Specified Domestic Transactions, Related Parties under Transfer Pricing

Procedures for ITR e-filing 2015-16

Acche Din - Are you a salaried employee??- Save Rs.10,000 of your income taxes

Budget this year popped late. However the slab rate changes apply to who of year's salary for you.

Read on to save. Share with your HR department and teams to take the benefits. I am sure many have missed out on this even at this juncture and you can save for many along with you. 

An official circular is issued now dt. 10th Dec. Better late than never.

Amendment was in the tax slab.

Although there is no change in the existing tax rate yet new Government had increased the minimum limit from Rs. 2,00,000 to Rs. 2,50,000. There were no changes in the tax slab from last 2 years.

So definitely, this is one of the very important announcements in new finance bill. Following are the tax slabs of Assessment Year 2014-15 & 2015-16.

Table 1: Tax Slabs

Tax Slabs 2014-15		Tax Slabs 2015-16
Income	Tax Rate	Income	Tax Rate
Upto Rs. 2 Lacs	0	Upto Rs. 2.5 Lacs	0
Rs. 2 Lacs to Rs. 5 Lacs	10%	Rs. 2.5 Lacs to Rs. 5 Lacs	10%
Rs. 5 Lacs to Rs. 10 lacs	20%	Rs. 5 Lacs to Rs. 10 lacs	20%
Above Rs. 10 Lacs	30%	Above Rs. 10 Lacs	30%

For senior citizen with Age group of 60 years or above but less than 80 years than their minimum tax limit is Rs. 300,000 instead of Rs. 250,000.

 On the other hand, senior citizen with age of 80 years or more than they do not need to pay tax of initial income of Rs. 500,000.

 Amendment is under section 80C and 80CCC.

Earlier, the maximum qualifying investments for deduction from total income was Rs. 1, 00,000 (even more amount was investment in specified schemes) which was raised to Rs. 1, 50,000. 

 So if no loan is taken by the employee to construct or renovate the house & having total salary income Rs. 5 lacs  than his total taxable income will decline by Rs. 50,000 (after availing this deduction) which is 12.5 % of earlier base income.

 The above conclusion can be examined with below table:-

(A) Person Having Income Rs. 5 lacs with no house loan

Table 2 Before Budget 2014 ( NO House loan is there)		Table 3 After Budget 2014 ( NO House loan is there)
Gross Salary	Rs. 500000	Gross Salary	Rs. 500000
less deduction U/S 80C +80CCC	Rs. -100000	less deduction U/S 80 + 80CCC	Rs.-150000
Taxable salary	Rs. 400000	Taxable salary	Rs. 350000
Loss from HP (due to interest on loan   taken for construction or renovation of house)	0	Loss from HP (due to interest on loan   taken for construction or renovation of house)	0
Net Taxable income	Rs. 400000	Net Taxable income	Rs. 350000

Now tax liability can be calculated as below:-

Table 4 Tax Liability before Budget 2014 ( NO House loan is there)			Table 5 Tax Liability before Budget 2014 ( NO House loan is there)
	Tax Rate	Tax		Tax Rate	Tax
Upto 2 lacs	0	0	Upto 2.5 lacs	0	0
Next 2 Lacs	10%	Rs. 20000	Next 1 Lac	10%	Rs. 10000
Total Tax before surcharge		Rs. 20000	Total Tax before surcharge		Rs.10000
Surcharge	3%	Rs. 600	Surcharge	3%	Rs. 300
Total Tax		Rs. 20600	Total Tax		Rs.10300
			Less: Rebate **		Rs. 2000
			Net Tax		Rs. 8300

  Table 6 Net change in Total tax Structure having gross income Rs. 5 lacs.

Total Tax liability before budget	Rs. 20600
Total Tax liability after budget	Rs.-10300
Net Benefit	Rs. 10300

Rebate u/s 87A of Rs 2000 will also be admissible if the person income does not exceed Rs. 500000.

Tax is not on revenue but on Profit!!

In India, a typical entrepreneur always wants to hide things from the tax department under a feeling of being questioned and asked for paying taxes. In this race for non-disclosure, sometimes the things of our benefit also remain underground.

This process of hiding starts without even knowing "What if this is disclosed?". Many a times this has positive impact as well!! Seems funny?? In our experience, many are seen doing the same.

Tax is not on revenue (sales) but on Profit!!  Funny part is people start worrying about taxes with respect to the revenue.

1. There are expenses which are deductible from this revenue to arrive at the profit. Please understand all the expenses which are incurred to earn the revenue directly and indirectly are allowed to arrive at the taxable profit.
2. Not only cash expenses but the expenses which are to be paid on later date are also available. These are termed as accrued expenses in accounting language. This include your year end bills of supplies, rentals, electricity which don't get paid in that period but are pertaining to that period. 
3. Also, there is are certain virtual deduction like for depreciation of Capital Goods like plant, building, machinery, equipment, motor car purchased in past for the purpose of the business. This is basically value for wear and tear of the assets in that period to generate the sales. Additional deduction on account of depreciation is allowed in the year of such investments for plant and machinery.
4. Other virtual deduction that needs to be taken into account while doing the computation of profits is with regard to the Bad Debts. Many times of our customers don't pay after committing even after followup and legal action. Those customer balances could be written off in the books and claimed as deduction. Even the discounts while settlement of dues are available as deduction if part of the deal.
5. Whenever there is an actual help coming in from the Partners, Directors, family members or relatives, we can pay them salaries and commissions. Even the directors and partners can have legitimate remunerations which are available as deductions subject to certain conditions. 
6. You may claim market rentals for the family properties from the company. This is something that many of us may be missing.
7. Other areas to check are credit card expenses and cash spending for business directly and indirectly. This many a times doesn't gets reflected in the books and may be missed out. It may be for business development, marketing, conveyance and so on for business purpose.

Above is a very broad list of items which are available as business deductions and we can deduce the sales / revenue to this extent before working out the taxes.

Our article on 5 basic disciplines of accounting for businesses would help you with tips of tracking the same diligently.

So, first track and than calculate correct PROFITS. It's quiet possible that you end up at a legitimate and acceptable tax liability without playing any gimmicks :-)

6 accouting tips for smooth year end closing

March end seems to be very hectic for the accountants and tax professionals. Sometimes, we hear the businessman saying they are busy with the year end closing.

As startups or new entrepreneurs, you may be thinking what really needs to be done?

Here is a top 6 items to be sorted out his year end.

Provisions for Expenses

Prudent accounting thumb rule is debit expenses pertaining to a period eventhough the payments are due in next period. With this in mind all your electricity, telephone, rent, salaries, etc. till march needs to be booked even if due in next month. If actual bills are not received, prudent accounts estimate and Book those to show correct picture. There is a basic matching principle to be kept in mind wherein all expenses corresponding to income generated in that period need to be booked showing correct picture of profit or loss for that period.

Check your VAT and Service Tax Calculations
Whether all the invoices are booked and accounted before the calculation for the same is done.

Has the legitimate setoff been claimed on the purchase side. Many of us miss claiming this while it is available. This has a cash impact and hence very trivial. Taxes once paid are difficult to get refunded. The setoff gets missed in the small expenses like flight tickets, hotel bills, taxi bills, purchase of office equipments, AMC charges, and so on.

Bank Reconciliations
Completely verify your bank statement visa-a-vis the books of account. This will allow you know if there are any cheque which are received but not deposited in the Bank or cheques which are issued but not cleared. This may also throw surprises like cheque bounces not recovered, huge bank charges and so on. Very important to pass all the pending entries in the Bank before deciding on the available balance for payments at the year end.

TDS (Withholding Tax)
Here the expectation is from the payer of income to deduct taxes while doing so. Contractors, Professional Fees, Advertising, Renting broadly attract deductions before making the payments from 1% to 10%. It is necessary to do this even with respect to the provisions of expenses even though the payments would be done later in the next year. As a recipient of the services, please be careful that each and every provision for expense is Tax Deducted

Writeoff all the bad clients
You may have been raising invoices on clients all through out the year. Now is time to clean up. Check if there are any clients not going to settle these and reverse those. This will help you save unnecessary VAT, Service Tax and even the Income Tax. From the commercial point of view, you may have only the real receivable customer balances lying in the books to be recovered. Doing a bill to bill reconciliation is advised instead of account to account.

Check whether your Cash book tallies with that in Hand
It's common that the cash doesn't matches with the balance in hand. Matching the physical cash with that in the book throws up surprises like cash lying with some employees, vouchers not booked, payments made without supporting documents and even theft.

It's like taking "a stitch in time would save nine".  This would not only make the life smoother from taxation angle but also show correct picture for the financial as to what's your profile or loss, which are liabilities to be paid and assets to be collected.

People say that accounting doesn't add any value in the business but we do not tend to agree. It acts like a mirror to show how do you look. It's like a dashboard of the Car which doesn't help in efficiency or speed but it definitely measures the achieved one.

What if you fail to deduct TDS while making payment to foreign Nationals

CBDT guidelines for failure to deduct TDS while making payment to foreign nationals and companies u/s 195

Clarification has been sought by field officers as to whether the tax is to be deducted (under sub section (1) of section 195) on the whole sum being remitted to non-resident or only portion of representing the sum chargeable to tax, particularly if no application has been made (under subsection (2) of section 195 of the act) to determine the sum.

The matter has been examined in the board and accordingly, in exercise of powers vested under section 119 of the act, the board hereby directs that in case where the assesse fails to deduct tax under section 195 of the act, the assessing officer shall determine the appropriate proportion of the sum chargeable to tax as mentioned in subsection (1) of section 195 to ascertain tax liability on which deductor  shall be deemed to be assesse in default under section 201 of the act , and the appropriate proportion of the sum will depend on the facts and the circumstances of each case taking into account nature of remittances, income component therein or any other fact relevant to determine such appropriate proportion.

Startup Showcase – MyMuneemji

Delighted to announce that The Hub of Startups by Prajakt Raut of India Angels Publishes the MyMuneemji story.

http://bit.ly/1kzHo6L

Here’s the story of MyMuneemji– We offer shared services accounting, compliance and reporting services to Start-ups.

Catch them on – www.MyMuneemji.com 

In conversation with Mitesh Katira, Founder of MyMuneemji – 

• Tell us about the story of your startup - Why did you start this, how did you start, when did you startup?

Run a mid-sized Chartered Accountancy firm for the last ten years, having start ups and small businesses as clients. While working with these companies, we felt the need to be able to provide a reliable, efficient and cost effective solution to these client segments which need quality accounting, compliance and reporting support. We felt the need to service existing and prospective customers using IT as an enabler. MyMuneemji was formally launched 6 months back.

• How did the co founders come together?

Harshal and I know each other for the last 30 years, we went to school together. I joined a mid-sized Chartered Accountancy firm as a partner and helped them grow the practice and more importantly bring in a process orientation in the way we managed our audits. We increasingly started using IT tools which helped us deliver more at one third the time to our customers. Deepak Pasad joined the CA firm and was the man behind the executing process improvements and the IT tools.

My interaction with Venkat and Deepak started in the early to mid 2000 when we knew each other as family friends and the bond just got stronger when WealthTree was set up in late 2006. My firm used to work very closely with WealthTree on matters that required support on Accounting, Compliance, Audits, Tax filing for WealthTree’s customers. We started discussing ideas and ways to improve customer experience. MyMuneemji is the outcome

• What challenges did you face and how did you deal with them?

We wanted to leverage technology to deliver MyMuneemji to the customers. Venkat put me in touch with one of his colleagues who was the CTO of the company where Venkat worked. Sabyasachi came with excellent credentials having been CTO with large corporations and he helped us get through the initial bit by building version 1 of MyMuneemji.

Unfortunately, Sabyasachi had to go back to Kolkata due to personal reasons and we started driving the process ourselves.

• What is your aspiration for the venture?

We want start ups, pre – revenue ventures, Non Profit Organizations (NGO), co – operative societies and small businesses to try the MyMuneemji model. We are currently in the process of migrating all our existing customers (around 350 in number) from a manual mode to a ‘shared services’ online mode. We want to sign up with 5,000 new companies in the next 12 months.

• What did you learn from the journey so far?

We believe there is a huge gap on the demand and supply side. While entrepreneurs require high quality accounting support, the quality of accountants/ accounting support available is below par. In a majority of cases, it is not reliable and stable. MyMuneemji exists to bridge this gap. One of the biggest gains to come out so far has been our own evolution in thinking on looking at things ‘from a customer standpoint’. What works and what may not work. As an established CA firm, we never felt the need to think through this aspect. Viewing this from a customer standpoint and bringing the customer at the center has been our biggest learning.

Boot strapping is another aspect of a start up. We have constantly tried to keep our costs to a minimum while at the same time doing what it requires to be done to be able to get the service off the ground. Partnerships and tie ups with key business stakeholders has been the key. Leveraging on the impact of social media and getting the team to being the brand ambassadors of MyMuneemji were also huge learnings.

• If you had to start all over again, what would you do differently?

I am currently reading a book called “The Lean startup”. I was able to establish the correlation between “Build - measure – Learn”. I realize that we could have saved at least 50% of time and effort had I read this a year ago.

Free Due-date Reminders - a Christmas Gift from MyMuneemji

Christmas is the festival of Cakes, Candles and Carrels. Cake says "be sweet", Carrels say "Love one and all" and Candles say "Light up your mind with knowledge". 

We at MyMuneemji extend warm greetings for Christmas and a Happy New Year 2014.

At this juncture, it is exciting to share that more functional version of MyMuneemji is launched. This welcomes the New Year with added visibility and pro-activeness.

As Just try our Free Signup to start getting free sms and email alerts on before relevant tax filing due-dates and avoid any interest or penalties. Do let us know if there are any suggestions and feedback in this regard to make us better in helping you.

Visibility gaining importance for the Social Ventures and NGOs

More and more businessman and professionals are taking an NGO to enjoys fulfillment of giving. Along with the Social Networks, Social funds, Social ventures and social entrepreneurs are also budding all around.


With this, the social work is becoming structured and attracting thoughtful talent. NGOs are craving to be more visible and articulate on what they are upto. Even they want to review their accounts on monthly basis and be updated on what's going on with the donations.

Mymuneemji was approached by one of such funds. Board of trustees have senior professionals who think that being tax compliant and having a timely MIS was very important.

We are glad for being able to give them the best price for this service with continuity and consistency on the service. They decided to move their accounts online from a offline unorganized accountant with lesser than what they spent before effortlessly.

The major benefits for adopting the online solution are as follows:

1. Monthly reports come handy for gauging the direction of the activities
2. Get their tax filings in time with timely SMS and Email reminders
3. Increasing credibility with the donors with transparency

One of the core members of the trust says "Apart from NGOs and businesses, Mymunmeeji can be useful idea to adopt for Housing Societies and Banks as well"

Register here for free tax reminders and updates.

Roha hardware is compliant now!!

Taheri bhai is a trader at small town of Roha. He runs a hardware shop having strong focus on paints. He has a got prestigious agency with Asian Paints.

With his honesty and hardwork, he could establish a great clientele with the MIDC around Roha. These relations are giving him good growth in business. 

To get organised and earn credibility with the Banks & Market, he wanted to get his accounts computerised. He also wanted to file his VAT returns and IT returns in time. 

MyMuneemji has helped Taheri bhai to computerise his books of account and be compliant with all the applicable tax laws since last two years. Over and above this, Taheri bhai now does his routine settlements with the clients and vendors based on the computerised ledgers which Mymuneemji providers on request. This has made Taheri bhai one of the smart and confident businessmen in this area. All this with zero travelling time and lower cost.

Taheri bhai says "MyMuneemji has simplified and brought on track my accounting work. I can now rest assure about my tax returns with this relation and focus on my business"

MyMunnemji going live Soon!!

Mymuneemji is close to completion with it's basic plate of services with a price point which is never tried for the quality which we aspire to offer.

Are you ready to make your accounts a child's play with enthusiastic team??

Contact us now to experience the Wow!!