Close of the financial year … 31st March 2009!!!

Finally, we saw the dawn of March 31. With the arrival of the new financial year 2009–2010, we just hope that the global recession doesnt haunt us anymore.

 

In the ensuing new financial year 2009–2010, we need to:

 

1. Organise our accounts fairly well;

2. Those do not having TDS certificates must file their returns before 31^st July, 2009. There is no reason why the returns must be delayed. Those who are corporates or covered under tax audit provisions must file their returns on or before 30th September 2009;

3. Individuals not covered under Tax Audit (Sec 44AB of the Income Tax Act, 1961) must file their returns on or before 31^st July. They must be prepared well in advance to produce any other documents that may be required for final uploading of returns. The last day filing may give some problems – especially in regard to TDS certificates collection, details of LIP, Mediclaim, Donations, bank statement, interest certificate, etc. The best course of action is to start early and end the statutory compliances well. Let us take such statutory compliances as a part of our business / profession / job;

4. Even the proprietorship firms who are covered under Tax Audit must file their returns by 31^st August, although the last date is 30th Sept;

5. Partnership firms, as like that in the case of corporate, must not go for last day filing, as they not only have to account TDS / TCS but also the income tax and fringe benefit tax. Most of the returns which are filed on the last day shows the tax payable (both FBT as well as Income Tax). This must be done away with. Any payables in your returns have the destructive effects on the Banks / financial institutions whenever one approaches them for liquidity support;

6. Lastly, one must organise their statutory documents (and other related documents) well in advance;

7. An advise to the auditors / accounts head of the companies: – Make sure that the financial ratios are set before the balance sheet is signed. Although the balance sheet may look fair, a little change in the accounts head / sub-head may either give a good picture of the balance sheet and vice versa.

 

With great hopes for the ensuing new financial year, we wish the readers of our blog a very happy, prosperous, fulfilling new financial year with lots of excitement too.

Request to our existing and prospective set of clienteles’ …

Respected Clienteles and esteemed Associates,

 

 

Its the time of the year again for necessary financial, investment and tax planning thereafter we all shall be set to file our Income tax returns as per the requirements of the statute and law of the land. You are requested to get the said planning done in advance before we see the dawn of March 31.

 

Filing of returns is not only the duty or the obligation on the part of the citizen or the assessee but its use lies elsewhere to the advantage of the assessee. Not only the assessee comes to know about his real gross and net income, he also comes to know about his financial networth and credit standing.

 

The necessary rightful and timely compliances gives him the due credit in the eyes of the Banks and financial institutions to avail of the loans for either buying a house, or for its renovation or for running of the business concern. You all shall agree that institutional funding is more dignified than personal loans taken from friends and relatives. If you keep on asking for loans from friends and relatives despite regular & timely payments, you shall see your credit rating in the social market decline too fast. However in the case of institutional funding, if you repay the loans on time and go for a bigger loan, your credit rating jumps to a favourable position. No wonder, a big borrower holds high dignity with the Banks and financial institutions. Not only he dictates his terms to the lending institution, his business also never gets a jolt because of credit crunch in the market.

 

To understand the basic intricacies of return filing, we are presenting two articles here. You are requested to copy and paste the said link in your internet browser for a better understanding. The said articles are divided into two parts. The said article has been taken from the blog maintained by the undersigned.

 

http://gulabsingh.wordpress.com/2009/03/02/itr-filing-fin-year-2008-2009-1/ 

 

http://gulabsingh.wordpress.com/2009/03/02/itr-filing-fin-year-2008-2009-2/ 

 

For any other clarifications or list of services we provide, you are requested to send a mail at gulab.a.singh@gmail.com and we assure you of our timely reply at the earliest possible time.

 

Last but not the least, we hope to see that all our esteemed and dignified clients file their returns on or before 31st July of each year so as to enable adequate planning for presentation.

Income Tax Return Filing for the financial year 2008-2009 (Assessment Year 2009-2010) – Part 1

As usual, year after year, like in the case of New Year Resolutions, we tend to promise ourselves to take up Income tax and other statutory return filing much before the next due date. Such promises are valid only till we file our returns either late or at the fag end of the deadline. Next year, we again find ourselves hard-pressed to manage our documents for necessary statutory compliances. The word ‘Next Time’ always remains there irrespective of the change in years and change in due dates.

 

We, however, this year had resolved to ensure that all the returns which are filed through us goes on time and ofcourse, much before the set deadline as has been issued by the Ministry of Finance. To ensure that the returns are filed on time, it is not only important to go and talk to your Chartered Accountant, however its also important to ensure that the documents as are required are compiled at your end itself and regularly followed up till the returns are submitted officially to the Income Tax department. The next due date for all classes of assessees except those covered under section 44AB (tax audit provisions) and corporate entities are July 31, 2009. For others, the due dates stands at 30th Sept, 2009.

 

We are presenting herewith the detailed set of documents that may be necessary / mandatory for disclosure for the purpose of filing your Income Tax Returns:

 

Section 14 of the Income Tax Act, 1961 classified the following Heads of Income:

 

1. Salaries (Sections 15 – 17)

2. Income from House Property (Sections 22 – 27)

3. Profits and gains of business or profession (Sections 28 – 44)

4. Capital Gains (Sections 45 – 55A)

5. Income from Other Sources (Sections 56 – 59)

 

Under the Head - Salaries

 

Most of the assessees in modern days jump from one employment to another. The income during the part of the financial year from the previous employment is not disclosed to the current employer leading to refund in Form 16. When the final computation of income is drawn, the case of tax liability arises. It is due to the fact that there is only one exemption of Rs. 150,000/– to an individual (not being a woman or a senior citizen). However, the employee has taken two such exemptions in different companies during the same accounting (financial) year under review. Its very important for the employees to know that the incomes earned from all the sources must be clubbed under appropriate head before going for exemptions and deductions.

 

Under the Head – Income from House Property

 

The determination of income is classified into Let Out Property, Self Occupied Property and Deemed to be let-out property. Its important that the rental income is shown properly under the right property. The complete address alongwith the pincode of the location where the property is located must be disclosed alongwith the PAN of the tenant. Incase of housing loans, a certificate must be obtained from the Bank specifying clearly the interest collected on the said housing loan and the connected principal so repaid during the said financial year.

 

Under the Head – Business or Profession

 

Without going into the intricacies of Business or Profession, it is to be noted that a necessary Profit & Loss Account alongwith the Balance Sheet must be prepared apart from Computation of Income showing various incomes and expenses under various heads. If the total turnover exceeds Rs. 40.00 lacs incase of business and Rs. 10.00 lacs gross receipts incase of profession, the said entity is subjected to Tax Audit U/s. 44AB of the Income Tax Act, 1961.

 

Under the Head – Capital Gains

 

This head is for profits and loss arising out of sale of shares, properties, etc., whose taxability is determined by the period of holding. Accordingly the capital gains are divided into two major section – Short Term Capital Gains and Long Term Capital Gains.

 

Under the Head – Income from Other Sources

 

This head is the most neglected section amongst the clientele and even the Tax Consultants or Chartered Accountants. No body (including a salaried employee or a businessman) discloses their Bank pass book for ascertaining Savings Bank interest that are not exempted from tax anymore. The tax on such income is as per the tax slab that an individual is aligned to. Moreover, no body discloses the accrued income on Fixed Deposits, nor any attempt is made to disclose the Exempted Dividend income earned by the assessee. Our statute clearly spelts out that all the information must be DISCLOSED. It means that all the disclosures must be made, irrespective of the fact whether those income are taxable or otherwise.

 

Since this post is going to be a little lengthier, the same has been divided into two parts. This is the end of Part 1.

Income Tax Return Filing for the financial year 2008-2009 (Assessment Year 2009-2010) – Part 2

In continuation with the previous post, the following documents are required for appropriate return filing. These set of documents are not stated in a chronological order and does not form part of exhaustive list. The following list is only illustrative in nature, looking at the facts that there are many other documents covering the entire gamut of compliances under the relevant statute.

 

1. Form 16 (TDS certificate for Salaried employees). It must be received from all the employers under whom the employee worked during the said financial year, even if it was a part of the year;

 2. Form 16A (TDS certificates from the Deductor company);

3. All Bank Pass Books in case of Savings Accounts;

4. All Bank statements incase of Current Accounts;

5. A statement of Life Insurance Premium paid during the said financial year alongwith deposits with National Savings Certificate (NSC) and Public Provident Fund (PPF);

6. A statement of Mediclaim and Donations given during the year. Mediclaim can be claimed only by the person making the said payment by way of cheque. Amount paid on account of Mediclaim on behalf of the assessee shall not entitle the assessee to claim the same U/s. 80D of the Income Tax Act, 1961;

7. List of Shares purchased and sold during the year, explicitly dividing them into Short term (less than one year holding) and Long term (more than one year holding);

8. Agreement copy of Purchase and Sale deeds for properties sold during the year, again dividing them into short term (less than 3 years) and long term (more than 3 years);

9. Interest Certificate from the bank against Housing loan availment. The interest repayment during the year shall be taken U/s. 24 whereas principal repayment shall be covered under Deductions U/s. 80C. The total deductions U/s. 80C is limited to Rs. 100,000/-, whereas Interest on borrowed capital for Housing loan is limited to Rs. 150,000/-. An important point to be noted here is that interest on borrowed capital for the purpose of renovation of the house is limited to Rs. 30,000/– only;

10. Interest certificate for the purpose of other loans are taken to the debit of Profit and Loss Account incase of freelancers, businessman and professionals. Incase of retainership / freelancers, when the person derives its income by way of consultancy must make sure to present Profit & Loss account and Balance Sheet as required under the statute (incase when the assessee is required to maintain the books of accounts);

11. Copy of PAN Card;

12. Copy of acknowledgement of previous years Income tax returns;

13. Incase of change in jurisdiction, a request letter duly acknowledged by the appropriate jurisdiction of the previous assessment must be attached and given to the current jurisdiction for the purpose of information;

14. Incase of fresh cases (new returns), an appropriate copy of the evidence must be enclosed alongwith the copy of the PAN card so as to enable the filers to file in the right jurisdiction;

15. Last but not the least, when an employee doesnt get an HR deduction from the salary, they can claim some amount of relief under Chapter VI, U/s. 80GG;

16. For any further expert clarification, you are requested to send the queries by email to gulab.a.singh@gmail.com, and we assure you of replying soon.

 

Incase any other details are required apart from any other detailed post on any other connected topics, the readers are requested to issue such request by way of posting comments. We assure all of our esteemed readers to revert back in 48 hours on all such requests or at the earliest possible time.

 

An important Notice to our esteemed clients (including the prospective set of clienteles’)

 

To avoid last hour rush and to ensure that there are no errors or no over-skipping of disclosures in the Income tax returns you all are requested to accumulated the aforesaid set of papers maximum by 30^th July 2009. Incase of any delay or any other reason you are requested to get in touch with the Author of this post either by email as given above or the necessary contact number you are in possession of.