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Category: Income tax

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Income tax

Understanding Tax Regulations in the Era of Cryptocurrency

Introduction

The Indian government has officially categorized digital assets, including cryptocurrencies, as “Virtual Digital Assets” (VDAs). With this recognition comes a comprehensive set of tax rules that govern any earnings or profits generated from dealing with these assets.

In this blog, we summarize the key aspects of crypto tax legislation in India for 2024, helping you stay informed and compliant.

Income Tax on Crypto Transactions

  • Virtual digital asset transfers (sale, acquisition, or exchange) are taxed at a flat rate of 30%.
  • This tax applies regardless of the holding period (short-term or long-term).
  • No additional deductions are allowed except for the cost of acquiring the asset.
  • Losses incurred from crypto transactions cannot be offset against other income or carried forward to subsequent years.

Tax Deducted at Source (TDS)

  • A TDS of 1% will be deducted on crypto transactions exceeding ₹10,000 in a financial year.
  • This applies to both direct and indirect transfers of digital assets.

Gift Tax on Crypto Gifts

  • If you receive cryptocurrencies as a gift, a 30% tax is applicable on the fair market value if the total value exceeds ₹50,000 in a calendar year.
  • The recipient is responsible for paying this tax.

Key Points to Remember:

  • Maintain accurate records of all cryptocurrency transactions, including purchase prices, sale prices, and dates.
  • Report your crypto profits and losses in your annual tax return.
  • Stay updated and ensure full compliance with evolving tax regulations. 

Important Note:

Tax regulations are subject to change and can be complex. Always consult a tax specialist for personalized advice tailored to your situation.

Summary Table of Crypto Tax Regulations in India (2024)

CategoryDetails
Tax on Crypto Transactions30% flat tax on income from the sale, purchase, or exchange of virtual digital assets, regardless of holding period.
DeductionsOnly the cost of acquiring the asset is deductible. No other deductions allowed.
Loss Carry ForwardLosses from crypto transactions cannot be carried forward or offset against other income.
Tax Deducted at Source (TDS)1% TDS on transactions exceeding Rs 10,000 in a financial year (applies to both direct and indirect transfers).
Gift Tax on Crypto Gifts30% tax on crypto gifts exceeding Rs 50,000 in a year, payable by the recipient.
Record KeepingMaintain records of purchase prices, sale prices, and transaction dates for tax reporting.
ReportingReport crypto income and losses on your annual tax return.
ComplianceEnsure adherence to tax laws and regulations for virtual digital assets.

Conclusion

Understanding crypto tax regulations is essential for compliance and avoiding penalties. By keeping accurate records and consulting tax professionals, you can ensure a smooth tax filing process.

Stay informed and adapt to any changes in the regulatory framework to secure your financial future in the world of cryptocurrencies.

Categories
Income tax

Is Your Tax Liability Above Rs 10,000? A Guide to Understanding Advance Tax Payment

The Income Tax Act classifies Advance Tax as an approach of paying taxes in installments during the calendar year rather than paying an entire tax bill at the end of the year. It is sometimes referred to as the “pay-as-you-earn” system.

Applicability of Advance Tax

All taxpayers, such as both individuals and businesses, have to pay advance tax if their aggregate tax liability surpasses ₹10,000 in a given fiscal year. It applies to multiple kinds of income, including salaries, business, profession, rent, and gains from capital.

Due Dates and Payment Schedule

The advance payment of taxes is paid in specified parts accordance to the due dates dictated by the Income Tax Department:

 

Due DateFor Non-CorporatesFor Corporates
On or before 15th June15% of the tax15% of the tax
On or before 15th September45% of the tax (cumulative)45% of the tax (cumulative)
On or before 15th December75% of the tax (cumulative)75% of the tax (cumulative)
On or before 15th March100% of the tax100% of the tax

 

Taxpayers with business income subject to the presumptive taxation scheme (Such as 44AD/ADA/AE) must pay advance tax in one installment by March 15th (100% of tax liability).

 

Calculation of Advance Tax

  1. Estimate Income: Determine total expected income for the fiscal year.
    2. Subtract eligible exemptions from Sections 10, 80C, etc.
    3. Determine taxable income.
    4. Apply slab rates for individuals or flat rates for businesses.
    5. Reduce your tax liability by reducing the amount already deducted at source (TDS).
    6. If the tax liability exceeds ₹10,000, you must pay it as

 Non-Payment or Late Payment

Failure to pay advance tax or a short payment brings interest under Sections 234B and 234C.

  • Section 234B: Interest for failing to pay 90% of total tax amount by March 31st.
    • Section 234C: Interest for delayed or unpaid advance tax installments.

How to Pay Advance Tax

Advance tax can be paid online through the Income Tax Department’s official portal or at approved bank branches with challan.

Please let me know if you need any specific examples or clarifications!

Conclusion

Finally, Advance Tax is an important tool under the Income Tax Act that ensures timely tax collection by distributing tax payments across the fiscal year. This applies to individuals, organizations, and entities with a tax due over ₹10,000, and prompt payment avoids interest penalties under Sections 234B and 234C. Taxpayers can efficiently manage their tax responsibilities by accurately calculating income, taking advantage of eligible deductions, and following payment schedules. This arrangement not only provides the government with a consistent revenue stream, but it also saves taxpayers from having to make lump-sum payments at the end of the year. This arrangement provides the government with a consistent revenue stream while also allowing taxpayers to escape the hardship of lump-sum payments at the end of the year.

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Income tax

Who can invest in the National Pension Scheme and what does it mean?

The National Pension System (NPS) is a voluntary, extended-term retirement investment programme in India. The Government of India introduced the programme in 2004, with a primary focus on persons in the unorganised sector and those who are self-employed. The following are essential aspects of the National Pension Scheme:

Objective: The main goal of NPS is to furnish post-retirement pension benefits to individuals.

Regulation: The Pension Fund Regulatory and Development Authority (PFRDA) is responsible for overseeing the operations of pension funds, investment standards, and other components of the National Pension Scheme (NPS).

Eligibility: The National Pension Scheme (NPS) is accessible to all Indian citizens, irrespective of where they work, including salaried persons, self-employed professionals, and labourers in the unorganised sector. It is also accessible to Non-Resident Indians (NRIs).

Tier Structure: NPS functions inside a dual-tier system:

Tier I refers to a compulsory retirement account that cannot be withdrawn from and has limitations on withdrawals prior to reaching the retirement age, which is currently fixed at 60 years.
Tier II: This is a discretionary account that permits investors to withdraw their savings at their convenience.
Investment alternatives: The National Pension System (NPS) provides a range of investment alternatives, such as equity (E), corporate bonds (C), government securities (G), and alternate investment funds (A). Subscribers have the ability to distribute their contributions across these asset classes according to their tolerance for risk and investing objectives.

Contributions paid towards the National Pension Scheme (NPS) are eligible for tax benefits under Section 80CCD of the Income Tax Act. These benefits allow for deductions up to a specified amount.

Retirement Exit Options: Upon retirement, individuals have the choice to take a portion of their accumulated corpus as a lump payment and allocate the remaining amount towards purchasing an annuity, which would then offer a consistent pension.

Portability: The Net Promoter Score (NPS) may be easily transferred across multiple occupations and places, enabling individuals to maintain their level of contribution even if they switch employers or relocate to a different city.

Performance: The performance of NPS is influenced by fluctuations in the market and the investment options selected. Subscribers are provided with regular statements that display the current worth of their assets.

The primary objective of NPS is to incentivize individuals to save for retirement over an extended period. It provides investors with flexibility, tax advantages, and a range of investment choices.

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Income tax TAN or Tax deduction

The income tax challan rectification process

  1. Login to incometax.gov.in
  2. Go to “Services” and click on “Challan Correction”.
  3. Click on “Create challan correction request”.
  4. Select the attributes which needs to be corrected. For example: Assessment year, major head, minor head
  5. Select the “Assessment year” or “Challan Identification Number” (CIN)
  6. All the open challans will be displayed on the next screen. You need to select the challan which needs to be corrected.
  7. Enter the correct details (AY, major head or minor head which is correct) and click on continue.
  8. The next screen will show the existing details and updated details. Click on Continue and do the e-verification.
  9. Once e-verification is complete, the challan correction procedure is completed.

 

Step 1: Go to the ITR filing website (https://www.incometax.gov.in/iec/foportal/) and sign in with your credentials. Choose the “challan correction” option located under the “Services” column.

Step 2: A new webpage will open. Here select ‘create challan correction request’.

Step 3: Now a new webpage will load. You will be prompted by the income tax portal to choose the relevant field that needs amending. A taxpayer has three possibilities: (a) modifying the assessment year; (b) altering the tax applicable (major head); and (c) modifying the payment method (minor head). After selecting, click “Continue.”.

Step 4: The taxpayer will be prompted to submit details about the income tax return that requires adjustment in the following phase. Either the assessment year or the challan identification number (CIN) should be given here. After that, click “Continue.”

Step 5: A new webpage will open depending on the choice selected. If the user entered a CIN number, the challan details will be shown. Otherwise, if an assessment year (AY) has been selected, a list of all challans connected with that AY will be displayed. One has to choose the challan which has to be modified. Once you’ve selected your choices, click the Continue icon.

Step 6: An individual needs to input the proper details of the earlier chosen option. Continue by selecting the icon. The example of updating the assessment year will be seen in the picture below.

Step 7: Once the proper details has been successfully input, the taxpayer has to verify the alteration in the tax challan. Through net-banking, Demat, and bank accounts, the verification can be done using an Aadhaar OTP, a digital signature certificate (DSC), or an electronic verification code (EVC). After selecting the authentication option, click Continue.

Step 8: Once the correction is successfully e-verified, the income tax e-filing website will show the success message along with the transaction ID. Keep this transaction ID handy to track the status of the correction request submitted.

Categories
Income tax

The Influence of the Digital India Act on India’s Gross Domestic Product (GDP)

The Digital India Act (DIA)

The Digital India Act (DIA) is a proposed piece of legislation that intends to act as a catalyst for the Indian economy by encouraging more innovation and entrepreneurs while also safeguarding Indian residents in terms of safety, trust, and accountability.

The DIA is predicted to have a large direct and indirect influence on India’s GDP. The DIA will directly contribute to the expansion of the digital economy, which is expected to reach $1 trillion by 2030. The DIA will also generate fresh job possibilities in the digital industry, which is projected to develop at a 20% per year over the next decade.

By making it easier for firms to operate online, the DIA will indirectly assist to increase the efficiency of the Indian economy. This will result in higher productivity and reduced costs, enhancing GDP growth.

The DIA is expected to have a good influence on social indices in India, such as education, healthcare, and financial inclusion. The DIA, for example, will make it less difficult for kids to access online education, which will aid in the improvement of literacy rates. Additionally, the DIA will make it simpler for consumers to receive healthcare services online, which will assist to enhance care quality. Furthermore, the DIA will make it easier for consumers to create bank accounts and conduct monetary transactions online, which will aid in decreasing poverty.

Overall, the Digital India Act is anticipated to have a major beneficial influence on India’s GDP and social metrics. The DIA will assist to make India a more wealthy and fair nation.

The following are some particular instances of how the DIA is predicted to effect India’s GDP:

The DIA will encourage the advancement of emerging digital technologies including artificial intelligence, blockchain, and quantum computing. These technologies have the potential to transform numerous sectors while also providing new employment and driving economic development.

The DIA will make it easier for firms to operate online. This will lower the cost for operating business and make it easier for enterprises to reach new clients.

The DIA will make government services more efficient. This will save both businesses and individuals time and money, promoting economic growth.

The DIA will encourage the development of digital literacy and skills. This will improve India’s workforce’s productivity in the global marketplace.

The DIA is still in its early phases of development, but it has the potential to be a significant engine of India’s economic growth. The DIA is projected to boost India’s GDP, social indicators, and global competitiveness.

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Income tax Uncategorized

Income Tax Audit under Section 44AB – Criteria, Audit Report, Penalty

Income Tax Audit

In India, an income tax audit is conducted under Section 44AB of the Income Tax Act, 1961. It is a formal examination of a taxpayer’s financial records and tax return by a chartered accountant (CA) or a tax auditor to ensure compliance with the provisions of the Income Tax Act. Income tax audits in India are applicable to certain categories of taxpayers meeting specific criteria.

Key Points about Income Tax Audit in India:

1. Mandatory Audit Threshold

As per Section 44AB, the following categories of taxpayers are required to undergo a tax audit if their total income in a financial year exceeds the specified threshold:

a. Businesses: Any person carrying on a business with total sales, turnover, or gross receipts exceeding Rs 1 crore in a financial year (Rs 2 crore from FY 2020-21 onwards).

b. Professionals: Any professional (e.g., doctors, lawyers, architects) with gross receipts exceeding Rs 50 lakhs in a financial year.

c. Presumptive Taxation Scheme: Taxpayers opting for the Presumptive Taxation Scheme under Sections 44AD, 44ADA, or 44AE, and having income lower than the deemed profits and gains.

2. Appointment of Tax Auditor

The taxpayer subject to tax audit needs to appoint a qualified chartered accountant as a tax auditor. The tax auditor will conduct the audit and provide an audit report in the prescribed format (Form 3CA/3CB and Form 3CD).

  1. Audit Process: During the tax audit, the tax auditor examines the taxpayer’s books of accounts, financial statements, supporting documents, and other relevant records to ensure the accuracy and compliance of the tax return.
  2. Due Date for Filing Audit Report: The audit report along with the income tax return must be filed by the due date for filing income tax returns, which is usually September 30th of the assessment year (i.e., the year following the financial year).
  3. Consequences of Non-Compliance: Failure to comply with the tax audit requirements can lead to penalties under Section 271B. A penalty of 0.5% of the total sales, turnover, or gross receipts, subject to a maximum of Rs 1,50,000, can be imposed.

It’s important for taxpayers meeting the audit criteria to ensure timely compliance with the tax audit requirements to avoid penalties and other consequences. Consulting with a qualified chartered accountant or tax consultant can help in the smooth conduct of the tax audit and proper filing of the audit report.

Categories
Income tax

Benefit of Filing of income tax returns

Benefits of Income Tax Return

Filing income tax returns offers several benefits for individuals and the broader economy. Some of the key advantages include:

 

1. Compliance with the Law

Paying income tax and filing returns is a legal obligation in many countries. By fulfilling this responsibility, individuals comply with the tax laws, helping maintain a fair and functioning tax system.

2. Claiming Refunds

Sometimes, individuals may have paid more taxes throughout the year than they owe. Filing a tax return allows them to claim a refund for the excess taxes they have paid, putting money back in their pockets.

3. Avoiding Penalties

Failure to file income tax returns or underreporting income can lead to penalties and legal consequences. Filing returns on time and accurately can help individuals avoid these penalties.

4. Documentation for Financial Transactions

Income tax returns serve as essential financial documents. They can be used as proof of income when applying for loans, visas, or other financial transactions.

5. Supporting Social Programs

Income tax revenue is a significant source of funding for various social programs, such as healthcare, education, infrastructure, and welfare initiatives. By paying income tax, individuals contribute to the development and well-being of their society.

6. Building a Financial History

Consistent filing of income tax returns helps individuals build a financial history, which can be beneficial when seeking financial opportunities or demonstrating financial responsibility.

7.  Retirement Benefits

In some countries, contributing to certain retirement plans or pension schemes is linked to tax benefits. Filing returns can enable individuals to claim these benefits and save for their retirement.

8. Avoiding Tax Evasion Charges

Filing income tax returns honestly helps individuals avoid tax evasion charges, which can lead to severe penalties and even criminal prosecution in some cases.

9. Supporting Government Operations

Income tax revenue is a crucial source of funds for governments. It aids in funding public services, maintaining infrastructure, and supporting various administrative functions.

10. Contribution to Economic Growth

Income tax revenue contributes to a country’s overall economic growth and development. It helps the government invest in projects that stimulate the economy and create job opportunities.

Overall, filing income tax returns is not just a legal obligation; it is a way for individuals to contribute to the functioning of society and support various public services and initiatives that benefit everyone.

Categories
Income tax TAN or Tax deduction TDS

Income Tax due dates for July 2023

7 July 2023 –

​Due date for deposit of Tax deducted/collected for the month of June, 2023. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan

7 July 2023 –

​Due date for deposit of TDS for the period April 2023 to June 2023 when Assessing Officer has permitted quarterly deposit of TDS under section 192, 194A, 194D or 194H

15 July 2023 –

​​Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of May, 2023

15 July 2023 –

​​Due date for issue of TDS Certificate for tax deducted under section 194-IB in the month of May, 2023

15 July 2023 –

​​Due date for issue of TDS Certificate for tax deducted under section 194M in the month of May, 2023​

15 July 2023 –

​Due date for issue of TDS Certificate for tax deducted under section 194S in the month of May, 2023

Note: Applicable in case of specified person as mentioned under section 194S

15 July 2023 –

​Quarterly statement in respect of foreign remittances (to be furnished by authorized dealers) in Form No. 15CC for quarter ending June, 2023

15 July 2023 –

​Quarterly statement of TCS deposited for the quarter ending 30 June, 2023​

15 July 2023 –

​Upload the declarations received from recipients in Form No. 15G/15H during the quarter ending June, 2023

15 July 2023 –

​Due date for furnishing statement in Form no. 3BB by a stock exchange in respect of transactions in which client codes been modified after registering in the system for the month of June, 2023

30 July 2023 –

​Quarterly TCS certificate in respect of tax collected by any person for the quarter ending June 30, 2023

30 July 2023 –

​Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA for the month of June, 2023

30 July 2023 –

​Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IB for the month of June, 2023

30 July 2023 –

​Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194M for the month of June, 2023

30 July 2023 –

Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194S in the month of June, 2023

Note: Applicable in case of specified person as mentioned under section 194S

31 July 2023 –

​Quarterly statement of TDS deposited for the quarter ending June 30, 2023

31 July 2023 –

​​Return of income for the assessment year 2023-24 for all assessee other than (a) corporate-assessee or (b) non-corporate assessee (whose books of account are required to be audited) or (c) partner of a firm whose accounts are required to be audited or the spouse of such partner if the provisions of section 5A applies or (d) an assessee who is required to furnish a report under section 92E.

31 July 2023 –

​Quarterly return of non-deduction of tax at source by a banking company from interest on time deposit in respect of the quarter ending June 30, 2023.

31 July 2023 –

​Statement by scientific research association, university, college or other association or Indian scientific research company as required by rules 5D, 5E and 5F (if due date of submission of return of income is July 31, 2023)​

31 July 2023 –

​Intimation in Form 10BBB by a pension fund in respect of each investment made in India for quarter ending June, 2023​

31 July 2023 –

​Intimation in Form II by Sovereign Wealth Fund in respect of investment made in India for the quarter ending June 2023

Source- https://incometaxindia.gov.in/

Categories
Budget Income tax

Budget News 2022

budget 2022 income tax

Taxing income doesn’t give private cryptos legitimacy: FM Sitharaman

 

At the customary post-Budget media interactions, Finance Minister Nirmala Sitharaman and her topmost bureaucrats touched upon a number of issues. The minister said the government taxing income from digital virtual assets did not give them legitimacy and that issue was being dealt separately in the planned cryptocurrency Bill. She also expressed confidence that the Budget targets were achievable. Excerpts:

On cryptocurrencies

There will be a digital currency launched by the RBI. Even if it is a cryptocurrency, only the central bank has the authority to issue a currency. Anything outside of that is not a currency, despite the fact that we refer to them as such. Nothing prevents me from taxing the gains that are being earned through buying and selling. They do not acquire legitimacy through taxation. We are not levying taxes on the digital rupee, which has not yet been released. Everything else is an asset made by a person, and if any gains are earned from selling it, they will be taxed at a rate of 30%. By enforcing a 1% tax deducted at source, we are also monitoring every transaction made in the cryptocurrency sector. A paper has been distributed, and we are getting feedback. Additionally, public stakeholders are contributing. Therefore, regulation will follow that procedure, but we won’t wait for regulation before taxing those who profit from such assets.

On Budget estimates

In the February 2021 Budget, we were told we had been conservative, but we were right in our assessment. And being conservative is not being overly optimistic. We are sure we will achieve the numbers, and will probably top them.

On revenues

If revenues are compared to the size of GDP, excise duty cannot be linked to that because it doesn’t increase as prices go up. So if excise duty collection is removed from the revised estimates, projected growth in revenues is 14 per cent, said Revenue Secretary Tarun Bajaj. This is not conservative, but a very pragmatic number, and the government will make all attempts to achieve it.

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