The Goods and Service Tax Network (GSTN) has enabled the window to opt-in for the GST Composition Scheme for the Financial Year 2022-23.
GST Composition Scheme
The eligible person can opt for a GST composition scheme for FY 2022-23 before March 31, 2022.
Who is eligible for the GST composition scheme?
Any taxpayer whose turnover is less than Rs. 1.5 crore can opt the scheme (CBIC has notified the increase to the threshold limit from Rs 1.0 Crore to Rs. 1.5 Crores).
However, you cannot opt for the GST Composition scheme if you –
⦁ are/you make any supply of goods which are not liable to be taxed under this Act;
⦁ inter-state outward supplies of goods;
⦁ Service providers (other than the person engaged in the supply of food and drinks i.e. restaurant services).
⦁ supplies through electronic commerce operators who are required to collect tax under section 52;
⦁ Producer of pan masala, or tobacco, ice cream;
⦁ a casual dealer;
⦁ a Non-Resident Foreign Taxpayer;
⦁ a person registered as Input Service Distributor (ISD);
⦁ and a person registered as TDS Deductor/Tax Collector.
How to opt for the Composition Scheme –
To opt for the Composition Levy, perform the following steps on the GST portal –
⦁ login to the Taxpayers’ Interface,
⦁ then Go to Services > Registration > Application to Opt for Composition Levy.
⦁ Fill out the form as per the form specification rules and submit.
GST Composition scheme – Applicable GST Rate
Type of Business
CGST
SGST
Total
Manufacturer and Traders (Only Goods)
0.5%
0.5%
1.0%
Restaurant (non-alcohol serviceable)
2.5%
2.5%
5.0%
Note – GST Composition scheme may be beneficial to one entity, while it may not be for the other. It is advised to take decisions wisely depending upon the target customers and various other factors. We help you in deciding the best scheme for GST, GST Advisory, and other GST Related Services.
The annual rate of inflation is 12.96% (Provisional) for the month of January 2022 (over January 2021), which is a continuous decline from 14.87% in November 2021 and 13.56% in December 2021. The high rate of inflation in January 2022 is primarily because of the rise in prices of mineral oils, crude petroleum & natural gas, basic metals, chemicals, chemical products, food articles, etc. as compared to the corresponding month of the previous year.
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GST Portal Update – Various new functionalities are implemented on the GST Portal, from time to time, for stakeholders. In the month of January 2022, the following changes are made:
i. Change in filling frequency of ITC-04 (turnover > 5 crores – half-yearly filling, otherwise annually)
ii. Enhancements in Search HSN functionality.
iii. Blocking filing of the statement of outward supplies in Form GSTR1 in case of non-filing of returns. In Form GSTR-3B for the preceding tax period.
MCA has amended the Companies (Accounts) Rules, 2014 w.e.f. 11th February 2022 to provide that every company covered under the provisions of CSR shall furnish a report on Corporate Social Responsibility in Form CSR-2 to the Registrar for the preceding financial year (2020-2021) and onwards as an addendum to Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS).
However, for the preceding financial year (2020-2021), Form CSR-2 shall be filed separately on or before 31st March 2022, after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.
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Why has the government of India has provided various deductions such as 80C, 80CCC, 80CCD, 80D?
Deduction from 80C, 80CCC, 80CCD, 80D is some of the most used deductions used by an individual to save taxes. The income tax department with an aim to inculcate saving and investment habits among individuals, and spread awareness for health insurance, has provided tax benefits under sections 80C and 80D. In the current era where education cost has increased and people take education loan to cover the cost of education, the government by providing deduction under 80E for the interest paid on education loan.
80C & 80CCC, 80CCD
80C is one of the most favorable sections and can be regarded as a gift to an individual given by Income-Tax Authorities to save some taxes. It is one of the most widely used sections for reducing taxes. Whenever you watch any news channel before the financial budget, you will hear people’s demand to increase the limits provided under Section 80C. The benefit under this section is provided to individuals and HUFs.
Note – Companies, LLPs, Partnership Firm, AOI, BOI, and other forms of business cannot avail the benefit under this section.
What is the current limit under 80C?
⦁ The current overall limit under section 80C is Rs. 1,50,000.
⦁ Even if you invest under 80CCC, the overall limit is still Rs. 1,50,000 (In easier sense limits combined for both 80C and 80CCC is Rs. 1,50,000) with an exception that you can avail the extra tax benefit of Rs. 50,000 if you invest in NPS covered under section 80CCD(1B).
Instrument covered under section 80C?
The instrument for Tax Deduction
80C
Following instrument qualifies for a deduction under section 80C – Public Provident Fund, Employees Provident Fund (the employees’ contribution, Equity Linked Saving Scheme (ELSS Mutual Fund), Life Insurance Premium, Stamp duty, and registration charges when a new property is purchased, principal payment for housing loan, Sukanya Samriddhi Yojna, National Saving Certificate (NSC), ULIP Policies, Tax Saver FD for 5 years, Infrastructure Bond, Senior citizen savings scheme (SCSS), etc.
80CCC Deduction for life insurance annuity plan.
80CCC allows a deduction for payment of premium/contribution for annuity pension plans. Note – Pension received from the annuity or amount received upon surrender of the annuity, including interest or bonus accrued on the annuity, is taxable in the year of receipt.
Note – The contribution above is combined with Rs 1.5 Lakh (limit allowed u/s 80C).
80CCD(1) Deduction for NPS
Employee’s contribution under NPS is deductible under section 80CCD(1) –
Maximum deduction allowed is least of the following – 10% of salary (Basic Salary+Dearness Allowances) (in case taxpayer is employed) and – 20% of gross total income (in case of self-employment).
Note – The contribution above is combined with Rs 1.5 Lakh (limit allowed u/s 80C).
80CCD(1B) Deduction for NPS
Additional deduction of Rs 50,000 per year is allowed for the amount deposited into the NPS account eligible under section 80CCD(1B).
Note – Contributions made to Atal Pension Yojana are also eligible for deduction under 80CCD(1B).
80CCD(2) Deduction for NPS
Benefit in this section is allowed only to salaried individuals and not self-employed. Employers’ contribution is allowed for deduction up to – 10% of basic salary plus dearness allowance.
80D
80D – Deduction for payment of Medical Insurance Premium –
Section 80D is allowed as a deduction for money spent on maintaining your health and health insurance and assumes great significance in your tax planning and managing personal finance.
The deduction is available for payment of premiums for health insurance policies and medical expenses for senior citizens.
Who can avail the deduction, for whom and up to what amount?
⦁ Any individual or HUF can avail of deduction u/s 80D.
⦁ The deduction is available for payment of insurance premium of –
⦁ Self
⦁ Spouse
⦁ Dependant children
⦁ Parents
Insured
Deduction Amount in Rs.
Age Below 60 yrs.
Age Above 60 yrs.
Self, Spouse, and Children
25,000
50,000
Parents
25,000
50,000
Max Deduction
50,000
1,00,000
Opt Preventive Healthcare*
5,000
5,000
What is Preventive Heath Checkup, and what qualifies for deduction?
⦁ To promote the habit of getting your body checkup every year, the government started giving deductions for a preventive health checkup from 2013-14. The idea of preventive health check-ups is to identify any illness and mitigate risk factors at an early stage through frequent health checkups.
⦁ The expenditure for health checkups can be made in cash.
⦁ Maximum deduction for self, spouse, and family is Rs. 5,000 (subject to overall ceiling mentioned above) and Rs. 5,000 for parents (subject to overall ceiling mentioned above).
Can we claim a deduction for Medical Expenses of Parents who are senior citizen?
⦁ In case your parents are senior citizens and they don’t have any active health insurance policy and they are not filing their Income Tax Returns, then you can claim expenditure incurred on their medical treatment as expenses subject to a maximum deduction of Rs. 50,000.
⦁ Expenditure can be made in cash.
⦁ Senior citizen includes super senior citizen.
Note –
⦁ Cash Payment for paying health insurance premiums is not allowed as a deduction, hence the premium has to be paid electronically or cheques.
⦁ In case premium or expenditure is paid on behalf of grandparents or siblings or working children or any other relative, then the deduction is not allowed.
⦁ HUF can claim a deduction under Section 80D for a medical insurance taken for any of the members of the HUF.. deduction will be Rs 25,000 if the member insured is less than 60 years, and will be Rs 50,000 if the insured is 60 years of age or more.
For Other deductions available for individuals – Read More.
A lot of compliances are required for a Private Limited Company. Whenever we think of a Private limited company, we back off thinking this. Let us look upon what really is required –
What are the Compliances Applicable to a Private Limited Company?
⦁ For carrying a Statutory Audit of the company, i.e. Audit mandated by Companies Act, 2013. (1st Auditor has to be appointed within 30 days when a company is incorporated).
⦁ It is compulsory in nature even if turnover is zero or a company is a loss-making entity.
⦁ Books of accounts have to be maintained compulsorily so that the Balance sheet and Profit & Loss Account can be prepared, which is required for ROC filings and filing of Income Tax returns.
⦁ It is compulsory in nature.
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⦁ At the initial phase, it is advisable to outsource the activity, as it would save your cost by 70% per month and you would also get an expert opinion from a taxation point of view. Contact us and we are set to work together.
⦁ TDS Returns – Non Salary – 26Q – Is Required to be filed every quarter if Company enters into any transaction in which TDS deduction is mandatory as per Income Tax Act, 1961.
⦁ TDS Return – Salary – 24Q – Is Required to be filed every quarter if Company is deducting TDS on Salaries of employees. The company here can only file last quarter’s return to save compliance costs. Kindly take the necessary legal opinion.
⦁ It is mandatory to comply with TDS Compliances.
⦁ TDS Payment has to be made by the 7th of the next month and in the case of March, the due date is 30th April.
⦁ TAN Number is mandatory both for payment of TDS and Filing of Returns.
⦁ GST Registration is a onetime activity, but returns have to be filed either monthly/ quarterly, depending on the periodicity.
⦁ To check whether GST Registration is compulsory for your organization – Kindly contact us. The services is free, so contact us to check whether GST is applicable at a current point in time.
⦁ Please don’t make a judgment based on the turnover limit of Rs. 20 lakh / Rs. 40 lakh. There are several other factors that determined whether GST is applicable, like inter-state sales, etc. (Never consume a medicine just by searching on search engine, same applies here.)
⦁ Filing of Income Tax Returns is mandatory for a Private Limited.
⦁ The original due date is 31st October, every year (subject to changes – please contact us to know the latest due dates – we never charge for giving you basic information.
⦁ It is a yearly activity and 1 return has to be filed every year. Subject to the condition that yes, it can be revised if required.
⦁ Various ROC Returns and compliances are required for a Private Limited Company. The government has given relaxation to small companies. We will only mention those compliances which are compulsorily required by a small Private Limited Company. Please don’t confuse a small company with your own definition, the definition is mentioned below for your reference.
⦁ As per the new definition and threshold limits, companies with a paid-up capital of INR 2 crore or less, and turnover of INR 20 crore or less come are defined as small companies. The earlier threshold was INR 50 lacs or less in paid-up capital and INR 2 crore or less in turnover. The above definition changes from time to time, so do contact us for the updated details.
⦁ AOC – 4 – In simple words, it is used to file the Balance Sheet and Profit & Loss Account with the Registrar of Companies. It is an annual activity.
⦁ MGT – 7 – In simple words, it is used to intimate ROC about the Annual General Meeting, number, and dates of board meetings, and other critical information. It is an annual activity.
⦁ Director’s KYC – Every director has to file the KYC every year with ROC, in case not filed on time, penalty of Rs. 5,000 is levied.
Note: The above compliances may change. So, do contact us – we offer free services to check whether you are compliant. Contact Us for more information.
We offer complete compliance solutions to a Private Limited Entity. We provide one of the best services, where you concentrate on the business and we shall handle all the compliances for you. Contact us for the packages.
Key-highlights of GST Proposals in Finance Bill 2022 –
⦁ Time-limit to avail ITC u/s 16 (4) extended till 30th November of next year from 30th September.
⦁ Additional Condition for availing of ITC u/s 16 (2)- ITC can be availed only if the same is not restricted to GSTR-2B.
⦁ Composition Tax Payer’s Registration can be canceled suo-moto if they have not filed their GSTR-4 return of 3 months from the due date.
⦁ Credit Notes in respect of a supply made in a financial year can be issued by 30th November of next financial year (currently allowed till 30th September).
⦁ Any rectification of an error in GSTR-1/ GSTR-3B is now permitted until 30th November of the next financial year (currently allowed till 30th September).
⦁ The two-way communication process in filing GST returns is scrapped.
⦁ The due date for filing a return by a non-resident taxable person is prescribed as the 13th day of next month.
⦁ Section 41 of the CGST Act is being substituted so as to do away with the concept of “claim” of ITC on a “provisional” basis.
⦁ Section 47 of the CGST Act is being amended to provide for a levy of late fees for delayed filing of TCS returns.
⦁ Section 49 of the CGST Act is being amended so as to provide for restrictions for utilizing the amount available in the electronic credit ledger.
⦁ Section 49 of the CGST Act is being amended so as to allow transfer of amount available in the E-cash ledger of a registered person to the E-cash ledger of a distinct person;
⦁ Section 49 of the CGST Act is being amended so as to provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger.
⦁ Section 50 (3) of the CGST Act is being substituted retrospectively, with effect from the 1st July 2017, so as to provide for levy of interest on input tax credit wrongly availed and utilized. (Meaning, thereby, interest will not be levied if ITC is not utilized).
⦁ Refund claim of any balance in the electronic cash ledger shall be made available.
⦁ Rate of interest u/s 50 (3) prescribed as 18% in all cases.
As we know, the latest income tax updates for FY 2022-23 have been proposed in the finance budget presented on 1st Feb 2022. The changes for the Financial year 2022-23 are mentioned below:
⦁ Provision for filing ‘Updated Income Tax returns’ within 2 years from the end of relevant AY.
⦁ Reduced AMT rates for Co-operatives from 18.5% to 15%.
⦁ Reduced surcharge for Co-operatives with a total income of 1cr to 10Cr.
⦁ Tax relief for persons with disability: Allow annuity payment to differently-abled dependents when parents attain the age of 60 years.
⦁ Deduction for National Pension Scheme for State Government employees u.s 80CCC made at par with Central Govt.
⦁ Start-ups established before 31.03.2023 (earlier–31.03.2022; now extended by 1 year) will be provided tax breaks.
⦁ Last date for commencement of manufacturing for claiming lower tax regime under Section 115BAB to be 31.03.2024 (earlier 31.03.2023; now extended by 1 year).
⦁ Virtual digital assets (Cryptocurrency): Income from transfer of virtual digital assets to be taxed at 30%; No deduction for expenses other than the cost of acquisition; No set-off of losses.
⦁ TDS @ 1% on consideration above a specific threshold.
⦁ The gift to be taxed under section 56(2)(x).
⦁ No repetitive appeals for a common question of laws.
⦁ Off-shore banking units/ IFSC income to be provided exemptions.
⦁ A surcharge of certain AOPs to be capped at 15%.
⦁ Surcharge on Long Term Capital Gains on any assets to be capped at 15%.
⦁ Health and education cess not allowable as business expenditure u/s 37.
⦁ No set-off of losses against undisclosed income detected during the search.
