Tag: INCOME TAX

Understanding Tax Regulations in the Era of Cryptocurrency

Post author By Infinity Services
Post date January 14, 2025
No Comments on 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)

Category	Details
Tax on Crypto Transactions	30% flat tax on income from the sale, purchase, or exchange of virtual digital assets, regardless of holding period.
Deductions	Only the cost of acquiring the asset is deductible. No other deductions allowed.
Loss Carry Forward	Losses 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 Gifts	30% tax on crypto gifts exceeding Rs 50,000 in a year, payable by the recipient.
Record Keeping	Maintain records of purchase prices, sale prices, and transaction dates for tax reporting.
Reporting	Report crypto income and losses on your annual tax return.
Compliance	Ensure 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.

Tags account, INCOME TAX

Uncategorized

When deciding between the new regime and the old regime, which one should you select? (Old Regime Vs new Regime)

Income Tax Regime

Opting for the new income tax regime in India requires comprehending the fundamental differences between the old and new regimes and evaluating which one aligns more favourably with your financial situation. Presented below is an in-depth manual to assist you in making an accurate decision:

Understanding both the Old and New Regimes

Old Regime

A variety of deductions and exemptions are available to taxpayers under this system. This includes the House Rent Allowance (HRA), the Leave Travel Allowance (LTA), the standard deduction, deductions under Section 80C (investment in PF, PPF, life insurance, etc.), deductions under Section 80D (medical insurance), and plenty other deductions and exemptions.

New Regime

However, the majority of deductions and exemptions are removed under the new tax system, which results in lowered tax rates. With a few exceptions, taxpayers who fall under this system cannot take advantage of the deductions that were indicated above. These exceptions are contributions to the National Pension System (NPS), the standard deduction, and interest on house loans for self-occupied property.

Determine the amount of tax liability

Calculate your tax burden under both regimes by using an income tax calculator or consulting with a tax professional. The calculation will be based on your income, deductions, and exemptions.

Income tax calculator

You may determine which of the two regimes delivers a lower tax burden by comparing the tax that was payable under the previous system to the tax that is due under the new regime.

Think about your current financial situation

– Conduct an examination of your life goals, investing tactics, and sources of income. If you heavily rely on deductions and exemptions to lower your tax payment, it is likely that the prior system would be more advantageous for you. If you value simplicity and are satisfied with the trade-off of lower tax rates but fewer deductions, then it may be a more favourable choice for you.

Analyse the Coming Alterations

Consider the potential alterations that may occur in your income and current financial situation in the future. For instance, if you expect a considerable rise in your earnings or if you want to make major investments that qualify for deductions, the prior approach could lead to more favourable tax consequences.

Alternatively, if you expect a consistent income that does not involve significant deductions, the reduced tax rates under the new tax system may result in a drop in the amount of money you save.

Evaluate the Effects on Investments

Conduct an analysis to determine the alignment between your current investments and your future investment plans with each regime. Under the previous system, specific investments may have qualified for tax benefits. However, under the current system, this is no longer applicable.
When choosing a government system, it is crucial to evaluate the impact of taxes on long-term assets, such as the profits made from selling stocks or property.

Chat matters thoroughly with a tax advisor

If you are uncertain about which regime to select, it is advisable that you seek the counsel of a financial adviser or accounting specialist. Similarly, they have the capability to provide customised guidance that is specifically designed to align with your specific financial resources and objectives.

Write us infinityservices2018@gmail.com

File Form 10-IE

– To take advantage of the changed tax system, you must file Form 10-IE along with your income tax return to declare your decision for the current fiscal year.

It is crucial to consider that choosing between the old and new tax regimes depends on various factors that are unique to your financial situation. Therefore, it is vital to carefully evaluate your options.

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

Post author By Infinity Services
Post date May 14, 2024
No Comments on 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.

Tags 80c, 80cc, INCOME TAX, national pension scheme, nps

TDS

Section 194O of the Income Tax Act

Post author By Infinity Services
Post date January 16, 2024
No Comments on Section 194O of the Income Tax Act

Section 194O of the Income-tax Act, 1961 deals with Tax Deducted at Source (TDS) on payments made to e-commerce participants. It was introduced in the Union Budget 2020 and came into effect on 1st October 2020.

Here’s a summary of the key points of Section 194O:

Who is responsible for deducting TDS?

E-commerce operators like Amazon, Flipkart, Meesho, etc., are responsible for deducting TDS at the rate of 1% on the gross amount of sales made through their platform by sellers (e-commerce participants).

What transactions are covered?

The TDS applies to sales of goods, provision of services, or both facilitated through the e-commerce platform. This includes professional and technical services as well.

When is the TDS deducted?

The TDS is deducted at the time of crediting the seller’s account, irrespective of the mode of payment, or at the time of making payment to the seller, whichever is earlier.

Threshold limit:

There is no threshold limit for e-commerce companies. They are required to deduct TDS on all transactions facilitated through their platform. However, for individual/HUF e-commerce participants, no TDS is deducted if the gross amount of sales during the previous year does not exceed Rs 5 lakh and they have furnished their PAN or Aadhaar.

Purpose of Section 194O:

This section aims to improve tax compliance by bringing e-commerce participants under the TDS net. Many small sellers operating on e-commerce platforms often miss filing their income tax returns. By collecting TDS at the source, the government ensures that some tax is collected upfront even if the seller doesn’t file their returns.
I hope this summary is helpful. If you have any further questions about Section 194O or its implications, feel free to ask!

Gaurav Sharma
8878797882
Infinityservices2018@gmail.com
Infinityservices2018.com

Tags account, central GST, CGST, INCOME TAX, tax return

Income tax TAN or Tax deduction

The income tax challan rectification process

Post author By Infinity Services
Post date October 31, 2023
1 Comment on The income tax challan rectification process

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

Tags account, GST Network, INCOME TAX, tax, tax return

GST

Detailed Overview of GST Audit: Audit in accordance with the Central Goods and Services Tax Act of 2017

Post author By Infinity Services
Post date September 23, 2023
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A Goods and Services Tax (GST) audit is a comprehensive review of a taxpayer’s financial records, returns, and compliance with the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act) and its corresponding state GST acts. The primary objective of a GST audit is to ensure that taxpayers are accurately reporting their GST liabilities, claiming eligible input tax credits (ITC), and complying with the various provisions of the GST laws.

Here is a detailed overview of the GST audit process in accordance with the CGST Act of 2017:

Applicability:

– GST audits are applicable to certain categories of taxpayers, including those with a specified annual turnover threshold, as prescribed by the government.

– Taxpayers whose annual turnover exceeds the threshold limit are required to get their accounts audited by a qualified chartered accountant or a cost accountant.

Audit Period:

– The audit covers a specific financial year or multiple financial years, as determined by the tax authorities.

Appointment of Auditor:

– Taxpayers subject to GST audit must appoint a qualified auditor, such as a Chartered Accountant (CA) or Cost Accountant, to conduct the audit.

Audit Process:

– The auditor examines the taxpayer’s books of accounts, records, invoices, and other relevant documents to verify the correctness of the reported GST transactions.

– They assess the accuracy of GST returns filed, including GSTR-1 (outward supplies), GSTR-3B (monthly summary return), and GSTR-2A (auto-populated purchase details).

– The auditor checks the reconciliation of ITC claimed in GSTR-3B with eligible invoices and relevant provisions.

Verification of Compliance:

– The auditor ensures that the taxpayer has complied with various GST provisions, such as:

– Timely filing of returns

– Correct classification of goods and services

– Proper valuation of supplies

– Correct calculation of GST liability

– Timely payment of GST

– Adherence to reverse charge mechanism (if applicable)

– Applicability of GST on exempt and non-GST supplies

– Compliance with anti-profiteering provisions

Audit Report:

– The auditor prepares an audit report, which includes findings, observations, discrepancies, and recommendations.

– The audit report must be submitted to the taxpayer within the prescribed timeframe.

Response and Rectification:

– After receiving the audit report, the taxpayer has the opportunity to respond to the findings and rectify any discrepancies or errors.

– If necessary, the taxpayer may need to make additional tax payments or file revised returns to correct any mistakes.

Submission to Tax Authorities:

– The taxpayer submits the audit report along with their response to the tax authorities within the stipulated timeframe.

Action by Tax Authorities:

– The tax authorities review the audit report and the taxpayer’s response.

– If discrepancies are found and the taxpayer’s response is unsatisfactory, the authorities may initiate further investigations and take appropriate action, including the imposition of penalties.

Conclusion:

– The GST audit process concludes once the tax authorities have reviewed the audit report and taken any necessary actions.

It’s important for businesses to maintain accurate records and comply with GST provisions to avoid penalties and legal consequences. The GST audit process is a crucial mechanism for ensuring tax compliance and preventing tax evasion in the GST regime.

Tags central GST, CGST, GST Network, GST(Goods and Services Tax), GSTN, INCOME TAX, integrated GST

Income tax

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

Post author By Infinity Services
Post date August 11, 2023
No Comments on 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.

Tags account, accountant, audit, Digital India Act (DIA), Gross Domestic Product (GDP), INCOME TAX, quickbooks, tax, tax return

Income tax Uncategorized

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

Post author By Infinity Services
Post date July 30, 2023
No Comments on Income Tax Audit under Section 44AB – Criteria, Audit Report, Penalty

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).

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.
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).
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.

Tags account, accountant, INCOME TAX, income tax audit, tax, tax return

Income tax

Benefit of Filing of income tax returns

Post author By Infinity Services
Post date July 28, 2023
No Comments on Benefit of Filing of income tax returns

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.

Tags account, accountant, audit, Filing income tax returns, INCOME TAX, income tax returns, quickbooks, tax, tax return

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