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How to Respond to Income Tax Demand on Income Tax Portal

Posted on by Fastlegal Team

The Income Tax Department might notify you of an outstanding tax liability through a demand notice on the e-filing portal. This can arise for various reasons, such as a mismatch between your declared income and the department’s records, miscalculations in your Income Tax Return (ITR), or late filing of the ITR. In such cases we are required to respond to Income Tax Demand on Income Tax Portal within time period , here is How we can respond :

Responding to the Demand Notice

Here’s a breakdown of the steps to take upon receiving a demand notice:

  1. Access and Analyze the Demand: Log in to the e-filing portal using your PAN and credentials. Navigate to the “Pending Actions” section on your dashboard and select “Response to Outstanding Demand“. This will display a list of any outstanding demands against your PAN.

Carefully examine the details of the demand notice to comprehend the nature of the tax liability and the specific amount demanded. The notice typically includes information like:

* Assessment year: The financial year for which the tax is due.
* Tax type: This could be income tax, interest on unpaid tax, or penalty for late filing.
* Calculation basis: How the department arrived at the demanded amount.
  1. Taking Action: Once you understand the demand, you can proceed with a response:
    • Agreeing with the Demand: If you acknowledge the tax liability as accurate, you can make an online payment immediately. Locate the specific demand and click “Pay Now” to settle the dues using the available payment options.
    • Disputing the Demand: If you believe the demand is incorrect, you have the right to contest it. Here’s what to do:
      • Locate the specific demand and click “Submit Response“.
      • Choose the option “Disagree with demand“.
      • Clearly explain your disagreement, providing a well-structured explanation with relevant calculations and supporting documentation (like bank statements or investment proofs) if applicable.
      • Explicitly state the amount you believe is not payable.

Additional Considerations:

  • Maintain Records: It’s crucial to keep copies of the demand notice, your response, and any supporting documents submitted for your reference.
  • Seeking Clarification: If you require further clarification on the demand or have difficulty navigating the e-filing portal, consider contacting the Income Tax Department’s helpline or regional office for assistance. Their contact details are available on the Income Tax Department website.
  • Professional Help: For intricate tax matters, especially those involving substantial amounts or complex calculations, consulting a qualified tax professional is highly recommended. They can guide you through the process, ensure your response is accurate, and represent you if necessary.

Timely Response is Key

It’s important to respond to an Income Tax Demand promptly to avoid accruing additional interest and penalties. By following these steps and addressing the demand efficiently, you can ensure a smooth resolution and minimize any potential complications.

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Annual Filings for Limited Liability Partnership (LLP)

Posted on by Fastlegal Team

Limited Liability Partnership (LLP) is a separate legal entity and Separate from Its partners, LLP is governed by LLP Act, 2008, LLP Rules, and in accordance with LLP agreement, LLP act and rules provides for the Annual Returns that are required to be filed by LLP (LLP Annual Filing) to Registrar of Companies by every LLP. beside compliances of LLP Act and rules LLP is required to file its Income tax return and Tax Audit report if required, and designated partners of LLP is required to complete there annual DIN KYC every year, all this comes under LLP Annual Filing, below we have discussed main LLP annual filing that is required to be done by every LLP:

LLP Annual Filing

LLP Annual Filings Calendar

LLP Filing

  • LLP Form 11
  • LLP Form 8
  • DIR-3 KYC
  • Income Tax Return
  • GST Return
  • TDS Return

Due Date

  • 30th May
  • 30th October
  • 30th June
  • 30th July (Non-Audit)
  • Every month /Qtr ( For GST Registered)
  • Every Qtr ( if TDS deducted)

LLP Form 11 ROC LLP Filing

LLP Form 11 is required to be filed by every LLP, Even if LLP has not carried out any business activity LLP Form 11 is mandatorily required to be filed. LLP Form 11 is also known as LLP Annual Return and it contains information about the ownership structure of LLP like Capital Contributed by each designated partner or partner, who are the partners of LLP as on the financial year ending date for which Form 11 is required to be filed.

Mandatory Attachment of Form 11 – In Form 11 a document in respect of Designated partners and partners is required to be attached which contains details in which the designated partner of LLP is the Director or Partner.

LLP Form 8 ROC LLP Filing

LLP Form 8 is required to be filed by every LLP, LLP Form 8 is filed with respect to Statement of Accounts and solvency, In general, this form is required to be filed for filing LLP Annual Accounts to ROC. So before Filing this form LLP is required to be prepare and finalize its books of accounts, otherwise, it is not possible to file this form. LLP Audit is also done under this where Auditor is required to Digitally signed this form, in case LLP is required to get its accounts audited, Presently Limit for LLP Audit is Rs. 40 Lakh for turnover and Rs. 25 Lakh for Capital Contribution, if either exceeds this limit LLP is required to get its accounts audited.

DIR-3 KYC for Designated Partners of LLP (LLP Annual Filing)

DIR-3 KYC is mandatory for every designated partner of LLP, non-filing will lead to a fee of Rs. 5000 for activation of DIN of designated partner. The due date for filing DIR-3 KYC is 30th September.

Income Tax Return of LLP (LLP Annual Filing)

Every LLP whose accounts are not required to be audited is required to file its Income Tax return on or before 31st July. For Audited LLP the due date is 30th September.

GST Return of LLP (LLP Annual Filing)

If LLP has GST Registration, then LLP is required to file Applicable GST returns like GSTR3B, GSTR1, GSTR9, and other applicable returns on a monthly, quarterly or yearly basis as and when applicable.

TDS Return of LLP

If LLP has made payments that are required to pay after deduction of Tax at source, The TDS amount is required to be deposited before the 7th of next month and is required to file a Quarterly TDS return.

Small LLP Incorporation

Enrich your business.

  • Name Approval
  • DIN
  • DSC
  • LLP Agreement *
  • PAN /TAN of LLP
  • Capital Contribution Up to Rs. 1 Lakh *

*Stamp duty up to Rs. 2000 included in this package

Rs. 9999 /-

LLP Annual Filing

Small LLP without Audit Applicability

  • LLP Form 11
  • LLP Form 8
  • DIN KYC
  • Income Tax Return
  • Book-keeping & Final Accounts up to 100 Entries

Rs. 8000/- Per year

LLP Annual Filings

Other than Small LLP

  • LLP Form 11
  • LLP Form 8
  • DIN KYC
  • Income Tax Return
  • Book-keeping
  • Audit

Request

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Draft Format of Director’s Report for Small Private Limited Company

Posted on by Fastlegal Team

To the Members of [Your Company Name],

In compliance with Section 134 of the Companies Act, 2013, the Directors are pleased to present the Annual Report along with the Audited Financial Statements for the financial year ended 31st March [Year].

1. Financial Summary or Highlights/Performance of the Company
The financial performance of the Company for the year end is summarized below:

ParticularsCurrent Year (₹)Previous Year (₹)
Total Revenue
Profit Before Tax
Provision for Tax
Profit After Tax
Dividend

2. State of the Company’s Affairs
Discuss the state of affairs of the company in detail. Mention any significant changes in the business operations during the year.

3. Change in the Nature of Business, if any
In case there has been any change in the nature of business, it should be reported in this section.

4. Dividend
If the board proposes to distribute a dividend, provide details about the rate of dividend and the total amount to be distributed.

5. Reserves
State the total amount proposed to be carried to reserves.

6. Brief description of the Company’s working during the year/Status of Affairs
Present an overview of the business and operations during the year, including any expansion, diversification, or contraction of activities.

7. Directors

  • A declaration by the Independent Directors under sub-section (6) of Section 149 of the Act.
  • In case of the appointment of a director or resignation of a director, the details should be mentioned.

8. Board Meetings
A detailed account of the number of Board Meetings conducted during the year.

9. Directors’ Responsibility Statement
A statement by the Directors’ on their responsibility regarding the preparation of annual statements, applying appropriate accounting standards, and maintaining adequate accounting records.

10. Details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government.

11. Conservation of energy, technology absorption and foreign exchange earnings and outgo
Details according to the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014.

12. Subsidiaries, Joint Ventures and Associate Companies
Provide a report on the performance and financial position of each subsidiary, associate, and joint venture included in the consolidated financial statement.

13. Deposits
Detail the amount, if any, which it has accepted exceeding the prescribed limit.

14. Particulars of Loans, Guarantees or Investments
Details as per the provisions of section 186 of the Companies Act, 2013.

15. Corporate Social Responsibility (CSR)
If applicable, a brief outline of the company’s CSR policy, including an overview of projects or programs to be undertaken pursuant to the CSR Policy.

16. Risk Management Policy
Elaborate on steps taken to mitigate the risks encountered by the business.

17. Internal Control Systems
Discussion of the effectiveness of the internal control systems and their adequacy.

18. Material changes and commitments, if any, affecting the financial position of the company

19. Details relating to Depository Participants
Mention any changes in the arrangements with the depository participants, if applicable.

This report intends to present a transparent view of the company’s business operations to our stakeholders. Your Directors acknowledge with gratitude the encouragement and support extended by our valued shareholders, bankers, suppliers, and customers.

The Directors also take this opportunity to express their appreciation for the hard work and dedication shown by the employees of the company and look forward to their continued contribution in the years ahead.

For and on behalf of the Board of Directors,
[Director’s Name]
[Director’s Signature]
[Date] & [Place]

Note: The details provided above are for illustrative purposes only and should be tailored to reflect the actual data and affairs of the specific company for which the report is being prepared. Furthermore, it is important to stay updated with legal requirements as they are subject to change.

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How to Conduct and Document Board Meetings Effectively as per Companies Act 2013 and Secretarial Standards

Posted on by Fastlegal Team

Board meetings are critical for the governance of a company. They are a platform for discussion and decision-making by the company’s board of directors. To ensure these meetings are conducted and documented effectively, one must adhere to the provisions of the Companies Act, 2013, and the Secretarial Standards set by the Institute of Company Secretaries of India (ICSI). Here’s how to do it step by step.

Step 1: Convene the Meeting

Issuing Notice:

  • Draft a notice of the meeting according to Secretarial Standard-1 (SS-1).
  • Include the meeting agenda, date, time, and location.
  • Send the notice at least 7 days before the meeting to all directors, by hand, post, or electronic means.

Agenda:

  • The agenda should be clear and comprehensive. Every item for discussion should be stated, including items specifically required by law.

Additional Documentation:

  • Provide any necessary notes or supporting documents to the directors along with the notice.

Step 2: Ensure Quorum

Quorum Requirements:

  • Quorum should be present throughout the meeting. As per the Companies Act 2013, the minimum quorum is 1/3rd of the total strength of the board or 2 directors, whichever is higher.

Leave of Absence:

  • If a director cannot attend, they should notify in advance, and the board may grant a leave of absence if deemed fit.

Step 3: Conducting the Meeting

Chairing the Meeting:

  • The Chairperson, as per the Articles of Association, presides over the meeting.
  • In absence of the Chairperson, the directors present may elect one amongst themselves to chair the meeting.

Discussion:

  • Follow the agenda strictly for discussions.
  • Encourage open discussion and note any dissenting opinions.

Voting:

  • Decisions are generally taken by a majority of votes. Each director has one vote. In case of a tie, the Chairperson has a casting vote.

Step 4: Documenting the Meeting (Minutes)

Recording Minutes:

  • As per Secretarial Standard-1 (SS-1), minutes should contain a fair and correct summary of the proceedings of the meeting.
  • They should be entered in the minutes book within 30 days of the meeting.

Contents of Minutes:

  • Include details like the date, time, place of the meeting, list of attendees, issues discussed, decisions taken, and the final resolutions passed.

Signing of Minutes:

  • The minutes should be signed by the Chairperson of the meeting or the Chairperson of the next meeting.
  • Once signed, the minutes are conclusive evidence of the proceedings.

Distribution:

  • Copies of the signed minutes should be circulated to all directors within 15 days after these are signed.

Step 5: Compliance and Filing

Filing Resolutions with Registrar:

  • Certain resolutions need to be filed with the Registrar of Companies within 30 days of the meeting.
  • File using the prescribed forms and ensure that all statutory registers are updated accordingly.

Maintain Statutory Records:

  • Safeguard the minutes and ensure they are accessible for inspections as required by law.

Step 6: Disclosure and Dissemination

Disclosure to Shareholders:

  • Share relevant excerpts of the minutes with shareholders if required by law or demanded by shareholders’ agreements.

Website Publication:

  • If applicable, publish the proceedings of the meeting on the company’s website as per the regulatory requirements.

By following these six steps, you can ensure that your company’s board meetings are not only effectively conducted but also meticulously documented in compliance with the Companies Act, 2013, and the Secretarial Standards issued by the ICSI.

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Convertible Notes: A Deep Dive into a Popular Startup Funding Instrument

Posted on by Fastlegal Team

Convertible notes are a form of short-term debt that converts into equity, typically associated with the financing of early-stage startups. In this deep dive, we will explore the nuances of this popular funding instrument, guiding you through its benefits, risks, and overall mechanics.

Understanding Convertible Notes

What Are Convertible Notes?

A convertible note is a type of financing instrument that startups often use in their seed rounds. It starts as a loan and then converts into shares of preferred stock during a future financing round, usually at a discount.

Why Use Convertible Notes?

Convertible notes are quick and easier to structure than equity rounds. They defer the valuation negotiation until a later stage when the company has grown and valuation is clearer.

How Do Convertible Notes Work?

Step 1: Issuance

The startup issues a convertible note to an investor in exchange for capital. The note outlines the terms of the agreement, including interest rate, maturity date, discount rate, and valuation cap.

Step 2: Accruing Interest

Unlike traditional loans, the interest on a convertible note typically doesn’t get paid out in cash. Instead, it accrues and converts into equity along with the principal amount at the next funding round.

Step 3: Conversion Triggers

Conversion triggers are predefined events that prompt the conversion of debt to equity. The most common trigger is a subsequent equity financing round.

Step 4: Conversion Mechanics

Upon a trigger event, the note will convert into equity. The discount rate applies to give the note holders a lower price per share than new investors.

Step 5: Conversion at Maturity

If the note reaches maturity without a conversion event, startups might repay the debt, renegotiate the note, or convert the debt into equity at a predefined ratio.

Key Terms of Convertible Notes

  • Valuation Cap: A maximum valuation at which the note can convert into equity to protect investors from dilution.
  • Discount Rate: A percentage reduction from the per-share price of the next investment round.
  • Interest Rate: The rate at which the loan accrues interest until conversion.
  • Maturity Date: The due date for the loan to be repaid or converted if no equity financing has occurred.
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Advantages and Disadvantages

Advantages

  • Provides flexibility for the startup.
  • Simplifies the fundraising process.
  • Incentivizes early investors with a lower price.

Disadvantages

  • Can be costly for founders in the case of high valuation caps.
  • Could lead to ownership and control dilution.
  • Complexities and legal risks if not structured properly.

Best Practices for Startups

  • Establish favorable terms to both parties.
  • Set a reasonable valuation cap and interest rate.
  • Prepare for different scenarios at the maturity date.
  • Engage with knowledgeable legal advisors.

Conclusion

Convertible notes offer a vital lifeline for startups looking to finance their growth without immediate valuation. By understanding how convertible notes work and their associated terms and conditions, founders and investors can facilitate a smoother and more efficient investment process.

Remember, the key to navigating convertible notes is a clear understanding of the instrument, sound legal advice, and well-negotiated terms that are fair to all parties involved.

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How to Declare and Pay Dividends in Accordance with Companies Act 2013

Posted on by Fastlegal Team

Declaring and paying dividends is a significant aspect of a company’s interaction with its shareholders. In India, the procedure of dividend declaration and payment is governed by the Companies Act, 2013. Below is a step-by-step guide on how to declare and payment dividends for companies operating under this act.

Step 1: Ascertain Profit Availability

Before declaring any dividend, the board of directors must ensure that there are sufficient profits. As per the Companies Act, dividends can be paid out of:

  • Current financial year’s profits
  • Profits from previous financial years after providing for depreciation
  • Money provided by the government for dividend payment in government companies

Ensure that adequate provisions are made for all unpaid dues, depreciation, and contingencies.

Step 2: Hold Board Meeting

A meeting of the Board of Directors should be convened by giving notice to all the directors of the company as per Section 173 of the Act. In this meeting, the board should:

  • Consider the profit and loss accounts
  • Decide the quantum of dividends
  • Fix the date for Annual General Meeting (AGM)

Record the minutes of the meeting as per Section 118 of the Act.

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Step 3: Declare Dividend at AGM

The shareholders of the company must approve the dividend at the Annual General Meeting:

  • The board’s recommended dividend is put forward to the members in the AGM
  • The declaration is subject to the approval of shareholders
  • The dividend declared should not exceed the amount recommended by the Board

Step 4: Deposit Dividend Amount

Within 5 days of the declaration, the company must deposit the total amount of dividend in a separate bank account as per Section 123 of the Act.

Step 5: Dividend Payment

  • The company should pay or dispatch the dividends within 30 days from the declaration date to the entitled shareholders
  • Electronic modes of payment are preferred
  • Ensure proper documentation and record-keeping of the payment

Step 6: Transfer to Unpaid Dividend Account

Any dividend amount that remains unpaid or unclaimed after 30 days of its declaration should be transferred to the ‘Unpaid Dividend Account’ as per Section 124 of the Act. The company should also inform the shareholders about this transfer.

Step 7: Transfer to Investor Education and Protection Fund (IEPF)

If any amount in the ‘Unpaid Dividend Account’ remains unclaimed or unpaid for a period of 7 years, the company shall transfer it to the Investor Education and Protection Fund established under Section 125 of the Companies Act.

Step 8: Maintain Statutory Registers and Records

The company must maintain the prescribed registers and records, including:

  • The register of dividends (Form SH-7)
  • Any documentation related to unpaid dividends

Step 9: Compliance and Reporting

  • File the necessary forms with the Registrar of Companies (RoC) within the prescribed timelines.
  • Ensure compliance with tax laws regarding dividend distribution tax (DDT), as applicable.

Step 10: Address Discrepancies and Grievances

The company should setup a mechanism to address any discrepancies and grievances that shareholders might have regarding dividend payments.

Following these steps in accordance with the Companies Act of 2013 helps ensure legal compliance and good corporate governance practices. It protects the interests of the shareholders and maintains the company’s reputation in the corporate ecosystem.

For additional information on dividend declaration and payment compliance, always refer to the latest version of the Companies Act and consult with legal professionals.

Note: As of the writing of this article, the Corporate Laws in India are subject to changes, and as such, the process outlined above might have been updated. Please ensure to check the latest provisions in the Companies Act, 2013, and amendments thereafter.

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How to Register Charitable Trust (NGO) in Rajasthan

Posted on by Fastlegal Team

In this article we will discuss Charitable Trust Registration in Rajasthan, trust is a form of NGO in which you can carry on non-profit activities to help society to grow at a larger scale.

Activities to be carried on by trust is governed by the trust deed, that is what is mention under the trust deed are the activities that trust can carry on

Following charitable activities can be carried on generally by trust:-

  • Promotion of education
  • Promotion of health
  • Promotion of sporting activities
  • Promotion for the betterment of society
  • To Increase self-employment by skill development
  • To provide medical relief to organize medical camps and to arrange medicines for poor
  • To promote cleanliness, to preserve environment and plantation of trees etc
Trust Registration in Rajasthan

Step by Step procedure for Trust Registration in Rajasthan:

  1. Declaration of trust: any person can declare trust with some property for the purpose of promotion of its objects. The person who declared trust is called settler
  2. Name of Trust: name the trust may end with the word “trust , Foundation etc.” I.e. you may have a name like “Shri shyam Charitable Trust”
  3. Address of the trust the address of the trust will decide its jurisdiction for registration and applications for under income Tax Act.
  4. Trustee: the settlor will declare the name of the trustees who sell accept all the terms mention in the trusted and act as a trustee to the trust.
  5. Board of Trustees: the trustees will be known as board of trustees and will be e designated has President, vice president secretary and treasurer
  6. Terms and conditions regarding managing of Trust funds
  7. Powers of the trustees
  8. Duration of trust etc..
  9. Once the above mentioned things are settled we have to draft the trust deed and get it signed from the settlor and trustees of the trust.
  10. The trust deed should be on non judicial stamp paper of rupees 500
  11. The trust deed should also be notarized.
  12. Application for registration of Trust deed to Devsthan Vibhag:

The Charitable Trust is registered under the Rajasthan public trust act under the jurisdiction of Devasthan vibhag, for registration with devsthan vibhag an application is required to be submitted along with trust deed and ID and address proof of trustees and settlor

13. Publication of Notice in Newspaper for objections from Concerned or Interested persons 

The Newspaper notice is published that require any interested person may object the trust registration application within period of 60 days of publication.

14. Hearing by Devasthan Vibhag : After the Expiry of Period of 60 days , Trustee is required to present for personal Hearing at Trust Office 

15. Grant to Certificate of Registration of Trust 

Documents Required for Trust Registration in Rajasthan

  1. Aadhar Card and Pan Card Copy of Settler
  2. Aadhar Card and Pan Card Copy of Trustees
  3. Electricity Bill of Office of Trust
  4. Rent Agreement of office of Trust in any
  5. Photo of Settler
  6. Photo of Trustees

Draft Trust Deed

Charitable Public Trust Deed

  • Ready-Made Trust Deed Draft Copy in Word
  • Just Change Basic Details like Name, Address, etc or make any changes you want
  • Ready to Print on Stamp Paper
Get Now

Fastlegal provides Services for Trust Registration in Rajasthan for any help please call us at 9782280098 or email us at mail@fastlegal.in

Fastlegal also provides 12A and 80G Registration Services in Rajasthan

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Guide to Depreciation on Fixed Assets and Deferred Tax Calculation

Posted on by Fastlegal Team

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. In this tutorial, we’ll explore how to calculate depreciation under the Companies Act and the Income Tax Act. We’ll also discuss the procedure for calculating deferred tax related to fixed assets.

Depreciation Under Companies Act

The depreciation under the Companies Act is calculated based on the useful life of the assets, as stated in Schedule II of the Companies Act, 2013.

Here’s a simplified step-by-step process:

  1. Identify the Asset: Determine the fixed asset that you will depreciate.
  2. Determine the Cost: Ascertain the historical cost of the asset, including purchase price, import duties, transportation, and installation.
  3. Assess the Useful Life: Refer to Schedule II for the prescribed useful life of the asset class.
  4. Select the Method: Choose a depreciation method (Straight line method or Written down value method) as per your company policy.
  5. Calculate Depreciation: Apply the method to the cost of the asset over its useful life.

Example Table of Rates and Useful Life as per Companies Act:

Asset TypeUseful Life (Years)Depreciation Rate (SLM)Depreciation Rate (WDV)
Buildings303.34%5.28%
Furniture109.50%18.10%
Machinery156.33%13.91%
Computers331.67%63.16%

Note: SLM stands for Straight Line Method, and WDV stands for Written Down Value Method.

Depreciation Under Income Tax Act

The Income Tax Act allows businesses to claim depreciation on their assets to reduce their taxable income using the Written Down Value (WDV) method.

Steps for calculation under Income Tax Act:

  1. Categorize the Asset: Identify the block of asset as per Income Tax rules.
  2. Determine the WDV: Find out the Written Down Value at the beginning of the year.
  3. Apply the Rates: Use the rates provided by the Income Tax Act for different asset types.
  4. Compute Depreciation: Calculate the depreciation for the year based on the applicable rate.

Example Table of Rates as per Income Tax Act:

Asset BlockDepreciation Rate
Building10%
Furniture and Fittings10%
Machinery and Plant (General)15%
Computers and Software40%

Calculating Deferred Tax

Deferred tax is calculated on temporary differences between the book value of assets as per accounting records and their value for tax purposes.

Here’s how to calculate deferred tax:

  1. Identify Temporary Differences: Determine the temporary differences that arise due to differences in depreciation methods or rates as per accounting standards and tax laws.
  2. Calculate Timing Differences: Assess the timing difference for the period by subtracting the tax base of the asset from its carrying amount.
  3. Apply the Tax Rate: Apply the current tax rate to the timing difference to find the deferred tax.
  4. Deferred Tax Asset or Liability: If the carrying amount is greater than the tax base, it results in a deferred tax asset. Conversely, if the tax base is greater, it leads to a deferred tax liability.

Example Calculation:

ParticularsCarrying AmountTax BaseTemporary DifferenceTax RateDeferred Tax
Machinery (as per books)100,00080,00020,00030%6,000

In this example, a deferred tax liability of Rs. 6,000 will be recognized on the balance sheet because the carrying amount is more than the tax base.

Remember that rules and rates are subject to change, and different types of assets may have specific requirements. It’s important to refer to the latest schedules and rates provided under the Companies Act and Income Tax Act respectively, and to consult with a tax professional for accurate depreciation and deferred tax calculations.

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A Comprehensive Guide on TDS: Monthly Payments, Returns, and Applicable Sections and Rates

Posted on by Fastlegal Team

Tax Deducted at Source (TDS) is a means of collecting income tax in India, under the Indian Income Tax Act of 1961. TDS is managed by the Central Board for Direct Taxes (CBDT) and is a part of the Department of Revenue managed by the Indian Revenue Service (IRS). It is a method of minimizing tax evasion by deducting tax at the point of income payment.

In this guide, we’ll cover the steps you need to follow for monthly TDS payments, filing of TDS returns, and we’ll provide a list of sections along with the rates of TDS.

Step-by-Step Tutorial on Monthly TDS Payments

TDS payments are typically due on the 7th of the next month. For example, TDS for the month of April would be due on or before May 7th.

Steps for Monthly TDS Payment:

  1. Calculate TDS: Determine the amount that needs to be deducted as TDS from the payments made during the month.
  2. Make Payment Online:

    • Visit the official website of the Tax Information Network of the Income Tax Department.
    • Go to the e-Payment section and select the relevant challan i.e., ITNS 281.
    • Fill in the necessary details like PAN/TAN, the applicable section, nature of payment, the period for which payment is made, and the amount of TDS.
    • Select the bank through which payment will be made and proceed to pay.
  3. Generate Challan 281: After successful payment, a challan counterfoil will be displayed containing CIN (Challan Identification Number), payment details, and bank name through which e-payment has been made. This challan is proof of payment.
  4. Late Payment Interest: If the TDS payment is delayed, interest will have to be calculated and paid for the period of delay.

Filing of TDS Returns

TDS returns must be filed quarterly. There are different forms for different purposes, such as Form 24Q for salaries, Form 26Q for non-salary deductions, and so on.

Steps for Filing TDS Returns:

  1. Prepare Return: Gather all the TDS certificates and challans for the quarter.
  2. Use Return Preparation Utility (RPU) & File Validation Utility (FVU):

    • Download the latest RPU and FVU from the NSDL website.
    • Prepare the return using RPU and validate it through FVU.
  3. Correct Errors: If there are any errors, rectify them and validate again.
  4. Submit Return: Once the return is error-free, it can be submitted online through the e-filing portal of the Income Tax Department.
  5. Verification: After submission, the return must be verified. This can be done via digital signature or by generating an EVC (Electronic Verification Code) through net banking.
  6. Acknowledgment: Upon successful submission and verification, an acknowledgment form – Form 16A/16B/16C will be generated. This serves as proof of filing.

List of Sections and Rates of TDS

Here is a simplified list of some common sections of the Income Tax Act and their corresponding TDS rates for the financial year 2023-24:

  • Section 192: TDS on salary income; the rate as per the individual’s income tax slab.
  • Section 193: TDS on interest on securities; 10%.
  • Section 194: TDS on dividend income; 10% if the dividend exceeds INR 5,000.
  • Section 194A: TDS on interest other than securities (e.g., bank interest); 10% if interest exceeds INR 40,000 (INR 50,000 for senior citizens).
  • Section 194C: TDS on payment to contractors and sub-contractors; 1% for individuals/HUF, 2% for others if payment exceeds INR 30,000 per contract or INR 1 lakh in aggregate in a year.
  • Section 194D: TDS on insurance commission; 5% for residents, 20% for non-residents.
  • Section 194H: TDS on commission or brokerage; 5% if exceeding INR 15,000 per annum.
  • Section 194I: TDS on rent; 2% for plant & machinery, 10% for land or building or furniture or fitting.

These steps and rates provide a general guideline and could change based on the government’s budgetary updates. It is always advisable to consult the official income tax website or a tax consultant for the latest updates and professional guidance.

0

Issue of Share Certificate in Private Limited Company: A Step-by-Step Tutorial

Posted on by Fastlegal Team

In this Article we will discuss A Step-by-Step Tutorial on Issue of Share Certificate in Private Limited Company, Issuing share certificates in a private limited company is an important procedure as it serves as proof of share ownership for shareholders. This document outlines the steps necessary to issue share certificates.

Step 1: Authorization from the Board of Directors

Before issuing any share certificates, the company must hold a board meeting to authorize the issuance of shares. The board resolution should include the number of shares to be issued, to whom, and at what price.

Step 2: Receive Payment for Shares

The company should ensure that the payment for the shares has been received as per the terms agreed upon. The payment should be in accordance with the price per share fixed by the company.

Step 3: Preparation of Share Certificates

Prepare the share certificates using the company’s standard format. According to the Companies Act, the certificate should include:

  • The company name and registration number
  • The name of the shareholder
  • The number of shares held and the share certificate number
  • The amount paid on those shares

Ensure that each certificate is signed by two directors or by a director and a company secretary, if appointed.

Step 4: Make Entries in the Register of Members

The company must enter the details of the issued shares in the Register of Members. The details should include the name of the shareholder, the number of shares, the date of issue, and the certificate number.

Step 5: Stamp Duty

Ensure that share certificates are stamped to comply with the stamp duty regulations applicable in your jurisdiction. This step usually involves paying the required duty and having the share certificate stamped by the appropriate authority.

Step 6: Issue the Share Certificates

Once the share certificate is duly stamped and signed, it should be issued to the shareholder within two months of the allotment of shares or the date of the transfer, as stipulated by the Companies Act.

Step 7: Report the Issuance of Share Certificates

The issuance of share certificates must be reported to the Registrar of Companies within a prescribed period, usually through the filing of specific forms that detail the allotment of shares.

Step 8: Update the Register of Allotments

Finally, the company must update its Register of Allotments with details similar to what is mentioned in the Register of Members. This register keeps track of all allotments made by the company since its incorporation.

Conclusion

Issuing share certificates is a legal requirement that must be accurately completed to ensure compliance with regulatory requirements. Always refer to the latest provisions of the Companies Act in your jurisdiction to ensure compliance with all legal formalities.

Remember that this guide is a general overview and might require alterations based on location-specific laws governing private limited companies and their share issuance procedures. It is advisable to consult a legal expert or a company secretary /chartered accountant for company-specific compliance.