There is no specific provision under the Goods and Services Tax (GST) Act on how to convert a proprietorship into a partnership.

There are various mentions in the Act on converting a proprietorship into partnership firm:

Step 1: Obtaining GST registration for partnership.

Step 2: Transfer of unutilised Input Tax Credit (ITC) to partnership firm,

and Finally in Step 3: Cancellation of proprietorship GST registration.

Going concern concept is one of the accounting principles that states that a business entity will continue running its operations in the foreseeable future and will not be liquidated or forced to discontinue operations for any reason.

In other words, a going concern is expected to have the following things working in their favour:

1. The business is capable of running the daily operations and has capital and raw materials to do so.
2. A business has the ability to pay off the debt during the accounting period.
3. There should be demand in the market for the products or services offered by the company.
4. There should be no changes in the law governing the business.

Importance of Going Concern Concept in Accounting

Going concern concept is very important for the generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The concept of going concern plays a significant role in the way assets are treated.

The concept of depreciation and amortization are based on the assumption that a business will continue to perform its operations in the near future (this period is the next 12 months after an accounting period).

Advantages of Going Concern Concept

Following are some of the advantages of the going concern concept

1.Companies during the formation years will be purchasing fixed assets that will be requiring expenditure upfront, but such assets will be providing the benefits spread over a long term, that is well beyond one accounting period. Therefore, the going concern concept provides a way to record the value of such assets.

2. It is the basis on which the profits and losses of the business are recorded for the year to which it belongs.

Disadvantages of Going Concern Concept

Listed below are some of the disadvantages of the going concern concept:

1. Financial statements are prepared at cost and not on the basis of current market value. In such a case, if the company in an event of liquidation, will have assets valued at the market value, and as such these values will be different from the value determined at cost.

2. In the event of business being liquidated, the financial statements will be calculated on the on going concern basis, which can be misleading for the stakeholders.

STT is a kind of financial transaction tax which is similar to tax collected at source (TCS). STT is a direct tax levied on every purchase and sale of securities that are listed on the recognized stock exchanges in India. STT is governed by Securities Transaction Tax Act (STT Act) and STT Act has specifically listed down various taxable securities transaction i.e., transaction on which STT is leviable.

Taxable securities include equity, derivatives, unit of equity oriented mutual fund. It also includes unlisted shares sold under an offer for sale to the public included in IPO and where such shares are subsequently listed in stock exchanges. STT is an amount to be paid over and above transaction value and hence, increases transaction value.

If a person receives any sum in contravention of the provisions of section 269ST, he will be liable to pay a penalty of a sum equal to the amount of such receipt under Section 271DA.

However if a person proves that there were good and sufficient reasons for the contravention, no penalty will be imposed.

Delay in Advance Tax Payment

Taxpayers who are having a tax liability of more than Rs.10,000 should remit Advance Tax to the government before the due date. However, senior citizens who are not having any business income need not pay advance tax. The due date for advance tax payment and procedure for remitting advance tax payment is reckoned as per the provisions of the Income Tax Act. In this article, we look at Section 234B and Section 234C of the Income Tax Act which deals with penalty for delay in advance tax payment.

Due Date for Advance Tax Payment

The due date for advance payment of tax is as follows:

Taxpayer Type By 15th June By 15th September By 15th December By 15th March

All types of taxpayers (other than those who opted for presumptive taxation scheme) Upto 15% of advance tax Upto 45% of advance tax Upto 75% of advance tax Upto 100% of advance tax

Taxpayers who opted for the presumptive taxation scheme NIL NIL NIL Upto 100% of advance tax

Section 234B – Penalty for Not Paying Advance Tax Payment

The penalty under Section 234B of the Income Tax Act is applicable if:

A taxpayer has failed to pay advance tax though he is liable to pay advance tax; or

The advance tax paid by the taxpayer is less than 90% of the assessed tax.

Penalty for Default in Advance Tax Payment

Under section 234B, interest for default in payment of advance tax is levied at 1% simple interest per month or part of a month. The penalty interest is levied on the amount of unpaid advance tax. If there is a shortfall in payment of advance tax, then interest is levied on the amount by which advance tax is short paid.

The penal interest for default in advance tax payment will be levied from 1st April of the relevant financial year till the date of determination of income under Section 143(1) or when a regular assessment is made, then till the date of such a regular assessment.

In case the taxpayer has paid any tax before the completion of the assessment, then interest will be levied as follows:

Upto the date of payment of self-assessment tax, interest will be computed on the amount of unpaid advance tax.

From the date of payment of self-assessment tax, interest will be levied on the unpaid amount of advance tax after deducting the self-assessment tax paid by the taxpayer.

In case income is increased due to an income tax assessment or recomputation, interest will be levied on the differential amount from the first day of the assessment year till the date of assessment/re-computation.

Section 234C – Penalty for Short Payment of Advance Tax

Section 234C is applicable if a taxpayer has paid advance tax which is less than the required amount. Since the advance tax is paid based on estimated tax liability, only tax payment that falls below the threshold below will be liable for a penalty for Section 234C of the Income Tax Act.

Penal interest under Section 234C is levied only if:

Advance tax paid on or before 15th June is less than 12% of advance tax payable.

Advance tax paid on or before 15th September is less than 36% of advance tax payable.

Advance tax paid on or before 15th December is less than 75% of advance tax payable.

Advance tax paid on or before 15th March is less than 100% of advance tax payable