Taxation issues for entrepreneurs

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TAXATION ISSUES FOR ENTREPRENEURS

by : DR. T.K. JAINAFTERSCHOOL centre for social entrepreneurship sivakamu veterinary hospital roadbikaner 334001 rajasthan, indiaFOR PGPSE / CSE PARTICIPANTS mobile : 91+9414430763

My words....

Ours is a great country with immense entrepreneurial potential. However, our legal system and taxation system is so cumbersome that our creativity and talent is wasted / unnecessarily diverted in these sectors. I wish that these are simplified so that an ordinary entrepreneur can understand these without help from any expert. Here I present a few basic questions for fundamental understanding of taxation system in India. I wish that more people should become entrepreneurs. An ordinary Indian entrepreneur wishes to remain an honest entrepreneur and contribute to the development of nation, but our systems and processes ...

Is Carry-forward and set-off of losses allowed in case of change in constitution of firm?

the firm is not entitled to carry forward and set off so much of the loss proportionate to the share of a retired or deceased partner as exceeds his share of profits

How is Carry-forward and set-off of losses allowed in case of succession of business or profession?

If the succession is by inheritance, the heir-at-law is entitled to carry-forward and set-off the losses sustained by the predecessor provided the business in question continues to be carried on by the successor.

Is it necessary to submit Return for Loss ?

An assessee is not entitled to carry-forward a loss unless he has filed a return of loss to the Department in time and in the prescribed form. It is obligatory on the part of the assessee to file such return, otherwise he will be deprived of the benefit of carry-forward of losses

What is section relating to Deduction in respect of donations to certain funds, charitable institutions?

Section 80G

What is section relating to Deduction for contribution to pension fund ?

Section 80CCC

What is section relating to Deduction in respect of contribution to pension scheme of Central Government ?

Section 80CCD

What is section relating to Deduction in respect of repayment of loan taken for higher education ?

Section 80E

What is section relating to Deduction in respect of medical treatment, etc. ?

Section 80DDB read with Rule 11DD

What is the section relating to Deduction in respect of medical insurance premia ?

Section 80D

What is section relating to Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability ?

Section 80DD

What is the section relating to Deduction in respect of rent paid ?

Section 80GG

What is section relating to Share of member of an association of persons or body of individuals in the income of the association or body ?

Section 86

What is the section relating to Deduction in respect of donations for scientific research or rural developmen?

Section 80GGA

What is the section relating to Deduction in respect of contributions given by companies to political parties ?

Section 80GGB

What is section relating to Deduction in respect of contributions given by any person to political parties ?

Section 80GGC

What is the section relating to Deduction in respect of profits and gains from projects outside India ?

Section 80HHB

What is section relating to Deduction in respect of royalty income, etc., of authors of certain books other than text books?

Section 80QQB

What is the Deduction in respect of remuneration from certain foreign sources in the case of Professors, Teachers etc. ?

Section 80R

What is section relating to Deduction in respect of remuneration received for services rendered outside India from foreign employer ?

Section 80RRA

What is section relating to Deduction in respect of royalty on patents?

Section 80RRB

What is the section relating to Deduction in case of a person with disability?

Section 80U

What is section relating to Deduction in respect of profits and gains from housing projects?

Section 80HHBA

What is section relating to Profits from Exports ?

Section 80HHC

What is section relating to Deduction in respect of certain incomes of Offshore
Banking Units ?

Section 80LA

What is section relating to Deduction in respect of royalties etc., from certain foreign enterprise ?

Section 80-O

What is section relating to Deduction in respect of income of co-operative societies?

Section 80P

What is section relating to Special provisions in respect of certain undertakings or enterprises in certain special category States?

Section 80-IC

What is section relating to Deduction in respect of profits and gains from export or transfer of film software?

Section 80HHF

What is section relating to Deduction in respect of employment of new workmen?

Section 80-JJAA

What is section relating to Deduction in respect of income by way of dividends, interest on securities?

Section 80L

What is section relating to Deduction in respect of earnings in convertible foreign exchange ?

Section 80HHD

What is section relating to Deduction in respect of profits and gains from the business of collecting and processing bio-degradable waste?

Section 80-JJA

What is section relating to Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings ?

Section 80-IB

What is section relating to Deduction in respect of profit and gains by an undertaking a enterprise engaged in development of Special Economic Zone ?

Section80-IAB

What is the section relating to Deduction in respect of profits from export of computer software?

Section 80HHE

What is the section relating to Deduction in respect of profits and gains from industrial undertakings or enterprise engaged in infrastructure development ?

Section 80-IA

When was service tax introduced in India ?

It was imposed at a uniform rate of 5% in the Union Budget for 1994-95. The Tax Reforms Committee headed by Dr. Raja J Chelliah had recommended imposition of service tax on select services.

Who is liable to pay service tax?

1. In general Insurance or Life Insurance services, the person carrying on the business of Insurance is liable and not the insurance agent. 2. In the case of services received in India from a place or person outside India, the recipient is liable. 3. In specified cases consignor or consignee who is paying freight charges is liable to pay service charge for the services received from a Goods Transport Agency. 4. In case mutual fund services, the mutual fund or asset management company is liable and not the agent. 5. For sponsorship services, the recipient body corporate or firm is liable.

What is the periodicity of payment of service tax ?

The service tax is payable either on monthly (by the 5th of the next month) or quarterly basis. The credit that is available at the end of the month or the quarter can be utilized for payment of service tax relating to that month or quarter.

When is e-payment of service tax mandatory?

e-payment is mandatory for those who paid Rs. 50 lakh or more in cash during the last financial year. Interest is payable @13% per annum per delayed payment of service tax under Section 75. The payment may be made either by cheque or cash depositing it through GAR-7 Challan.

Is registration under service tax compulsory ?

It is mandatory for every person liable to pay service tax to get registered with Superintendent of Central Excise. A person providing a taxable service is liable to pay service tax in terms of Section 68.

How should application be made for registration under service tax?

form (ST-1). within a period of thirty days from the date on which the service tax is leviable. With the following documents: Permanent Account number (PAN); An affidavit declaring the commencement of the services; Copy of passport/ration card etc., showing proof of residence; Passport size photograph of the assessee in case of an individual. In case of partnership firm, copy of partnership deed duly certified to be true copy along with registration certificate in case the firm is registered; In case of corporate assessee, copy of memorandum, articles of association

What will happen if an entrepreneur sells his business to another person?

In case of transfer of business by the assessee to another person, the transferee is required to obtain a fresh Certificate of Registration from the Superintendent of Central excise (who grants a certificate of registration in Form ST-2 with in 7 days of the date of receipt of the application.). This certificate gives the details of all the taxable services provided by the service provider.

What will happen if an entrepreneur closes / partially closes his business ?

He must surrender his Certificate of Registration to the Superintendent of Central Excise. In case of a partial closure, a partial surrender can be made of the services which are discontinued. In such case, he can get it endorsed on the registration certificate.

What is the time limit for filing service tax returns ?

Return under Service Tax is required to be filed by every assessee on half yearly basis in Form ST-3 or Form ST-3A, as the case may be, along with a copy of the Form TR-6, in triplicate for the months covered in the half-year

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