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Can we adjust expenses with income of similar nature?
Yes, expenses can be adjusted against income of a similar nature under certain conditions, but this depends on accounting standards, tax laws, and specific business circumstances. Let’s analyze this from an accounting and Ind AS/AS perspective. 1. Accounting Treatment as per Ind AS & AS (A) IndRead more
Yes, expenses can be adjusted against income of a similar nature under certain conditions, but this depends on accounting standards, tax laws, and specific business circumstances. Let’s analyze this from an accounting and Ind AS/AS perspective.
1. Accounting Treatment as per Ind AS & AS
(A) Ind AS Perspective
📌 Ind AS 1 (Presentation of Financial Statements):
📌 Ind AS 18 (Revenue Recognition) & Ind AS 115 (Revenue from Contracts with Customers):
📌 Ind AS 37 (Provisions, Contingent Liabilities, and Contingent Assets):
(B) AS Perspective (Indian GAAP – Accounting Standards)
📌 AS 9 (Revenue Recognition):
📌 AS 5 (Net Profit or Loss for the Period, Prior Period Items, and Changes in Accounting Policies):
2. When is Offsetting Allowed?
✅ Examples Where Adjustment is Allowed:
❌ Examples Where Adjustment is NOT Allowed:
3. Taxation Perspective
📌 Under Income Tax Act, 1961, netting off is not generally allowed except:
Final Answer:
- Ind AS & AS generally prohibit offsetting unless specifically permitted.
- Business-related expenses can only be adjusted against income of a similar nature (e.g., direct expenses against trading income).
- Tax laws have specific rules for set-offs, so compliance with Income Tax Act, 1961 is necessary.
See lessShould GST need to be paid while making payment of advance against a Performa invoice?
Yes, GST applicability on advance payments depends on whether the transaction involves goods or services as per the GST law: 1. Advance Payment for Goods 📌 As per Notification No. 66/2017 – Central Tax, GST is NOT required to be paid on advances received for the supply of goods (except in cases coveRead more
Yes, GST applicability on advance payments depends on whether the transaction involves goods or services as per the GST law:
1. Advance Payment for Goods
📌 As per Notification No. 66/2017 – Central Tax, GST is NOT required to be paid on advances received for the supply of goods (except in cases covered under the reverse charge mechanism).
📌 The supplier should issue a Proforma Invoice followed by a Tax Invoice at the time of supply.
2. Advance Payment for Services
📌 As per Section 13(2) of the CGST Act, 2017, GST must be paid at the earlier of:
📌 The supplier must issue a receipt voucher for the advance amount received.
3. ITC (Input Tax Credit) on Advance Payment
📌 The recipient (buyer) can claim ITC once the Tax Invoice is received and the supplier has reported the GST payment.
✅ Final Answer:
- For Goods ➝ GST not required on advance payments.
- For Services ➝ GST must be paid at the time of advance receipt.
- Ensure proper documentation like receipt vouchers & tax invoices for compliance.
See lessI am buying a property from NRI, How much TDS is required to be deducted on it and what is the process?
TDS on Purchase of Property from an NRI – Rate & Process If you are buying a property from a Non-Resident Indian (NRI), you are required to deduct TDS under Section 195 of the Income Tax Act. The process is different from buying a property from a resident Indian. 🔹 TDS Rate on Property PurchaseRead more
TDS on Purchase of Property from an NRI – Rate & Process
If you are buying a property from a Non-Resident Indian (NRI), you are required to deduct TDS under Section 195 of the Income Tax Act. The process is different from buying a property from a resident Indian.
🔹 TDS Rate on Property Purchase from an NRI
📌 Additional Charges:
🚨 Key Point: Unlike resident sellers (where TDS is 1% under Section 194-IA), TDS for an NRI seller is deducted on the entire sale value, NOT just on profit.
🔹 TDS Deduction & Payment Process
✅ Step 1: Obtain TAN (Tax Deduction Account Number)
✅ Step 2: Deduct TDS & Pay to the Government
✅ Step 3: File TDS Return (Form 27Q)
✅ Step 4: Issue TDS Certificate (Form 16A)
🔹 Lower TDS Deduction Option
If the NRI seller’s total tax liability is lower than the deducted TDS, they can:
✔ Apply for a Lower TDS Certificate (Form 13) from the Income Tax Department.
✔ Submit the certificate to the buyer to deduct TDS at the reduced rate.
🔹 Key Points to Remember
✔ TAN is mandatory for buyers deducting TDS from an NRI seller.
See less✔ TDS is deducted on the entire sale value, not just profit.
✔ File TDS returns (Form 27Q) on time to avoid penalties.
✔ NRI sellers can claim a refund of excess TDS while filing their ITR.
Who is required to pay TCS?
Who is Required to Pay TCS (Tax Collected at Source)? Tax Collected at Source (TCS) is a tax that a seller collects from the buyer at the time of selling specified goods or providing certain services. The seller is responsible for collecting TCS and depositing it with the government. 🔹 Who is RequirRead more
Who is Required to Pay TCS (Tax Collected at Source)?
Tax Collected at Source (TCS) is a tax that a seller collects from the buyer at the time of selling specified goods or providing certain services. The seller is responsible for collecting TCS and depositing it with the government.
🔹 Who is Required to Collect TCS?
As per Section 206C of the Income Tax Act, the following sellers are required to collect TCS when selling specified goods or services:
✔ Companies (Private Ltd. & Public Ltd.)
✔ Partnership firms
✔ Proprietorships (in specific cases)
✔ Cooperative societies
✔ Local authorities & State/Central Government agencies
📌 Individuals & HUFs (Hindu Undivided Families) need to collect TCS only if their turnover exceeds ₹1 crore (for business) or ₹50 lakh (for professionals) in the previous financial year.
🔹 When is TCS Collected?
TCS is collected at the time of sale of certain specified goods or services.
📌 List of Goods/Services Liable for TCS:
🚀 Key Point: TCS is collected from the buyer at the time of receipt of payment or sale invoice generation, whichever is earlier.
🔹 When is TCS Not Required?
✔ If the buyer is the Government, an embassy, or a recognized international organization.
✔ If the buyer is liable to deduct TDS under any section of the Income Tax Act.
✔ If the sale value does not exceed the threshold limit specified above.
🔹 How is TCS Deposited?
📌 The seller must deposit the collected TCS to the government by the 7th of the following month.
📌 TCS is reported in Quarterly TCS Returns (Form 27EQ).
📌 Buyers can claim TCS credit when filing their Income Tax Return (ITR).
🔹 Conclusion
✔ Sellers of specified goods/services are required to collect TCS from buyers.
See less✔ TCS rates vary based on the nature of the goods/services.
✔ Buyers can claim TCS as a credit while filing ITR.
✔ Proper compliance with TCS deposit & return filing deadlines is necessary to avoid penalties.
What is the use of form 15 CA and 15 CB under the Income Tax Act?
Use of Form 15CA and 15CB under the Income Tax Act Forms 15CA and 15CB are required for making remittances (payments) to non-residents to ensure compliance with TDS (Tax Deducted at Source) provisions under the Income Tax Act. These forms help track foreign remittances and prevent tax evasion. 🔹 WhaRead more
Use of Form 15CA and 15CB under the Income Tax Act
Forms 15CA and 15CB are required for making remittances (payments) to non-residents to ensure compliance with TDS (Tax Deducted at Source) provisions under the Income Tax Act. These forms help track foreign remittances and prevent tax evasion.
🔹 What is Form 15CA?
📌 Purpose: Form 15CA is a declaration by the remitter (payer) stating whether TDS is applicable on the foreign remittance. It helps the Income Tax Department track taxable foreign payments.
📌 Who files it?: The remitter (payer) files Form 15CA electronically on the Income Tax e-Filing portal.
📌 When is it required?:
🚀 Key Point: Form 15CA is MANDATORY in most cases, even if TDS is not applicable.
🔹 What is Form 15CB?
📌 Purpose: Form 15CB is a certificate issued by a Chartered Accountant (CA) confirming the taxability of a foreign remittance. The CA verifies:
📌 Who issues it?: A Chartered Accountant (CA) issues Form 15CB before submitting Form 15CA (Part C).
📌 When is it required?:
🚀 Key Point: Form 15CB is NOT required for transactions where:
✔️ Remittance is covered under Rule 37BB (specified list of exempted payments).
✔️ Payment is below ₹5 lakh in a financial year.
🔹 When Do You Need Both Forms?
🔹 How to File Form 15CA & 15CB?
1️⃣ Obtain Form 15CB from a CA (if required).
2️⃣ Log in to the Income Tax e-Filing Portal https://www.incometax.gov.in/.
3️⃣ Navigate to “File Income Tax Forms” > “Form 15CA”.
4️⃣ Fill in details & submit the form.
5️⃣ Provide acknowledgment to the bank for processing the remittance.
🔹 Key Takeaways
✔ Form 15CA is filed by the remitter for foreign remittances.
See less✔ Form 15CB is required only if the remittance exceeds ₹5 lakh and is taxable in India.
✔ These forms help track foreign payments and ensure TDS compliance.
✔ Banks will not process foreign remittances without Form 15CA (and 15CB, if required).
What is the procedure for obtaining certificate of lower TDS rate deduction under the Income Tax Rate?
Procedure for Obtaining a Lower TDS Deduction Certificate under the Income Tax Act (Section 197) A taxpayer can apply for a Lower TDS Deduction Certificate under Section 197 of the Income Tax Act if they believe that their total income justifies a lower or nil rate of TDS deduction. The procedure isRead more
Procedure for Obtaining a Lower TDS Deduction Certificate under the Income Tax Act (Section 197)
A taxpayer can apply for a Lower TDS Deduction Certificate under Section 197 of the Income Tax Act if they believe that their total income justifies a lower or nil rate of TDS deduction. The procedure is as follows:
Step-by-Step Process to Obtain Lower TDS Certificate
Step 1: Eligibility Check
✔ The applicant should be earning income where TDS is applicable (e.g., salary, interest, professional fees, rent, etc.).
✔ The applicant must justify that the TDS deduction at normal rates would result in excess tax deduction leading to a refund situation.
Step 2: Online Application on TRACES Portal
Step 3: Processing by the Assessing Officer (AO)
✔ The Assessing Officer (AO) reviews the application and may request additional documents.
✔ If satisfied, the AO will issue a Lower/Nil TDS Deduction Certificate (Form 13).
✔ The certificate specifies the validity period and applicable TDS rate (which could be lower than the standard rate).
Step 4: Submission to Deductor
✔ The taxpayer must provide the lower TDS certificate to the deductor (payer).
✔ The deductor will deduct TDS at the specified lower rate instead of the standard rate.
Key Points to Remember:
✔ Validity: The certificate is valid for a financial year or a specific period mentioned in the approval.
See less✔ Deadline: Apply at the beginning of the financial year to avoid excess TDS deductions.
✔ Form 15G/15H: For individuals with income below the taxable limit, Form 15G (for non-senior citizens) or 15H (for senior citizens) can be submitted instead of Form 13.
What are the TCS rates?
TCS (Tax Collected at Source) Rates for FY 2024-25 The TCS rates under Section 206C of the Income Tax Act vary based on the nature of the transaction. Below is a summary of the latest applicable rates: Nature of Transaction Section TCS Rate (with PAN/Aadhaar) TCS Rate (without PAN/Aadhaar) Sale of ARead more
TCS (Tax Collected at Source) Rates for FY 2024-25
The TCS rates under Section 206C of the Income Tax Act vary based on the nature of the transaction. Below is a summary of the latest applicable rates:
Important Points:
✔ PAN/Aadhaar is mandatory for lower TCS rates.
See less✔ TCS must be collected at the time of receiving payment from the buyer.
✔ TCS must be deposited by the 7th of the next month.
✔ The buyer can claim TCS credit while filing their Income Tax Return.