Input Tax Credit

Input Tax Credit

Provisions have been made for the smooth transition of Input Tax Credit available under VAT, Excise Duty or Service Tax to GST.  A registered dealer opting for composition scheme will not be eligible to carry forward ITC available in the previous regime.

Here are some of the cases where ITC transition provisions will be applicable:

1. Closing balance of credit on Inputs:

The closing balance of ITC as per the last return filed before GST can be taken as credit in the GST regime.

The credit will be available only if the returns for the last 6-months i.e. from January 2018 to June 2018  were filed in the previous regime (i.e. VAT, Excise and Service Tax returns had been filed).

Form TRAN 1 has to be filed by 27th December 2018 to carry forward the Input Tax Credit. Also, TRAN 1 can be rectified only once.

2. Credit on Capital Goods:

Before GST, only a part of input tax paid on Capital Goods could be taken as credit.

For example, if ITC on a Capital Good purchased in the year 2016-17 is Rs 10,000,

50% i.e. Rs 5,000 can be claimed as ITC in the same year and balance Rs 5000 can be claimed in the next year.

In such cases, there could be some amount of un-utilized credit available on the capital goods. This credit can be carried forwarded to GST by entering the details in Form TRAN 1.

3. Credit on Stock:

A manufacturer or a service provider who has goods lying in the closing stock on which duty has been paid can also take the credit for the same. The dealer has to declare the stock of such goods on the GST Portal.

The dealer should have the invoices for claiming this credit. Also, the invoices should be less than 1 year old.

What if you don’t have invoices?

Manufacturers or service providers who do not have an invoice evidencing payment of duty, cannot claim the credit under the GST regime.

Only traders can claim credit in case invoice is unavailable, subject to the following conditions:

• The stock should be identified separately
• The credit can be taken by the trader only if the benefit of the same is passed on to the final consumer

Check the Status of My ITR-V

I Want to Check the Status of My ITR-V

After successfully submitting your income tax return, you get an acknowledgement from the IT department called the ITR-V or Income Tax Return-Verification. You receive a mail on your registered e-mail ID from the Income Tax Department containing the ITR-V.

How to Recover Your Income Tax E filing Password

So you’ve lost access to your Income Tax Department account because you don’t have the password, and you’re afraid you won’t be able to e-File or access it again?

Don’t worry because ClearTax can help you out.

You can reset your Income Tax Department password by sending an email to validate@incometaxindia.gov.in with the following details:

1. PAN
2. PAN holder’s name
3. Date of birth
4. Father’s name
5. Registered PAN address

From 1st July onwards, it is mandatory to link your PAN with Aadhaar and mention it in your IT returns. If you have applied for Aadhaar, you can mention the enrollment number in your returns.

What is Debit Note and Credit Note

What is Debit Note and Credit Note?

When goods supplied are returned or when there is a revision in the invoice value due to goods (or services) not being up to the mark or extra goods being issued a Debit Note or Credit Note is issued by the supplier and receiver of goods and services.

A debit note or a Credit Note can be issued in 2 situations –

1. When the amount payable by buyer to seller decreases –There can be a change in the value of goods after the goods are delivered and invoice is issued by the seller. This can be due to a return of goods or due to the bad quality of the goods delivered, etc.In this case, the value of goods decreases due to which a Debit Note is issued by the purchaser to the seller. The Debit Note provides details of the amount of money debited from the sellers’ account and also states the reason for the same.The reason behind this – In the purchaser’s books of account the seller will have a credit balance. When a debit note is issued the credit balance of the Sellers account decreases, thus reducing the seller’s balance. It means that that lesser amount is required to be paid by the buyer to the seller to settle his liability. Thus debit note reduces the liability for the buyer.The seller issues a Credit Note as a response or acknowledgment to the Debit Note
2. When the amount payable by buyer to seller increases-When the value of invoice increases due to extra goods being delivered or the goods already delivered have been charged at an incorrect value a Debit Note is required to be issued.The Debit Note, in this case, is issued by the seller to the buyer. And the buyer as an acknowledgment to the receipt of Debit Note issues a Credit Note.The reason behind this – In the seller’s books of account the buyer will have a debit balance. When a debit note is issued the debit balance of the buyer’s account increases. It means that more amount is required to be paid by the buyer to the seller to settle his liability. Thus, credit note increases the liability for the buyer.

Home renting TAX ASTER BILLING

Home renting

• House Rent Allowance or HRA (for salaried only) Given how many Indians move cities for work, this is a common allowance most salaried individuals can find in their payslips. If you are renting an apartment, be sure to claim this in your tax return.
• Section 80GG (if you are renting and don’t get HRA) If you are not salaried, or you are still salaried, but don’t get HRA, then you can claim deduction for rent under Section 80GG. Learn more.

Health

• Life insurance premium under Section 80C
• Medical insurance under Section 80D
• Preventative health checkups under Section 80D
• Medical bills (for salaried only)( replaced with standard deduction of Rs 40,000 effective 1 April 2018)

'Tax Liability' Aster Billing

BREAKING DOWN 'Tax Liability'

A tax liability is the amount of taxation that a business or an individual incurs based on current tax laws. Taxes are imposed by a variety of taxing authorities, including federal, state and local governments. When a taxable event occurs, the taxpayer needs to know the tax base for the event and the rate of tax on the tax base.

The tax liability doesn't just include the current year, instead, it factors in any and all years that the entity may owe taxes. That means that if there are back taxes (any taxes that remain unpaid from previous years) due, those are added to the tax liability as well. 

Examples of Income Tax Liability

The most common type of tax liability for taxpayers is the tax on earned income. Assume, for example, that a taxpayer earns $50,000 in gross income, which is reported on an IRS W-2 form at the end of the year. If the federal tax rate is 20 percent, the tax base of $50,000 is multiplied by the 20 percent rate to compute a federal tax liability of $10,000.

Assume that the taxpayer’s W-4 resulted in the employer withholding $8,000 in federal taxes, and that the taxpayer made a $1,000 tax payment during the year. When the taxpayer files the Form 1040 individual tax return, the remaining tax payment due is the $10,000 tax liability less the $9,000 in withholdings and payments, or $1,000. On the other hand, if the taxpayer's W-4 information resulted in $5,000 in withholdings and no $1,000 tax payment is made during the year, the tax payment due with the tax return is the $10,000 liability less the $5,000 payment, or $5,000.

How Capital Gains Are Taxed

When a taxpayer sells an investment, real estate or another asset for a gain, that individual pays taxes on the gain. Assume, for example, that a taxpayer purchases 100 shares of XYZ common stock for $10,000 and sells the securities five years later for $18,000. The $8,000 gain is considered to be the tax base for this taxable event, and the transaction is a long-term capital gain, since the holding period is greater than one year. The tax rate for capital gains can be different from rates for income taxes and other tax calculations. If the tax rate is 10 percent, the tax liability is $800 and the taxpayer will include this calculation on the individual 1040 tax return.

Line 63 — Total Tax (Liability)

Filled out your Form 1040? Lines 52 through 62 added together will give you your total tax liability to the IRS — and that total will go into line 63. This appears on the last page of the Form 1040. Sometimes that sum might make your stomach turn because it can appear high. Not to fret. When the tax liability is calculated, you will then adjust the liability for estimated tax payments, tax credits and other items to compute the amount of taxes currently due and unpaid. If you overpaid, then you end up with a refund. On the other hand, if you paid too little, then you'll owe the IRS some more change. 

by 
Aster Billing

CONSTITUTIONAL SCHEME OF INDIRECT TAXATION IN INDIA BEFORE GST - Aster Billing

CONSTITUTIONAL SCHEME OF INDIRECT TAXATION IN INDIA BEFORE GST :

2.1 Article 265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law. As per Article 246 of the Constitution, Parliament has exclusive powers to make laws in respect of matters given in Union List (List I of the Seventh Schedule) and State Government has the exclusive jurisdiction to legislate on the matters containing in State List (List II of the Seventh Schedule). In respect of the matters contained in Concurrent List (List III of the Seventh Schedule), both the Central Government and State Governments have concurrent powers to legislate.

2.2 Before advent of GST, the most important sources of indirect tax revenue for the Union were customs duty (entry 83 of Union List), central excise duty (entry 84 of Union List), and service tax (entry 97 of Union List). Although entry 92C was inserted in the Union List of the Seventh Schedule of the Constitution by the Constitution (Eighty-eighth Amendment) Act, 2003 for levy of taxes on services, it was not notified. So tax on services were continued to be levied under the residual entry, i.e. entry 97, of the Union List till GST came into force. The Union also levied tax called Central Sales Tax (CST) on inter-State sale and purchase of goods and on inter-State consignments of goods by virtue of entry 92A and 92B respectively. CST however is assigned to the State of origin, as per Central Sales Tax Act, 1956 made under Article 269 of the Constitution. 

2.3 On the State side, the most important sources of tax revenue were tax onsale and purchase (entry 54 of the State List), excise duty on alcoholic liquors,opium and narcotics (entry 51 of the State List), Taxes on luxuries,entertainments, amusements, betting and gambling (entry 62 of the State List),octroi or entry tax (entry 52 of the State List) and electricity tax ((entry 53 of the4 | 46State List). CST was also an important source of revenue though the same waslevied by the Union.