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Compliances Applicable to a Private Limited Company

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?

Auditor Appointment –

  • ⦁ 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.

Accounting and Book-Keeping –

  • ⦁ 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.
  • ⦁ Cheapest Software available in Indian Market – Zoho books, Tally, QuickBooks, and Busy
  • ⦁ 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.

Filing of TDS Returns / TCS Returns and Payment of TDS-

  • ⦁ 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 Returns and Registration –

  • ⦁ 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.)

Statutory Audit –

Payment of Advance Tax –

  • ⦁ Required only by a profitable entity and can be ignored if the company is a loss-making entity/ having no revenues.
  • ⦁ The due dates to pay advance tax are 15th June – 15%, 15th September – 45%, 15th December – 75%, and 15th March – 100%.
  • ⦁ In case taxes are not paid on time, interest has to be paid under different sections like 234A, 234B, 234C.

Filing of Income Tax Returns –

  • ⦁ 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.

ROC Compliances –

⦁ 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.

Compulsory ROC Returns for small companies includes –

  • ⦁ 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.

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Key-highlights of GST Proposals in Finance Bill 2022

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.
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Latest Income Tax Updates for FY 2022-23.

Latest Income Tax Updates for FY 2022-23.

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.
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GST Update – Alert on the GST portal

Latest GST Updates, Alert on the GST Portal –

⦁ Where the liability declared in GSTR-3B varies significantly with Form GSTR-1.

or

⦁ Where ITC taken in GSTR-3B varies significantly in comparison with auto-populated GSTR-2B.

GST update – Indicating a contravention to the provisions in rules, registration shall be suspended in terms of Rule 21(2A) of CGST Rules 2017.

⦁ If one could remember, as per Notification 94/2020 dated 22nd December 2020, a new sub-rule 2A has been inserted in Rule 21A of the Central Goods and Services Tax (CGST) Rules, which states.

⦁ Any significant differences or anomalies observed between the GSTR-3B and the GSTR-1/2B could lead to the suspension of GST registration.

⦁ Further, if these differences remain unexplained, the GSTIN could get canceled.

⦁ The tolerance limit has been kept at 10% in both cases by GSTN as per the alert message.

The taxpayer can check the comparison / variances post-login by navigating through Services–>Returns–> Tax liabilities–>and ITC Comparison–> Select year (period).

Note – This alert will definitely be helpful for the taxpayers to keep a tag on the variance/ anomalies and take corrective measures in time.

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Key Highlights: Budget 2022

Key Highlights, Budget 2022 –

  • ⦁ GDP growth for FY 22 is expected to be 9.2%, the highest for any large economy.
  • ⦁ PLI (Production Linked Incentive scheme) in 14 sectors for Aatmanirbhar Bharat to create 6 million jobs, an additional allocation of Rs 19,500 crore for PLI in solar PV module manufacturing.
  • ⦁ Promoting Fintech and the digital economy is a focus area for this budget.
  • ⦁ 75 digital banking systems in 75 districts by scheduled commercial banks.
  • ⦁ IBC to be amended to improve the efficiency of the resolution process, including cross border.
  • ⦁ Core Banking Services to start in Post offices.
  • ⦁ PM Gati-shakti master-plan Has scope to enhance multimodal communication through 7 engines, 2000 km of the rail network to be brought under KAVACH & Highway network to grow by 25,000 km in FY23.
  • ⦁ Contracts for implementation of multimodal logistics parks at 4 locations to be awarded in 2022-23, in PPP Mode.
  • ⦁ ECLGS (Emergency Credit Line Guarantee Scheme) to be extended up to March 2023, guaranteed cover extended by another Rs 50,000 crore.
  • ⦁ 8 million new dwellings in rural, urban areas to be completed under PM Awas Yojana.
  • ⦁ Rs 2.37 trillion worth of MSP direct payments to wheat and paddy farmers.
  • ⦁ Rs 2 trillion outlay for MSMEs. Additional loans for 13 mn MSMEs.
  • ⦁ Rs 48,000 crore allocated to housing projects under *PM Housing Scheme* for FY23, Rs 1,500 crore allocated for the development of the Northeast in FY23 & Desh stack e-portal to be launched to promote Digital infra.
  • ⦁ New provision to file the updated return within 2 years of the relevant assessment year.
  • ⦁ The alternate minimum tax for cooperative societies down from 18.5% to 15%.
  • ⦁ The tax deduction limit for state Govt employees* to NPS was raised from 10% to 14%**.
  • ⦁ Surcharge on Corporate tax pruned from 12% to 7% Surcharge on the transfer of long-term capital gains tax capped at 15%.
  • ⦁ Tax exemption to start-ups extended to March 2023.
  • ⦁ Gross GST collection for January 2022 at a record Rs 1.41 trillion.
  • ⦁ No change in income tax slab.
  • ⦁ Electric Vehicles battery-swapping policy is to be brought out with interoperability standards.
  • ⦁ Concessional duty on import of capital goods to be phased out.
  • ⦁ Duty on unpolished diamonds to be reduced to 5%.
  • ⦁ Customs duty on steel scrap extended by a year.
  • ⦁ RBI led digital rupee using blockchain to be launched in FY23, *1% TDS* on the transfer of virtual digital assets & income to be taxed at 30%.
  • ⦁ 68% of capital outlay for the Domestic defense industry.
  • ⦁ Revised Fiscal Deficit 6.9% of GDP in FY22 as against 6.8% in Budget estimates, Fiscal deficit at 6.4% in FY23.
  • ⦁ Total expenditure in FY23 estimated at Rs 39.45 trillion; total resources mobilization to be Rs 22.84 trillion other than borrowing.
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Budget Updates – 2022

Update on Budget 2022 –

  • ⦁ FM Housing projects allotted Rs 48,000 crore for FY23 under the PM Housing scheme. Rs 60,000 Cr allocated to cover 3.8 crore households for tap-water.
  • ⦁ Chemical-free natural farming is to be promoted throughout the country. FY22 farm procurement value to be ₹2.37 lakh crore. To implement the scheme to lower dependence on oilseed imports.
  • ⦁ Rs 1,500 Cr to be allotted for development initiatives for northeast in FY23.
  • ⦁ Required spectrum auction for 5G rollout to be conducted in FY22-23. Contracts for laying optical fibers via PPP mode will be awarded in FY23.
  • ⦁ 68% of capital procurement budget to be earmarked for domestic Defence Industry. To set up an umbrella body for Defence Equipment Certification.
  • ⦁ Additional allocation of Rs 19,500 crore for PLI in solar Photovoltaic module manufacturing, says FM.
  • ⦁ Capital goods stocks FY23 Capex target at Rs 7.50 lakh crore from Rs. 5.5 lakh crore in FY22.
  • ⦁ BUDGET 2022: CRYPTO: INDIA FIN MIN SAYS TO LAUNCH CENTRAL BANK DIGITAL RUPEE CURRENCY.
  • ⦁ 68% of defense Capex to be kept for domestic cos. Defense R&D will be opened up for industry startups, says FM.
  • ⦁ Slab raised from 10% to 14% for contribution to NPS by employers.
  • ⦁ Crypto transactions are to be taxed at 30% without any deductions.
  • ⦁ LTCG surcharge capped at 15% for unlisted assets (earlier it was graded) – this is enormous for HNIs.
  • ⦁ Customs duty on Steel Scrap extended by one year.
  • ⦁ Duty On Unpolished diamonds Is Reduced To 5% Duty Reduced on Selective Chemicals specially used in Petchem Customs Duty On Umbrellas Increased To 20% Customs Duty On Steel Scrap Extended For 1 Year.
  • ⦁ Customs duty on methanol and acetic acid reduced Positive for Balaji amines, alkylamine (methanol is a raw material) Negative for Acetic acid producer- GNFC.

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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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