Advance Ruling

Advance Ruling is one of the most important terms used in the taxation matters related to Non-Resident and Foreign Companies to avoid a number of probable litigations. Section 245N to Section 245 V deals with the various Continue reading →

MAT-Minimum Alternate Tax—-purpose, meaning and calculation mechanism

MAT i.e. Minimum Alternate Tax was introduced by Finance Act 1987 and was made applicable from April 1, 1989 onward.

The basic reason behind introduction of MAT was non-payment of tax by lot of big companies by taking the advantage of various tax benefits and exemptions available under the provisions of Income Tax Act, 1961. These companies were generally known as zero tax companies because despite showing big profits in books of account and paying substantial dividend to shareholders they used to pay marginal or nil tax. To avoid this legalized practice of tax avoidance provisions of MAT was Continue reading →

Angel Tax—- IFs and BUTs

Now a days we are hearing a lot of noise about Angel Tax so today we will discuss in details what the term Angel Tax Stands for, what are its repercussions on taxation of various start-ups, why is everybody disturbed about it. So lets starts this roller coaster ride of Angel Tax with all the terms associated with it: –

ANGEL TAX: –

The most prominent and easiest way of evasion of tax on black money was issuance of shares in privately and closely held companies at a huge premium (what we have always heard in the cases of black money converted by politician and most prominent in recent days was Lalu Yadav Farm House Case of Bijwasan). Continue reading →

PF and ESI — Treatment in Income Tax

PF (Provident Fund) and ESI (Employee State Insurance) is basically governed by three sections viz. 2(24)(x), 36(1)(va) and Section 43B. But before discussing these three sections first we would discuss the basic principles of PF and ESI.

PF (Provident Fund)/ESI (Employee State Insurance): – The contribution to PF is being governed by provisions of Employees’s Provident Fund and Miscellaneous Provisions Act, 1952 and provides that an amount of 12% of basic salary of will be deducted from the salary and to be deposited towards providing social security to Continue reading →

CAPITAL GAINS

In the last article we discussed about deduction of tax on capital gains on sale of property by NRI. Now we will discuss what the term Capital Gains means. This is the most effective tool of wealth creation, which we will discuss in details in our next articles. Today we will discuss about capital gains only, its types. Wealth creation through capital gains re-investments will be discussed in later articles. So lets start our journey of capital gains.

Capital gains in a layman’s language means ” a profit from Continue reading →

TDS on sale of property by NRI

In our last article we discussed about deduction of tax @ 1% on purchase of property if the property value exceeds Rs. 50.00 Lacs. Section 194-IA of the Income Tax Act, 1961 deals with these provisions and provides the compliance requirement for a resident seller. But in case of sale of property by a non-resident section 195 of the income tax applies, which reads as follows: –

“Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest (not being interest referred to in section 194LB or section 194LC) or section 194LD or any other sum chargeable under the provisions of this Act not being income chargeable under the head “Salaries”) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force” Continue reading →