About: India Briefing

Filing Income Tax Returns in India

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By Dezan Shira & Associates

An Income Tax Return (ITR) is a declaration that you have an income for which you have paid tax.  Filing of ITR is a mandatory obligation where you detail your income from salary and other sources, allowances and reliefs claimed, and investments made through the financial year (FY). ITRs have to be filed in the assessment year following the financial year during which income was earned.

Previously, one could file income tax returns for the previous two years; this has now been reduced to one year. Tax returns must be filed by the deadline of July 31, 2017, where income earned during FY 2016-17 will be accounted for.

In this article, we highlight the key steps necessary for filing tax returns in India.

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Income Tax Return Forms in India

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By Dezan Shira & Associates

Assessees who earn a taxable income must declare their total income earned by filing an income tax return form. Tax returns for a financial year must be filed by July 31 of the next financial year.

India’s Central Board of Direct Taxes (CBDT) has introduced new and simplified Income Tax Returns (ITR) forms for the financial year (FY) 2016-17 and assessment year (AY) 2017-18.

In its most recent update, the income tax department has inserted new columns in every ITR form seeking details on cash deposits made during the demonetisation window, i.e., from November 9, 2016 to December 30, 2016. Any such deposit needs to be reported only if it exceeds Rs 200,000 (US$3,100).

The CBDT has now made it compulsory for individuals and businesses to quote their Aadhaar number while filing tax returns.

Moreover, all income tax returns have to be filed electronically. Paper returns can only be filed by ‘super senior’ citizens (above 80 years of age) or by an individual whose income is less than Rs 500,000 (US$7,754) and who has not claimed any refund in his/her return.

The ITR forms notified for AY 2017-18, their applicability, and key changes are stated below:

ITR-1 (Sahaj)

The previous seven-page form is now replaced by a simplified one page form, called Sahaj, making it easier for taxpayers to file their annual income tax returns. 

ITR-1 Sahaj is to be used by salaried employees, individuals, and Hindu Undivided Family (HUF), who have income under the following heads, totalling up to Rs 50 lakh (US$77,000) and dividend income up to Rs 10 lakh (US$15,509):

  • Income from salary or pension;
  • Income from one house property; or
  • Income from other sources like interest income, etc. (excluding winning from lottery and income from race horses).

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Establishing a Presence in India – Offices, Partnerships, and Companies

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By Bradley Dunseith

A physical presence in India is essential to break into the country’s emerging market. But establishing the right kind of presence can mean the difference between success and wasted efforts.

Foreign companies should consider state regulations, physical connectivity, and local costs when choosing a location for their Indian office. Of equal importance is the type of Indian presence foreign companies choose.

India’s Reserve Bank of India (RBI), in conjunction with the Registrar of Companies, allows for several types of offices – Liaison, Branch, and Project – in addition to firms and partnerships for foreign companies hoping to establish themselves.

Here, we run you through a short description of each type as well as their respective benefits and drawbacks.

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India Regulatory Brief: Cross-Border Mergers Approved for Indian Businesses, Aadhaar Now Mandatory for Expats

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Indian businesses now cleared for cross-border mergers

In a major push to attract greater foreign direct investment (FDI), the federal government has greenlit cross-border mergers in India if they are approved by the Reserve Bank of India. This means that Indian business entities can now negotiate mergers with foreign companies, after meeting select criteria. The policy shift opens up the merger and acquisitions (M&A) landscape in the country and incentivizes foreign companies to enter the Indian market more aggressively.

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Waste Management Opportunities in India’s Smart Cities

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By Bradley Dunseith

Editor’s Note: This is the final article in a three part series. The first can be found here and the second can be found here.

India’s rapidly urbanizing landscape necessitates effective and innovative waste management solutions. Aware of this need, the current government is funding planned urbanization schemes that will make Indian cities both easier to live in and more business friendly.

The central government first announced their ambitious ‘Smart Cities Mission’ in 2014, and the government has now earmarked roughly US$15 billion for the creation of 100 ‘smart cities’ as well as the rejuvenation of another 500 urban centers.  

The success of these ‘smart cities’ will be, in part, dependent on the development of proper waste management systems. Furthermore, in order to renew poor infrastructure, the federal government is relaxing access to urban infrastructure and services sectors for private investment

In the final part of this three part series, we look at the opportunities in partnering and investing in India’s waste management sector in the context of smart cities and planned urban growth.

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SMEs and Startups in India’s Waste Sector

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By Bradley Dunseith

Editor’s Note: This is the second article in a three part series. The first can be found here and the third can be found here.

In 2014, the Modi government identified cleaning up India as a national concern through the Swachh Bharat Abhiyan (Clean India Movement). Though the Clean India Movement has yet to be followed up with comprehensive policies, the initiative invigorated national attention towards finding solutions to India’s overloaded waste management systems.

Startups and small and medium enterprises (SMEs) have already begun to profit from effective waste management. Furthermore, with the planned creation of 100 smart cities in India, getting involved in effective waste management solutions will position companies and investors to benefit from India’s planned industrialization in the near future. 

In part two of this three part series, we track the innovative work startups and SMEs have done in India’s waste management sector. We also highlight how foreign companies and investors can play a role in making India’s waste management more effective and sustainable. In the third and final instalment of this series, we explore the investment potential of waste management in relation to India’s Smart Cities Mission.  

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The Waste Management Industry in India: Investment Opportunities

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By Bradley Dunseith

Editor’s Note: This is the first article in a three part series; the second can be found here and the third can be found here.

By 2025, India’s waste management sector is expected to be worth US$13.62 billion with an annual growth rate of 7.17 percent. Much of the waste India produces simply ends up in landfills without proper processing or treatment – redirecting this untapped waste to proper treatment and processing facilities will open up new investment possibilities.

In part one of this three part series, we look at India’s regulatory landscape for waste management and the types of waste India produces. In part two, we will highlight the innovations adopted by startups and small and medium enterprises (SMEs) in the country’s waste management sector and  prospects for foreign investors and companies. Finally, in part three, we will explore waste management opportunities in the context of India’s ‘Smart Cities Mission’ – a huge urban planning initiative – necessitating critical sustainable waste management solutions. 

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Goods and Services Tax in India: What it Means for Businesses

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By Vasundhara Rastogi

The new goods and services tax (GST) will replace all indirect taxes in India from July 1, 2017. The federal and state government will concurrently impose the GST on almost all goods and services produced in India or imported into the country.

The GST will enhance India’s trade competitiveness by eliminating cascading taxes and transform India’s economy into a single ‘common market’. GST will simplify the current tax structure and broaden the tax base, resulting in a potential boost to the country’s GDP by 0.9 to 1.7 percent. Direct taxes such as income tax, corporate tax, and capital gains tax will, however, not be affected under the new tax structure.

Apart from its macroeconomic implications, the GST will transform the way businesses are carried out in India.

In this article, we look at how the new indirect tax structure affects companies and the challenges they need to overcome to achieve successful compliance. 

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