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Clarification with Respect to Section 194-O, 194-Q and 206C (1H)

1. If tax has been deducted by the e-commerce operator on a transaction under…

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1. If tax has been deducted by the e-commerce operator on a transaction under section 194-O of the Act [including transactions on which tax is not deducted on account of sub-section (2) of section 194O, that transaction shall not be subjected to tax deduction under section 194Q of the Act.

2. Though sub-section (IH) of section 206C of the Act provides exemption from TCS if the buyer has deducted tax at source on goods purchased by him, to remove difficulties it is clarified that this exemption would also cover a situation where instead of the buyer the e-commerce operator has deducted tax at source on that transaction of sale of goods by seller to buyer through e-commerce operator. (E COMMERCE OPERATOR HAS DEDUCTED THE TDS ON THE BEHALF OF SELLER)

3. If a transaction is both within the purview of section 194-O of the Act as well as section 194Q of the Act, tax is required to be deducted under section 194-O of the Act and not under section 194Q of the Act. (E COMMERCE OPERATOR HAS DEDUCTED THE TDS ON THE BEHALF OF BUYER)

4. If a transaction is both within the purview of section 194-O of the Act as well as sub-section (I H) of section 206C of the Act, tax is required to be deducted under section 194-O of the Act. The transaction shall come out of the purview of subsection (I H) of section 206C of the Act after tax has been deducted by the e-commerce operator on that transaction. Once the e-commerce operator has deducted the tax on a transaction, the seller is not required to collect the tax under sub-section (I H) of section 206C of the Act on the same transaction. It is clarified that here primary responsibility is on e-commerce operator to deduct the tax under section 194-O of the Act and that responsibility cannot be condoned if the seller has collected the tax under sub-section (I H) of section 206C of the Act. This is for the reason that the rate of TDS under section 194-O is higher than rate of TCS under sub-section (I H) of section 206C of the Act.

5. If a transaction is both within the purview of section 194-Q of the Act as well as sub-section (I H) of section 206C of the Act, the tax is required to be deducted under section 194-Q of the Act. The transaction shall come out of the purview of sub-section (1 H) of section 206C of the Act after tax has been deducted by the buyer on that transaction. Once the buyer has deducted the tax on a transaction, the seller is not required to collect the tax under sub-section (I H) of section 206C of the Act on the same transaction. However, if, for any reason, tax has been collected by the seller under sub-section (I H) of section 206C of the Act, before the buyer could deduct tax under section 194-Q of the Act on the same transaction, such transaction would not be subjected to tax deduction again by the buyer. This concession is provided to remove difficulty, since tax rate of deduction and collection are same in section 194Q and subsection (IH) of section 206C of the Act.

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Nil Tax Even If Salary Income is Rs. 10 Lakhs

Can we imagine that if a salaried person is getting Rs. 10,00,000/- p.a. still,…

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how to save tax even if i earn 10 lakhs

Can we imagine that if a salaried person is getting Rs. 10,00,000/- p.a. still, he need not to pay tax under the income tax act. The answer is yes after the budget announcement it can happen with smart investment and tax planning.

Let us understand the same with an example

SRParticularsAmt(Rs.)Amt(Rs.)
Income from salary10,00,000
 –Less: Standard Deduction (Under Section 16(ia)), irrespective of the allowances received by the employees of the company)(50,000)
 –Net Income from salary9,50,000
 –Less: Interest on housing loan (Max. allowable deduction under section 24(b) is Rs.2,00,000 for self-occupied house property)(2,00,000)
Gross Total Income7,50,000
Deduction under chapter VI of the Income tax act
 –Under section 80C (Max. deduction allowed is Rs. 1,50,000/-)(for investment in ELSS Mutual fund, PPF, LIP, tuition fees of school or recognized university for full-time course, NSC, KVP, a stamp duty of house, principal repayment of housing loan, sukanya samriddhi yojana, etc.)(1,50,000)
 –Under Section 80CCD (Max. deduction allowed is Rs. 50,000/- for investment in recognized National Pension scheme)(50,000)
 –Under section 80D (Max. Rs. 25,000/- for self, spouse and children and Rs. 25,000/- for parents). It will be Rs. 30,000/- if self and spouse or parents any of them is a senior citizen)(50,000)
 –Total Deduction(2,50,000)
Total Income5,00,000
Tax on total income
 –On First upto Rs. 2,50,000/-Nil
 –On Next upto Rs. 2,50,000/- @ 5%12,500
 –On Next upto Rs. 5,00,000/- @ 20%N.A.
 –Income Above Rs. 10,00,000/- @ 30%N.A.12,500
 –Less: Rebate under section 87A (Max. upto Rs. 12,500/- for a person having total income upto Rs. 5,00,000/-)(12,500)
Net Tax PayableNil

The government has given various benefits under different heads of income as well as under deduction sections of the income tax act. So, even if any person is earning Rs. 10,00,000/- p.a. he need not to pay any income tax to the government.

However, if the total income of the individual is increased even by Rs. 1/- above Rs. 5,00,000/- then benefit of section 87A is not available to individual then in that case the tax amount will be increased by Rs. 12,500/- as the benefit under section 87A is not available to the individual. Moreover, the above-mentioned benefits are available to only Individual and HUF. Partnership firm or company will not be getting such benefits of slab rate or rebate or deduction under chapter VI as mentioned above.

Super20 aim to improve students’ skills to build their careers in the accounting area. Every year we enrolled hundreds of students who are completed or pursuing B.com degree and help them to get 100% Placement Assistance after completion of our course. S20 is one of the best taxation coaching centers in Ahmedabad.

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Mutual Funds in India

Mutual Funds in India   Friends, let us take a stock of some basic…

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Mutual Funds in India

 

Friends, let us take a stock of some basic information of mutual funds in India.

 

  1. Structure:

In India, Mutual Funds are having three tier structure. Mutual Fund is set up as a trust, which is sponsored by a sponsor entity. Sponsor entity takes approval from SEBI to launch mutual fund. This entity then establishes a trustee company to become trustee of the mutual fund. Most importantly, the sponsor establishes Asset Management Company (AMC) to manage the mutual fund assets. Hence, the structure will look like as below. Further, every scheme of the mutual fund needs specific separate clearance from SEBI and then can be launched.

 

 

 

 

  1. Features:

Some of the features of mutual funds are lower investment sizes, professional management, transparency, diversification, liquidity are unique and offer advantages to investors.

  1. Types of Schemes:
  2. Equity Schemes: Invests primarily into various shares and equity instruments. (Generally, 65-100%). LTCG beyond 1 year is tax free for resident Indians.
  3. Debt Schemes: Invests primarily into debentures, bonds, debt market instruments, money market instruments, Govt. Securities etc. LTCG beyond 3 years is applicable with indexation for resident Indians.
  4. Hybrid Schemes: As the name suggests, it is a combination of Equity + Debt in varied proportions. If more than 65% assets are in Equity, taxation of Equity Schemes are applied. Otherwise, taxation of debt schemes are applied.
  5. Funds of Funds: As the name suggests, these schemes invest in various mutual fund schemes. If more than 65% assets are in Equity funds, taxation of Equity Schemes are applied. Otherwise, taxation of debt schemes are applied.
  6. International Funds: As the name suggests, these schemes invest in international securities / funds. Taxation would be same as Debt Schemes, if less than 65% of the assets invested in Indian Equity Instruments.
  7. Exchange Traded Funds: As the name suggests, these funds are listed on a stock exchanges and gets traded like a share. Hence, investors can buy / sell them freely.
  8. Index Funds: As the name suggests, these funds are replica (copy) of some index like Sensex, Nifty etc. and provides matching returns of relevant index.
  9. Closed-end Funds: These funds are closed for subscription / redemption.
  10. Interval Funds: These funds are closed for subscription / redemption for a fixed interval.
  11. Open-end Funds: These funds are open for subscription / redemption on continuous basis.

 

  1. Transaction Types:
  2. Lumpsum Investment:

Investing any amount of money in a mutual fund scheme at one go.

  1. Lumpsum Redemption:

Withdrawing any amount of money from a mutual fund scheme at one go.

  1. Switch Transactions:

Switching-out from existing scheme of a mutual fund and switching-in the same into another mutual fund scheme. (Basically, transferring from one scheme to another).

  1. SIP (Systematic Investment Plan):

One can put every month / quarter fixed amount in a mutual fund scheme as a regular investment.

  1. SWP (Systematic Withdrawal Plan):

One can withdraw every month / quarter fixed amount from a mutual fund scheme as a regular income / withdrawal.

  1. STP (Systematic Transfer Plan):

One can transfer every month / quarter fixed amount from one scheme of mutual fund to another.

 

  1. Mutual Fund Industry in India:

There are around 45 mutual fund companies in India with total Assets Under Management (AUM) as on 30-Jun-17 of approx. Rs. 17 lakh Crore. E.g. ICICI Prudential Mutual Fund, HDFC Mutual Fund, SBI Mutual Fund, Franklin Templeton Mutual Fund etc. MF industry in India a growing at a very fast pace recently and is projected to grow multifold in years to come. Thousands of schemes are launched by these companies for the benefit of investors. For more knowledge and information about mutual funds India, one can visit websites of

www.investor.sebi.gov.in

https://www.amfiindia.com/

http://www.mutualfundssahihai.com/en/amfi

  • By Tejas Patel