8 common reasons for getting income-tax notices and how to avoid them

The usual reaction on receiving Income Tax Notices is of tension and stress because that is the last thing we would want to receive. As a matter of fact, we must not get panicked about the situation until and unless we have gone through the notice and understood its purpose. Always remember there are various other small reasons because of which you can receive Indian Income Tax Notices from IT Department.

In this post, we have covered all possible reasons for receiving an Income Tax Notice. But despite what the reasons are, always remember that you must never ignore income tax notices and respond to them as quickly as possible to avoid inviting any trouble or penalty.

Reasons For Receiving Income Tax Notices and How To Avoid Them

Here are some common reasons because of which you can end up receiving an income tax notice:

Error in TDS Value

Reason:

  • Mismatch in TDS in IT return due to delayed return filing by your employer or filing of incorrect returns.

Solution:

  • Ask your employer to review the TDS amount that has been credited to you.
  • Always match the TDS amount with that of your employer before filing for your return to avoid any hassles later on.

Reminder for Filing Tax Returns

Reason:

  • I-T department every year send notices to all those who have not filed the income tax returns.
  • These reminders can be for up to six previous years.
  • There can also be a penalty of up to Rs. 5,000.

Solution:

  • Respond to the notice by filing your return immediately.
  • Always make sure that you file your return on yearly basis to avoid such situations.

Reporting High Value Transactions

Reason:

  • If you have failed to report any kind of high value transaction.
  • This includes credit card purchase beyond Rs. 2 lakhs, cash deposit in bank beyond Rs. 10 lakh, sale or purchase of real estate beyond Rs. 30 lakhs or mutual fund investment beyond Rs. 2 lakh.

Solution:

  • Always report such transactions to the I-T department to avoid getting notices.

Discrepancy in Return

Reason:

  • If there is a problem in your return then you will get served with a notice.
  • In case you have forgotten to declare any of your income or you have provided incomplete information then you may get a notice.

Solution:

  • In such a case, submit information related with the discrepancy mentioned in the notice.
  • Always ensure that you have made all the income declarations.
  • Ensure that you have claimed deductions under right sections.
  • Information that you are providing is complete and correct.

Non-Disclosure of Income From Interest

Reason:

  • If you have failed to pay tax on income received from your saving bank accounts, fixed deposits or recurring bank accounts, you will certainly get a notice.
  • Deductions of up to Rs. 10,000 on interest on saving account are allowed.
  • Interest on FD and recurring accounts are completely taxable if the income from interest is beyond Rs.10,000.

Solution:

  • Always remember to include income from interest from bank accounts as well.

Scrutiny at Random

Reason:

  • The I-T Department randomly scrutinizes returns in order to enforce tax compliance.

Solution:

  • Respond to the notice after checking its validity in the allotted time period.

Documentation Review

Reason:

  • Sometimes the department may ask you to review some documents using which you have filed your I-T returns to have some clarity.

Solution:

  • You must quickly submit the required documents which have been asked for.

Investments Made in Family Members’ Names

Reason:

  • In case you have made any investments in the name of your family members in order to evade taxes then any income from these investments is going to be taxable.

Solution:

  • On receiving a notice, you must declare that income and have the error rectified by paying the tax you are liable to pay.
  • Also make sure that you declare all such kind of incomes when you are filing the return to avoid any notices in future.

These are the probable reasons which can lead be the reason for you receiving an Income Tax notice.

 

FAQ on E commerce under GST

In last couple of years, e-commerce has become the latest business trend not only across the world but also in India. Ecommerce platform helps sell all kinds of products and services digitally. That’s the reason the numbers in suppliers is increasing and so are GST FAQs in relation with GST application on selling of different goods and services across e-commerce websites.

In this post we have come up with GST Frequently Asked Questions which bother e-commerce suppliers. Read these latest FAQs on GST which provide clarity to an e commerce operator under GST. Read these GST FAQ 2019 to clear all your doubts.

Question 1. Who is an e-commerce operator?

Answer. A person who owns, manages or operates any digital or electronic platform in order to sell the products and services online will be termed as e-commerce operator. Some popular examples of e-commerce operators are Flipkart, Amazon, Myntra etc.

Question 2: GST Registration for e-commerce operators- is it mandatory or not?

Answer. GST registration is mandatory for every e-commerce operator irrespective of the turnover. This means that every e-commerce operator has to be GST registered no matter what is their supply because at present, there are no threshold exemptions available to them.

Question 3: Will a person who is supplying products or services over an e-commerce platform be entitled for threshold exemption?

Answer. NO. Irrespective of the supply value made by an ecommerce operator, he will not be entitled for any kind of threshold exemption. This means that all the e-commerce operators, whether big or small, will have to be registered under GST irrespective of the turnovers they have.

Question 4: Instead of supplier, will the liability of paying tax in relation with supply of goods or services made by ecommerce operator will lie on him?

Answer. YES. But ecommerce operator will be liable to pay tax only in cases which involve application of reverse charge mechanism. Under such cases, the liability of paying tax is on ecommerce operator if products or services are supplied through his ecommerce platform and all the provisions mentioned in the Act also apply to him because he is the supplier of the services and therefore, he is liable to pay the related tax.

Question 5: Return of goods is a very common practice with ecommerce customers. In such scenario, how are adjustments to return goods are made?

Answer. Tax is collected on the net value of taxable supplies that have been made. This means that the tax is calculated on aggregated supplies which are derived after deducting returns from supplies.

Question 6: What do we mean by Net Value of Taxable Supplies?

Answer. Net Value of Taxable Supplies is the aggregate value of supplies made during a month by the ecommerce operator.

Net Value of Taxable Supplies = Aggregate Value of Taxable Supplies of Goods/ Services for a month – Aggregate Value of Taxable Supplies Returned During a month.

Question 7: On behalf of actual supplier, is each e-commerce operator is suppose to collect tax?

Answer. YES. Each and every e-commerce operator has to make tax collections on behalf of the actual supplier.

Question 8. When are these tax collection required to be made by an e-commerce operator?

Answer. When a reasonable amount is collected from recipient, tax collection has to be made during a month.

Question 9. What is TCS or Tax Collection Source?

Answer. TCS is defined as the tax amount collected by e-commerce operator at one percent rate of net value of taxable supplies that have been made through the platform.

Question 10. What is the duration of time in which TCS is suppose to be remitted to Government by e-commerce operator?

Answer. After the end of the month during which the amount was collected, within a duration of 10 days it has to be remitted.

 

Can a Foreigner be a Director of the Indian Company

Company being an artificial person has to be run, managed and controlled by a real person. These officials who manage a company are called directors and are the head of the company. They are the ones responsible for all the managerial and other official affairs in the company.

In this post, our special focus will be one can an NRI be a Managing Director of an Indian company or can a foreigner be a director of an Indian company.

NRIs and directorship in Indian firms

In India, as per law, a foreign national can become a director in an Indian company whether it is a public or private company provided at least one of the directors in the company is on Indian nationality. Share below are the laws in relationship with Foreign Nationals Director in Indian Company.

Criteria to Become a Director Under Companies Act, 2013

  • Director has to be a major, i.e. above 18 years and has to be a natural person.
  • There is no restriction on becoming a director of an Indian company because of nationality.
  • An NRI or foreign director is eligible to become an executive or non-executive director.

Steps to Follow for Foreign National to Become a Director

We have come up with essential steps for becoming a foreign national to become a director in Indian company:

Director Identification Number

  • Before being appointed as a director, it is mandatory for the foreign national to have a Director Identification Number (DIN).
  • This is allotted by Central Government against the application of allotment of DIN filled by person who intends to become a director under Sec 153.
  • Electronic Form DIR- has to filled and submitted along with fees of Rs.500.
  • Form DIR-3 can be downloaded online and has to be submitted electronically along with a photograph, proof of identity and residence, Form DIR-4, duly verified digital signature.
  • Details of valid passport have also to be submitted in Form DIR-3. The certified copy of the same is also to be attached with DIN application.
  • Digital verification of Form DIR-3 can be done by a practicing CA or CS or Cost Accountant. It can also be verified by CS of the company or MD or director of the company for which applicant is applying for directorship.
  • Once DIN application is submitted online, provisional DIN gets generated automatically.
  • Person is not allowed to use provisional DIN until approved and confirmed by Central Government.
  • The Central Government issues DIN within one month from issuing the receipt of application.
  • In case Central Government finds any defect then the same is communicated using email or putting it on website asking to rectify the errors within 15 days.
  • In case the person doesn’t rectify the defects within 15 days, the application becomes invalid along with provisional DIN.

Foreign National as Independent Director

  • Foreign national must possess experience and knowledge in more than one fields of management, sales, finance, marketing administration, technical operations etc. which are related to the governance of the company.

Foreign National as Managing Director

  • He should be a resident of India. He should be staying in India at a stretch for at least 12 months immediately after date of appointment.
  • He should be between 21 to 70 years of age.
  • He should not have convicted any offence for duration of over 6 months.
  • In case the above mentioned criterion is not fulfilled then approval from Central Government is needed.
 

Format of letterhead as per companies act 2013

A letterhead is a significant document for a company. Not only it shares details about your company but also represents your business. Though there is no particular legal format of a letterhead but there are legal provisions for letterhead. As per format of letterhead as per Companies Act 2013, here are some of the things which must be included:

  • Company’s Name
  • Company’s registered address
  • Telephone number
  • Email Id
  • Company’s website
  • Corporate Identification Number
  • Fax number

These are the letterhead legal requirements in India. Private Limited Company letterhead in India have to include these heads to create a perfect letterhead for their organization.

Check this : How to write a Letterhead Format

Download the Indian company letterhead sample to create your own. Follow the letterhead format word and PDF to create an impressive letterhead in sync with the legal requirements.

 

How do you Register for CA Articleship

If you are pursuing Chartered Accountant in India then you must know that CA articleship forms a significant part of it as it gives a practical exposure to the industry.

If you wish to become a Chartered Accountant in India and you are all set to register for CA articleship but don’t know how to go about it, we are here to help you.

In this post, we have shared everything that you need to know about articleship registration online, checking articleship registration status and various other things.

Registering for CA Articleship in India

  • The first thing is to find a CA or CA firm which has a vacancy.
  • When you have found one, inform about it to ICAI
  • The next step is to fill CA Articleship Registration Forms- 102 and 103.
  • These forms can be bought from any ICAI’s branch for Rs. 50 or can be downloaded online by sending a DD of Rs.50 to ICAI along with submitting the forms.

Know About Form 102 for Articleship

If you are wondering how to fill form 102 for articleship then here is everything you need to know:

  • Also known as Deed of Articles, this forms the main contract between the principal and yourself.
  • In this contract, you make a promise to serve the Principal with loyalty. Likewise, Principal also promises to instruct you to the best of his knowledge, to give you reasonable chances to work and acquire accountancy skills.
  • In case you or your Principal fail to keep up the obligations as per the contract then it will be considered as breach of contract.

Points to Keep in Mind While Filling Form 102

  • You need stamp paper for articleship registration. Non judicial or special adhesive stamp paper can be used to execute the deed.
  • Duration of deed execution is 3 years.
  • Both the parties have to sign the deed.
  • Original copy of deed lies with the Principal and you keep the duplicate copy.
  • You are not required to send Form 102 to ICAI until and unless there is long gap in registration from date of joining of articleship.

Know About Form 103 for Articleship

  • This is the registration form for articleship.
  • There are two schemes- Direct Entry or Foundation Route and you must mention under which scheme you are having yourself registered.
  • You will need to fill in your details.
  • Your Principal should fill in his or her details.
  • The form has to filled in triplicate copies- one for you, another for principal and third one to be submitted to ICAI within duration of 30 days from commencement of articleship along with other documents.

Click here this link

Documents to be sent along with Form 103

Here are the list of documents to be sent along with the form:

  • Copy of Secondary or Higher School certificate
  • Copy of certificate issued on completion of ICITSS i.e. Integrated Course on Information Technology and Soft Skills
  • Copy of CA intermediate Group I or II or both marksheet

All these copies have to be attested by your Principal.

Some additional documents are also needed:

  • In case of foreign national, attested copy of student visa or study permit from authorities to know duration of CA course.
  • Attested copy of graduation or PG marksheet or intermediate exam statement of ICAIA or ICSI by CA or gazette officer or college principal.
  • CA articleship registration fees to be submitted in form of DD or Banker’s Cheque in name of “Secretary, The Institute of Chartered Accountants of India” payable at Mumbai, Delhi, Chennai, Kolkata as may be the case.
  • In case of any other engagements during articleship, form 112 needs to be filled to seek permission from ICAI for such engagements.

Student Identity Card

  • There is an identity card in Form 103 which also needs to be duly filled by the candidate along with affixing latest passport size photograph on it.
  • Principal and candidate, both must sign at designated places on it.
  • This card is also required to be submitted with Form 103 mandatorily.
  • This card is returned by ICAI along with registration letter.
  • Validity of this ID card is for 3 years.

Registration Fees for Articleship

Articleship Registration Fee is Rs. 2000. This amount is to be paid at the time or articleship registration or to be send with form 103 in form of DD or banker’s cheque

Late Fee for Articleship

Students are required to submit Form 103 along with the above mentioned documents within 30 days of commencement of articleship. But in case they are unable to do so then they have to send a hand written application stating the reason for delay. This is called Condonation of Delay and must be signed by the Principal and also article assistant.

Here is the late fee required to be submitted:

  • 30 days beyond specified time, Rs.100 is the late fee.
  • 31 to 180 days beyond specified time, Rs. 300 is the late fee.
  • Beyond 181 days, Rs. 1000 is the late fee.