Professional Updates

 Why does a tax liability arises in case of change in employment? 1) While filing the returns we may see that there is a tax payable while disclosing salaries from all the employers during the year. 2) This situation arises when the salary from previous employment is not disclosed with the later employer. 3) In the absence of disclosure, second employer calculates tax on the salary paid by him alone. 4) In such case, each employers calculates tax as below upto 250000 - 0 tax 250001-500000 5% 500001-1000000 20% above 10 lacs 30% 50000 standard deduction  5) But while filing tax return, the entire salary will be clubbed and taxed according to the slabs. 6) We get standard deduction of 50000 only once, the basic exemption of 250000 only once and the balance income might be taxed at highest slab. This results in shorter tax deduction from both the employers and you see there is a tax payable while filing the return. To be crisp, this tax payable is nothing but shorter tax deductio...

Who is eligible to apply? Employee must be in service and contributing to pension scheme under EPS-95 before 01.09.2014 or individuals retired after 01.09.2014 but contributed to EPS-95 before 01.09.2014. Member of EPFO before 01.09.2014 ✅ Still in employment ✅ Retired after 01.09.2014 ✅ When is the last date to opt for HIGHER PENSION? 03.05.2023. What is Pensionable salary? Pensionable salary is used to calculate the contribution made to EPS out of the employer's contribution of EPF. If Not opting for higher pension, it is Rs.15000 p.m irrespective of your actual Basic + DA p.m If opting for higher pension, it is considered as the average of last 60 months actual Basic + DA p.m before retirement. What is pensionable service? The number of years of service for which contribution to EPS was made.  What is the formula to calculate monthly pension? Monthly pension amount  = Pensionable salary * (Pensionable se...

Let us discuss about the key points from the budget presented today. This budget will be effective for the Financial Year 2023-24. Let us understand the FM's speech concerning Personal income tax.  1) Currently, those with income up to Rs.  5 lakh do not pay any income tax in both old and new tax regimes. I  propose to increase the rebate limit to Rs.7 lakh in the new tax regime. Thus,  persons in the new tax regime, with income up to Rs7 lakh will not have to  pay any tax. If an employee choses NEW TAX REGIME, then there is NO tax if the Gross salary and Other taxable income is less than Rs.7 lacs. 2)  I had introduced, in the year 2020, the new personal income tax regime  with six income slabs starting from Rs.2.5 lakh. I propose to change the tax  structure in this regime by reducing the number of slabs to five and  increasing the tax exemption limit to Rs.3 lakh. The new tax rates are: Income in Rs.          Tax ...

Earlier, interest earned on EPF contributions was completely exempt. But with the new amendment w.e.f 01.04.2022, certain portion of interest income is being taxed in the hands of employees. let us understand in detail. WHAT IS TAXED? Interest accrued on contribution made to EPF by employer and employee during the financial year over and above the threshold limits is taxed in the hands of employee. WHAT IS THE THRESHOLD LIMIT? For the interest income to be taxed, Finance Ministry has mentioned threshold limits as below. If employer does not contribute to PF - Rs.500000 If both employer and employee contributes to PF - Rs.250000 HEAD OF INCOME: the taxable portion of interest will be taxed under the head "INCOME FROM OTHER SOURCES". TDS ON TAXABLE INTEREST: If the taxable interest exceeds Rs.5000 per annum, then EPFO will deduct TDS @10% u/s234A. However, the taxable interest income will appear in 26AS/AIS and hence, the employee has to include this income while filing the re...

In terms of safeguarding the personal assets from financial losses occurred during course of business, LLP is the best option. The following post enumerates the concept in detail. Any business owner shall think of continuity of business irrespective of the members joining or leaving the entity. The status of the entity should remain same in case of death or insolvency or bankruptcy of any member so that the interest of other members are safeguarded. Hence, LLP can be treated as best option that any business owner can choose. WHAT IS A PARTNERSHIP FIRM? An association of two or more persons who have agreed to share the profits of a business which they run together. The liability of partners is unlimited with respect to capital. The losses can be recovered from the personal assets of partners. WHAT IS A LIMITED LIABILITY PARTNERSHIP? A business entity in which the partners liability is restricted to the capital contribution by them. Let us understand various concepts under Private limite...

Common FAQs about income tax return filing and processing .   1. How long does it take for the return to be processed? Ans: There is NO DUEDATE for the processing to be completed. 2. Do you have any update on processing? Ans: CA will not get update on the returns. You can check the status of the return in the website. 3. How does the department pick a file for processing? Ans: The file shall be picked by the system randomly and there is NO known logic regarding the same. 4. My friend/relative who has filed after me has received the refund but I did not. Why is that so? Ans: System picks the file randomly and it does not know that both of you are related. 5. What is the tentative time for refund credit after receiving Intimation mail u/s.143(1)? Ans: As per mail, the refund will be credited within 15 working days, provided the bank account is verified. 6. What is the tentative time for refund processing as per your experience over years? Ans: I have seen variou...

Let us understanding the tax-ability of proceeds received from withdrawal of Provident Fund. Condition 1: Withdrawal of PF after completion of 5 years of service. Proceeds received from withdrawal of PF from the fund accumulated over a period of more than 5 years is EXEMPT from tax. Period of employment with all the previous employers shall be included in calculating the 5 years period provided, the old PF account is merged with the new employer.  Condition 2: Withdrawal of PF before completion of 5 years of service. Proceeds received the withdrawal of PF before completion of 5 years of employment shall be TAXABLE. Let us understand the taxability of PF in details. PF withdrawn shall have 4 components namely, Employer's contribution, Employee's contribution, Interest on Employer's contribution, Interest on Employee's contribution. a) Employer's contribution Contribution made by employer in the accumulated balance shall be TAXED under the head INCOME FROM SALARY.  ...