Tax & Accounting

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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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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Goods and Services Tax (GST) in India: Key Terms and Concepts

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By Vasundhara Rastogi

The goods and services tax (GST), regarded as India’s biggest tax reform, will be implemented from July 1, 2017. The new single tax system will transform India’s present indirect tax regime, and is expected to have far reaching implications for the country’s economy, business, and society at large.

Despite the importance of the GST, many business managers still remain confused about key aspects of the forthcoming tax system. From the taxes that will be subsumed by the GST to technical dimensions of the GST model, this article serves as a complete guide to what will change on July 1.

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India Sets GST Rates, App for July 1 Rollout

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By Dezan Shira & Associates

India’s government is keen to roll out its Goods and Services Tax (GST) from July 1 and is speedily laying the groundwork for immediate implementation.

On March 4, two bills (federal GST law and integrated GST law) were finalized by federal and state finance ministers in the GST council, the federal agency regulating the GST. Two more bills now need to be approved by the 36 state and union territory legislatures by March 16 when the council meets again.

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How did the 2017 Budget Affect Startups and MSMEs in India?

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By Dezan Shira & Associates

After November 2016’s surprise demonetization, businesses in India looked to the Union Budget 2017 to gauge the government’s economic outlook.

While this year’s budget retained a development-oriented focus, key tax and regulatory provisions declare the government’s intent to encourage business, create jobs, promote entrepreneurship in a digitally empowered economy, and spur GDP growth.

In this context, startups and micro, small, and medium enterprises (MSMEs) should pay attention to the following provisions and amendments stated in the latest budget:

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GAAR to Take Effect in India from April 2017

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By Koushan Das 

India will adopt the General Anti-Avoidance Rules (GAAR) with effect from April 1, 2017. GAAR is an anti-avoidance regulation that allows tax authorities to deny tax benefits on transactions conducted with the purpose of avoiding taxes.

While tax avoidance regulation in India is currently governed by the Specific Anti-Avoidance Rules (SAAR), it was not considered comprehensive enough by the government, leading to the formulation of GAAR. However, SAAR regulations will continue to be applicable in addition to GAAR provisions: GAAR will cover those avoidance cases which fall short of SAAR regulations.

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POEM to Determine Tax Residency in India from April 2017

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By Dezan Shira & Associates

The Central Board of Direct Taxes (CBDT) recently finalized the guidelines for Place of Effective Management (POEM) regulations in India, which will come into effect from April 1.

POEM is an internationally recognized test for determining the residence of a company incorporated in a foreign jurisdiction. Intended to curb corporate tax evasion, the new norms will apply to the assessment year 2017-2018 and subsequent assessment years. There will be no retrospective assessment.

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