Received an Income Tax Notice ?

Though we file our income tax return cautiously we do make few errors. After making such errors we all are concerned about the outcome of such errors. Once we upload our income tax return, the same is assessed by the Income tax department. After assessment the Income Tax Department issues Income tax Notices. In this article I am going to give a bird’s eye view on the types of notices issued and reasons of such issuance.

Notice u/s 139(9): When filing your income tax return, it is important to ensure that you provide details of all your income, deductions, investments. If the Income Tax Department finds any mismatch of information or mistakes in your tax return, it will send you a notice u/s 139(9), asking for proof/justification for the mistakes/mismatch. Failure to respond to the notice issued, the ITD can levy heavy penalties on you.

Notice u/s 148: You can get notice u/s 148 if the assessing officer has a reason to believe that your income which was chargeable to tax has escaped assessment. If he has material to support his belief, he will record his reasons in writing and send you a notice u/s148.

Notice u/s 245: This intimation is received when you have a tax demand pending from the IT department or when you have claimed a refund from them for some other assessment year. Section245 of the Income tax empowers the AO to adjust the refund against any tax demand outstanding from the taxpayer. In simple words, the IT department wants to adjust the refund due against a demand due from you. This demand may pertain to previous years.

Notice u/s 143(1): This intimation is received by the assessee when there are arithmetical errors, internal inconsistencies, tax and interest calculation errors, Tds mismatch etc. Reply to such intimations have to make in due time or else the return filed could be considered as in valid.

Notice u/s 143(2): If you get notice u/s 143(2), it means your return has been selected for scrutiny by the Assessing Officer. The notice might ask you to produce documents in support of deductions, exemptions, allowances, reliefs, other claims of loss you have made and provide proof of all sources of income.

Notice u/s 144: If the tax payer has not filed his Income tax return or has not replied to any of the notices issued by the department, then notice u/s 144 is issued. This notice informs the tax payer about his tax payable along with interest and penalty.

Notice u/s 142: In this notice the information of the bank statements, amount deposited, withdrawn, investment details as well as other transaction details are asked by the department.
      There is no need for the taxpayers to get worried after getting any of the notices, if a person understands these notices properly, then he will be less worried and can act correctly.
                

                                                                                          - CA Neha Vora               

Income Tax Return Filing

                                                           

Bahubali: Who are suppose to file the Income tax return?

Katappa :  It is mandatory to file Income tax return in India if:-

1. Your gross total income (before allowing any deduction u/s 80C to 80U) exceed Rs.2.5 lakh.
2. You have income from Salary, income from house property (Rent Income), agriculture income, capital gains or income from other sources.
3. You are a company or a firm irrespective of whether you have income or loss during the financial year.
4. You want to claim an income tax refund
5. You want to carry forward a loss under a head of income
6. You are a resident individual & have an asset or financial interest in any entity located outside India. 

Bahubali: As it is mandatory in above circumstances, we file income tax return. But do we have any benefits as well ?

Katappa : A proof of income tax return filing is required at the time of applying for a Loan or Visa. And timely return filing helps you in avoiding penalty & interest on delay of return filing.

Bahubali: Do we have any due date for filing these income tax returns?

Katappa : Yes, the due date of filing tax return is 31st July for those assessee whose accounts are not required to be audited such as assessee having Salary income, rent income, capital gains, Income from other sources. For other categories such as companies, working partner of a firm etc whose accounts are required to be audited, the due date for filing return  is 30th September.

Bahubali : What are the consequences, if we file the return after due date?

Katappa  : If the returns are not filed within due dates then assessee has to bear the penalty and
interest.

Assessee having income up-to 5,00,000 shall be liable for a late fee penalty of Rs 1,000  whereas the assessee having income beyond 5,00,000 shall be liable for late fee penalty of 5,000 up-to December & thereafter Rs 10,000 up-to March along with interest.
Interest is levied at 1% per month of the tax amount payable by the assessee.

Bahubali : So Katappa, what should one learn from this?

Katappa  : Baahu, The assessee should wisely file their returns and pay the taxes. It not only help him to do tension free business but it also contributes in the development of the nation.

                                                                                                               CA Neha Vora

A SMALL CONTRIBUTION FROM US TO OUR SOLDIERS

        Today’s blog article is for our Indian soldiers martyred in Pulwama attack. More than 40 Jawans were killed in that bomb blast. We all are aware of this fact that Pakistan plays a crucial role in these kind of terrorist attacks that we face every now and then.

We all got disturbed and started posting are condolences to our soldiers family. There were many posts saying that we should have another Surgical strike or a direct war with Pakistan. For sure we should take a revenge. But a sudden thought crossed my mind that if we went on a war , no doubt we will Win it, but even we will be losing our soldiers life. Of course it is not going to be your or my decision to start the war. The military forces know the ground reality, so they will decide how to take the revenge.

So what can we do in mean time. Yes, donate funds to the martyrs’ families, protest against Pakistan, ban Pakistani players and artists etc. But as it is an open secret that China supports Pakistan by providing  with Arms and Ammunition, Funding for their military camps etc. why not ban China from our country. If we try and analyze properly, China generates majority of its income from India by supplying all sorts of products in India and use the same money against India by helping Pakistan. If we take a small example of mobile phones that we use, nearly 70% market is captured by phones of  Chinese brands such as Xiaomi, One Plus, Vivo, Oppo  etc . This is just an example of one product. If we look around us from a goods with price ranging from one rupee to thousands of rupees, we use Chinese brands. Imagine the amount of income they generate from us. If we start using Indian products or Products Made in India voluntarily, it will not only affect Chinese economy badly, but on a reverse it will help grow our economy. Once we stop using Chinese products, it will be obligatory for Multinational companies to setup manufacturing units in India. It will not only help our economy but will eventually get employment for our people and circulate our money for our own Country’s wellbeing.

Of course it needs involvement of all Indians to show its impact effectively and long lastingly. And also it will send a clear message to other countries, that if you want to earn from us, stand with us.  I will end my blog with Chanakya’s quote “ If you want to destroy your enemy, Destroy their roots so it cannot stand again”

Jai Hind !

Understanding the GST calculation on Gold/ Gold Jewellery

    Gold plays an important role in Indian culture, weather it is a festive season or a wedding we buy gold.Even from an angle of Investment gold plays a vital role. But many a times while purchasing this asset we are unable to understand the calculation done by the shopkeeper. It is an attempt from this article to give an easy understanding of GST (Goods and Service Tax) calculation on Gold and on Gold Jewellery.

We all are aware of this fact that before implementation of GST we had to pay 10% Customs duty, 1% Excise duty and 1.2% VAT on purchase of Gold. But now under the changed compliances VAT and Excise duty have been replaced by 3% GST with 10% Customs duty remaining same.

GST Calculation on Gold i.e Bullion / Biscuits etc
Eg: If you have to buy 100gm Gold @ rate being 32000/10gm ,calculation would be-
Before Implementation of GST:
   Total Price (a)               3,20,000
+10% Customs duty (b)  32,000 [a*10%]
+1% Excise duty (c)        3,520 [a+b]*1%
+1.2% VAT (d )               4,266 [a+b+c]*1.2%
Total cost of gold            3,59,786/- Rs


After GST Implementation;
   Total Price  (a)                3,20,000
+10% Customs duty (b)    32,000 [a*10%]
+3% GST  (c)                   10,560 [a+b]*3%
Total cost of Gold             3,62,560/- Rs


In the above example we discussed about the purchase of pure gold. But when we purchase any ornament, we have to bare the making charges of the ornament along with the cost of Gold. Making charges would differ from ornament to ornament as well as from shop to shop. But what remains same is the GST on this making charges. GST on Making charges is 5%. So let's understand the calculation of the same.

GST calculation on Gold Jewellery:
 If you purchase a necklace of 100gm, its price will above 3,62,560/- + Making charges + GST on Making charges (i.e 5%).
Say making charges rate is 12%,
Calculation:
   Total Price (a)                    3,20,000
+10% Customs duty (b)       32,000
+3% GST (c)                       10,560
+ Making Charges (d)         42,240 [a+b]*12%
+5% GST on making          2,112   [d*5%]
Total cost of Necklace        4,06,912/- Rs


I hope this blog article helped you in understanding the calculation in easy manner.