Feb 282015
 
Due dates for the Month of March 2015
05-03-2015
Service Tax
- Service Tax payments by Companies for February
06-03-2015
Central Excise
- Due date for Payment of Excise Duty for all Assessees (Including SSI Units)
07-03-2015
Income Tax
- TDS Payment for February
10-03-2015
Central Excise
- Filing ER-1 Return (Other than SSI Units)
– Filing Quarterly ER-2 Return by 100% EOUs
– Filing monthly ER-6 Return by specified class of Assessees regarding principal inputs.
15-03-2015
Income Tax
- Advance Income Tax Payment – Final Installment All Assessees
Providend Fund
- PF Payment for February
20-03-2015
MVAT
– TDS Payment for February
21-03-2015
ESIC
- ESIC Payment for February
MVAT *
– MVAT Monthly Return for February (TAX>1000000/-)
– Montly payment of February
31-03-2015
Profession Tax
- Payment of February
*If payment of MVAT made as per time prescribed, additional 10 days are given for uploading e-return
Software Solutions Available on
XBRL | TDS | Payroll | Web Payroll | Web HRMS | Fixed Asset | Service Tax | IncomeTax | Digital Signature
PDF Signer | Attendance Machine | Data Backup Software
Sensys Technologies Pvt. Ltd.
HO: 524, Master Mind1, Royal Palms, Goregaon East, Mumbai – 400 065.
Tel.: 022-66278600 | Call: 09769468105 / 09867307971
Email: sales@sensysindia.com | Website: http://www.sensysindia.com
Branches: Delhi & NCR | Pune | Bangalore | Hyderabad | Ahmedabad | Chennai | Kolkata
Visit our BLOG for latest news and updates related to XBRL, Income Tax, HR & Payroll, PF / ESIC / TDS / PT etc..
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Feb 192015
 

Restructure your compensation with perquisites and other long terms benefits

In our earlier blogs we have already discuss in detail about structuring your compensation plan. Here we are providing you few more tips which will help you in restructuring your salary so as to minimize your tax bill:-

Make use of perquisites

One smart way to avoid tax is to opt for a company leased car instead of buying one yourself. Instead of you paying the EMI out of your post-tax income, your employer pays the EMI and includes it in your CTC. This cuts the tax significantly because you are taxed only for the perk value of the car, which is between Rs 1,800 a month (for cars of up to 1600 cc) and Rs 2,400 a month (for cars bigger than 1600 cc).

If your employer is willing to fund a professional course, the taxable value of such a perk will only be at 10% of the course fee. This means, for a benefit of, say Rs 70,000, you will be taxed for only Rs 7,000.

Check if your employer can provide you a laptop or tablet for professional as well as personal use. You will have to pay tax on the perk value of the gadget, which is only 10% of the price of the gadget.

Other tax-efficient perks include food coupons, which can be used at various outlets and departmental stores to buy food items. Most of big grocery chains, fast food outlets and departmental stores accept these coupons. One can take nearly Rs 30,000 worth of meal coupons and gift coupons of up to Rs 5,000 in a year. This has the potential to reduce the tax by almost Rs 10,000 for someone in the 30% tax slab.

Opt for more long-term benefits

Tax can be reduced further if you opt for certain long-term benefits. Every month, 12% of your basic pay flows into your PF account with a matching contribution by your employer. While your contribution fetches you tax benefits under Section 80C, you can opt for investments that give you additional tax benefits over and above the Rs 1.5 lakh deduction under Section 80C.

Under Section 80CCD(2), up to 10% of your basic salary is fully deductible if invested in the national Pension System (NPS). Additionally, the employer’s contribution, which is up to 10% of the basic, is deductible under Section 80CCE over and above the Rs 1.5 lakh deduction limit for Sections 80C, 80CCC and 80CCD. In the highest 30% tax bracket, it will enhance your increment by 3% of your basic salary.

Become the consultant

Another way to ensure a higher take-home salary and lower tax is by becoming a consultant. Consultants can claim deduction for work-related expenses. As a consultant, your income is taxed under the head ‘income from business or profession’ and accordingly you can claim deduction of all expenses incurred, including telephone bills, travel, entertainment, stationery and depreciation of assets. This can go a long way in reducing the taxable income for the individual.

However, there are several hassles you need to go through as a consultant.

You will have to maintain proper books of accounts and get an audit report in case the gross receipts exceed Rs 15 lakh in a year.

A consultant is also liable to pay service tax if his income exceeds Rs 10 lakh.

It is wrong to assume that the tax burden will lessen if one becomes a consultant. It will depends on how much expenditure one has incurred against receipts.

However, you have to forego some benefits you would have otherwise enjoyed as a salaried individual. For instance, HRA, LTA and medical allowance are some key benefits that consultants are not eligible for.

So we advice taxpayers to think about the long-term benefits of continuing as an employee rather than becoming fixated with the short-term tax benefits of a consultant. They stand to reap certain incidental benefits that help build long-term savings in the form of Provident Fund, as well as certain terminal benefits like gratuity and superannuation.

We are of strong belief that above article would help you in preparing a tax efficient salary structure and will help you to increase your take home salary.

Feb 192015
 

Agriculture Income To Employee

In previous document we have discuss few methods of planning your salary structure in the manner that suits tax man and in the same time minimise your tax bill. Even after availing all those benefits requirement is observed to avail some more avenues of income which are tax free and can be earned with minimal efforts. Hence we are looking forward for agriculture income, which is a need of human life.

What practically few employees doing is; while working in office of employment they give their lands to cultivate and grow to others which is managed by their family. In this way they have a additional source of income and at the same time they need not to pay additional tax. The provision related to agriculture income explained in following para.

Meaning of “Agriculture Income” : Agriculture Income means-

  1. any rent or revenue derived from the land which is situated in India and is used for agriculture purposes sec.2(1A)
  2. any income derived from the land by agricultural operation including processing of the agriculture produce, raised or received as rent –in-kind so as to render fit for the market, or sale of such produce[sec.2(1A)
  3. income attribute to a farm house subject to the conditions that on the building is situated on or in the immediate vicinity of the land and is used as a dwelling house, store house or other out building and the land is assessed to land revenue or a local rate or, alternatively ,the building is situated on or in the vicinity of land which (though not assessed to land revenue or local rate) is situated outside in urban areas, i.e., any area which comprised within the jurisdiction of a municipality or cantonment board having population of 10,000 or more in any area within such notified distance upto 8 km from the local limits of such municipality or cantonment board.

 Benefit of having Agriculture Income

  • SECTION 10(1) exempts agriculture income from tax.
  • The reason of exemption of agricultural income from central taxation is that the constitution gives exclusive power to makes laws with respect to taxes on agricultural income to the state Legislature.
  • Agricultural income is taken into consideration to determine tax on non-agricultural income in exceptional cases only.
  • With effect from the assessment year 2009-10, any income derived from saplings seedlings grown in a nursery shall be deemed to be an agricultural income.

Essentials condition to prove income to be agriculture income:-

- There must have a land.
– Rent or revenue should be derived from land.
– The land is one which is situated in India.
– The land is used for agricultural purposes.

How shall an employee take benefit of this provision:-

To availing this exemption, an employee shall disclose his agriculture income in the exempted income listing of return. At self assessment level no other procedural requirement needs to be met. However, in case of scrutiny employee must prove correctness of his claim to Income Tax Authority (ITA).

Further to avail this exemption, employees needs to show a relation between his income and agriculture land situated in India. Employees need not to be owner of land. The only requirement is a relation between income and agriculture land. This relation may be direct or indirect.

It shall be noted that agriculture income is added to salary income only for determining tax rates on salary income. To that extent it can be said agriculture income is indirectly taxed in terms of higher tax rates of normal salary income.

However in some cases transactions are coloured as agriculture income. This is not correct. If you get catch my ITA, it will raised huge penal and prosecution action against such person.

So after discussion the scope of taxation of agriculture income it may be concluded that even if you are not owner of land still you can avail the benefit of this exemption and minimise your tax bill. In upcoming document we will provide you practical method of availing this exemption and few other important aspects related to agriculture income.

Feb 172015
 

How to structure your salary tax efficiently

The appraisal season is just ahead and many people will be rewarded for the hard work. Several others will be lured to switch with better offers. In either case, before you sign the agreement, pay attention to the compensation structure being offered. Various components of the compensation package may not come to you immediately. Others may be fully taxable. If the compensation package is not structured properly, you might get a rude shock in your next pay cheque.

This blog tells you what you can do to minimise the tax outgo and enhance your take-home income. An employee earning Rs 60,000-70,000 a month can save over Rs 20,000 in tax in a year by realigning the package appropriately,

Opt for lower basic and variable pay

The basic pay, which is the primary component of the compensation package, is fully taxable. If the basic pay is too high, your tax liability will shoot up. However, you can’t keep it too low because the other components of the package, such as the HRA and Provident Fund benefit, are linked to the basic pay. For those in the highest tax bracket, it makes sense to keep the basic pay low, but a higher basic will not have a big impact in the lowest 10% income tax slab.

How much basic pay you should have?

Those who have to fund immediate goals would need a higher take-home pay. This can be done by lowering the basic pay component. Those focusing on building a corpus for retirement can opt for higher basic pay, as it leads to a higher contribution to the Provident Fund. Similarly, the variable pay and special allowance is also fully taxable. Any bonus will get the same tax treatment. Make sure that the employer has not loaded your CTC with these heads.

More allowances less taxes and more take home salary

Instead of a high basic pay, opt for more tax friendly allowances and reimbursements, such as conveyance, medical, telephone, and newspaper/periodicals. Some companies even offer soft furnishing allowances to cover clothing and certain household items.

However, all these allowances become taxfree only if the individual submits bills as evidence of the expenses incurred. If no bills are submitted, these become fully taxable. Selection between various types of allowances is based on individual needs and living style. Here under few allowances are discuss”

  1. Leave travel allowance (LTA) : LTA can be a big amount but you have to submit evidence of the journey.
  2. HRA: If you do not pay rent, the HRA becomes fully taxable. Even if you pay rent, the exemption is linked to your basic pay. It is the least of the following three options: the actual HRA received, 50% of basic pay (40% in non-metros), and actual rent paid minus 10% basic. If you pay a high rent and can claim exemption, include it in the package. If you live in your own house or the rent is very low, replace it with some other allowance.

When you sit down to reconfigure your pay package, keep in mind that the allowances are allocated reasonable amounts. There is no upper limit to how much a company can pay under one head. However, someone with a monthly CTC of Rs 80,000 cannot get Rs 40,000 a month for conveyance and Rs 10,000 for books and periodicals. If this component is unreasonably high, the taxman may raise an objection.

We hope this should help you design a more tax friendly compensation package for yourself. For more ways to plan your compensation package go ahead for read our further blogs.

Feb 142015
 
Calculation of TDS from Salary

Scheme of TDS: Under the scheme of tax deduction at source (TDS), persons responsible for making payment of income & covered by the scheme, are responsible to deduct tax at source & deposit the same to government treasury within the stipulated time.

The recipient of income – though gets only net amount, is liable to tax on the gross amount and the amount deducted at source is adjusted against his final tax liability.

DEDUCTION OF TAX FROM SALARIES

Any person responsible for paying any income chargeable under the head “salaries” is required to deduct at source on the amount payable. Tax is to be calculated at the rates prescribed for the financial year in which payment to employees is made.

POINTS TO CONSIDERED FOR COMPUTE THE SALARY & TAX THEREON

1.House rent allowance exemption- exemption pertaining to house rent allowance should be calculated by the employer on the basis of specified limit provided by the section10(13A) of income tax act.

2.Deduction from gross total income- Employer should taken into consideration amount deductible under sections 80C, 80CCD, 80CCG, 80D, 80DDB, 80E, 80EE, 80GG, 80GA, 80TTA, and 80U. The employer should not give any deduction in respect of donation (deduction under section Sec 80G) given by the employee.

3. TAX LIABILITY- Tax is deductible on the taxable income at the rate applicable for the financial year 2014-15, which is reproduced below for your reference:-

3.1 For a resident senior citizen (who is 60 years or more at any time during the previous year but less than 80 years on the last day of previous year i.e., born during April 1,1935 and march 31,1955):-

Net income range Income-tax rates Surcharge Education cess Secondary & higher education
Up to Rs 3,00,000 Nil Nil Nil Nil
Rs.3,00,000-Rs.5,00,000 10% of (total income minus Rs.3,00,000) Nil 2% of income-tax 1% of income-tax
Rs.5,00,000-Rs.10,00,000 Rs.20,000+20% of(total income minus Rs.5,00,000) Nil 2% of income tax 1% of income- tax
Rs.10,00,000-Rs 1,00,00,000 Rs1,20,000+30% of (total income minus Rs.10,00,000) Nil 2% of income- tax 1% of income- tax
Above Rs 1,00,00,000 Rs.28,20,000+30% of (total income minus Rs.1,00,00,000 10% of income tax 2% of income- tax &surcharge 1%of income –tax & surcharge-

3.2 .For a resident super senior citizen (who is 80 years or more at any time during the previous year, i.e., born before April 1, 1935)-

Net income range Income-tax rates surcharge Education cess Secondary &higher education cess
Up to Rs 5,00,000 Nil Nil Nil Nil
Rs.5,00,000 – Rs. 10,00,000 20% of (total income minus Rs.5,00,000) Nil 2% of income -tax 1% of income-tax
Rs 10,00,000 – Rs 1,00,00,000 Rs.1,00,000+ 30% of (total income minus Rs.10,00,000) Nil 2% of income -tax 1% of income-tax
Above Rs1,00,00,000 Rs.28,00,000+30% of (total income minusRs.1,00,00,000) 10% of income-tax 2% of income –tax & surcharge 1% of income-tax & surcharge

3.3 Any other case of individual, every HUF / AOP / BOI / AJP :-

Net income range Income-tax rates Surcharge Education cess Secondary & higher education
Up to Rs 2,00,000 Nil Nil Nil Nil
Rs.2,00,000-Rs.5,00,000 10% of (total income minus Rs.2,50,000) Nil 2% of income-tax 1% of income-tax
Rs.5,00,00-Rs.10,00,000 Rs.25,000+20% of(total income minus Rs.5,00,000) Nil 2% of income tax 1% of income- tax
Rs.10,00,000-Rs 1,00,00,000 Rs1,25,000+30% of (total income minus Rs.10,00,000) Nil 2% of income- tax 1% of income- tax
Above Rs 1,00,00,000 Rs.28,25,000+30% of (total income minus Rs.1,00,00,000) 10% of income tax 2% of income- tax & surcharge 1%of income –tax & surcharge

**The rates are subject to maximum marginal relief.

TDS RATES IN CASE PAN NO IS NOT FURNISHED
If the recipient does not furnish his PAN to the deductor, tax will be deducted by virtue of section 206AA at the normal rate or the rate of 20% whichever is higher.

4. WHEN A PERSON IS EMPLOYED BY TWO OR MORE EMPLOYERS DURING THE FINANCIAL YEAR – In such a case tax will be deducted by each employer separately. However, the employee is under obligation to declare salary receive & tax deducted thereon from other employers to one of the employers by submitting information in Form no. 12B.

5. TDS CERTIFICATE – TDS certificate will be given to the employee in form no. 16 annually on or before if few condition are satisfied. Form no. 16 can be given in digital signature. The employer should also give a statement of perquisites / profit in lieu salary.

6. SALARY WITHOUT TDS OR WITH LOWER TDS – To get salary without TDS or with lower TDS, the employee will have to approach the assessing officer by submitting an application in Form no.13 under the section 197.

7. Other points:-

7.1 TAX ON PREQUISITE PAID BY EMPLOYER – Section 192(IA) provides that the employer responsible for paying an income in nature of perquisite referred to in section 17 (2) may pay at his option, tax on the whole without making any deduction therefrom. In case employer opts to make payment of tax on perquisites, such tax payments will added back to income of employee. However, such tax payments shall not be allowed as tax deduction in the hands of employer.

7.2 MORE THAN ONE EMPLOYER – When an employee has more than one employer, he is required to furnish in form no.12B to one of the employer the detail of salary due /receive by him other employer.

Only after submission of information in FORM no 12B, it becomes obligation of the employer (to whom Form No 12B is submitted) to deduct tax at the source after considering the information submitted by the employee.

7.3 Relief under section 89: Section 192(2A) provides that in respect of salary payment of employees deduction of tax at source is to be made after allowing relief under section 89. To avail this benefit the concerned employees should furnish information in Form no. 10E to the employer.

7.4 Supporting documents: No need to collect supporting evidence for giving exemption in respect of LTC/ Conveyance allowance. For other deduction and allowances employees must have proper supporting documents and must satisfy himself for correctness of claim by employee.

7.5 Tax deduction in respect of other incomes of employee: Following points are notable before including other income of employees for tax deduction:-

  • The employee may (or may not) declare his other income to employer.
  • If the employee wants to declare his other incomes to the employer, then such information should be given plain paper to the employer.
  • The employer may declare details of his other incomes (including loss under the head” Income from house property” but not any other loss) & tax deducted thereon by others.

If the aforesaid information is not submitted by the employee to the employer, then employer cannot take into consideration other incomes of the employee.

Feb 022015
 

Due dates for the Month of February 2015

05-02-2015
Service Tax
- Service Tax payments by Companies for January
06-02-2015
Central Excise
- Payment of Excise Duty for all Assessees (Including SSI Units)
07-02-2015
Income Tax
- TDS Payment for January
10-02-2015
Central Excise
- Filing ER-1 Return (Other than SSI Units)
– Filing Quarterly ER-2 Return by 100% EOUs
– Filing monthly ER-6 Return by specified class of Assessees regarding principal inputs.
15-02-2015
Providend Fund
- PF Payment for January
20-02-2015
MVAT
– TDS Payment for January
21-02-2015
ESIC
- ESIC Payment for January
MVAT
– MVAT Monthly payments of January
MVAT
*
– MVAT Monthly Return for January (TAX>1000000/-)
28-02-2015
Profession Tax
- Payment of January
*If payment of MVAT made as per time prescribed, additional 10 days are given for uploading e-return
Software Solutions Available on
XBRL | TDS | Payroll | Web Payroll | Web HRMS | Fixed Asset | Service Tax | IncomeTax | Digital Signature
PDF Signer | Attendance Machine | Data Backup Software
Sensys Technologies Pvt. Ltd.
HO: 524, Master Mind1, Royal Palms, Goregaon East, Mumbai – 400 065.
Tel.: 022-66278600 | Call: 09769468105 / 09867307971
Email: sales@sensysindia.com | Website: http://www.sensysindia.com
Branches: Delhi & NCR | Pune | Bangalore | Hyderabad | Ahmedabad | Chennai
Visit our BLOG for latest news and updates related to XBRL, Income Tax, HR & Payroll, PF / ESIC / TDS / PT etc..
Click here to visit Sensys BLOG