Home/ Ramesh Sharma/Questions

Taxchopal Latest Questions

Ramesh Sharma
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    When it comes to claiming deductions for scientific research expenses, the answer really depends on how those expenses relate to your income-earning activities. Here’s the lowdown: If it’s Business-Related:When you’re running a business or are engaged in a profession and you spend money on scientifiRead more

    When it comes to claiming deductions for scientific research expenses, the answer really depends on how those expenses relate to your income-earning activities.

    Here’s the lowdown:

    • If it’s Business-Related:
      When you’re running a business or are engaged in a profession and you spend money on scientific research to help improve or innovate your business, then—provided you can show that the expense was incurred “wholly and exclusively” for business—the expense may be deductible as a business expense. This is in line with general business expenditure provisions in the Income Tax Act.

    • If it’s Personal:
      If you’re doing scientific research out of personal interest or for non-business reasons, unfortunately, that cost isn’t deductible. The tax law only allows deductions for expenses directly related to earning taxable income.

    • Alternatively, Support Research Through Donations:
      Even if your own research isn’t deductible because it’s not tied to your business, you can still support scientific research by donating to approved research institutions. In that case, the donation itself may qualify for a deduction under the provisions for charitable contributions.

    Bottom Line:
    An individual can claim a deduction for scientific research expenses only if those expenses are directly linked to their business or professional activities. Personal research expenses are not deductible. However, if you donate to an approved research institution, you might enjoy a tax benefit for that contribution.

    See less
    • 0
Ramesh Sharma
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    When you incur revenue expenses on scientific research—expenses that are recurring in nature and directly tied to your research activities—they can be claimed as a business deduction, provided they meet certain criteria. Steps to Claim the Deduction Ensure the Expense is “Wholly and Exclusively” IncRead more

    When you incur revenue expenses on scientific research—expenses that are recurring in nature and directly tied to your research activities—they can be claimed as a business deduction, provided they meet certain criteria.

    Steps to Claim the Deduction

    1. Ensure the Expense is “Wholly and Exclusively” Incurred for Business

      • The research must be undertaken to generate or enhance your business income.

      • Only those expenses directly related to research (like salaries of research personnel, lab consumables, and other operational costs) can be claimed.

    2. Proper Classification in Your Books

      • Record these expenses under the appropriate head (usually under research and development or scientific research expenses).

      • Keep detailed documentation (bills, receipts, contracts) to substantiate the claim during any tax scrutiny.

    3. Utilize the Provisions of Section 35

      • If you are engaged in in-house research, Section 35 (specifically Section 35(2AB) for in-house R&D) may offer a weighted deduction—commonly allowing you to deduct a percentage (e.g., 150%) of the expenditure.

      • This weighted deduction boosts the benefit compared to standard business expenses, effectively reducing taxable income more significantly.

    4. File Your Tax Return Accurately

      • When you file your income tax return, include the qualifying scientific research expenditure in your books as part of your overall business expenses.

      • Ensure that your tax computations reflect the weighted deduction if you meet the conditions under Section 35.

    Key Points to Remember

    • Eligibility:
      The deduction is available only if the research is integral to your business operations. Research done purely for personal or non-business purposes does not qualify.

    • Documentation:
      Maintaining meticulous records is crucial. Properly categorizing and documenting your research expenses will support your claim if questioned by tax authorities.

    • Weighted Deduction Benefit:
      For companies engaged in in-house research, the weighted deduction (e.g., 150% of the expenditure) can significantly lower taxable income, making it an attractive incentive for promoting scientific research.

    See less
    • 0
Ramesh Sharma
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    Terminal Depreciation is essentially the final depreciation deduction that a taxpayer can claim on a fixed asset in the year it is disposed of or written off. It helps ensure that the entire cost of the asset is eventually written off for tax purposes. How It Works: Final Year Adjustment:When an assRead more

    Terminal Depreciation is essentially the final depreciation deduction that a taxpayer can claim on a fixed asset in the year it is disposed of or written off. It helps ensure that the entire cost of the asset is eventually written off for tax purposes.

    How It Works:

    • Final Year Adjustment:
      When an asset is sold or otherwise disposed of before the end of its useful life, the usual depreciation calculation may leave a remaining balance (the written down value). Terminal depreciation is the pro-rata depreciation claimed in the year of disposal based on the number of days the asset was in use.

    • Pro-Rata Calculation:
      In the disposal year, depreciation is calculated on a pro-rata basis. This means if the asset was used for part of the year, you claim a proportionate deduction for that period. This final adjustment is what we call terminal depreciation.

    • Purpose:
      The idea is to fully account for the cost of the asset in your tax computations. Without terminal depreciation, there might be an unabsorbed cost remaining in the books when the asset is disposed of.

    Key Point:

    • Section 32 of the Income Tax Act, 1961 governs the depreciation of assets, including the pro-rata (or terminal) depreciation in the year of disposal. While “terminal depreciation” isn’t mentioned by name in the Act, the concept is inherent in the depreciation calculations applied when an asset is retired.

    See less
    • 0
Ramesh Sharma
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    A:If you’re required to register under GST and fail to do so, the law imposes a penalty to discourage non-compliance. Here’s what you need to know: Penalty Provision:Under the CGST Act, if you do not register within the prescribed time, you may face a penalty. This penalty is generally calculated asRead more

    A:
    If you’re required to register under GST and fail to do so, the law imposes a penalty to discourage non-compliance. Here’s what you need to know:

    • Penalty Provision:
      Under the CGST Act, if you do not register within the prescribed time, you may face a penalty. This penalty is generally calculated as a percentage of the tax that should have been collected on your turnover. In practice, it is often around 10% of the tax due on the turnover that required registration, with a minimum penalty amount prescribed by the authorities.

    • Additional Charges:
      Along with the penalty, interest may be charged on the unpaid tax amount until you complete your registration and clear the outstanding dues.

    • Importance of Timely Registration:
      Registering on time not only helps you avoid these financial penalties and interest but also ensures that you can avail input tax credits and comply with other GST compliance requirements.

    See less
    • 0
Ramesh Sharma
Enlightened
Asked: In:

  1. PrashantBute Beginner

    The rate of tax to be used for the reverse charge supply is the rate that is applicable on such goods/services. GST Compensation Cess is also applicable on reverse charge. If the goods/services purchased in exempted or nil rated then no tax is payable under RCM. Composition dealers are required to pRead more

    The rate of tax to be used for the reverse charge supply is the rate that is applicable on such goods/services. GST Compensation Cess is also applicable on reverse charge. If the goods/services purchased in exempted or nil rated then no tax is payable under RCM.

    Composition dealers are required to pay reverse charge at normal rates (5%,12%,18%,28%) and not at the composition rates (1% or 5%).

    See less
    • 0
Ramesh Sharma
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    Reverse charge is a mechanism under the Goods and Services Tax (GST) system where the responsibility for paying GST shifts from the supplier to the recipient. This means that instead of the seller collecting the tax from the buyer, the buyer is required to pay the GST directly to the government. KeyRead more

    Reverse charge is a mechanism under the Goods and Services Tax (GST) system where the responsibility for paying GST shifts from the supplier to the recipient. This means that instead of the seller collecting the tax from the buyer, the buyer is required to pay the GST directly to the government.

    Key Points:

    • Liability Shift:
      Under the reverse charge mechanism (RCM), if you are the recipient of certain specified goods or services, you must pay the applicable GST even if the supplier does not charge it.

    • Applicable Situations:
      Reverse charge is applicable in specific cases mandated by the GST law. This can include:

      • Certain categories of goods and services notified by the government.

      • Supplies from unregistered persons where the recipient is registered.

      • Transactions involving government departments or agencies.

    • Relevant Provisions:
      The provisions for reverse charge are primarily found in the GST Acts (both CGST and IGST), which outline the circumstances and conditions under which RCM applies.

    • Compliance:
      As a recipient, if you fall under the reverse charge mechanism, you must:

      • Pay the GST on the purchase.

      • Ensure proper accounting and reporting in your GST returns.

      • Claim input tax credit (if eligible) on the tax paid under reverse charge.

    See less
    • 0
Ramesh Sharma
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    If you fail to file your GST return by the due date, you can incur a penalty under the GST law. Here’s a straightforward explanation: 1. Daily Penalty: General Taxpayers:You may be charged a penalty of ₹50 per day for each day the return is late. Small Taxpayers:If your aggregate turnover is up to ₹Read more

    If you fail to file your GST return by the due date, you can incur a penalty under the GST law. Here’s a straightforward explanation:

    1. Daily Penalty:

    • General Taxpayers:
      You may be charged a penalty of ₹50 per day for each day the return is late.

    • Small Taxpayers:
      If your aggregate turnover is up to ₹1.5 crore, the penalty is typically ₹20 per day.

    2. Maximum Limit:

    • The daily penalties accumulate up to a maximum limit, which is generally ₹5,000 for most taxpayers and ₹1,000 for small taxpayers.

    3. Additional Considerations:

    • Interest:
      Note that aside from the penalty, interest may also be charged on any tax due if the return is not filed on time.

    • Continuous Non-Filing:
      If returns are not filed for a continuous period, the tax authorities may take further actions, such as restrictions on claiming input tax credits.

    See less
    • 0
Ramesh Sharma
Enlightened
Asked: In:

  1. Amit Ganguly Beginner

    Yes , You can use your firm Name after cancelling its Registration. Cancelling the Registration means Removing its liability of GST which does not impact on its existance. However, in case of wind off the concern , there are no questions of using of Firm Name.

    Yes , You can use your firm Name after cancelling its Registration. Cancelling the Registration means Removing its liability of GST which does not impact on its existance.

    However, in case of wind off the concern , there are no questions of using of Firm Name.

    See less
    • 0
Ramesh Sharma
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    Yes, you can apply for the surrender of your GST registration if you no longer meet the eligibility criteria or if you wish to discontinue your GST compliance. Here’s what you need to know: Eligibility for Surrender:If your business turnover falls below the threshold, or if you are no longer engagedRead more

    Yes, you can apply for the surrender of your GST registration if you no longer meet the eligibility criteria or if you wish to discontinue your GST compliance. Here’s what you need to know:

    • Eligibility for Surrender:
      If your business turnover falls below the threshold, or if you are no longer engaged in any taxable activities, you may opt to surrender your GST registration.

    • Relevant Provisions:
      Under the CGST Act, provisions allow taxpayers to voluntarily surrender their GST number. This process is intended to help businesses avoid unnecessary compliance if they are no longer required to be registered.

    • Procedure to Surrender Your GST Number:

      1. Log in to the GST Portal:
        Access your account on the official GST portal.

      2. Submit an Application:
        Fill out the form for cancellation/surrender of registration, providing the required details and reasons.

      3. Compliance Check:
        Ensure that all pending returns are filed and any outstanding tax liabilities or refunds are settled.

      4. Confirmation:
        Once your application is processed, you will receive confirmation that your GST registration has been surrendered.

    • Important Reminder:
      Surrendering your GST number means you can no longer collect GST on your sales or claim input tax credits. Make sure this is the right step for your business before applying.

    See less
    • 0
Ramesh Sharma
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    If your GST registration has been cancelled—either voluntarily or by the tax authorities—you may have the option to restore it if your business operations have resumed. Here’s a quick guide on how to do that: Step 1: Check the Cancellation Status and Time Limit If your registration was cancelled andRead more

    If your GST registration has been cancelled—either voluntarily or by the tax authorities—you may have the option to restore it if your business operations have resumed. Here’s a quick guide on how to do that:

    Step 1: Check the Cancellation Status and Time Limit

    • If your registration was cancelled and you wish to resume your business, you need to check whether you’re still within the allowed window for restoration.

    • Typically, you can apply for restoration within a prescribed period (usually within 30 days from the cancellation date). If you miss this window, you might have to register as a new taxpayer.

    Step 2: Log In to the GST Portal

    • Visit the official GST portal and log in using your credentials.

    Step 3: Submit an Application for Restoration

    • Navigate to the registration section and look for the option to “Restore Registration” or “Resume Registration.”

    • Complete the application form, providing all the required details and the reason for restoration (such as resumption of business).

    Step 4: File All Pending Returns and Clear Outstanding Dues

    • Ensure that any pending GST returns are filed.

    • Settle any outstanding taxes or interest to avoid complications during the restoration process.

    Step 5: Await Approval

    • After submitting your application, the GST authorities will review your request.

    • If approved, your GST registration will be restored, and you can continue with your business activities under the same GSTIN.

    See less
    • 0
Load More Questions