Income Tax (India)

You may invest in mutual funds for regular income, capital appreciation or both depending on the mutual fund type. You could measure the return from mutual funds using CAGR (Compound Annual Growth Rate) and XIRR (Extended Internal Rate of Return). You will find CAGR showing you the rate at which your mutual fund investment grows per year over the investment period. However, you cannot use CAGR to calculate the return for multiple cash flows. You may consider using XIRR to calculate mutual fund returns for multiple cash flows. For example, you may use XIRR to determine the return from mutual fund investments through the systematic investment plan (SIP).  What is XIRR? You can put a lump-sum amount in a mutual fund. You have a one-time redemption where you sell the entire investment after some time. Investing through a lump sum involves two cash flows. You have a cash outflow which is your investment, and a cash inflow (redemption).  You may consider using CAGR to calculate the ...

GST composition scheme was implemented under the respective State VAT Laws with conditions applied on eligibility for the scheme accordingly. GST composition scheme assures greater compliance without the requirement of maintaining records. Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover. This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 crore*. * CBIC has notified the increase to the threshold limit from Rs 1 Crore to Rs. 1.5 Crores. Who can opt for composition scheme? A taxpayer whose turnover is below Rs 1.5 crore can opt for Composition Scheme. In case of North-Eastern states and Himachal Pradesh, the limit is now Rs 75 lakh. As per the CGST (Amendment) Act, 2018, a composition dealer can also supply services to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher. This amendment will be applicable from the 1st of Feb, ...

Every registered person is allowed to take tax credit for input tax.  Input credit helps in determining the correct amount of working capital at any given point of time. This is highly critical information from business liquidity standpoint. Meaning of input tax credit Input tax in relation to a registered person, means the central tax, state tax, or union territory tax charged on any supply of goods or services or both made to him ,  for any supply of goods and/or services to him or purchases he makes, which are used or are intended to be used, for the furtherance of his business.  it does not include the tax paid under the composition levy. What are the conditions for claiming input tax credit? Sec 16 of CGST act provides some conditions, input tax credit can only be claimed after fulfilling these conditions: The said goods or services or both are used or intended to be used in the course or in the furtherance of business. Possession of tax-paying document Every Registe...

Mutual funds   investment may seem complicated for first-time investors as it can be confusing at times. Understanding how mutual funds work is the first step in your investment journey. You can invest as low as Rs 500 in a mutual fund through SIP, which may not be possible with most other investment options. There are several mutual funds available, and you may invest in funds whose investment objectives and risk levels are in sync with your risk profile. How do Mutual Funds work A mutual fund is formed when an asset management company (AMC) pools investments from various individuals and institutional investors with common investment objectives. A fund manager professionally manages the pooled investment by strategically investing in securities to generate maximum returns for the investors in line with the investment objectives of the fund. Fund managers are professionals with an excellent track record of managing investments and have an in-depth understanding of markets. The fund...

We are in the month of February and the deadline for doing your tax planning for this financial year’s investments is drawing nearer. If have not done your tax planning for Assessment Year 2022-23 (FY 2021-22), then you should do it now. The last date for making tax saving investments for AY 2022-23 is 31 st  March 2022. Section 80C of Income Tax Act of 1961 allows investors to claim deduction of up to Rs 150,000 from their taxable incomes by investing in certain schemes which are eligible u/s 80C. These schemes include Employee and Voluntary Provident Fund (EPF and VPF), Public Provident Fund (PPF), National Savings Certificates (NSC), 5 year tax saver bank fixed deposits, life insurance policies (both traditional and unit linked) and mutual fund Equity Linked Savings Schemes (ELSS). How to plan your taxes? There are various sections in Income Tax Act, which can enable investors to claim tax deductions but we will restrict ourselves only to section 80C in this article. The maximum...

Agriculture is said to be the primary occupation in India. It is usually the only source of income for the large rural population in India. The country as a whole is entirely dependent on agriculture for its basic food requirements. The government has numerous amount of schemes, policies and other measures to promote growth in this sector – one of them being an exemption to income tax. Let us take a look at the provisions of the law in this regard. What is agriculture income? Agriculture income constitutes the following 3 main activities: 1. Income derived from agriculture land as below: (A)  Agriculture: Agriculture has been explained to consist of two types of operations.   Basic agriculture operations would include cultivation of the land and consequently tilling of the land , sowing of seeds, planting and all such operations that require the human skill and effort directly on the land itself.     S ubsequent operations   would include operations that are c...

The Government of India has adopted several fiscal and non-fiscal measures to move towards a less cash economy, to reduce the generation and circulation of black money and to promote the digital economy, The GOI with a vision to transform India into a digitally empowered society and knowledge economy introduces various flagship digital Programs. “Faceless, Paperless, Cashless” is one of professed role of Digital India. Cashless payments are taking off in India, growing faster than in other countries around the world. Digital transactions in India increased by 55% last year, compared with 48% in China and 23% in Indonesia, according to data from the Bank for International Settlements (BIS). As per the Report of RBI Digital transactions set to rise four times by 2021. As part of promoting cashless transactions and converting India into less-cash society, various modes of digital payments are available. The Government to encourage digital economy and move towards a less-cash economy, ...