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Odisha Minimum wages from October 2023 to March 2024.

Odisha Minimum wages from October 2023 to March 2024. Compliances

Oct 182023

The Government of Odisha has notified the revised rate of minimum wages for the scheduled employment that takes effect from 01 October 2023.

MW-Orissa: (DOWNLOAD)

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Bihar Minimum Wages were revised from 1st October 2023 to 31st March 2024.

Bihar Minimum Wages were revised from 1st October 2023 to 31st March 2024. Compliances

Oct 112023

The Government of Bihar, vide Notification No- 1687,1688 Dated- 31.03.2023 Gazette No.- 298 Dated 10.04.2023, revised the VDA effective 1st October 2023. Please refer to the notification for more details

BIHAR MINIMUM WAGES 01-10-2023 TO 31-03-2023 (DOWNLOAD)

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Punjab Factory Rules Amendment 2023.

Punjab Factory Rules Amendment 2023. Compliances

Sep 272023

The Labour dept of Punjab has amended certain rules of the Factory Act 1948, and section 65 subsection (3) and clause (IV) have been amended pls refer to the said notification

Punjabi Factory Act Amendment: DOWNLOAD

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PAN-Aadhaar linking deadline extended to 30 June 2023.

PAN-Aadhaar linking deadline extended to 30 June 2023. Compliances

Mar 292023

It has become a mandatory process to link your PAN with your Aadhaar. This is an important process because this will allow your income tax returns to be processed.

To provide some more time to the taxpayers, the date for linking PAN & Aadhaar has been extended to 30th June 2023, whereby persons can intimate their Aadhaar to the prescribed authority for PAN-Aadhaar linking without facing repercussions.

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16 Top Payroll Challenges for Small Businesses and How to Solve Them.

16 Top Payroll Challenges for Small Businesses and How to Solve Them. Compliances

Feb 272023

Small businesses face unique payroll challenges due to their limited resources and staff. One of the most significant payroll challenges for small businesses in compliance with federal and state payroll regulations. Small business owners must keep up with changing laws and regulations related to payroll taxes, wage and hour laws, and employee benefits, which can be time-consuming and costly. Another challenge is the complexity of payroll administration, especially for businesses with many employees. Managing payroll requires accurate record-keeping, timely processing, and ensuring that all taxes and deductions are correctly calculated and paid. Errors in payroll processing can result in fines and penalties, which can be especially damaging for small businesses.

Here are 16 top payroll challenges faced by small businesses:

Staying up-to-date with changing tax laws and regulations
Calculating and managing employee taxes, deductions, and benefits
Ensuring accurate and timely payment to employees
Dealing with payroll errors and correcting them
Keeping track of employee leave and paid time off
Managing employee classification and overtime pay
Compliance with wage and hour laws and regulations
Managing different pay rates for different employees or positions
Accurately tracking and reporting employee hours
Managing and processing employee expenses and reimbursements
Ensuring accurate record-keeping and documentation
Managing payroll for remote or distributed teams
Integrating payroll with other HR and accounting systems
Providing accessible payroll information and self-service options for employees
Ensuring the security and confidentiality of payroll data
Handling payroll in multiple states or jurisdictions.

What’s Important to Book-keepers When Processing Payroll

For book-keepers, processing payroll accurately and efficiently is of utmost importance. One critical aspect that bookkeepers focus on is ensuring that employees are paid correctly and on time. To do so, they need to keep track of various factors such as employee hours, overtime, taxes, and deductions. This process can be tedious and time-consuming, but bookkeepers can streamline the process significantly with attendance management software.

Attendance management software helps bookkeepers track employee attendance and monitor their hours worked. The software can automatically calculate and record employee hours, including overtime and breaks. This helps to minimize errors and saves time that would have been spent manually entering data. The software also enables bookkeepers to track employee absences, including sick days, vacation days, and personal time off, making it easier to deduct these days from an employee’s pay accurately.

Things you should know Before you Install Payroll Software

Before installing payroll software, it’s crucial to consider several factors, including integrating leave management software with payroll. Leave management software can help automate leave requests, approvals, and tracking of employee leaves. Integrating it with payroll software can help streamline the payroll process, including calculating leave balances and pay-outs and ensuring accuracy and compliance with applicable laws and regulations.

It’s also essential to check whether the payroll software is compatible with your company’s current payroll processes, especially regarding leave management. Some payroll software may not support specific leave policies, such as leave without pay or other paid or unpaid leave, which can lead to incorrect payroll calculations. Hence, it’s crucial to choose customizable payroll software that can accommodate different types of leave policies.

How can you Solve these Problems while using Payroll Software?

Payroll software can be a valuable tool for solving various problems related to payroll processing and management. One of the main benefits of payroll software is that it can help to automate many of the manual processes associated with payroll. This can help save time and reduce the administrative burden associated with payroll processing, improving accuracy and reducing the risk of errors.

Another benefit of payroll software is that it can help to ensure compliance with all relevant payroll regulations and requirements. Payroll software can automatically calculate taxes, deductions, and other withholdings and help you stay up-to-date with changes in tax laws and other regulations. This can reduce the risk of fines and penalties associated with non-compliance and give you peace of mind that your payroll processes are accurate and up-to-date.

Frequently Asked Question

Q.1 What are the basics of payroll?

A. Payroll is an integral part of any business. It involves tracking employee hours, calculating wages, taxes, insurance premiums, and other deductions while keeping records of payments and providing reports to the government. Understanding payroll basics will ensure your business runs smoothly and efficiently while keeping you compliant with local tax laws.

Q.2 How does a small business manage payroll?

A. Payroll is a complex task for small businesses. With limited resources and tight budgets, it cannot be easy to manage payroll without the help of a specialist. Fortunately, there are ways to simplify the process with technology and outsourcing services. This article will discuss how small businesses can manage payroll more effectively, from setting up accurate payment systems to finding solutions for payroll taxes.

Q 3 What are the biggest challenges in payroll?

A. Payroll is one of any business’s most critical and complex processes. It involves various tasks such as calculating employee wages, managing tax deductions, tracking vacation time, etc. Unfortunately, these tasks can be incredibly time-consuming and challenging to manage. As a result, many businesses are now turning to payroll software and AI writing assistants to help make the process easier and more efficient.

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Broad scheme of Tax Deduction at Source from “Salaries”.

Broad scheme of Tax Deduction at Source from “Salaries”. Compliances

Feb 142023

Every year an employer is obliged to deduct TDS from the salary payable by him to his employees. There are many practical difficulties faced by him in deducting TDS on estimated salary in determining the rate of TDS and estimated salary income on which such rate shall be applied. These difficulties are further increased due to amendments made by the authorities every year. Therefore an attempt is made to clarify all the practical difficulties faced by the employer.

1. Method of Tax Calculation

A. Every person who is responsible for paying any income chargeable under the head “Salaries” shall deduct income tax on the estimated income of the assessee under the head “Salaries” for the financial year 2022-23.

B. The income tax is required to be calculated on the basis of the rates given in the image attached to this blog.

C. Person deducted tax as above shall ensure that the provisions related to the requirement to furnish PAN or Aadhaar number, as the case may be, as per sec 206AA of the Act,

D. TDS u/s 192 shall be deducted at the time of each payment.

E. The tax paid by the employer shall be deemed to be TDS made from the salary of the It may be noted that tax liability may not be the same in case the employee opts for a concessional tax regime under section 115BAC of the Act. Thus, it is not always open to an employee to deduct the tax of an employee under the new tax regime as this option is open to employees at the time of filing income tax returns for the relevant assessment year.

F. Any employee intending to opt for the concessional rates of tax under section 115BAC of the Act may intimate the deductor, being his employer, of such intention for each previous year and upon such intimation, the deductor shall compute his total income, and make TDS thereon in accordance with the provisions of section 115BAC. The intimation made to the deductor shall be only for TDS during the previous year and cannot be modified during that year.

G. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of section 115BAC of the Act.

H. No tax, however, will be required to be deducted at source in a case unless the estimated salary income including the value of perquisites is taxable after giving effect to the exemptions, deductions, and relief as applicable.

2. Salary payable in foreign currency:

I. For the purposes of deduction of tax on salary payable in foreign currency, the value in rupees of such salary shall be calculated at the “Telegraphic transfer buying rate” of such currency as on the date on which tax is required to be deducted at source (see Rule 26 and Rule 115).

3. Adjustment for Excess or Shortfall of Deduction

J. The provisions of Section 192(3) allow the deductor to make adjustments for any excess or shortfall in Tax deduction arising out of any previous deduction or failure to deduct during the financial year.

4. Case

The income chargeable under the head “salaries” of an employee below sixty years of age during the Financial Year 2021-22, is Rs. 6,00,000/- (inclusive of all perquisites), out of which, Rs. 50,000/- is an account of non-monetary perquisites and the employer opts to pay the tax on such perquisites as per the provisions discussed in para 3.2 above.

Income Chargeable under the head ―” Salaries” inclusive of all perquisites	Rs. 6,00,000/-
Tax as per normal rates on Total Salary (including Cess)	Rs. 33,800/-
Average Rate of Tax [(33, 800/6,00,000) X100]	5.63%
Tax payable on Rs.50,000/= (5.63% of 50,000)	Rs. 2815
The amount required to be deposited each month (subject to adjustments in tax payable on account of change in salary structure)	Rs. 235= 2815/12

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TDS on Purchase of Immovable Property from Non-Residents.

TDS on Purchase of Immovable Property from Non-Residents. Compliances

Jan 062023

1. Rate of TDS deduction.

According to section 195(1), any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest other than interest referred to in section 194LB or section 194LC or section 194LD or any other sum chargeable under the provisions of this Act other than salary shall, at the time of credit or at the time of payment, whichever is earlier, deduct income-tax thereon at the rates in force.

As per section 2(37A) (iii), the TDS rate under section 195 would be the rate of income tax as specified in —

(a) Finance Act of the relevant year; or

(b) Double Taxation Avoidance Agreement entered by Central Government under section 90; or

whichever is most beneficial shall apply.

In case of payment to non-residents TDS shall be increased by surcharge and cess if applicable.

Thus when a person resident in India makes any payment to a non-resident on the purchase of immovable property they shall deduct tax as per provision of section 195.

2. No deduction or deduction at a lower rate.

For this purpose, the payee (non-resident seller) has to make an application in Form 13 to the assessing officer.

3. Tax required to be deducted while making payment.

When a property is sold by the non-resident TDS liability would depend upon the nature of capital gain arising in such transaction. The following points need to be considered for TDS deduction on such payment.

he was not aware of the fact that he was liable to deduct tax at source while making payment to a non-resident could not be accepted where it was clear from agreement to sale (ATS) that the seller was a non-resident.
Where the assessee payer failed to deduct TDS from the payment made to non-residents and also failed to obtain a certificate for non-deduction of tax, he will be treated as assessee-in-default under section 201(1).
Payments made by the assessee payer towards the purchase of property to two parties on behalf of the non-resident seller constitute the payments made to the said non-resident seller and hence, the tax was deductible under section 195.
Payment is made for the purchase of the property being jointly owned by P, a non-resident, and S, a resident in equal shares. However total consideration is paid to S. P was admittedly, a non-resident and to the extent of Rs. 60 lakhs paid to her via S, the provisions of section 195 were attracted and the assessee ought to have deducted tax at source while making payments to the non-resident through S.

4. Payment is made through the General power of attorney (GPA) holder.

Assessee payer had purchased an immovable property from the NRIs, the liability to deduct tax at source under section 195 could not be done away with merely because the assessee had paid the sales consideration in India to GPA.
Assessee paid certain sums to one P for purchasing land. P was the power of attorney holder on behalf of five non-resident co-owners. P was a resident and an agreement was entered into with P for purchasing land by the assessee. In these circumstances, the power of attorney holder was not merely acting as an agent of the non-residents to receive money but as a person who had the right to alienate the land by the virtue of rights vested in him by the power of attorney signed by the co-owners. Provisions of section 195 were, therefore, not attracted.

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Scope of Reasonable Cause For Not Levying Penalty Under Section 221 For Non-Payment of TDS.

Scope of Reasonable Cause For Not Levying Penalty Under Section 221 For Non-Payment of TDS. Compliances

Dec 192022

Penalty under section 221 is levied when there is a default in payment of tax. Under sub-section (1) of section 221, the assessing officer is empowered to impose a penalty where an assessee is in default or is deemed to be in default in payment of tax. The said penalty is leviable in addition to the amount of the arrears and the amount of interest payable under section 220(2). Further, in the case of continuing default, the assessing officer may direct to pay further amount or amounts by way of penalty, so, however, that the total amount of penalty does not exceed the amount of tax in arrears. However, such a penalty is discretionary and can be waived where reasonable cause exists for such default.

Here an attempt is made to explain and examine what constitutes the reasonable cause for not levying a penalty under section 221.

Depends upon the facts of each case

The exercise of discretion u/s 221 is not to be arbitrary but is dependent on the facts and circumstances of the case

No penalty where the reasonable cause is proved

According to the second proviso to section 221(1), the penalty cannot be levied where the assessee proves to the satisfaction of the assessing officer that the default was for good and sufficient reason.

Penalty leviable even if the tax paid before levy of penalty

Penalty under section 221 will be exigible even in a case where the tax is paid after the due date but before the levy of penalty.

Impact of the outcome of final order regarding default in payment of tax

According to sub-section (2) of section 221 whereas a result of any final order, the amount of tax with respect to the default in the payment of which the penalty was levied, has been wholly reduced, the penalty levied shall be canceled and the amount of penalty paid shall be refunded.

Financial crises for not levying penalties under section 221

The assessing officer passed an order under section 201 treating the assessee as the assessee in default as it had not remitted the amount collected by way of TDS to the government account during the relevant assessment year. The assessee did not file any appeal against the order under section 201 and remitted tax deducted at the source along with interest.

The assessing officer also initiated penalty proceedings under section 221.

The assessee said that it was facing severe financial hardship and the same constitutes a good and sufficient reason for not levying a penalty under section 221.

It is true that a mere default is not sufficient for the levy of penalty, but in the instant case, the assessee used the TDS amount to meet various business commitments. Further, it was continuously making defaults on payment of TDS to the government account, which is very serious in nature.

One can understand the financial difficulties the assessee was facing if it was in defaulter for a short period. But in this case, the assessee’s conduct was that it continuously defaulted the payment of the TDS amount to the government account.

The only reason the assessee mentioned for non-payment of TDS was financial difficulties, which under these circumstances, did not appear to be sufficient. Accordingly, the penalty was confirmed.

No waiver of penalty on grounds of payment of self-assessment tax

Penalty under section 221(1) cannot be waived merely on the ground that self-assessment tax is paid before such levy of penalty. There existed good and sufficient reasons to mitigate said default.

Transfer of Input Tax Credit on Conversion of Partnership Firm into Private Limited Company.

Transfer of Input Tax Credit on Conversion of Partnership Firm into Private Limited Company. Compliances

Dec 142022

Statutory provisions regarding the transfer of input tax credit on sale, merger, lease, or transfer of business.

Sub-section (3) of section 18 of the Central Goods and Services Tax Act, 2017 (in short ‘the CGST Act’) deals with the transfer of credit on sale, merger, lease, or transfer of business. Accordingly, where there is a change in the constitution of a registered person on account of the sale, merger, demerger, amalgamation, lease, or transfer of the business with the specific provisions for transfer of liabilities, the said registered person would be allowed to transfer the input tax credit which remains unutilized in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or assigned business.

The change in the constitution of a registered person includes the conversion of a proprietorship firm into a private limited company. Hence, the input tax credit lying in the input tax credit of the ledger of the proprietorship firm can be transferred in terms of sub-section (3) of section 18 of the CGST Act.

Procedure for transfer of credit.

The procedure for transfer of credit is prescribed under rule 41 of the CGST Rules, as under:–

(i) The registered person would furnish the details of the sale, merger, de-merger, amalgamation, lease, or transfer of business, in Form GST ITC-02 electronically on the Common Portal along with a request to transfer the unutilized input tax credit lying in his electronic credit ledger to the transferee (no time limit is prescribed for filing Form GST ITC-2);

(ii) In the case of a demerger, the input tax credit shall be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme.

The ‘value of assets means the value of the entire assets of the business, whether or not input tax credit has been availed thereon.

(iii) The transferor would also submit a copy of a certificate issued by a practicing chartered account.

(iv) The transferee would accept the details furnished by the transferor on the Common Portal and, upon such acceptance, the unutilized credit specified in FORM GST ITC-02 shall be credited to his electronic credit ledger.

Conclusion

Upon transfer of the partnership firm into a private limited company, the GST registration number would get changed. However, this would not affect the entitlement of ITC of the transferee company if the transfer satisfies the conditions specified under sub-section (3) of section 18 and follows the procedure prescribed under rule 41 of the CGST Rules.

Requirement of RERA Registration on receipt of Occupation Certificate vis-a-vis Completion Certificate.

Requirement of RERA Registration on receipt of Occupation Certificate vis-a-vis Completion Certificate. Compliances

Dec 032022

All real estate projects are required to be registered with the RERA of the respective State so that authorities have jurisdiction over the projects. However, there is a dispute over the issue as to the date on which the requirement of registration under RERA is applicable i.e. on the date of receipt of the occupation certificate or completion certificate.

Requirement of Registration under RERA

Under the ‘Real Estate Regulation and Development Act, 2016’, each State of India has to appoint Real Estate Registration Authority to monitor and adjudicate real estate disputes. The relevant extract of section 3 of the Act relating to registration of the real estate projects with their concerned authority reads as:

(1) No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment, or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under the Act:

Provided that projects that are ongoing on the date of commencement of the Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within three months from the date of commencement of the Act:

(2) Notwithstanding anything contained in sub-section (1), no registration of the real estate project shall be required-

(b) where the promoter has received a completion certificate for a real estate project before the commencement of the Act

Requirement of Registration of ongoing projects under RERA

A plain reading of the aforesaid section shows that a completion certificate is mandatory (before the commencement of the Act) and in absence of the same, one has to go for registration with the RERA authority.

Meaning of ‘completion certificate’

Section 2 of the Act provides definitions of various terms. Accordingly, —

Completion certificate means the completion certificate, or such other certificate, by whatever name called, issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plan, layout plan, and specifications, as approved by the competent authority under the local laws. [Section 2(q)].

Meaning of ‘occupation certificate’

Occupancy certificate means the occupancy certificate, or such other certificate, by whatever name called, issued by the competent authority permitting occupation of any building, as provided under local laws, which has provisions for civic infrastructures such as water, sanitation, and electricity—[Section 2zf].

Completion certificate	Occupation certificate
Completion certification is available once the project is developed on an approved plan and layouts	An occupation certificate is available once necessities like water and electricity are done for the project

Case study: [based on – Ruling of Punjab and Haryana High Court in Experion Developers (P.) Ltd. v. State of Haryana]

The date on which RERA “the Act” come into force = 01^st May 20017

The date on which the occupancy certificate is received = 2^nd March 2017

Whether the project is required to be registered under RERA?

Analysis:

There is a difference carved out in the Act itself as to what is a completion certificate and an occupancy certificate, unless the petitioner had obtained a completion certificate for the project in question, before the date that section 3 of the Act came into effect, i.e. 1^st May 2017, it was necessarily required to get itself registered with the RERA authority.

A completion certificate still not having been obtained, simply obtaining an occupancy certificate or having applied for such certificate in terms of the Haryana Building Code, 2017, the Court would not consider the petitioner to be outside the purview of the jurisdiction of the RERA Authority.

Conclusion:

Mere obtainment of an occupation certificate before commencement of the Act will not absolve the requirement of registration of projects under the Act as the requirement is to have a completion certificate and if the same was not available on the date of commencement of the Act, the requirement of registration of the project with RERA authority is mandatory.

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