Browse Category: compliance

Corporate Benefit after Budget

 

Impact of Budget-2017 on Companies & LLP/Partnership Firms

  • Budget 2017 has given companies an advantage over partnership and Limited
    Liability Partnership in terms of Income Tax
  • The maximum marginal tax rates including surcharge will be lesser in
    Companies in comparison to LLP/Partnership Firm after Budget-2017.
  • As per the new budget 2017, the corporate tax on companies has been reduced
    from 30% to 25% though the tax on LLP/Partnership remains same i.e. 30%.

Applicable Tax Rate on Companies & LLP/Partnership Firms

Advantages Of Companies Apart From Taxation Point Of View

Restriction on payment of Salary and Interest to Partner when compared to
Company

  • Limit Partners to draw salary, remuneration and interest from partnership/LLP whereas there are no Limit on payment of
    Salary/Remuneration to Directors.
  • The formula is given in Income Tax under Section 40(b) which defines maximum amount which can be given to partners and
    claimed as expenses for partnership firm and LLP.
  • Following are the Limits:-

Dividend Distribution Tax

Dividend distribution tax is the tax levied by the Indian Government on
companies according to the dividend paid to a company’s investors. At
present the dividend distribution tax is 15%. However many closely
held companies instead of declaring dividend they pay Salary and
remuneration to directors to avoid paying DDT.

Formation and Other cost

The cost for formation of Company is bit higher than compared to partnership and
LLP. However it is one time cost and can be adjusted against the tax benefit it
receives over LLP and partnership.

Other Benefits

  • ✓ Company has Limited Liability when compared to partnership Firm
  • ✓ Better Corporate Governance
  • ✓ Easy Succession Planning and expansion
  • ✓ Separate Legal Entity as compared to Partnership Firm

Conversion OF LLP into Private Limited Company

Before filing application for conversion, please ensure the followings:

  • That secured creditors have given their consent for such conversion;
  • A notice in newspaper about such conversion, one in English and in vernacular language seeking objections must be
    published;
  • There are minimum seven or more members in the existing LLP for converting the LLP into a Company.
  • A general meeting must be held where majority of partners have given their consent for such conversion.

Procedure to be followed for Conversion:

  • Apply for DIN in DIR-3- In case members ought to be directors;
  • Apply for Name approval in form INC-1-The name once approved by the authority is valid for 60 days;
  • File eform URC-1- for conversion;
  • File eForm INC 7- For declaration of compliance;
  • File eForm INC 22- For registered office address; and
  • File eform DIR 12- For appointment of Directors

CHARGES

Meaning of Charges

As per Section 2 (16) of the Companies Act, 2013 , charges means an interest or lien created on the property or assets of the company or any of its undertakings or both as security and includes a mortgage.

Essential Features of Charges

There should be 2 parties:- creator of charge and chargeholder. There should be a subject matter of charge, which may be current or future assets. The intention of borrower, in respect of repayment of borrowed money plus interest at agreed rate, should be displayed by an agreement entered by him.

Registration of Charges

All types of charges are required to be registered whether:

  • Created within or outside India.
  • Created on property or assets or any of the company’s undertaking.Creation is tangible or otherwise, situated in or outside India.

 

**If the company fails to register the charges within 300 days of creation or modification or within 30 days of satisfaction, then it may seek extension from Central Government to condone the delay.

Satisfaction of charges

The company shall give intimation to the Registrar within 30 days of payment or satisfaction of charges.

** The Registrar shall issue a notice to the charge-holder within 14 days, if the satisfaction form (i.e. Form CHG-4) is not signed by the holder or if it is not satisfied with intimation made by the company. If no response comes from the holder then the Registrar shall record the same and inform the company.

Consequences of Non-Registration Of Charges

Following are the consequences of non-registration:-

  • Charge becomes void.
  • Charge holder becomes unsecured.
  • Debt is still recoverable.
  • Company is penalized for the same.

Penalty for Non-Registration Of Charges

Applicable to Fines and penalties
Company Rs 1,00,000 to Rs 10,00,000
Officer in default

Imprisonment- Upto 6 months

Or

Fine- Rs. 25,000 to Rs. 1,00,000

Or

Both

 

Particular of charges

The following particulars in respect of each charge are required to be filed with the Registrar:

(a) date and description of instrument creating charge;

(b) total amount secured by the charge;

(c) date of the resolution authorizing the creation of the charge; (in case of issue of secured debentures

only);

(d) general description of the property charged;

(e) a copy of the deed/instrument containing the charge duly certified

or

if there is no such deed, any other document evidencing the creation of the charge to be enclosed;

(f) list of the terms and conditions of the loan; and

(g) name and address of the charge holder.

List Of E-Filing Under Charge

Sl. No. E-Form                      Purpose
1 CHG-1 Creating or modifying the charge (for other than Debentures)
2 CHG-2 Certificate of registration
3 CHG-3 Certificate of modification of charge
4 CHG-4 Intimation of the satisfaction to the Registrar
5 CHG-5 Memorandum of satisfaction of charge
6 CHG-6 Notice of appointment or cessation of receiver or manager
7 CHG-7 Register of charges
8 CHG-8 Application for condonation of delay shall be filed with the Central Government
9 CHG-9 Creating or modifying the charge in (for debentures including rectification)
10 CHG-10 Application for delay to the registrar

DIFFERENCE BETWEEN PRIVATE LIMITED COMPANY V/S ONE-PERSON COMPANY (OPC) V/S LIMITED LIABILITY PARTNERSHIP (LLP)

What kind of business you should Start off with?????

There are several platforms which are available, to Choose one’s plan of owning a business and deriving maximum benefits out of it. However, one need to make a proper analysis of the risks and returns of which they are anticipating of such occurrence before venturing into a new project or certainly the outcome from it.

Here’s the quick analysis of the 3 different forms of organization.

There are various criteria which distinguishes Private ltd company, OPC & LLP.

 

Aspects Private Ltd Company One-person Company(OPC) Limited Liability partnership(LLP)
Governed by Companies Act 2013 Companies Act 2013 Limited Liability partnership Act 2008
Minimum No of Members Min.2 members (Can be body corporate also) 1 member who is resident of India, and 1 nominee should be present. LLP should have a minimum of 2 members. There is no limit on maximum number of members.
Minimum No of Directors Min.2 Directors out of which 1 Director has to be present in India. 1 Director who has to be a resident of India. 2 Designated partners out of which 1 director has to be present in India.
Name shall include Name of the Private Company to end with “Private Limited”. “One-person Company” shall be mentioned in brackets below the name of such company. Name to end with LLP (Limited Liability partnership)
Minimum Capital No minimum requirement No minimum requirement No minimum requirement
Taxation Taxed at 30% + Surcharge + Cess. Taxed at 30% + Surcharge + Cess. Taxed at 30% + Surcharge + Cess.
Annual filings Annual accounts and annual returns to be filed with ROC. Financial Statements and Annual return to be filed with ROC. Annual statement of Accounts and Solvency & Annual Return has to be filed with ROC.
Statutory Audit Compulsory Compulsory If Contribution is >than 25 lakhs, or turnover is

>40 lakhs.

Minimum Number of Meeting (Including Board & AGM)
  • Atleast 4 Board Meetings, 1 in each quarter & the gap between 2 meetings should not be more than 120 days.
  • AGM to be held within 6 months from closure of Accounts (usually in the month of September of every year)
  • Atleast 1 Board Meetings, 1 in each half year & the gap between 2  meetings should not be less than 90 days.
  • No requirement of AGM.
  • No specified Limits.
Suitability More suitable for businesses, trade, manufactures, large industrial establishments etc. Suitable for Individuals whose Capital requirements are less than 50 lakhs or Turnover is less than 2 Cr. More suitable for professionals like CA, CS, Advocates etc.
Conversion Can be converted into LLP. Can be converted only after the expiry of 2 years from the date of incorporation. Can be converted into Company/Firm.
Time taken for Registration 5-7 days 7-10 days 10-15 days
Procedure for Incorporation
  • Obtain Director Identification Number(DIN).
  • Obtain Digital Signature Certificate(DSC)
  • Name Approval
  • Filing of Various Documents & forms required for Incorporation
  • Obtain Director Identification Number(DIN).
  •   Obtain Digital Signature Certificate(DSC)
  •   Name Approval
  •   Filing of Various Documents & forms required for Incorporation
  •   Filing Nominee Details.
  • Obtain Director Identification Number(DIN).
  •   Obtain Digital Signature Certificate(DSC)
  •   Name Approval
  •   Filing of Various Documents & forms required for Incorporation
  • File LLP Agreement.
Liability Limited Liability Limited Liability Limited Liability

Conclusion:

  • One-person Company is a new concept that has been introduced in India. Still there are lot of Changes having to be undergone and lot more review for the improvement of OPC Company is required.
  • In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. This is an important difference from the traditional unlimited partnership under the partnership Act, in which each partner has joint and several
  • Private Limited Company the business owners hold all shares of the company privately. Shareholders may operate the business themselves, or hire directors to manage the Company on their
  • Forming a private limited Company results in protection of personal assets, access to more resources, financial assistance and greater
Deposit

Demonetisation Update: Things you need to know about depositing old notes in banks

Last date

  • Last date to deposit old notes is Dec 30

 

Restrictionsa

  • Old notes above value of Rs.5000 can be deposited only once before Dec 30.

 

 

Magnify

  • Deposit of old notes above value of Rs.5000 will be subject to audit and taken on record. A satisfactory explanation will be required during such deposit.

 

scrutiny

  • Deposits made in small amounts above value of Rs.5000 via old notes will be subject to scrutiny

 

Regulations

  • Only KYC compliant bank accounts will be credited with full value of deposits made above Rs.5000. Non complaint accounts will be restricted to credits limiting upto Rs.50,000

 

Exempt

  • The regulations are exempt for deposits under Taxation and Investment Regime for the Pradhan Mantri Kalyan Yojana, 2016

ADVANCE TAX AND SELF-ASSESSMENT TAX

For Individuals, there are two types of tax that you might have to pay before submission of your return as on 31st July 2017:

  1. Advance Tax

If you have annual tax dues of more than Rs.10, 000, you must pay income tax in advance. Usually, for the salaried, these income tax payments are taken care of via TDS deductions by employer.

Due Dates of payment of Advance Tax for FY 2016-17

For Individuals

On or before 15th June – Up to 15% tax

On or before 15th September – Up to 45% of tax

On or before 15th December- Up to 75% of tax

On or before 15th March- Up to 100% of tax

How to calculate and pay advance tax:

  • Estimate your Total Income: Add income from all sources. Include salary income, interest income, capital gains etc.

  • Allow deductions: From your total income reduce deductions and arrive at your taxable income.

  • Calculate Tax due on total income: Apply the latest income tax slab rates on your taxable income to calculate your income tax due. Reduce any TDS that may have been deducted from your total tax due. These have to be paid as per the installments mentioned above.

  1. Self Assessment Tax

Your income tax return cannot be submitted to the tax department, unless you have paid tax dues in full. Sometimes, you may see tax payable at the time of filing your return (in spite of paying advance tax).

You can only file the returns once you have successfully paid the income tax online.

Usually, interest under section 234B and 234C will also have to be paid along with your tax due, if you are paying tax after 31st March.

For online payment of both advance tax and self assessment tax

Step 1: Login to http://www.tin-nsdl.com > Services > e-payment: Pay Taxes Online.

Step 2: Select the relevant Challan (CHALLAN NO./ITNS 280)

Figure: Challan for payment of Advance Tax and Self Assessment Tax

Step 3: Select your bank and pay the amount through net banking.

Step 4: A challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment being made. Please store the Counterfoil.

In case you need some expert help to calculate the tax payable and the amount of advance tax to be paid, contact us: info@unicomply.com or call: 9739002844.

Why is PAN card Important?

Based on the Circular by GOI, CBDT as on 17th November 2016, PAN will be mandatory for these 5 new transactions along with the earlier list of transactions.

The Income Tax Department prescribes a list of transactions for which quoting of Permanent Account Number (PAN) is mandatory. These are listed in Rule 114B of the Income Tax Rules, 1962 that were first inserted with effect from 1st November 1998 and have been amended from time to time. The list under Rule 114B as on date requiring PAN to be quoted includes the following banking transactions:

a. Deposit with a banking company or a co-operative bank in cash exceeding fifty thousand rupees during any one-day.

b. Purchase of bank drafts or pay orders or banker’s cheques from a banking company or a co-operative bank in cash for an amount exceeding fifty thousand rupees during any one-day.

c. A time deposit with a banking company or a co-operative bank or a Post Office

d. Opening an account [other than a time-deposit referred to above or a Jandhan / Basic Bank Deposit Account] with a banking company or a co-operative bank.

In addition to the existing requirement of quoting of PAN in respect of cash deposits in excess of Rupees fifty thousand in a day, quoting of PAN will now also be mandatory in respect of cash deposits aggregating to Rupees two lakh fifty thousand or more during the period 09th November, 2016 to 30th December, 2016 as per an amendment notified by CBDT on 15-11-2016.

The Department has already issued close to 25 crore PAN till date. You can also apply for PAN applying to the NSDL in a prescribed format with the necessary documentary proof.

In case you are having trouble we can help you with your PAN application. Please contact us on +91 7022251221, 080-40463170 or drop in an email at info@unicomply.com

Understanding Demonetization

Why Demonetization?

The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw the specified notes has been introduced.

What is Demonetization?

The legal tender character of the existing bank notes in denominations of 500 and 1000 issued by the Reserve bank of India till November 8, 2016 (hereinafter referred to as Specified Bank Notes) stands withdrawn. In consequence thereof these Bank Notes cannot be used for transacting business and/or store of value for future usage. The Specified Bank Notes can be exchanged for value at any of the 19 offices of the Reserve Bank of India or at any of the bank branches of commercial banks/ Regional Rural Banks/ Co-operative banks or at any Head Post Office or Sub-Post Office.

District Central Cooperative Banks (DCCBs) can allow their existing customers to withdraw money from their accounts upto (24,000 per week upto November 24, 2016. No exchange facility against the specified bank notes (500 and 1000) or deposit of such notes should be entertained by DCCB’s. The Reserve Bank has accordingly advised all banks to permit withdrawal of cash by DCCBs from their accounts based on need.

How much time to exchange the notes and make cash deposits?

The scheme closes on December 30, 2016. The Specified banknotes upto 4500 per day can be exchanged at branches of commercial banks, Regional Rural Banks, Urban Cooperative banks, State Cooperative Banks and RBI till November 24, 2016 and the cash amount can be deposited till 30th December, 2016, at specified RBI offices. As there is ample time, people need not rush to exchange putting avoidable strain on the banking branch network.

Proof of identity that needs to be carried to exchange/ deposit the Specified bank notes

Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff.

A brief summary of the dates, events and remarks are given below for your better understanding:

Start Date

Particulars

End Date

Limits (Rs.)

Remarks

8-11-2016

Old Currency notes are no longer valid. Certain specified outlets still accept the old currency till the end date.

11-11-2016

will still be accepted in Petrol Pumps, government hospitals, Railway, airline, government bus ticket booking counters, Consumer co-operative stores run by state or central government, Milk booths authorized by state governments, Crematoriums and burial grounds till 11th November 2016.

9-11-2016

ATMs shut down and Banks closed to public.

10-11-2016

ATMs will not work and banks will not be accessible to public  to adjust to the changes made.

10-11-2016

Old Notes can be deposited in banks

30-12-2016

Valid Bank Account or Post Office saving account

10-11-2016

Old Notes can be exchanged for new ones.

24-11-2016

4,500/-amount to be reviewed later

Original Identity Proof with a copy in the form of Aadhaar card, PAN Card, ration card, passport, driver license.  Exchange can be made in all branches of commercial banks/RRBS/UCBs/State Co-op banks or at any Head Post Office or Sub-Post Office and all Issue Offices of RBI

10-11-2016

Money can be withdrawn from ATMs.

18-11-2016

2,000/- per day

10-11-2016

Money can be withdrawn from Banks

10,000/- per day limited to 20,000/- per week

Weekly amount includes amount withdrawn from ATMs.

19-11-2016

Amount that can be withdrawn from ATMs is increased.

4,000/- per day

31-12-2016

Old Notes can be deposited in cases where depositing before 30-12-2016 was not possible.

31-3-2017

ID Proof, Pan & Declaration Form

Foreign Tourists

within 72 hours after the notification

foreign exchange equivalent to Rs. 5,000/-

provide proof of purchasing the old notes

Person not in India

authorize in writing enabling another person in India to deposit the notes

Same as for any Indian

Same as for any Indian

person so authorized has to come to the bank branch with the old notes along with the authorization letter and a valid identity proof

NRIs

Same as for any Indian

Same as for any Indian

deposit the old banknotes to their NRO account.

I have a problem, whom should I approach?

You may approach the control room of RBI by email or on Telephone Nos 022 22602201/022 2260294.

You can also contact us on +91 7022251221, 080-40463170 or drop in an email at info@unicomply.com

ANY HIGH VALUE CASH TRANSACTION IN BANK ACCOUNT? YOU MAY RECEIVE A NOTICE BY THE IT DEPT.

Firstly lets understand what is a High value cash Transaction?

With an aim to curb black money mess and to track high value cash transactions, the government has decided to implement new reporting guidelines w.e.f November 2016. As per the govt’s notification, all goods & services providers have to report to the IT department about high value cash transactions & cash receipts.

Under the new norms, cash receipts, purchase of shares, mutual funds, immovable property, term deposits, sale of foreign currency will have to be reported to the tax authorities in a prescribed format, which is Form 61A.

  • Immovable Property: The Registrar of properties will have to report purchase & sale of all immovable property exceeding Rs 30 Lakh to the Income Tax authorities.

  • Professionals: The Professionals will be required to inform the tax department of receipt of cash payment exceeding Rs 2 lakh for sale of any goods or services.

  • Cash Deposits in Banks: Banks will have to report cash deposits aggregating Rs 10 lakh or more in a financial year in one or more accounts (other than Current Account / Time Deposit) of a person.

  • Term Deposits in Banks:  Banks will have to report cash deposits aggregating Rs 10 lakh or more in a financial year in one or more Time Deposit accounts of a person (other than a time deposit made through renewal of another time deposit). These norms will also cover deposits and withdrawal made in Post Office Account.

  • Deposits in Current Accounts: Cash deposits or withdrawals aggregating to Rs 50 lakh or more in a financial year in one or more Current Account of a person will have to be reported by the bank to the I-T authorities.

  • Any cash payment of Rs 10 lakh or more in a financial year for purchase of bank drafts or pre-paid instrument issued by RBI will also be reported.

  • Investments in Financial Securities : A company has to report receipt of Rs 10 lakh or more from a person/an investor in a financial year for acquiring bonds, debentures, shares or mutual funds (other than the amount received on account of transfer from one scheme to another scheme of that Mutual Fund).

  • Cash Deposits during 9th Nov to 30th Dec, 2016: Cash deposits during the period 09thNovember, 2016 to 30th December, 2016 aggregating to –

    • (i) Rs 12.5 Lakh or more, in one or more current account of a person (or)

    • (ii) Rs 2.5 Lakh or more, in one or more accounts (other than a current account) of a person.

In addition to the above list, quoting your PAN is now mandatory for many financial transactions. Based on this data also the IT department can track your financial transactions.

If you receive any notice by the IT department for any high value cash transaction, you can follow these steps to response to the IT department

Step 1: Log in to e-filing portal https://incometaxindiaefiling.gov.in. 

Step 2: If you are registered, fill in your details and click on the compliance tab. If not, register yourself and proceed.

Step 3: Under the Compliance tab click on “ Accounts with Cash Transaction” link. You may also find this option under “Quick Link”. This will direct you to “ Bank/ Financial Account(s) with substantial Cash Transaction page.

Step 4: Check the details of the bank account related to you.

Step 5: Please select your reason amongst the one given in the page and make the submission. Keep the acknowledgement for your record.

Step 6: In case you make a mistake in submission of response, you may further revise it by login to e-filing portal.

In case you are having trouble we can help you. Please contact us on +91 7022251221, 080-40463170 or drop in an email at info@unicomply.com

FINISH filing your old Income Tax Returns by August 31 2016

Are you sure your IT Return has been filed and processed?  Merely uploading the IT return does not finish the process.  You also need to file acknowledgements of tax returns to complete the process or else the return submission is not complete.

Don’t worry, the Government has permitted all tax payers to regularise their returns for the last six assessment years by 31 August 2016 to complete the process.

The Central Board of Direct Taxes (CBDT) has given a final opportunity to taxpayers to complete pending tax returns for the previous six assessment years. This is being done to regularise income tax returns that have remained pending because the ITR-V (acknowledgement) was not received by the Central Processing Cell (CPC).

Returns for AYs from 2009-10 to 2014-15, which were uploaded electronically by the taxpayer within the time allowed but have remained incomplete due to non-submission of ITR-V for verification, will also be allowed for verification through an Electronic Verification Code (EVC).

It is mandatory for all the taxpayers who have annual total income of more than Rs.5 lakh or have a refund claim, to e-file their ITR. The next step is to verify the ITR-V using any of the following methods, and this needs to be done within 120 days from filing of the return:

  • Verification using a digital signature;
  • Sending a signed form ITR-V to tax department’s Centralized Processing Centre (CPC).
  • E-verification of ITR-V using a one time password (OTP), either through Aadhaar or Internet banking (introduced from AY 2015-16).

While most of the people generally file their returns, many forget to complete the last part of the process – verifying the ITR-V, which technically means that the return has not been filed.

Where tax filers have not submitted their ITR-V within the stipulated time period of 120 days, the return is not considered as Valid. However, the same can now be regularised for the returns from AY 2009-10 to AY 2014-15.

An intimation is generally received from the income tax department if your ITR is pending because of non-submission of ITR-V. Nonetheless, you can also find out the status yourself by logging on to the tax department’s website: https://incometaxindiaefiling.gov.in.

 

tax

Under services, you will find an option ‘ITR-V Receipt Status’. Enter your Permanent Account Number (PAN) and AY or e-Filing Acknowledgement Number. If ITR-V has not been received within the prescribed time, its status will not be displayed, which will mean that you need to take steps to complete the filing process.

Completing verification

You can either complete the verification process through any of the methods specified above.

Interest on refunds due

If there is a pending refund, interest on it will be calculated based on the rules under section 244(A)2 of the Act. However, if your ITR-V is pending for processing due to your mistake, interest on due refunds will be calculated only till the date of filing returns.

Please make sure you use this opportunity and regularise your Income Tax Returns. This is the final opportunity provided by the Government. If not done, it will be treated as though the return was never filed – aka – does not exist. Penalty of Rs.5,000 may also be levied apart from interest on pending taxes, and other penal actions can also be taken.

We strongly recommend you to check the status of your ITR – V on the tax department’s website and do the needful as early as possible. This is a good opportunity to get your tax filings in order.

Please note – the Government has only permitted to file the ITR-V till August 31, 2016. It does not mean that you can proceed to file your Income Tax Return now, if you have not filed earlier.

Ensure you check your e-Filed Returns status to know what is the status of the Income Tax Returns filed. Below is the sample of how the screen may look for the different years that you have filed your returns.

tax-1

If status is showing return uploaded, it means the return is pending for verification. You can click the green box just above the return status (which says “Click here to view your returns pending for e-verification”) and then e-verify to complete the process immediately.

tax-3

Should you require any clarification or assistance, please feel free to mail on info@unicomply.com

File your Income Tax Returns now – Do not delay it –Reasons & explanation

After every financial year ends, it is a good process to reflect upon the past year and make future outlook better.  Also, it is a time to set right all your financial details and file your income tax return (without waiting for the due date to reach close).

Many people procrastinate on this process, waiting until close to the July 31stdeadline to get going (and many people fail to do it even ater that, until and unless prompted by external factors like IT notice on non-filing, visa requirement etc).

There are many reasons why it’s a bad idea to wait to file your income tax returns.The intelligent and smart ones get going as soon as possible, and they reap the rewards of early filing.

If you are stuck in thought on whether you should take the steps to go ahead and file your income tax return or think of doing it later (cos you are busy busy busy), here are some negatives of procrastinating and a few reasons why it helps to file it soon…

  1. Mistakes often happen if you rush at the end moment

Think of the times that you have had to rush in doing some work and you have either messed it or not done your best with it. When you wait until the last minute, you will be working under pressure. You’ll be rushing to finish things, and you won’t have the time to go back and recheck or review the things that you need to recheck or review.

This leads to an increase in probability that you may make a mistake on your taxes.  You may forget to enter some important details, fail to disclose income, avail deduction etc.

If you start earlier, you will have a chance to go back, reflect and look at your Income Tax Computation workings with a fresh mind again.  You will ensure that it is all done properly & filed.

  1. Your Tax refund is your right – Why delay?

The Income Tax Returns can be filed by you as soon as the ITR Forms are available (mostly May starting).  The earlier the IT Filing is done, the earlier the returns can be processed by the IT Department.

People who wait to file till the deadline can have to wait for the refund as the processing may take longer (due to bulk inflow of IT returns).  Why delay filing when you can get your tax refund at the earliest?

  1. Opportunity loss as your money (refund) is not with you

In continuation of the last point, when you file your returns early, you get your tax refund sooner and you can use the same to make more wealth. Whether you putthat money in stock markets (risk and returns, both higher) or even keep it in the bank (where it grows a measly 4% to 7%), you have a chance to put that money to work for you.

The longer you wait, the longer you are lending your money to the Government of India without receiving any return. While impact may look smaller to you, this is a bad move in the long term, depriving you of the benefits of compound interest. Even if you’re not a stock market investor, it is useful to have the refund amount in your bank, as you can spend it on something you want or just keep it for safety and security.

  1. Professional help may be limited if filing returns closer to deadlines

A professional may give you more time when you approach him/her to file your returns.  Depending upon how complex your tax filing happens to be, you may benefit from more time with a professional who knows precisely what he/she is doing. If you wait until the last minute, you will have a difficultyin getting time with your accountant or tax expert.

If you start earlier, the professional can go through your data in order to ensure that you’ve availed all the possible deductions, exemptions, etc. This time can save you big money (and your time as well) over the long run.

  1. Waiting longer increases your chances of being noted in default lists

The IT department, with its increased technological push, is now starting to send default notices to people/ corporates/ PAN holders who have not filed their return of income.  The IT department can get hold of your transactions made (as PAN is now increasingly being used in various domains) and therefore, if IT return has not been filed, you may get a notice seeking explanation.

It is always wise to get a jump start on your tax filing. There is no reason to follow the crowd and waiting until the end of July 31 to file. The earlier you file, the better your chances of avoiding mistakes that could potentially cost you a lot of money in interest and penalties down the line. On top of that, you’ll have one less worry as you can concentrate to increase your wealth in current financial year.

 

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