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Monthly Archives: January 2022

Zero Tax on Salary of Rs. 10,00,000? Is it possible?

Zero Tax on Salary of Rs. 10,00,000? Is it possible?

Yes, even if your salary is up to Rs. 10,50,000, you will not be required to pay the taxes after reading this article.

1. Standard Deduction

⦁ Assumption – Salary Considered – Rs. 10,50,000. If even if it is less, you can still save the taxes to zero and yes, you heard it right – Legally, without having the sleepless nights of getting notices from the Income Tax Department.

⦁ the government provides the Standard Deduction of Rs. 50,000. So your taxable salary is Rs. 10,50,000 – 50,000 = Rs. 10,00,000.

2. Deduction under Section 80C. Confused about what comes under 80C – Read Below –

⦁ PPF, EPF, LIC premium, Equity-linked saving scheme, principal amount payment towards home loan, stamp duty and registration charges for the purchase of property, Sukanya Samriddhi Yojana (SSY), National saving certificate (NSC), Senior citizen savings scheme (SCSS), ULIP, tax saving FD for 5 years, Infrastructure bonds, etc.

⦁ The maximum deduction which can be claimed here is Rs. 1,50,000. Hence, considering you invest Rs. 1,50,000, your taxable salary becomes – Rs. 10,00,000 – Rs. 1,50,000 = Rs. 8,50,000 (taxable salary).

3. Deduction under Section 80CCD (1b) – National Pension Scheme –

⦁ You can claim a deduction of Rs. 50,000 by investing under NPS. Yes, it has restrictions for the withdrawal, but this will help you in building a retirement corpus.

⦁ The taxable salary after investing here will become – Rs. 8,50,000 – Rs. 50,000 = Rs. 8,00,000.

4. Deduction Under Section 80D – Medical Insurance –

⦁ Indians, yes you heard it right we Indians have started giving importance to Insurance policies and yes now we don’t ask ” Wapas Kitna Milega Kuch Nahi Hua To” – With this change in mindset and living in a pollutive environment we require medical insurance. “Sone pe Suhaga” is it will even save your taxes.

  • ⦁ For self, spouse & children – There is a cap of Rs. 25,000 or 50,000 (in case of senior citizen)
  • ⦁ For Parents – There is a cap of Rs. 25,000 or 50,000 (in case of senior citizen)
  • ⦁ Even body checkups are allowed and a deduction up to Rs. 5,000 can be claimed. But the upper limit is mentioned above.
  • ⦁ If your parents are senior citizens, and they don’t have medical insurance and they aren’t filing their Income Tax Return and if you paid for their medical treatment, you can claim up to Rs. 50,000.
  • ⦁ Hence, after section 80D, the taxable salary shall become – Rs. 8,00,000 – Rs. 25,000 = Rs. 7,75,000.

5. Interest on Housing Loan – Section 24b of Income Tax Act –

⦁ We Indians grow up hearing “Apna Ghar Apna Hi Hota Hai” and our minds start thinking about it as soon as we start family planning.

⦁ Interest on housing loans is allowed till Rs. 2,00,000 every financial year. Hence, your taxable salary becomes – Rs. 7,75,000 – Rs. 2,00,000 = Rs. 5,75,000.

6. Interest on Education Loan / Purchase of Electric Vehicle / Donation Under Section 80G —

⦁ Education has become very costly and middle-class parent cannot afford to pay from their pocket, hence education loan is taken by the number of students. The interest component of the loan is deductible under section 80E.

⦁ The world is shifting from Petrol/ Diesel to EVs and yes, you can even claim a deduction of up to Rs. 1,50,000 on interest paid for the purchase of EVs. The deduction is available u/s 80EEB. (Vehicle should be financed, notional interest cannot be claimed).

⦁ If none of the above is applicable, then donations are also allowed as deductions. Provided you are donating to charitable trust or NGOs which has got the certificate from Income Tax.

⦁ Now the overall objective is to reduce the taxable income from Rs. 5,75,000 to Rs. 5,00,000. Considering Rs. 75,000 deductions are claimed by using the above section. Then you need to pay zero taxes. Confused? Happy? How How? Let us see –

⦁ Now the Taxable salary is Rs. 5,00,000. The tax on income up to Rs. 2,50,000 is exempt from tax. Thus the tax payable would be Rs. 12,500 (5% slab from Rs. 2,50,000 to Rs. 5,00,000. Hence 5% of Rs. 2,50,000 is Rs. 12,500).

7. Rebate under section 87A –

⦁ If your income is Rs. 5,00,000 or lesser, you can claim a rebate under section 87A for a maximum of Rs. 12,500. Hurrah the tax payable is Rs. 12,500 (tax calculated above) – Rs. 12,500 (rebate u/s 87A) = 0 (Zero).

“Start Planning, you can thank us later 🙂“

⦁ Upcoming article – How to pay zero taxes on Rs. 20,00,000 salary. Stay tuned.

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All IECs not been updated after 01.07.2020 will be de-activated –

⦁ All IECs (Import Export Code) which have not been updated after 01.07.2020 shall be de-activated with effect from 01.02.2022. The list of such IECs may be seen at the link (https://www.dgft.gov.in/CP/?opt=IECDL). The concerned IEC holders are provided an opportunity to update their IEC in this interim period till 31.01.2022, failing which the IECs shall be de-activated from 01.02.2022. Any IEC where an online updation application has been submitted but is pending with the DGFT RA for approval shall be excluded from the de-activation list.

⦁ It may further be noted that any IEC so de-activated, would have the opportunity for automatic re-activation without any manual intervention or any visits to the DGFT RA. For IEC re-activation after 31.01.2022, the said IEC holder may navigate to the DGFT website and update their IEC online. Upon successful updation, the given IEC shall be activated again and transmitted accordingly to the Customs system with the updated status.

Reference is drawn to Notification No. 58/2015-2020 dated 12.02.2021, 11/2015- 2020 dated 01.07.2021, 16/2015-2020 dated 09.08.2021, whereby it was mandated by DGFT to all IEC holders to ensure that details in their IEC is updated electronically every year during April-June period (for which no user charges were to be borne by the IEC holder). Based on representations received from the IEC holders who had not updated their IECs, the period of
updation was extended up to 31.07.2021 and subsequently to 31.08.2021. Due intimations were also provided vide Trade Notice 18/2021-2022 dated 20.09.2021 and Trade Notice 25/2021-22 dated 19.11.2021 prior to the phase-wise deactivation of the IECs not updated yet.

IEC-Updation last date notification, update otherwise will be deactivatedDownload

In continuation to the aforementioned notification(s) and Trade Notice(s) and as per para 2.05(e) of the Foreign Trade Policy (FTP), the third phase of deactivation of IECs which are not yet updated is being started.

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“GePP-On” new functionality for generating E-invoicing (GST, Helping Business –

With the intent of – helping businesses – to generate e-invoices (GST), NIC has released an application known as ‘GePP-On’. (GST e-Invoice Preparing and Printing (GePP) Tool)

To generate e-invoices using GePP-on application, one needs to enter the invoice details in the form designed in the application.

Following are the features of GePP-On:

1. Browser-desktop based application that works on mobile devices as well
2. Generation of IRN
3. Cancellation of IRN
4. Generation of e-way bill number along with IRN
5. Printing of e-invoice with QR Code
6. You can create customer and HSN master
7. Designed to work in offline mode
8. Backup and restoration of data and many such related features.

Currently, the beta version of “GePP-On” is released for businesses that are enabled for e-invoice generation.

These businesses can use the existing login credentials to access the application. Shortly, the final version of GePP-On will be made available.

Download link to GePP:https://einv-apisandbox.nic.in/gepp/#/

The efforts to release of GePP-On application for e-invoice generation is a welcome move, not only for businesses that are already enabled for e-invoicing but also would benefit many small businesses in the coming days, when more businesses are brought under the ambit of e-invoicing.

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E-way bill-Every transaction to be looked into independently for a ceiling limit of Rs. 50,000

In a very important decision the Hon’ble Allahabad High Court, in the case of Shri Surya Traders v. Union of India Writ Tax No. 1146 of 2021, Allahabad HC (SB) has passed a detailed ruling on detention, seizure, and release of goods and conveyances in transit.
It has been held that every transaction has to be looked into independently for the purpose of determining ceiling of Rs. 50,000 for the requirement of generation of e-way bill.

The Petitioner assessee is engaged in the business of selling Sweet Supari and Betel Nut products. The Petitioner, in its normal course of business sold 90 bags of betel nut product in the following manner, i.e. 87 bags to one registered dealer and 3 bags to another registered dealer using common transport, in such manner that the value of the second transaction/ consignment was less than Rs. 50,000 and accordingly in the opinion of the Petitioner, did not require an e-way bill. Regarding the supply of 87 bags of betel product, however, the documentation was complete and an e-way bill was also generated.

The vehicle was intercepted, and on examination, it was found that while 87 bags of goods were accompanied with a valid invoice, e-way bill, and all supporting documents, the 3 bags of betel nut product were not accompanied by a tax invoice. As a result, the Department formed a view that complete 90 bags are liable to be detained and subsequently were seized.

The Hon’ble Court quashed the impugned detention/ seizure orders and allowed the writ petition of the Petitioner and concluded that every transaction has to be looked into independently for determining ceiling of Rs. 50,000 when being transported under different Tax Invoices, though under the same conveyance.

Added to that, the Hon’ble Court imposed costs of Rs. 20,000 on the Respondents, granting them the liberty to recover the said cost from the erring officer.

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ITR & Tax Audit due date extended –

Due dates for filing income tax returns?

Due date of uploading Tax Audit Report in case where transfer pricing is not applicable –

  • ⦁ The earlier due date was 15th January 2022, the new extended date is – 15th February 2022.

Due date of uploading Tax Audit Report in case where transfer pricing (person entering international transactions) is applicable –

  • ⦁ The earlier due date was 31st January 2022, the new extended date is – 15th February 2022.

What is the due date to file Income Tax Returns in case audit is applicable?

  • ⦁ In case transfer pricing is not applicable – The earlier due date was 15th February 2022, the new extended date is – 15th March, 2022.
  • ⦁ In case transfer pricing is applicable – The earlier due date was 28th February 2022, the new extended date is – 15th March, 2022.

Due date of filing 3CEB form applicable in case of Transfer Pricing-

  • ⦁ The earlier due date was 31st January 2022, the new extended date is – 15th February 2022.

Note – The due dates have only extended in case where tax audit is applicable, in non-audit cases the due date of returns has already passed. Although a person can still file his ITR with late fees of Rs. 1,000 or Rs. 5,000 as the case may be.

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The textile industry is seeing a major shift in terms of growth –

The textile industry is seeing a major shift in terms of growth. It’s outperforming. Re-rating of the entire Indian textile industry in focus. Hold tight for big-time returns as robust export opportunities give strong and sustainable earnings visibility Textile company shares bucked the weak market trend and rallied on Thursday as improving exports of cotton and made-up apparel, along with attractive valuation and earnings growth visibility, made analysts bullish on the sector.

Shares of Super Fine Knitters, Super Spinning, and Filatex India rallied up to 10 percent on Thursday. Those of JCT, Surat Textile, Swasti Vinayaka, KPR Mill, Sumeet Industries, Bhandari Hosiery, Minaxi Textiles, and Bombay Rayon, gained between 4 percent and 5 percent, and Gokaldas Exports, Suryaamba Spin, and Vardhman Textiles also ended in the green.

In comparison, the S&P BSE Sensex fell over 1 percent, or 621 points, and closed the session in the 60,000-mark. Further, the US-China trade war and imposition of additional duties on Chinese T&A imports have forced US-based importers to scout other destinations such as India.

In December, the US signed into law legislation that bans imports from China Xinjiang region over concerns about forced labor. As Xinjiang makes up nearly 20 percent of the global cotton market, the supply re-adjustment on account of this ban has led to more demand for Indian cotton and cotton yarn, analysts at Spark Capital said while initiating coverage of the sector.

They highlighted that cotton and cotton yarn exports from India have surged at a 34 percent CAGR (between April and October) from FY19-21. The US market accounts for 15 percent of global T&A imports. Countries such as China, Bangladesh, Vietnam, and Cambodia have become reliant on India for their cotton requirements after the ban, and Indian cotton exports have skyrocketed in the past eight months. Separately, India has witnessed increased exports in the made-up segment. The demand in the segment has significantly increased because of lockdown-led home confinements and the pandemic-induced new standard operating procedures (SoPs) which has led to the underlying volume demand improving. India being the second-largest supplier of made-ups naturally benefitted on account of Chinese suppliers losing market share, Spark Capital pointed out.

The government’s stance on free trade agreements (FTAs) is a welcome policy change for the T&A players. The stocks in the sector are also ripe for a re-rating as robust export opportunities give strong and sustainable earnings visibility, say analysts at ICICI Securities. Revival in the hospitality sector, along with duty reimbursement by the government of India, and market share gain on China 1 theme will drive earnings trajectory. Spread between yarn and cotton prices continues to remain high and should enable yarn producers to report strong earnings for Q3FY22, said a note by JM Financial.

From an investment viewpoint, analysts suggest playing the theme by going long on Suryaamba Spin, Vardhman Textiles, Trident, Sutlej Textiles, Alok Industries, KPR Mill, Nitin Spinners, Welspun India, Indo Count, Himatsingka Seide, Gokaldas Exports. This should be seen as a buying opportunity. Whenever market gives a dip, focus on these stocks.

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Reporting of Sales in GSTR-3B for Restaurant supplying food through ECO –

Who are ECOs?

  • ⦁ ECO’s are e-commerce operators or aggregators who bridge the gap between buyer and seller. For Example – Swiggy, Zomato, Ola, Uber, Flipkart, Amazon all are examples of ECOs.
  • ⦁ Any person supplying the following services is notified under section 9(5) of the CGST Act, 2017 –
  • ⦁ Restaurant Service – effective from 1st January 2022 – Notification No. 17/2021-Central Tax (Rate) and 17/2021-Integrated Tax (Rate) dated 18.11.2021.
  • ⦁ Motor Cabs
  • ⦁ accommodation
  • ⦁ housekeeping services

Where should we report the transaction in GSTR-3B?

Supplies reported byReporting in Form GSTR-3B
Supplies under 9 (5) reported by ECOTable 3.1(a) of GSTR-3B
Registered person/Restaurant supplying through ECOTable 3.1(c) along with nil and exempted supply

For more details, please refer to CBIC Circular No. Download

Read more – GST for restaurants registered with swiggy, zomato, & other e-commerce aggregators.

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