As per Section 208 of the Income Tax Act, Every person (individual, firm, company, etc.) whose estimated tax liability for the year (i.e., for the year in progress such as FY 2016-17, FY 2017-18, etc.) after TDS (i.e., TDS which is deducted for the person by its payers/clients/banks, etc.) is Rs. 10,000 or more shall pay its tax for the year in advance during the same financial year.
Q. Such tax shall be paid in installments as on due dates specified in the act:
Ans: Individuals, having only salary income are not required to pay advance tax as the liability to deduct and deposit tax is on the employer making such payment in the form of TDS. However, they must ensure that TDS deducted by an employer is adequate as per their tax liability.
Q. Whether a taxpayer opting for Presumptive Taxation u/s 44AD or 44ADA is liable to pay advance tax?
Ans: Yes, from the A.Y 2017-18, an assessee who opts for the presumptive taxation scheme under section 44AD and section 44ADA is required to pay advance tax related to such business. However, the advance tax can be paid during the financial year (immediately proceeding to the assessment year) on or before March 15.
Q. When Assessing Officer is liable to determine the Advance tax liability?
Ans: If a taxpayer who has a legal obligation to pay advance tax fails to make payment for advance tax or advance tax is lower than the correct amount, AO may pass an order asking the taxpayer to pay tax on assessee’s current year income. Such order shall clearly specify the amount payable and in the number of installments, the same needs to be paid.
Such order should be passed anytime during the previous year but before 1st March, i.e., by 28th February.
Assessing Officer can serve an order requiring the assessed to pay advance tax if he is of the opinion that such person is liable to pay advance tax or the tax paid is lower.
In such cases, the Officer will take the higher of following incomes and calculate the tax as per the prevailing rate of income-tax:-
(a)The total income of the latest previous year in respect of which Officer has assessed income, i.e., the year for which an assessment has been completed by the Income-tax Officer;
or
(b) The total income declared by the assessed in any return after the year of assessment by an officer., i.e., Any income furnished by the assessee in Income-tax return for any previous year after;
Q. Which tax rates are to be used for computing advance tax liability?
Ans: For computing, the advance tax liability of the prevailing tax rates or the rates in force of the previous year for which the advance tax is to be computed are to be used.
Q. What is the treatment of Advance Tax in the books of accounts?
Ans:
Advance Tax is considered to be an asset and not an expense. It can be adjusted against one’s tax liabilities at the time of finalization of the Balance Sheet.
It is shown under Loans and Advances in the Balance Sheet.
Q. Who is not required to pay Advance tax?
Ans: A resident senior citizen not having any income from business or profession is not liable to pay advance tax.
Q. What are the due dates for payment of advance tax?
Ans: The Advance Tax must be paid in four equal installments on or before the following dates:
Installment
Due Date
1st Installment
15th June
2nd Installment
15th September
3rd Installment
15th December
4th Installment
15th March
Q. How much tax must be paid in each installment of advance tax?
Ans: The amount of Advance tax to be paid in each installment must not be less than prescribed in the following table:
Installments
Amount of Advanced Tax
1st Installment
Not less than 15% of advance tax liability.
2nd Installment
Not less than 45% of advance tax liability as reduced by the amount, if any, paid in the earlier installment.
3rd Installment
Not less than 75% of advance tax liability, as reduced by the amount(s) if any, paid in the earlier installment (s).
4th Installment
The whole amount of advance tax liability as reduced by the amount(s) if any, paid in the earlier installment (s).
Audit under GST is compulsory for all registered dealers whose annual turnover is more than 2 crores. GST Audit is the examination of records maintained by a registered dealer. The audit will mainly focus on three key areas namely i) correctness of data declared by the taxpayer, ii) taxes paid and iii) compliance with GST law. GST Audit must be conducted by a practicing CA or a CMA.
The Government has notified the GSTR-9C form for annual GST audit under which every taxpayer above Rs 2 crore turnover in a financial year would need to fill up a reconciliation statement and also obtain a certification of an audit.
According to section 35 of CGST Act, 2017, every taxpayer whose turnover exceeds Rs 2 crore during a financial year, is required to submit audited annual accounts and a reconciliation statement in GSTR-9C.
Design of GST Audit Report:
GSTR-9C is essentially a reconciliation statement for reconciling turnover, input tax credits and tax payments reported in GST returns (annual return) vis-a-vis annual books of accounts.
GSTR-9C is broadly divided into the following:
a) Gross turnover (including taxable and non-taxable turnovers)
b) Taxable turnover
c) Tax liability and payments (rate-wise)
d) Input tax credit availement
The reconciliation is to be accompanied with certification from the auditor (can be statutory auditor as well). Further, there is a separate table for auditor’s recommendation on additional liability to be discharged on account of non-reconciliation of turnover and input tax credit. The auditor may also recommend on erroneous refunds, outstanding demands etc.
There is a separate table for disclosing additional amount payable on account of un-reconciled amount as per Sr. No. 1, 2, 3 and 4. Taxpayers should note that it appears that the said amount is to be paid in cash (and not credit).
Some Points for Consideration:
The format prescribes indicative sub-heads under which the expenses are generally booked in the financials (like freight, purchases, imports, employee cost, repair & maintenance, capital goods etc.). Tax payer may add/ delete the sub-head as per relevancy and against these sub-heads, the amount of input tax credit as reported in financials is to be reconciled with annual return. However, this is a new requirement and could be challenging for most taxpayers.
Fortunately, the Government has prescribed 2 different certifications as part of GST Audit Format – one where reconciliation statement is drawn and audited by statutory audit and the other wherein it is drawn and audited by a person other than statutory auditor.
It would, however, be interesting to see if the auditors would be comfortable with the prescribed language for certifications and if any changes in the language would be allowed while certifying the reconciliation statement. At the moment, Part B provides the format of the certification.
Check List for Companies:
Reconciliations: Ensure reconciliations of output tax/input tax between the books of accounts, returns and e-waybills issued (output side) / tax discharged by the vendors (input side).
Tax positions: Review the tax positions adopted by the company and also whether these are correctly reflected in documentation.
Credits: Review if any ineligible credits have been availed (include the ng review of credits availed) and in the process also ensure completeness of credits.
Applicability of other provisions like free of cost services/goods, valuation, and cross-charges between related persons/distinct persons.
GST Law prescribes specific guidelines regarding issue and format of Tax Invoice by registered dealers. Here is a detailed check list of things to keep in mind while issuing tax invoice. Refer to the following list for further details:
Invoice Title
Name and Address of the Supplier
GST Number of the Supplier
Tax Invoice Number
Date of Invoice
Name and Address of the Recipient
GST Number of Recipient
HSN / SAC Code
Description of Goods / Services supplied
Rate per unit and Taxable Value of Goods / Services
GST Rate
Amount of GST Charged
HSN / SAC Code wise bifurcation of GST
Invoice Title:
Every invoice issued by a registered dealer in which GST in charged must be titled “Tax Invoice”. Hence, it is compulsory to give appropriate title to your invoice.
Name and Address of the Supplier:
A primary information in a tax invoice is the business name and address of the supplier. Make sure the Trade Name and business address is accurate and as per registered business details.
GST Number of the Supplier:
It is mandatory to mention GST number of the supplier on every invoice. Make sure that GSTIN mentioned on the invoice is correct.
Tax Invoice Number:
Every invoice issued during a financial year must be assigned a unique consecutive serial number. Likewise, Financial Year in which the invoice is issued must also be mentioned in the invoice number.
Date of Invoice:
This is the date on which the invoice is issued. This is one of the most important elements of a tax invoice as GST liability is determined based on the date of invoice. While deciding the date of issue of invoice, rules related to time of supply under GST must be kept in mind.
Name and Address of the Recipient:
It is mandatory to mention name and address of the recipient in the tax invoice. These details must be in accordance with the registered details of the recipient. It is also necessary to mention Pin Code and State Code of the recipient.
GST Number of Recipient:
A recipient of goods / services requires to take Input Tax Credit of the GST charged by supplier in the tax invoice. However, the recipient will not be able to take any credit unless and until his GST number is mentioned in the invoice. Hence, it is utmost important to mention recipient’s GSTIN in the invoice.
HSN / SAC Code:
As per GST law, it is mandatory to mention HSN / SAC code in the invoice for all goods / services supplied. However, dealers having annual turnover of less than 1.5 crore are granted exemption from mentioning HSN / SAC code in the invoice.
Description of Goods / Services supplied:
It goes without saying that description of goods / services supplied must be mentioned in the invoice. Appropriate unit of measurement for goods must also be stated.
Rate Per Unit and Taxable Value of Goods / Services:
Taxable Value is the value of goods / services on which GST is charged. Details of both rate per unit and total taxable value must be specified. Normally, GST is charged on the total taxable value. However, in some specified cases, GST may be charged based on item rate per unit.
GST Rate:
It is mandatory to mention rate at which GST is charged on the taxable value of goods / services. Slabs for the GST rates are 0%, 5%, 12%, 18% and 28%. In case if CGST and SGST are charged instead of IGST then mention rates accordingly.
Amount of GST Charged:
Amount of GST charged must be mentioned in the invoice. Also, details like total GST charged including CGST and SGST must be stated separately.
HSN / SAC Code wise bifurcation of GST:
An HSN / SAC code wise summary must be provided at the bottom of the invoice. The summary must state how many HSN codes are used in the invoice. GST rate wise bifurcation of taxable value and tax thereon should also be provided.
Introduction of Tax Audit:
The Finance Act, 1984 inserted section 44AB to introduce provisions related to tax audit in Income Tax Act, 1961 w.e.f 1st April 1985. As per this section, it is the obligation of every assessee having income / loss from business or profession to get his books of accounts audited by a CA in practice.
Applicability of Tax Audit:
Tax Audit may be applicable to an assessee who is carrying on any business or profession. However, it is not necessarily applicable to all such assessees. Please refer to below table:
Type of Assessee
Applicability of Tax Audit
Assessee covered under section 44AE, 44BB or 44BBB
Applicable if profit or gain from business are lower than profit and gain computed under the said sections.
Assessee covered under section 44AD
Applicable where profit or gain declared by assessee is less than minimum profit percentage of annual turnover as prescribed in this section if such profit or gain exceeds minimum amount of income not charitable to tax.
OR
Total turnover exceeds Rs. 2 crore
Assessee covered under section 44ADA
Applicable where profit or gain declared by assessee is less than minimum profit percentage of annual turnover as prescribed in this section if such profit or gain exceeds minimum amount of income not charitable to tax.
OR
Total turnover exceeds Rs. 50 lakh
All other Assessee
In case of business : If turnover during previous year exceeds 1 crore.
In case of Profession : If gross receipts during previous year exceeds Rs. 50 lakh.
Relevant Forms for Tax Audit:
Nature of Person
Audit Report
Form
In case of a person who carries on business or profession and who is required by or under any other law to get his accounts audited
Form 3CA
Form 3CD
In case of person who carries on business or profession but not being a person referred to above.
Form 3CB
Form 3CD
In case of a company, when previous year and accounting year are different the tax auditor would have to carry out the tax audit in respect of the period covered by the relevant financial year and submit his report in Form 3CB only
Circular No. 561/22.5.1990
Note: Form No. 3CD is been recently revised vide notification No. 33/2018 dated 17th July 2018 with effect from 20th August 2018.
Due Date for Filing Income Tax Return:
The Due date for filing the Return of Income for persons liable to Tax Audit is 30th September of the year succeeding the relevant financial year. For the financial year ending on 31.03.2018 the due date is 30.09.2018.
Tax Audit report Submission:-
If the assessee gets his account audited u/s 44AB and furnish the said report as required, than penalty u/s 271B shall not be levied even if the return of income is filed after the due date specified u/s 139(1).
Signature on Auditors’ report:
Tax Audit Report should be signed by the CA in Practice with following details mentioned:
Name of firm
Name of the member signing
Membership No
Registration Number
Penalty in case of Non Compliance:-
If any person fails to get his accounts audited as required under the provisions of section 44AB before the due date u/s 139(1), the AO may impose penalty which may be a sum equal to one-half percent of the total sales, turnover or gross receipts subject to a maximum of Rs. 1.5 Lakh.
Auditors Responsibility:-
It is the professional duty of the CA to ensure that the audit accepted by him gets completed on or before the due date. If there is any unreasonable delay on his part, he is answerable to ICAI, if the complaint is made by the client. However, if the delay in the completion of audit is attributable to his client, the tax auditor cannot be held responsible.
Communication with Previous Auditor: –
A CA in practice shall be deemed to be guilty of professional misconduct, if he accepts a position as auditor previously held by another CA without first communicating with him in writing.
Assessee not bound to accept Tax Auditors View: –
The opinion expressed by the tax auditor is not binding on the assessee.
If the tax auditor has qualified his report and expressed an opinion on a particular item, the assessee may take a different view while preparing his return of income. In such cases, it is advisable for the assessee to state his viewpoint and support the same by any judicial pronouncements on which he wants to rely.
FAQs:-
1. Who can appoint Tax Auditors and who should sign their appointment letter?
The assessee himself can appoint Tax Auditor for conducting the audit as mentioned in section 44AB. It is advisable that such an appointment letter should be signed by the person competent to sign the Return of Income.
2. Is it necessary to appoint statutory auditors as tax auditors?
Section 44AB does not specify that only the statutory auditor appointed under the Companies Act should perform the tax audit. Therefore the tax audit can, be conducted either by the statutory auditor or by any other CA in practice.
3. Whether more than one CA firms can be appointed as Tax Auditor?
It is possible for the assessee to appoint two or more CAs as joint auditors for carrying out the tax audit, in which case, the audit report will have to be signed by all the CAs.
4. In case where multiple auditors are appointed, can they issued separate audit reports?
Yes, each tax auditor may issue separate audit report.
5. Can a relative of the director be appointed as Tax Auditor?
Yes, however, the provisions of section 188 of the Companies Act, 2013 will be attracted when a relative of a director is appointed as a tax auditor of the company, if the remuneration thereof exceeds the limits prescribed in the aforesaid section. The necessary formalities will be required to be complied with as required under section 188.
House Rent Allowance is one of the important components of salary. Particularly if you are living in a rented house and your salary income is taxable, House Rent Allowance can provide some tax relief for you. However, entire amount of HRA received cannot be claimed as deduction. Income Tax Act prescribes a specific formula through which amount of exempt HRA can be determine. In this article we shall focus on important rules related to claiming exemption for HRA and House Rent paid.
Section 10(13A):
The exemption on HRA is covered under Section 10(13A) of the Income Tax Act and Rule 2A of the Income Tax Rules. It must be kept in mind that entire amount of HRA is not an exempt income. It is an allowance and exemption can be claimed only if certain conditions are fulfilled.
Conditions for Claiming HRA Exemption:
First and foremost condition for claiming HRA exemption is that the assessee must reside in a rented house. If the assessee resides in his own house or does not pay any rent for the house he resides in to, he shall not be eligible for any exemption in HRA.
The amount of HRA received by the employee from his employer must be clearly stated in salary statement and Form 16.
How to Calculate amount of Exempt HRA?
According to section 10 (13A) of Income Tax Act, 1961 read with rule 2A of Income Tax Rules, House Rent Exemption will be least of following three:
1. Actual HRA received
2. Rent paid in excess of 10% of salary (Basic + DA) (Actual Rent Paid – 10% of Salary)
3. 40% of salary (50% if residing in a metro i.e., New Delhi, Kolkata, Chennai or Mumbai)
Let’s take an example.
Basic Salary per month
1,00,000
House Rent Allowance
55,000
Rent Paid per month
40,000
City of Residence
Mumbai
Exempt HRA shall be least of the following:
Actual HRA Received per month
55,000
Rent above 10% of basic i.e.
30,000 (40,000 – 10,000)
50% of Basic
50,000
Exempt HRA
30,000
HRA Calculation – Monthly or Annual?
There are four variables in HRA tax calculations: namely:
Salary (i.e., basic pay plus DA)
Actual HRA received
Rent paid
City of residence (whether metro or non-metro)
If all of above variables remain the same throughout the year, the HRA tax exemption calculation cab be done on ‘annual’ basis. However, if there is any change in the variables during any month of the year, HRA calculation must be done on monthly basis as exempt HRA for different months may be different.
Cases where location of residence and location of work are different?
For the purpose of HRA calculation, location of residence shall be considered as valid for determination of Metro or Non-Metro city. In such a case for the purpose of HRA calculation, place of residence will be considered and not place of working. Suppose that you’re working in a factory or a company located in Vapi (near Mumbai) while residing in Mumbai. So, for the purpose of HRA, your maximum entitlement for tax purpose will be 50% of the basic instead of 40% because for metros HRA tax entitlement is 50% and for non-metros it is 40%.
Can a self-employed person claim tax benefit for the rent paid?
A self-employed person does not receive salary. Hence, no tax benefit in respect of HRA can be claimed by such assessee. However, such person can claim exemption under section 80GG for rent paid by him.
What if the employer refuses to allow the HRA tax benefit?
In case if an employee residing in a rented house does not receive HRA as part of salary, he can claim tax exemption for the rent paid by him under section 80GG.
Can husband and wife both claim HRA tax benefit separately?
Both working spouses can claim exemption for HRA received by them subject to following conditions:
Both spouses must receive HRA as a part of salary.
They must reside in a rented house and must pay house rent jointly.
Landlord must have issued either two separate rent receipts for both husband and wife or must have specified proportion in which both spouses have paid rent amount in a single receipt.
Payment of Rent to Spouse:
HRA Exemption cannot be availed for payment of rent to husband or wife. The legal relationship between husband and wife entails that they are supposed to live together and any rent paid to a spouse is not valid for claiming deduction from HRA or u/s 80GG.
Payment of Rent to Parents:
Tax benefit can be availed for payment of rent to parents. However, parents must show such rent amount as “Income from House Property” in ITR.
Required Evidence for claiming HRA Exemptions:
Following documents are required as evidence for claiming exemption from HRA in respect of rent paid.
Rent Receipt issued by Landlord to the tenant.
Form 16 issued by employer specifying amount of HRA received by employee.
Requirement to mention PAN of Landlord:
If rent paid for the year exceeds is Rs. 1 lacs . (Cir. No. 8/2013) PAN of landlord needs to be mentioned. However, if the landlord does not have a PAN, declaration must be taken from him for the same.
HRA benefits if no rent is paid:
Exemption from HRA can be claimed only if the assessee pays rent for the relevant FY for residential purpose. If no rent is paid by the assessee, he/she cannot claim deduction for HRA received by him.
Liability for Payment of Advance Tax (Section 208):
As per section 208 of Income Tax Act, 1961, every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”. Such advance tax must be paid in four instalments on or before due dates of advance tax payment. In this article we shall discuss about various provisions related to Advance Tax and applicable interest in case of non-conformance to such provisions.
We know that income earned during the financial year 2018-19 shall be charged to tax in the assessment year 2019-20. But the assessee is required to pay tax, in advance, on the taxable income of financial year 2018-19 during the financial year 2018-19 itself.
Advance Tax, as computed in accordance with the provisions of this chapter, shall be payable during a financial year, only when the amount of such advance tax payable by the assessee during that year is Rs. 10000 or more.
Instalments of advance tax and due dates (section 211):
Advance Tax must be paid on or before due dates as specified in Income Tax Act. Similarly, it is also clarified how much advance tax must be paid in each installment. Refer to below table for further details:
Due Date of Instalment (On or before)
All assessees (other than the Eligible assessee as referred to in Section 44AD or section 44ADA)
Taxpayers who opted for presumptive taxation scheme of section 44AD or section 44ADA
15th June
Not less than 15% of advance tax liability
Nil
15th September
Not less than 45% of advance tax liability as reduced by the amount, if any, paid in the earlier instalment.
Nil
15th December
Not less than 75% of advance tax liability, as reduced by the amount(s) if any, paid in the earlier instalment(s)
Nil
15th March
The whole amount of advance tax liability as reduced by the amount(s) if any, paid in the earlier instalment(s).
Up to 100% of Advance tax
Note:- Assessees covered u/s 44AD & u/s 44ADA are to pay advance tax of the whole amount in one instalment on or before the 15th March of the financial year.
Interest payable to assessee u/s 244A:
When refund is due to assessee, he is entitled to receive refund as well as simple interest on it. Interest will be calculated as follows.
Refund Type
Rate of Interest
Period
Where refund is out of TDS/TCS or advance tax paid during F.Y.
½ % per month or part of a month
1st day of April of the assessment year to the date on which refund is granted.
In any other case
½ % per month or part of month
Date of payment of tax or penalty to the date on which refund is granted.
Interest Payable by Assessee :
The income tax Act, 1961 provides for the imposition of interest on assessee who doesn’t pay various taxes timely. In the same way, government has to pay interest on excess payment of tax to assessee.
Cases Where Interest Payable by Assessee :
Interest for not filing or late filing of return before due dates u/s 234A.
Interest for non-payment or short payment of advance tax u/s 234B.
Interest for deferment of advance tax u/s 234C.
Interest for failure to deduct & pay the TDS u/s 201(1A).
Interest for not Filing or Late Filing of Return before Due Dates [section – 234A]: Interest u/s 234A is attracted in following cases:
Where return is filled after due date.
Where return is not furnished by the assessee.
Due date: Date specified in section 139(1)
Rate of interest: simple interest @ 1% per month or part of the month
Period: Interest will be payable from the due date of submission of return to the date of actual furnishing the return.
Amount: Interest is payable on tax determined minus TDS/TCS & advance tax paid by assessee.
Note: Where the assessee had paid the taxes before the due date of filing the return but could not file the return for reasons beyond his control but filed belated, interest u/s 234A will not applicable as there is no loss of revenue.
Interest for Non-payment or Short Payment of Advance Tax [section – 234B]: Interest u/s 234B is attracted in following cases:
Advance tax has not been paid by the assessee or
The advance tax paid by the assessee is less than 90% of the ‘assessed tax’.
Assessed tax: Tax determined on total income minus TDS/TCS & advance tax paid by assessee.
Rate of interest: simple interest @ 1% per month or part of the month
Period: Interest will be payable from 1st April of A.Y. to date of Actual payment or regular assessment.
Amount: Interest is payable on assessed tax minus advance tax (paid if any)
Interest for Deferment of Advance Tax [section-234C]:Interest u/s 234C is attracted in following cases:
Instalment is not paid by the assessee or
An instalment is paid by the assessee but amount paid is less than actual/required.
Interest for Failure to Deduct & Pay the TDS [u/s 201(1A)]: Interest u/s 201(1A) is attracted in following cases:
Assessee who is required to deduct doesn’t deduct the tax at source (TDS)
Assessee after deducting tax at source fails to deposit the same.
Rate of interest: simple interest @12% P.a.
Period: Interest will be payable from the date on which such tax was Deductible to the date on which such tax is actually paid.
Amount: interest is payable on amount of TDS.
To own a house is dream of one and all. However, the stark inflation in real estate market has proven to be a nightmare for young couples in India who aspire to own a house. Thanks to Income Tax Act which has given Home Loan borrowers a reason to cheer. There are two sections under Income Tax Act i.e. Section 80C and section 24 under which a Home Loan borrower can claim deductions in relation to Home Loan.
Key Highlights:
Tax Benefit on Repayment of Home Loan for a self occupied House Property
Tax Benefit on Repayment of Home Loan in case of Jointly Owned Property
Eligibility for HRA Exemption Benefits
Treatment of Pre-Construction Interest
Tax Benefit on Repayment of Home Loan for a self occupied House Property:
From Income Tax point of view, you must bifurcate total amount of EMIs paid by you during the relevant previous year in two components:
1. Home Loan Principal Repayment: Principal repayment can be claimed as deduction under section 80C up to maximum limit of Rs. 1,50,000. Hence, claimable deduction is either Rs. 1,50,000 or actual amount of principal repaid during the year whichever is lower. This is subject to the maximum limit across all 80C investments. 2. Home Loan Interest Payment: Interest paid during the year can be claimed as a deduction under Section 24B. The maximum amount of interest that can be claimed as deduction is Rs. 2,00,000 or the actual interest paid whichever is lower. (You can claim this interest only when you are in possession of the house).
Refer to below table to understand maximum deduction limit on home loan repayment.
Particulars
Deduction U/S
Maximum Deduction
Principal Payment
80C
1,50,000.00
Interest Payment
24b
2,00,000.00
Total Maximum Deduction on House Loan Repayment
3,50,000.00
Consider below scenarios for further clarification:
Particulars
Case 1
Case 2
Case 3
Principal Repayment
1,50,000
1,00,000
3,00,000
Interest Repayment
2,00,000
1,50,000
2,50,000
Maximum Deduction U/S 80C
1,50,000
1,00,000
1,50,000
Maximum Deduction U/S 24B
2,00,000
1,50,000
2,00,000
Total Deduction
3,50,000
2,50,000
3,50,000
Note: In case if house property is given on rent, there is no upper cap for claiming deduction U/S 24B. However, if loss from house property needs to be set off against any other head, the maximum loss that can be set off must not exceed Rs. 2,00,000.
In case of Jointly Owned Property:
If house property is jointly owned all co-owners can claim deduction under both sections subject to following conditions:
1. You must be a co-owner in the property: To be able to claim tax benefits for a home loan, you must be an owner in the property. Many a times, a loan is taken jointly, but the borrower is not an owner as per the property documents. In such a case you may not be able to claim tax benefits.
2. You must be a co-borrower for the loan: Besides being an owner, you must also be an applicant as per the loan documents. Owners who are not borrowers and do not contribute to the EMI shall be devoid of the tax benefits.
3. The construction of the property must be complete: Tax benefits on a house property can only be claimed starting the financial year in which construction of the property is complete. Tax benefits are not available for an under construction property. However, any expenses prior to completion are claimed in five equal instalments starting the year in which construction is complete.
Tax Benefit on Repayment of Home Loan in case of Jointly Owned Property:
Tax Benefit in case of Self-Occupied Property:
1. For a self occupied property: Each co-owner, who is also a co-applicant in the loan, can claim a maximum deduction Rs 2,00,000 for interest on the home loan in their Income Tax Return. The total interest paid on the loan is allocated to the owners in the ratio of their ownership.
2. Each owner/borrower can claim interest benefit up to a maximum of Rs 2,00,000. Goes without saying, the total interest claimed by the owners/borrowers cannot exceed the total interest paid for the loan. For example Mr. X and his father bought a house on loan and paid Rs 5,60,000 in interest. They have a 50:50 share in the property. Mr. X can claim Rs 2,00,000 in his tax return, his father can also claim Rs 2,00,000.
3. For Rented Property: In the budget 2017, the interest that can be claimed as a deduction in case of rented property is restricted to the amount to which loss from such house property does not exceed Rs 2 lakhs.
Each co-owner can claim a deduction of maximum Rs 1,50,000 towards repayment of principal under section 80C. This is within the overall limit of Rs 1,50,000 of Section 80C.
Eligibility for HRA Exemption Benefits:
If the house for which you have taken a home loan is not ready for possession, and you leave in rented house, you can claim HRA exemption. Once, construction is complete, no exemption can be claimed for HRA. However, if you let out your house for rent and yourself leave in another rented house, you can continue to avail HRA exemption.
Pre-Construction Interest:
Pre-Construction Interest is the amount of interest paid by borrower before construction of the house is complete. No benefit in respect of such interest can be availed during construction period. However, such interest can be claimed as deduction in five equal instalments starting from the year in which construction is completed. Please note that such deduction shall be subject to maximum deduction limit under relevant sections.
Key Highlights:
Home loan borrowers are entitled to tax benefits under Section 80C and Section 24 of the Income Tax Act. These can be claimed by the property’s owner.
In the case of co-owners, all are entitled to tax benefits provided they are co-borrowers for the home loan too. The limit applies to each co-owner.
A co-owner, who is not a co-borrower, is not entitled to tax benefits. Similarly, a co-borrower, who is not a co-owner, cannot claim benefits.
Housing companies usually require all co-owners to be joint borrowers to a home loan. Loan providers specify who can be a joint borrower for a home loan.
The tax benefit is shared by each joint owner in proportion to his share in the home loan. It’s important to establish the share for each co-borrower to claim tax benefits.
The certificate issued by the housing loan company, showing the split between principal and interest for the EMIs paid, is required for claiming tax benefits.
You will need to show the statement provided by the lender showing the repayment for the year as well as the interest & principal components of the same.
In one of our previous blogs we have discussed about Capital Expenditure and Revenue expenditure. Let us now understand Capital Receipts and Revenue Receipts.
Capital Receipts:
Capital receipts are the income received by the company which is non-recurring in nature. They are part of the financing and investing activities rather than operating activities. The capital receipts either reduces an asset or increases a liability. The receipts can be generated from the following sources:
Issue of Shares
The issue of debt instruments such as debentures.
Loan taken from a bank or financial institution.
Government grants.
Insurance Claim.
Additional capital introduced by the proprietor.
Sale of investment
Sale of plant and machinery
Revenue Receipts:
Revenue Receipts are the major source of income of the enterprise, without which a business may not survive for a long time.
Definition of Revenue Receipt: Revenue Receipts are the receipts which arise through the core business activities. These receipts are a part of normal business operations that is why they occur again and again however its benefit can be enjoyed only in the current accounting year as its effect is short term. The income received from the day to day activities of business includes all the operations that bring cash into the business like:
Revenue generated from the sale of inventory
Services Rendered
Discount Received from the creditors or suppliers
Sale of waste material/scrap
Interest Received
Receipt in the form of dividend
Rent Received
Commission received
Key Differences Between Capital Receipt and Revenue Receipt:
Receipts generated from investing and financing activities are capital receipts, on the other hand, receipts from operating activities are revenue receipt.
Capital Receipts do not frequently occur, as it is non-recurring and irregular. But, revenue receipts do not occur again and again they are recurring and regular.
The benefit of capital receipt can be enjoyed in more than one year, but the benefit of revenue receipt can be enjoyed only in the current year.
Capital Receipts appears on the liabilities side of the Balance Sheet whereas Revenue Receipts appears on the credit side of the Profit and Loss Account as income for the financial year.
The capital receipt is received in exchange for the source of income. Unlike revenue received which is a substitution of income.
Capital receipt either decreases the value of an asset or increases the value of liability, but revenue receipt neither increases nor decreases the value of asset or liability.
Purpose of raising Capital Receipts:
Capital Receipts are raised by an organization for the following purposes:
One of the most important purpose of raising capital receipts is to meet capital expenditure (CAPEX) requirements of the business. This is particularly important for a capital intensive business unit.
A business organization may also raise capital receipts to pay off existing debts. Issuing shares to repay the amount of debentures is one such example.
A business organization may also raise capital receipts to create a reserve to meet future capex requirements.
Treatment of Capital Receipts in the books of Accounts:
Any capital receipt would affect Balance Sheet of the business. A capital receipt may affect only one or both sides of the balance sheet i.e. Asset and Liability side.
Capital Receipts which affect only Asset Side: In case where capital receipts arise from sale of an asset, it would affect only asset side of the balance sheet. In such cases, Bank or cash account is debited while the asset account is credited.
Capital Receipts which affect both Sides: In case where a company issues shares or debentures, the bank or cash account is debited while the equity or debentures account is credited.
In the armed forces, accounting has an essential role to play as it aids in strategic planning, cost-cutting and effective disbursement and spending of public resources and nation’s defence capital. For this purpose, Indian Military —Indian Army, Indian Navy and Indian Air Force has always kept open doors to recruit eligible accounting personnel and executives.
Although their selection procedures are rigorous and systematic, if you are one of the budding accountants, it is simply worthwhile to explore accounting careers in the Indian army rather than limiting your choices to just MNCs and private financial and accounting corporations.
Listed below are some of the popular job opportunities for accounting roles, the eligibility criteria, job duties, military accountant’s salary structure and essential details to join the financial and accounting side of the Indian Military:
Accountant Jobs in Indian Army:
To land an accountant’s job in the Indian army, the applicant should be between 18 to 25 years and have completed his intermediate or 12 standard or hold Senior Cambridge Higher Secondary School Certificate. The candidate can also have any other equivalent educational qualification to apply to this role. The monthly salary compensation of an accountant at the Indian Army varies between Rs 29,000 to 92,000, depending on the experience and expertise in the job.
The selection process for an accountant job would include interview and written tests on Accounting, Mathematics and Current Affairs. The final round will be reviewed by a panel of officers and unit commandent.
Accountant Post in India Navy and Air Force:
The applicants must be between the 20 to 23 years with minimum 60 percent aggregate score in graduation or Bcom. To join the Air Force, the graduate is required to clear AFCAT (Air Force Common Admission Test) or appear for CDS (Combined Defence Services) test conducted by UPSC, two times in a year. Those who have cleared the CDS test are eligible to join as an accountant with the India Navy and Air Force.
Apart from meeting the above criteria, the applicants are required to be at least 157 centimetres tall and certified physically fit for the role.
For details on Accounting training courses, contact Munimji’s career placement advisors and trainers.
Chartered Accountant in Indian Air force:
The scope for candidates with CA certificate from a recognized university is preferably better at the India Air Force. The applicants should have scored a minimum of 60 percent aggregate in all subjects of all semesters during their graduation and also must clear the AFCAT (Air Force Common Admission Test). Besides, they should pass physical and medical examination by the IAF based on their performance in written test, interview rounds and medical tests.
Chartered Accountants applying for job at IAF should not be over 27 years before the commencement of the training. The selected applicants’ names will be announced in the IAF recruitment news twice, every year.
Indian Defence Account Service: The Indian Defence Account Service or IDAS is a division created by the Ministry of Defence to manage the complete accounts of the Indian defence services. The IDAS hires accountants for various roles across departments to carry out important procedures and matters related to pension, use of financial resources to make the defence forces stronger, handle accounting procedures, conditions of work contracts and procedures of Internal Audit for defence. The applicants are required to clear IDAS exam conducted every year, in the month of August and must have qualifications that are same for other services.
If a candidate manages to appear for the Civil Services exam, he is capable of enrolling for superior roles like the Assistant Controller of Defence Accounts. The salary structure of defence accountants’ vary according to the ranking and also depends on the accountant’s duties. It starts with basic amount of Rs 8,000 and can go up to Rs 260,000 as monthly salary.
We hope the above information was useful in helping you consider an accounting career in Indian defence forces. For more details on certificate courses in Accounting and placement training, visit our site at munimji.com
Electronic Way Bill or E-Way is a new milestone in the country ever the since GST regime unfolded to unify direct taxes. The E-Way bill system is said to be made compulsory in all states starting from February 1 of this year. After being implemented and tested in almost 10 states, the government has given the E-Way a green signal throughout the nation to allow traders to monitor and track online the movement of goods and consignment.
What is an E-Way Bill?
It is an electronically generated document that has replaced the Way bill under the previous VAT regime for the movement of goods. The new E-Way bill will be generated from E-Way bill portal and is required for the transport of goods worth over Rs 50, 000 from one place to another. The bill should be compulsorily generated by the supplier, recipient and transporter for the physical movement of goods within or outside a state (for distances exceeding 10 kms) for sales or trading, returns and transfer purposes.
Each time the bill is generated, a unique E-Way bill code or EBN number is allocated to the individuals involved in the movement of goods. Another important feature of the E-Way bill system is that the bill can be generated or even cancelled through simple SMS.
The system of E-Way bills eliminates the need for transit passes for each state and will enable tax authorities to closely inspect the bills anytime to control tax evasion.
Also, the validity limit of the bill is purely based on the distance travelled for the movement of good (for less 100 kms or additional kms). The date and time of E-Way bill generation is also taken into consideration while calculating its validity period.
Documents Needed for E-Way Bill Generation
All invoice receipts, bills and Challan related to the movement of goods, the transporters’ ID and vehicle document are needed in case the goods are transported via road. If the goods are transported by air, rail or ship, then the transporter’s ID, document number and date on the document should be submitted in order to generate E-Way bills.
The discussions related to approval of E-Way bill were held last year, around August 5 by the GST committee and was announced on August 30. However, the panel reportedly did not make solid confirmations about the date of implementing the E-Way bill system. Later, during November when the findings revealed that the projected monthly GST incomes was at Rs 83,346 crores, much below the target amount of Rs 91, 000 crores, the nation reportedly requested to fix the gaping holes in the current GST regime.
The Prologue before the E-Way Bill Practice
The GST council led by the Finance Minister, Arun Jaitley approved the date, February 1 to roll out the E-Way bill system and June 1 as the deadline. Additionally, the new system has given states full freedom to choose their deadline before June 1 of this year. The GST council ran its trial in Karnataka during September 2017 and eventually in Rajasthan, Uttarakand and Kerala. The other states that also came on board were Haryana, Bihar, Maharashtra, Gujarat, Sikkim and Jharkhand.
The council also listed out 154 items for which the E-Way bill will not be applicable and it includes items like curd, fish, household LPG, Kerosene, vegetables, meat and other items for public distribution system (PDS).
What E-Way Bill has in Store for Accountants?
The advent of GST has hauled in compliance and implementation complexities for many businesses. A large proportion of businesses and tax payers took time to welcome this change. However, many are still at the state of understanding the underlying benefits and success of GST on trade and economy. The new E-Way bill system would drive accounting firms and expert to include this concept in their GST compliance, filing and reporting services to enable individuals and businesses to adapt to this new change.
At Munimji, we offer certificate courses on GST, which would help businesses and individuals seamlessly transition to new tax system.
Munimji's Recorded Courses are Coming Soon! Share your contact details with us, and we'll inform you!
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.Accept
+91 95585 56622
