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Direct Tax Compliances

Direct Tax Compliances

Direct Tax Compliances includes Preparation, review, filing of corporate & non-corporate returns, e-returns, withholding Tax (TDS) compliance services, Handling & representation in income tax Search, Seizure & Survey cases, and Appearance before Income Tax authorities.

WHAT IS A DIRECT TAX?

A direct tax is a tax which is paid directly by an individual or organization to the imposing body. A taxpayer, for example, pays direct taxes to the government for various purposes, involving real property tax, personal property tax, income tax or taxes on assets.

BREAKING DOWN OF DIRECT TAX

Direct taxes in India are built on the ability-to-pay principal amount. This principle is a financial term that states that those who have more funds or earn a higher income should pay more taxes. The ability to pay taxes is a way to redistribute the wealth of a nation. Direct taxes cannot be delegated onto a different person or entity; the individual or organization upon which the tax is levied is accountable for the fulfillment of the full tax payment.

Direct taxes in India, especially in a tax bracket system, can become a discouragement to work hard and earn more money, since the more money a person earns, the more taxes he/she pays.

Direct taxation is the opposite of indirect taxation, where the tax is charged on one entity, such as a seller, and paid by another, such as a sales tax paid by the buyer in a retail business. Both taxes are equally important to the revenue generated by a government and, therefore, to the economy.

EXAMPLE OF DIRECT TAXES

Corporate taxes are the best example of direct taxes. Moreover, a person’s income tax is an instance of a direct tax. If a person earns $100,000 in a year and owes $40,000 in taxes, the $40,000 would be a direct tax.

Types of Direct Taxes

  1. Corporate tax: The corporate tax is kind of a direct tax. This is the tax that companies and other industries must pay to the government on the profits they make. However, partnerships and sole proprietorships do not pay corporate taxes.
  2. Income Tax: Another type of Direct taxes in India is income tax. Where a person needs to pay tax on the income he has earned.
  3. Property tax: Another type of direct tax is the property tax, paid by the owner of a property. These are classically collected by local governments and are built on the evaluated value of a property.
  4. Advance tax: The advance tax has to be made by every taxpayer if his estimated tax liability is INR 10,000 or more during a fiscal year. The taxpayer is liable to pay advance tax in four installments during the financial year itself.
  5. File belated return tax: March 31, 2019, is the last date to file belated Income-tax return (ITR) for the Financial Year 2017-18. It must be noted that the taxpayers filing a belated return are required to pay late filing fees under section 234F. As per Section 234F, taxpayers are required to pay late filing fees of Rs. 10,000 if the return is filed on or after January 1, 2019, but up to March 31, 2019. The fees shall be Rs. 1,000 if total income is up to Rs. 5 lakhs.
  6. File revised return tax: Section 139(5) provides that a revised return can be filed by the taxpayer if he discovers any omission or error in the original ITR. March 31, 2019, is the last date to file a revised return for the Financial Year 2016-17.

How to complete your tax planning?

A taxpayer can reduce his Income-tax burden by availing the various income-tax deductions available under various sections of Chapter VIA (Section 80C to 80U). These deductions are allowed for the amount invested in life insurance policies, health insurance, NPS, Provident Fund, donations, etc.

It is important to note that the benefit of the deduction is available only if the taxpayers pay the amount during the relevant financial year. In order words, if a taxpayer wants to claim the benefit of deduction during the Financial Year 2018-19, he has to make the payment on or before March 31, 2019. Any amount paid after March 31, 2019, is not eligible for a deduction for Financial Year 2018-19. However, the deduction can be claimed in the next Financial Year.

The relevance of linking your PAN with Aadhaar number:

Linking process of Aadhaar with PAN and ITR was introduced by the Finance Act, 2017 by inserting a new section 139AA in the Income-tax Act, 1961.

  • This section offers every person who is entitled to attain Aadhaar to quote his Aadhaar number in the return of income filed on or after July 1, 2017.
  • If any person does not hold the Aadhaar Number but had applied for the Aadhaar then he can quote Enrolment ID of Aadhaar application Form in the ITR.

How ASC can help you with Direct Tax Compliances?

ASC’s tax compliance team provides businesses with an effective way of handling their tax compliance assignment and meeting deadlines. Direct tax compliance includes:

  • Corporate Income Tax (CIT)
  • Regional or other tax
  • Local or municipal tax
  • Other jurisdictional taxes and reports

ASC helps you in Preparation and Filing of various Tax Returns, Tax Planning, Taxation of Non-residents and Expatriates. ASC deals with the handling of Assessment Proceedings, Representations before Tax Authorities & Appellate matters before CIT (Appeal) and Income Tax Appellate Tribunal.

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