once all the details are filled up and appropriate documents are uploaded, the applicant is required to submit the Form 13.

• Post submission of Form 13The online Form 13 is processed and is reviewed by the AO;
• The AO reviews the details and documents and asks for clarifications, if any;
• Post AO approval, the application is forwarded to Addl CIT for his approval;
• Post approval by Addnl CIT, the application is sent to CIT for review and final approval
• Post approval by CIT, the application is successfully completed and the process for generation of lower withholding certificated is initiated;
• Once Lower Withholding certificate is generated, the same can be downloaded from TRACES portal.

Repatriation of money outside India by Non-Resident Indians (NRIs) – It refers to the process of transferring funds from their NRI bank accounts in India to their foreign bank accounts or overseas accounts outside of India. NRIs may repatriate money outside India subject to certain rules and regulations set by the Reserve Bank of India (RBI) and other applicable laws. The process for repatriation of money outside India by NRI generally involves the following steps:

1. Determine Eligibility: NRIs need to check if the funds they intend to repatriate are eligible for repatriation as per the regulations of the RBI. Repatriation is generally allowed for funds held in Non-Resident External (NRE) accounts, Foreign Currency Non-Resident (FCNR) accounts, and for certain investments made under the Foreign Exchange Management Act (FEMA) guidelines.
2. Documentation: NRIs need to provide necessary documents for repatriation, which may include a duly filled and signed Form A2 (Application cum Declaration Form) available with the authorized dealer (bank), a copy of the sale deed or agreement for sale, and any other relevant documents as required by the authorized dealer.
3. Compliance with Limits: NRIs need to ensure that the amount being repatriated falls within the limits prescribed by RBI. As per the current regulations, NRIs are allowed to repatriate up to USD 1 million per financial year from their NRO (Non-Resident Ordinary) accounts, subject to payment of applicable taxes and submission of required documents.
4. Taxation: NRIs need to comply with applicable tax regulations while repatriating money outside India. For example, they may need to pay taxes on capital gains or other income earned in India, as per the Indian tax laws. It’s advisable to consult a tax professional or a qualified Chartered Accountant to understand the tax implications and fulfill the tax obligations.
5. Submitting Application: NRIs need to submit the duly filled and signed Form A2, along with the required documents, to the authorized dealer (bank) for processing the repatriation request. The authorized dealer will verify the documents and process the request as per the RBI guidelines.
6. Follow-up: NRIs may need to follow-up with the authorized dealer to ensure that the repatriation request is processed and the funds are transferred to their foreign bank accounts as per the applicable regulations.

It’s important to note that the repatriation process may be subject to changes in the regulations and guidelines issued by RBI or other relevant authorities. NRIs are advised to stay updated with the latest regulations and consult a qualified professional for accurate and up-to-date information on the repatriation process and requirements.

In addition to the steps mentioned earlier, NRIs are required to submit Form 15CA and Form 15CB to the bank for repatriation of money outside India received on the sale of property in India. Here’s an overview of these forms and their requirements:

1. Form 15CA: This form is a declaration of the remitter (NRI) and is used for furnishing information related to remittances which are chargeable to tax in India. Form 15CA is required to be filled and submitted online on the Income Tax Department’s website (https://www.incometaxindiaefiling.gov.in/) prior to making the remittance. It requires details such as the remitter’s name, address, PAN (Permanent Account Number), remittance amount, nature of remittance, tax determination, and other relevant information. Form 15CA can be generated and filled by the NRI or by their Chartered Accountant.
2. Form 15CB: This form is a certification by a Chartered Accountant and is required to be obtained by the NRI for remittances outside India.Form 15CB certifies that the remittance is in compliance with the Income Tax Act and other applicable laws. It requires details such as the remitter’s name, address, PAN, remittance details, and certification by the Chartered Accountant that taxes have been duly paid on the remittance as per the Indian tax laws.
3. Lower TDS Certificates U/S.197 – Section 197 of the Income Tax Act, 1961 provides for the facility of NIL deduction of tax at source or at a deduction at a Lower rate of tax. To avail of this benefit the assessee whose TDS is likely to be deducted on certain receipts should make an application before the TDS Assessing Officer who has a jurisdiction over his/ her/ its case. The assessee/ deductee concerned may apply for a certificate for Nil or lower deduction of TDS on their receipts in Form No 13. Delays in this matter can be avoided by filing the prescribed form correctly and submitting the required details along with the form itself.
4. Guidelines for handling issues related to applications received u/s 197: In order to streamline the procedure of handling the applications received u/s 197 and disposing the same in a time bound manner in consonance with the Citizens’ charter, the commissioner of Income tax (TDS) has issued certain guidelines for the Assessing Officers. In a nutshell, these guidelines make it mandatory for the Assessing Officer to dispose of the applications u/s 197 within a time frame of 30 days from the end of the month in which application complete in ALL respect is received. The section 197 strikes a delicate balance between requirement of ensuring cash flow to the taxpayer and realizing government dues at the earliest. Taxpayers are, therefore, advised to file complete details required for processing the application in the first instance itself. This will expedite the issuance of certificate u/s 197.

It’s important to note that Form 15CA and Form 15CB are required to be submitted to the bank in duplicate, with one copy retained by the bank and the other copy sent to the Income Tax Department. The bank may also require additional documents and information as per their internal procedures.

NRIs are advised to engage a qualified Chartered Accountant to assist with the preparation and submission of Form 15CA and Form 15CB, as these forms have specific requirements and need to be filled accurately to ensure compliance with the Indian tax laws. It’s also crucial to provide accurate information and make all necessary disclosures, including the source of funds and payment of applicable taxes, to avoid any delays or issues in the repatriation process.

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The following are some key points related to PAN in India:

Who needs a PAN card?

Section 139A of the Income-tax Act, 1961 prescribes various conditions under which an assessee is required to obtain PAN. Any person who earns taxable income in India or carries out business activities in India must have a PAN card.

How to apply for a PAN card?

There are two ways to apply for a PAN card: online and offline.

(a) Offline: You can download the form from the NSDL or UTIITSL website or get it from any TIN-FC (Tax Information Network Facilitation Centre). Fill out the form and submit it along with supporting documents and fees at any TIN-FC.

(b) Online: You can apply for a PAN card online through NSDL or UTIITSL website by filling out an application form and submitting it along with supporting documents and fees.
What documents are required to apply for a PAN card?

To apply for a PAN card, you need to submit proof of identity (such as Aadhaar Card, Voter ID Card), proof of address (such as Passport, Driving License), and proof of date of birth (such as Birth Certificate).

How to link Aadhaar with PAN?

You can link your Aadhaar with your PAN through online or paper mode. (a) Online: By visiting the website of the PAN Service providers (i.e., www.protean-tinpan.com or www.utiitsl.com). Click on the button ‘Link Aadhaar to PAN’ which will direct you to the income-tax website. By visiting directly the e-filing website (i.e., www.incometaxindiaefiling.gov.in). (b) Paper mode: File one page Form along with minimal fee with the designated PAN centre. Copies of PAN card, Aadhaar card are to be furnished.

What is the penalty for not having a PAN card?

If a person is required to have a PAN card but does not have one, he/she may be subject to a penalty of Rs. 10,000.

A PAN card is used for various purposes such as filing income tax returns, opening a bank account, buying or selling property, investing in mutual funds or shares, applying for loans or credit cards, and many other financial transactions. It is also used as a proof of identity and address in India.

A PAN card is a crucial document for individuals, families, and businesses in India. It is used as a unique identification number for various financial transactions and other purposes.

Some of the key uses of a PAN card are:

1. Filing Income Tax Returns: A PAN card is mandatory for filing income tax returns in India. It helps the Income Tax Department to track the tax payments and income of an individual or business.

2. Opening Bank Accounts: A PAN card is required to open a bank account in India. It helps banks to verify the identity and address of the account holder.

3. Buying or Selling Property: A PAN card is mandatory for buying or selling property in India. It helps to track the transactions and prevent tax evasion.

4. Investing in Mutual Funds or Shares: A PAN card is required for investing in mutual funds or shares in India. It helps to track the investments and prevent money laundering.

5. Applying for Loans or Credit Cards: A PAN card is required for applying for loans or credit cards in India. It helps banks to verify the creditworthiness of an individual or business.

6. Proof of Identity and Address: A PAN card serves as a proof of identity and address in India. It can be used as a valid document for various purposes such as applying for a passport, driving license, voter ID, etc. In summary, a PAN card is an essential document that serves multiple purposes such as tracking financial transactions, preventing tax evasion, verifying identity and address, and many more.

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The introduction of the new tax regime in India has brought about a lot of changes that affect the tax filing process. While it aims to simplify the tax process for taxpayers, it comes with new rules and regulations that need to be followed. In this article, we will discuss the tax filing process under the new tax regime in India, and the key differences between the old and new tax systems.

Introduction

The new tax regime was introduced in the Union Budget 2020, and it became effective from the assessment year 2021-22. It offers taxpayers a choice between the old tax regime and the new tax regime. Under the new tax regime, taxpayers have the option to pay tax at lower rates with fewer deductions and exemptions.

The new tax regime is an optional tax regime, which means that taxpayers can choose between the old and new regimes when filing their income tax returns. However, once a taxpayer selects the new tax regime, they cannot switch back to the old tax regime for the same financial year.

Tax Filing Process Under the New Tax Regime in India

The tax filing process under the new tax regime in India is similar to the tax filing process under the old regime. Taxpayers are required to file their income tax returns on time to avoid any penalties.

Under the new tax regime, taxpayers are required to select the new tax regime option while filing their income tax returns. They will have to provide details of their income and calculate the tax liability based on the new tax rates applicable under the new tax regime.

The income tax returns can be filed online or offline as per the taxpayer’s convenience. The online filing of income tax returns is the most convenient way for taxpayers to file their returns. Taxpayers can use the Income Tax e-filing portal to file their returns online.

Under the new tax regime, taxpayers are required to provide details of all their income sources, including salary, business income, capital gains, and other sources. They will also have to provide details of their investments and deductions under the new tax regime.

Key Differences Between Old and New Tax Regime

Now, let’s take a look at the key differences between the old and new tax regimes:

1. Tax Rates

Under the old tax regime, different tax slabs were available for taxpayers based on their income. The tax rates under the old regime were higher than the new tax regime. Under the new tax regime, taxpayers have the option to pay tax at lower rates without availing any deductions or exemptions. The new tax rates range from 5% to 30%, depending on the income slab.

2. Deductions and Exemptions

Under the old tax regime, taxpayers were allowed deductions and exemptions on various investments and expenses like tuition fees, medical expenses, interest on home loans, etc. These deductions and exemptions helped in reducing the total taxable income of the taxpayer. However, under the new tax regime, taxpayers are not allowed to claim any deductions or exemptions. However, taxpayers can claim certain specified deductions under Chapter VI-A of the Income Tax Act. These deductions include contributions to the National Pension Scheme, Public Provident Fund, and medical insurance.

3. Alternate Minimum Tax

The Alternate Minimum Tax (AMT) was introduced under the old tax regime to ensure that higher-income taxpayers did not escape tax by claiming excessive deductions and exemptions. Under the old tax regime, taxpayers were required to pay the AMT if the total tax payable, after deductions and exemptions, was less than 18.5% of their adjusted total income. However, under the new tax regime, the AMT has been abolished.

4. Capital Gains Tax

Under the old tax regime, capital gains tax was calculated based on the period of holding of the asset. If the asset was held for more than 12 months, it was considered a long-term capital asset, and the tax rate was lower than that of a short-term capital asset. However, under the new tax regime, the tax rate on capital gains is the same, irrespective of the period of holding.

5. Dividend Income

Under the old tax regime, dividend income was taxable at the taxpayer’s applicable slab rate. However, under the new tax regime, dividend income is taxable at a flat rate of 10% for all taxpayers.

Conclusion

In conclusion, the new tax regime has brought about significant changes to the tax system in India. While it offers taxpayers lower tax rates, it does come with new rules and regulations that need to be followed. Taxpayers who are contemplating switching to the new tax regime should carefully consider the pros and cons of both regimes, and make an informed decision based on their individual financial situation. Additionally, they should ensure that they meet all the requirements for filing their income tax returns, as failure to do so can result in penalties and interest charges.

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The process of linking Aadhaar to PAN for individual taxpayers can be done online through the Income Tax Department’s e-filing portal (https://www.incometaxindiaefiling.gov.in/). However, as of now, there is no specific requirement to link Aadhaar to HUF PAN.

It’s important to note that HUFs are considered as a separate entity for income tax purposes and have their own PAN, separate from the PANs of individual members of the HUF. Therefore, it’s not necessary to link Aadhaar to HUF PAN, as per the current guidelines. However, it’s always recommended to stay updated with the latest notifications and announcements from the Income Tax Department or consult with a qualified tax professional for specific and up-to-date information on tax-related matters for HUFs or any other tax-related queries.

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Once you have obtained GST registration and have been issued a GSTIN (Goods and Services Tax Identification Number), you can start issuing GST-compliant invoices for your taxable supplies. A GST-compliant invoice should contain specific details, such as your GSTIN, the GSTIN of the recipient, the applicable GST rates, and other required information as per the GST laws.

Issuing a GST invoice without having valid GST registration is considered a violation of the GST laws and can result in penalties, fines, and other legal consequences. Therefore, it is important to ensure that you have obtained GST registration before issuing any GST invoices for your business transactions to comply with the GST regulations in India.

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However, it’s important to note that this exemption threshold applies to the aggregate turnover of a business, which includes the turnover of all supplies made by the business, whether taxable, exempt, or nil-rated. If the aggregate turnover of a business exceeds the applicable threshold in a financial year, GST registration becomes mandatory, and the business is required to obtain a GSTIN (Goods and Services Tax Identification Number) and comply with the GST regulations.

Even if your business has a turnover below the exemption threshold, you may still voluntarily opt for GST registration if it suits your business needs. GST registration can provide certain benefits, such as the ability to claim input tax credits, participate in interstate transactions, and establish your business as a registered entity in the eyes of customers and suppliers.

It’s recommended to consult with a qualified tax professional or visit the official GST portal at https://www.gst.gov.in/ for the latest and specific information on GST registration requirements and exemptions, based on your business location, turnover, and nature of supplies.

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Step 1: Visit the GST portal Go to the official GST portal of India at https://www.gst.gov.in/ and click on the “Services” tab.

Step 2: Click on “New Registration” Under the “Services” tab, click on the “New Registration” option.

Step 3: Select “New Registration” under “I am a” You will be presented with three options: “Taxpayer,” “Tax Deductor,” and “Tax Collector.” Select “Taxpayer” if you are an individual or business entity applying for GST registration.

Step 4: Fill in the required details Fill in the required details in the GST registration form, including your legal name, PAN (Permanent Account Number), email address, and mobile number. You will receive an OTP (One-Time Password) on your mobile and email for verification.

Step 5: Complete the verification process Enter the OTP received on your mobile and email to verify your details on the GST portal.

Step 6: Fill in the additional details Once your details are verified, you will be directed to the GST registration form. Fill in the additional details, such as your business information, bank account details, and authorized signatory details.

Step 7: Upload supporting documents Upload the required supporting documents, such as PAN card, address proof, and bank account details as per the specified formats and sizes.

Step 8: Submit the application Review the information and documents provided, and click on the “Submit” button to complete the application process.

Step 9: Wait for verification and approval After submitting the application, your GST registration application will be verified by the concerned authorities. If all the information and documents are in order, your application will be approved, and you will receive a GST registration certificate.

Note: It is advisable to keep track of the application status and any updates or notifications on the GST portal. Once your GST registration is approved, you will be issued a GSTIN (Goods and Services Tax Identification Number), which you will need to use for all GST-related transactions and filings in India.

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