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Knowledge Series For Commerce Students: Know Your Home Loan

Home Loans cater to your needs or possibly a renovation, construction, or additional repairs…

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Home Loans cater to your needs or possibly a renovation, construction, or additional repairs to your humble abode. It is affiliated with a plethora of facets that the borrower needs to take into consideration before he/she can finally attempt to avail of such a loan.

How Much Of A Loan Amount Are You Eligible To Avail?
The predominant requirement is the eligibility of the borrower in the repayment of the loan that would determine the tenure, interest rates, and down payments attached to the loan amount. Your surplus income will drive the lender to figure out the actual amount of loan that you are eligible for.

So, your total assets, total liabilities, and the apparent stability of income play a pivotal role in gaining the lender’s trust. At the end of the day, a bank needs to ensure that your financial stability will not pose any problem for them in the repayment of the loan amount.

Additional Charges And Figures That You Need To Be Aware Of
Statistically, the bank assumes that as much as 50% of your income would suffice for your loan repayment, furthermore, the desired tenure, as well as pegged interest rate, will also impact the decision of assessing the amount of loan.

The majority of lenders expect around 10 to 20 per cent of the amount of home’s purchase in the form of a down payment on your part, and the remaining portion of the loan is eventually financed by the lender.

Now, this aggregate amount of loan encompasses certain charges, for instance, registration, transfer, stamp duty etc. You may be eligible for a larger amount but it does not necessarily mean that you have to get that much amount financed, even a significantly smaller amount can also be availed which directly relies on your requirement.

It is advisable, however, that keeping the ratio of down payment relatively higher than the ratio of loan amount so that the ultimate cost of interest payable can be mitigated and be kept at the desired level.

The Necessity Of A Co-Applicant
Additionally, having a co-applicant is an indispensable requirement to fulfil, so if you are the only owner of the property under scrutiny, then, in this case, an immediate sibling or any other family member can be anointed as a co-applicant.

What Specific Documents You Will Require For The Loan?
The documentation process is another integral and intrinsic phase where a checklist of specified documents is handed out by the bank which is to be filled accurately to steer clear of future ramifications.

Your unique identity proof, proof of residence, form 16/Income tax returns and recent salary slips which has to be decidedly authenticated by your employer and has to be self-attested.

But generally, in most cases, collateral security is also warranted such as insurance policies, units of mutual funds or any other significant investment. In most cases, the designated property is purposefully mortgaged in favour of the lender in the form of security until the loan has been repaid in its entirety.

Should You Secure Your Home Loan With An Insurance Policy?
It is vehemently advisable to secure insurance in favour of the home loan so that the liability does not fall on anyone else, but you alone will be secured enough to repay it. Now there are two prominent plans which are prevalent in today’s scenario, i.e. pure term insurance and the other one is a Mortgage insurance plan.

Now the loan amount should be equivalent to the insurance amount. As far as the premium is concerned, then a single premium, as well as regular premiums, will be the coveted choice. However, it is not mandatory to avail of insurance cover but a sense of self-assurance is generated by availing of such service.

Disbursement Of Loan
The documentation process is the precursor of the disbursement of the loan. The magnitude of the loan amount is solely scrutinised based on the documentary proof and that entails the procurement of a sanction letter from the bank which explicitly states the final amount of loan, duration, and applicable interest rate etc.

So in a nutshell, when the loan has finally been confirmed from the bank, it is commonly referred to as disbursement of the loan after getting through entire technical and legal or valuation activities and handover the cheque or demand draft in favour of seller after successful execution of sale deed and mortgage deed of the house.

Types Of Interest Rates
Rates of home loan can be distinct in the form of fixed or flexible. Calculation of EMI varies as per the various financial institutions/banks from where your loan has been sanctioned. Underlying additional charges also apply in tandem with the payment of the EMI such as processing fee which is generally about 0.5 to 1% of the loan amount. Now, repayment in the form of EMI begins right after the month when the loan has been disbursed.

Repayment Through ECS
Electronic Clearing System (ECS) is one of the avenues through which the repayment of the loan can be done, which involves direct payment of the loan amount from your salary account on a specific date of the repayment.

If you are eligible to pay higher EMI, then it will certainly benefit you since it acts as a long-term advance. Clearing the obligated amount faster will alleviate and relieve your mental stress easily.

Pre-Closure
The borrower always has this option at his disposal to pre-close his/her loan way ahead of the specified duration. However if the interest on your loan is of floating nature, then you will not be bound to pay additional charges, whereas if it is of a fixed nature, then certain charges may be applicable.

Every financer or lender should explicitly state in their statement the total interest as well as the principal amount payable at the very beginning of the financial year. This will eventually serve as a propellent factor to the department of accounts regarding your proof of investment for necessary tax deductions.

This phenomenon will serve you to reap tax benefits at the end of the year. It is prudent to pick the lender that renders the lowest EMIs option which can mean that you are paying a significantly lesser amount of money in the form of repayments as compared to other applicants from any other financial institution.

How Your Grievances Can Be Addressed
There may be incidences that a borrower may not be satisfied with the services rendered by the bank or some other pertaining relevant problem might occur.

So in that case, you can mention your grievance specifically in writing delineating the factors that displeased you, which needs to be addressed at the concerned branch and if however, the bank does not resolve or overlooks your concern then you have the option at your disposal to lodge your complaint with the ombudsman.

Income Tax Benefit of Housing Loan
Interest payment for housing loan is deductible under the head income from house property. The maximum limit is Rs. 2 Lacs p.a. u/s. 24(b). Moreover, we can also get benefit u/s. 80C of income tax for the principal repayment of housing loan with maximum limit of Rs. 1.50 Lacs. The stamp duty and registration charges paid at the time of registration of sale deed is also deductible u/s 80C of Income Tax Act, 1961.

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Knowledge Of Insurance For Tax Professionals

Varsha who works at a media office in Ahmedabad met with an accident on…

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Varsha who works at a media office in Ahmedabad met with an accident on her way to work. She was rushed to the hospital where she was treated for four days before being discharged. The hospital bill amounted to about Rs.60,000.

Fortunately, she had a health insurance cover of Rs.3,00,000. The hospitalization and treatment charges were taken care of by the insurer. Had there been no insurance coverage, she would have had to pay the entire amount out of her own pocket.

Insurance is your cushion against unexpected financial losses or damages. An insurance policy is what Varsha signed with the insurance company which was a legal statement of her agreement with the company, which agreed to cover costs in case of a damage, in exchange for a periodic premium paid by her.

Here, the company is the ‘insurer’ while Varsha is the ‘policyholder’ as well as the ‘insured’. A policyholder is not always the same as the ‘insured’. Such cases will be explained further in this read.

Insurance is not only procured by individuals but also by businesses to insure against specific types of risks. Premium, Deductible and the Policy Limit are three essential components of an insurance policy. A good understanding of what all an insurance policy entails can be gathered by enrolling in the taxation course in Ahmedabad.

Components Of An Insurance Policy

  • Premium – A premium is a regular payment – annual, semi-annual or monthly —made by the policyholder to the insurance company for purchasing a policy. The amount of the premium depends on factors like the type of coverage (business-specific, medical insurance, home insurance etc.), the amount of total coverage, an individual’s insurance history (to determine risk factors), as well as competition in the insurance industry. Higher the risk factors, more the amount of premium you have to pay.
  • Deductible – It is the amount that a policyholder has to pay on her own while the insurer pays a claim. Deductibles are meant to work as disincentives against minor or insignificant claims. The policyholder usually has the choice to decide their deductible. As a general rule, higher the deductible, lower is the premium and vice versa. 
    Policy Limit – It is the maximum amount the insurance company will pay for a covered claim. These maximum amounts can be determined per-damage, per-time-period or over a policy’s lifetime. Higher policy limits have higher premiums.

Policy limits can vary within a policy according to various aspects of the damage. To delve into understanding these, one may consider taking the tax practitioner course in Ahmedabad.

Types Of Insurance Policies

Life Insurance or Term Plan

It is particularly an essential coverage in cases where the beneficiaries are heavily dependent on the insured person. Life insurance policies promise to compensate the beneficiaries of the insured person, in case they expire during the policy term, or after a set period. The payment made for life insurance is deductible under section 80C of Income Tax Act,1961. To know details about how much you can save as tax you can learn by taxation course in Ahmedabad.

Health Insurance 

For medical emergencies, health insurance covers the costs of treatment, hospitalization and medication. Health insurance plans in India also come with tax benefits on premiums as mentioned in section 80D of Income Tax Act, 1961. Types of Health insurance plans include 

  • Individual plans
  • Family plans
  • Senior Citizen plans
  • Critical Illness plans
  • Maternity plans
  • Group plans
  • Unit Linked health plans
  • Coronavirus plans

Employees these days are mostly covered under Group insurance plans by employers, who pay the premium instead of the employees.The same is allowable expense for the company. Though the amount is usually not great, yet it is advisable to be covered under such plans since some benefits still count against zero-premium paid.

Vehicle Insurance 

It ensures monetary compensation in case of any accidents that may have led to the damage of the motor vehicle. A four-wheeler insurance policy is mandatory in India as per the Motor Vehicle Act 1988.

Vehicle insurance includes all expenses in case of death and damage suffered due to collisions or natural calamities, hospitalization expenses in the event of an accident, legal/financial damages due to third party liability, as well as rider benefits like roadside assistance. Major types of car insurance plans available in India are –

  • Comprehensive car insurance: Insures car damages and third-party liability cover 
  • Third-Party car insurance: Only third-party legal liability cover
  • Pay as you drive insurance: Insurance premiums are decided by the kilometres driven (suitable for people who own more than one car, and each of the vehicles is not used very frequently)

The taxation training in Ahmedabad is a good option to consider if one wants to learn about new policy developments like the ‘Pay as you drive insurance’, that are created as a response to changing lifestyles and newer needs.

Education Insurance 

Securing their child’s future is the biggest concern of a parent. Education insurance policies aid in the same by providing an amount of education cost when the child is ready to indulge in higher education; 18 years of age and above. This is the kind of policy where the ‘policyholder’ is not the same as the ‘insured’. Here, the parent/guardian is the policyholder while the child is the insured. 

Home Insurance 

It covers all expenses in case of damages incurred to a house due to any sort of physical damage caused either due to human-caused accidents or natural calamities. Home insurance covers not only the building or structure but also the contents of the house and any other detached structures that may be a part of it. Home insurances are aimed at providing indemnities for a variety of damages and include- 

  • Fire and Special perils
  • Public Liability cover
  • Building structure insurance
  • Burglary or Theft
  • Personal accident
  • Contents insurance
  • Landlord insurance
  • Tenant insurance

Professional Liability Insurance 

It ensures professionals like lawyers, trainers, tax preparers, accountants, doctors, beauticians and so on, against claims of damage made by clients. It indemnifies professional liability for the policy period only. The cover is provided mainly on a claims-made basis.

The aspect of a retroactive date is also available in the case of Professional Liability Insurance, which means that damages caused before the beginning of the policy period, which is being claimed during the policy period, are also covered.

Knowledge about insurance and its acute parts and mechanisms can be expanded by enrolling in the best tax course provider in Ahmedabad. A deeper understanding will help one to better analyze and choose the perfect insurance needed for a specific case and time. Knowledge so gathered will assist in making wiser decisions when choosing financial safety nets for oneself or clients.  

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All About Depreciation Bookkeeping

Finances are an inherent part of our everyday lives and on an everyday basis…

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Finances are an inherent part of our everyday lives and on an everyday basis – we do come across the processes of depreciation, appreciation and other related processes in different forms. These processes may sound complicated to comprehend, but once we understand them and the outline of their functioning, we may conclude that they are actually simple and extremely essential.

Before we delve deeper into the processes of depreciation, we must go through the concept of bookkeeping. Bookkeeping is the backbone of a stable and well running business, as it involves keeping records of the financial affairs of the business. This process must be done judiciously with care and concern, as if it is taken lightly, it may circumstance in financial muddles and other such confusion. 
The skill of bookkeeping is not easily learnt, and engaging in official and professional training for the same is beneficial – both for the individual and her respective business. To further understand the concept of bookkeeping as a whole, an individual can consider enrolling in a tally class in Ahmedabad.

What Is Depreciation?

Before we understand the process of depreciation as a whole, we need to don the economic eyeglasses and understand the concept of a fixed asset – as depreciation revolves wholly and solely around this concept. 

A fixed asset is most often defined as a long-term asset used by a company/firm that holds a lasting period for over a year. These assets include land, big machines etc. – and depreciation involves constant decreasing of a specific/recorded cost on this very asset.

For instance, let us say that a firm purchases a steel grinding machine with a cost of Rs 400,000 and the expected working period of this specific machine is eight years, then it can be said that the firm depreciates the asset held under this process of depreciation at the cost of Rs 50,000 per year. 

Thus, we can infer, from the given example, that it is the cost of the depreciation asset divided by the number of years the asset is put into use, which is considered as a certain ‘depreciative cost’ every year. (From the given example, we can infer that the asset is divided by eight years as the machine is used for eight years). 

The principles and nuances of depreciation can be levied on every other fixed asset except land, as land is a particular asset whose value only appreciates with time and usage. The above description is a brief overview of depreciation, and further insight into depreciation can be gained in a tally computer course, to be considered in Ahmadabad, which the individual must consider attending.

Calculation Of Depreciation 

There are multiple methods, using which depreciation can be calculated with both ease and efficiency. Yet, before we engage with the calculation process, there is a certain checklist of factors that we must keep in our mind, which are as follows – 

  1. Life of the asset – The ‘life’ of the asset, or to be more specific, the ‘productive’ life of the asset refers to a certain period beyond which the mentioned asset is not considered useful. The mentioned asset loses its cost – affectivity post this period, and the operation of this very asset cannot be continued judiciously. 
  2. Salvage Value – After the mentioned asset discards its cost-effectivity and is no longer useful for the company, losing its ability to contribute towards the functioning of the operation productively, the firm may consider selling the asset at a lower amount. This ‘lower amount’ is defined as the salvage value of the mentioned asset.
  3. The overall cost of the asset – As we engage with the process of depreciation, it is essential for us to keep in mind, the overall cost/total cost of the asset we are working with. This ‘overall cost’ does not merely include the cost of the asset, but it also includes production/set up expense, transport cost – so on and so forth. 

A further and more thorough understanding of these factors can be obtained in the tally computer course in Ahmedabad. Attending this course can surely prove to be a knowledgeable and enriching experience for the individual who poses interest in the field of accounting, and specifically in the field of bookkeeping. 

Finally, what is depreciation bookkeeping?

Depreciation Bookkeeping

After we thoroughly comprehend the processes of depreciation and make a checklist of certain, specific factors to keep in mind while engaging with this process, we must now move onto the main topic of depreciation bookkeeping, which is, in simpler words, the accounting/recording of the amount of depreciation suffered. 

  1. Straight Line Depreciation Method – It involves the simple placement of a constant rate of depreciation every year, over the life of a fixed asset. This is not merely the easiest, but the most straightforward method of depreciation calculation which can also be classified as the method most commonly and easily used by companies. 

Formula – Annual Depreciation expense = (Asset cost – Residual Value(5% of original cost of asset)) / Useful life of the asset
2. Written Down Value Method: Most of the companies are using the written down value method. The main reason of this depreciation method is that the actual realizable cost of the asset can be derived from this method of depreciation. In this method of depreciation, depreciation on assets is higher in the initial period and lesser in later years. This is because, asset value will be reduced more in the initial years and there after, maintenance cost increases and value of the asset will be decreasing but with a lesser amount.

The above methods of depreciation bookkeeping are just a brief insight into the vast field of accounting, knowledge about which can be furthered if the individual enrolls in the tally course in Ahmedabad. 

Enrolling in the mentioned class is highly recommended, as professional insight into the processes of depreciation and related methods holds great water in the long run, benefitting both the individual and her firm as a whole, ensuring greater stability/smooth financial functioning of the firm, development of better customer relations, and most importantly, complete internal satisfaction to the person running/supervising the finances and the overall working of the firm.

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Accounting For Reserves And Surplus

Just the way we categorize our expenditures at the end of every month, various…

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Just the way we categorize our expenditures at the end of every month, various business organisations include Reserves and Surplus in their balance sheet keeping their future needs as an organisation in the picture. In simple words, they are the savings of big corporates which can be used as assets during a crisis.

What Do Reserves And Surplus Mean?
Reserves
A financial accounting Reserve is a part of the shareholder’s equity except for basic share capital. A Reserve is profits that have been appropriated for a particular purpose. In accounting terminology, reserve implies the amount set aside for future activities which include buying assets, paying for bonuses or even legal settlements.

Surplus
Surplus describes the amount of an asset or resource that exceeds the portion that is actively utilised. In the budgetary context, a Surplus occurs when income earned exceeds expenses paid.
Reserves and Surplus, as the name suggests, are the accumulated profits that a company has earned and retained over time. Retained profits are the profits that are left after repaying the shareholders. General Reserves are created out of profits and kept aside for the financial strengthening of the company in bad years.

Difference Between Reserves And Surplus
Reserves are the primary amounts that are earmarked by the organisation for specific purposes. Whereas Surplus is where all the profits of the company reside.

Types Of Reserves And Surplus
Depending on their purpose there are various types of Reserves used in a balance sheet.

Capital Reserve
A Capital Reserve is the type of Reserve that is created from capital profits. Capital Reserve is maintained to prepare the company for sudden hazards like inflation, business expansion and funds for new ventures.

  • Cash received by selling current assets
  • Excess on revaluation of liabilities and assets

are a few examples of Capital Reserves.

Capital Redemption Reserve (CRR) 
Capital Redemption Reserve is created when the preference shares or the capital is redeemed. It is a statutory Reserve. When a company wishes to redeem shares a Capital Redemption Reserve account is created to benefit both the creditors and employees.

A Capital Redemption Reserve comes in handy for the company on a rainy day. Several litigations are attached to this reserve such that the company can open this reserve only under certain circumstances.

Security Premium Reserve
It is the additional amount charged on the face value of any share when the shares are issued, redeemed and forfeited. Security premium account is a part of the Shareholders Fund, it refers to the difference between market value and the face value of a share.

Debenture Redemption Reserve
A Debenture is a debt security that lets the investors borrow money at a fixed rate. A Debenture Redemption Reserve must be created to protect investors from the possibility of a company defaulting.

Debentures are not backed by any kind of asset, lien or collateral. Free Reserves are those Reserves upon which the company can freely draw, Debenture Redemption Fund is one such Reserve.

Revaluation Reserve
Organisations have the freedom to construct line items for assets on the balance sheet when they believe it is a necessity for correct accounting to be presented. Revaluation Reserves are not inherently normal, but they can be used when a business assumes that the value of their assets will fluctuate after a certain time frame.

Other Reserves: Specifying Nature And Purpose

Surplus
Surplus i.e balance in statement of profit and loss disclosing allocations and appropriation such as dividend, bonus, shares and transfer to/from Reserve etc.

Accounting is a part of our daily chores, let it be a multi-crore business or the expenses of a middle-class family accounts play a vital role, here is a link to a certified accounting course in Ahmedabad that will make you a pro at finance and accounting.

Why Are Reserves And Surplus Called Liabilities?
Aren’t Reserves supposed to be good? They are money set aside for future endeavours and hazards, How is being financially safe considered a liability? Isn’t having surplus money a boon?

Well here are the answers to all your queries,

Reserves are considered on the liabilities side of a balance sheet because they are sums of money that have been set aside to be paid out on a future date. To be more precise Reserves are considered a liability keeping the peasant scenarios in mind. Reserve is considered a liability keeping all the future requirements in mind.

Reserves also represent the obligations that the form has, which makes Reserves a liability item. Reserves can be future or potential obligations to various stakeholders or future use of funds to benefit various stakeholders.

For a better understanding, we can compare Reserves to a bank, though the bank is always expected to have money, yet it is considered a liability keeping in mind that money is not for the bank but to meet up with the financial needs of their account holders.

What Is Meant By A Negative Reserve?
Negative Reserves are considered as assets, for example, the money which is due to the policyholders i.e debtors. But these are assets which may be realised or forgetting that the policyholders may withdraw, leading to a policy lapse.

To conclude, accounting at the end of the day is an asset to our lives, it is a massive ocean of its own, here is the address of an Accounting institute in Ahmedabad, they offer various  Accounting Training in Ahmedabad that will turn you from a liability to an asset.

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All About PAN And TAN For Bcom Students

To collect and manage tax from various incomes, the Income-tax department issues various unique…

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To collect and manage tax from various incomes, the Income-tax department issues various unique identification numbers. While PAN (Permanent account number) is a 10 digit identity number allotted to taxpayers, TAN  is a 10 digit number allocated to Tax deductors.

PAN: Permanent Account Number
PAN is an identification number that is mandated by the Income Tax Department for any individual who carries out financial transactions or pays the income tax.

PAN Card For Students
A PAN card is issued by the NSDL and UTI on behalf of the government, to all the individuals. It is generally adults over the age of 18 who apply for a PAN card. However, a student can also apply for a PAN card.

The government of India has made it mandatory for all the individuals who has taxable income to possess a PAN card, including a PAN card for students as well. Since PAN card is an official document for identity proof in India, it should be used by all income earning individuals and non-individuals.  For students, a PAN card can act as an alternate identity for a school ID card.

Benefits Of Having A PAN Card
A PAN card comes into a student’s life with numerous benefits, keeping all the prospects in mind. Students should apply for a PAN card as early as possible since  it comes with numerous perks like:

  • Proof Of Identity: It will serve as one of the major sources of identification proofs in both governments as well as private institutions. It is one of the Indian documents that is accepted universally. Any student who wishes to go abroad for further studies should apply for a PAN card making the entire journey hassle-free.
  • Applying For Student Loans: A PAN is a must for getting loans from the bank. If a student going through a crisis, wishes to apply for a bank loan for further studies, they should apply for a PAN card first.
  • Life-Long Validity: Once applied, the PAN card doesn’t require any further replacements. This document will link all your lifelong financial transactions through one single identity card.
  • IT Returns Filing: Let’s admit, all of us have to start paying taxes one day, all individuals who are eligible for IT are expected to file for their IT returns. A PAN card is necessary for filing IT returns, hence it would be advisable to get familiar will the IT culture beforehand and be well equipped rather than applying for a PAN card at the heat of the moment.
  • Starting A Business: If you are a young budding entrepreneur who is fascinated by the start-up culture in India, you have to know that to start a company it is mandatory to have a PAN Registered on its name. The earlier you start to learn about taxes and banking, the more beneficial it is, here is the link of a verified tax practitioner course in Ahmedabad that will give you a better perspective about taxes and transactions.

Linking Of PAN With Aadhar
Being a responsible citizen one should link their PAN card with their Aadhaar to help our nation avoid the problem of issuing numerous PAN cards under a single name. Government has mandated to have aadhar card and linking of the same with PAN. No New PAN can be issued without Aadhar card. Even issued PAN has to be linked with Addhar, Your PAN will be cancelled if it will be not linked to Addhar in near future.

How Can One Apply For A PAN Card?

PAN card is issued by the IT Department of India under the supervision of the Central Board of Direct Tax. There are different steps to apply for a PAN card online and offline.

  • For the online process of PAN Card UTIITSL, NSDL is the most authentic platforms for students to apply.
  • If an applicant is from India they should pay Rs.110 as the application fee.
  • A 49A form has to be filled for both online or offline proceeding of the application.
  • One has to carry 2 latest passport size photographs, and a copy of Aadhar Card required as address and identity proofs. If Aadhar card don’t have date of birth then birth proof is required to be attached.
  • TAN: Tax Deduction And Collection Account Number: While filing for Tax deducted at source (TDS) or Tax Collected at Source (TCS), quoting TAN is a prerequisite. As a 10- digit alphanumeric identifier for individuals or entities that deduct or collect tax at source, TAN helps streamlining or collection of tax at source.

Do Students Need TAN?
As TAN Furnishes details about Tax deducted at source and is used for Filing TDS return it is not required by students as they are not. Tax Deductor or TDS return filer.

However, students should have a brief idea about Taxes as it is not taught in educational institutions and can be quite a tedious task once they start adulting. Understanding taxes can be quite arduous at times, here is a link to one of the best tax courses in Ahmedabad that will help you learn better.

Is PAN Compulsory For A TAN Application?
The Central Board of Direct taxes is considering making PAN mandatory as a requirement for allotting  Tax Deduction Account Numbers (TAN) to companies that deduct tax at source.

Can PAN Replace TAN?
PAN should never be quoted in the field where TAN is required to be quoted. However, a person required to deduct tax under section 194-1A can use PAN in place of TAN as such a person is not required to obtain Tan.

Procedure To Apply For TAN
Just like PAN a person has the choice to apply for TAN either through online or offline methods.

  • One has to fill a TAN Application form 49B to avail a new Tax Deduction and Collection Number.
  • While applying for TAN the applicants are not required to submit any documents, they only have to submit an acknowledgment slip if they apply for a new TAN.

As we grow older Taxes become an essential part of our life, PAN card will become a core part of our identity, due to their lack of knowledge a lot of people get cheated in the beginning process of their tax filings. Here is a link to a taxation training course in Ahmedabad, that will save you on a rainy day.

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Professional Etiquettes For Tax Professionals

How you conduct yourself speaks volumes about you. The way you act and communicate…

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How you conduct yourself speaks volumes about you. The way you act and communicate with people around you becomes your hallmark, especially in professional settings. 

In a professional setting, you would come across a lot of people, including your seniors, your subordinates and your clientele. To leave a positive impression on them and to earn their trust and respect, you must abide by some unwritten codes of conduct. Simply put, professional etiquettes are what define you in a professional setting. 

Tax professionals to need to abide by a set of professional etiquettes, to succeed. You can consider taking the course on taxation training in Ahmedabad if you want expert advice on this matter.

Why Tax Professionals Must Act According To Professional Etiquettes
If you are an aspiring tax professional, you must understand a simple fact. While dealing with your clientele, you must win them over with your manners. Your courteous demeanour will help you forge good relationships with your clients.

Even your chances of being recommended to other potential clients would improve to a great extent. If you opt for a tax practitioner course in Ahmedabad, you will surely receive proper guidance about professional etiquettes that you must observe.

Etiquettes Which All Tax Professionals Must be Mindful of
Now that you know why tax professionals must be mindful of professional etiquettes, you must know what codes of conduct you must abide by. Let’s take a look at how you must conduct yourself while dealing with your clients, under different circumstances:

1. When You Are Having A Face-to-Face Interaction In Real Life

While having a face-to-face interaction with your clients in real life, you must act according to the following etiquettes:

  • Be polite and amiable when greeting them. 
  • Stand up when you are welcoming them. When you are introducing yourself to them or are being introduced, you must stand up.
  • Try not to avoid eye contact with your client when talking to them or negotiating with them. Staring at them for several minutes might indeed make them feel uncomfortable. But a complete avoidance of eye contact is not acceptable either. 
  • A little small talk can help your clients feel at ease with you. However, avoid asking them overly personal questions. For instance, you may enquire after their health but you must refrain from asking them about their relationship status.
  • Listen to your clients attentively. 
  • Your dress code forms a part of your professional etiquette. So, dress formally and professionally.
  • Be confident when discussing matters with your clients or filing tax returns. If you speak with an air of confidence, it will leave a lasting impression on the minds of your clients.

2. When You Are Having A Virtual Face-to-Face Interaction

Owing to the COVID-19 pandemic raging all over the world, face-to-face communication with clients had to be shifted to the digital and virtual platforms. 

So, when you are interacting with your clientele on Google Meet or Zoom, you must be mindful of a few more points in addition to the professional etiquettes as discussed above. The additional etiquettes or rather, netiquettes have been discussed in the following section:

  • It’s important to minimize distractions and noises in the background when you are having an online meeting with your clients. Choose a relatively noise-free area when you are attending the meeting. 
  • Make sure that you have a stable internet connection. You must make sure to ask your clients politely, about their internet connection as well. In case any problem arises in connection to this issue, you must apologize to your client and talk to them about making an alternative arrangement.
  • While listening to your client, you must mute yourself.
  • Even if you are having an online meeting, it’s important to abide by a formal dress code. If you appear presentable and professional, it will leave a good impression on the minds of your clients.

3. When You Are Talking To Clients Over Phone

Sometimes, you might have to connect with your clients over the phone. You must uphold your professionalism in this regard as well. Following are the professional etiquettes which you must keep in mind in this regard:

  • Refrain from calling your clients at ungodly hours, unless there is an exigency. Calling them after normal working hours, on weekends or national holidays may be perceived as unprofessional.
  • Once they receive your call, politely ask them if they can talk to you at that particular point of time. If they are unable to talk to you at that juncture, you may call them later as per their convenience.
  • Be direct and straightforward while discussing matters over a phone call. It’s always advisable to keep it short and sweet.
  • Try minimizing distractions and background noises too.

4. When You Need To Send E-mails To Your Clients

You must remember to act professionally while sending e-mails to your clients and responding to their queries. So, without further ado, let’s look at the professional etiquettes that you should observe when it comes to e-mail:

  • Always use salutations and proper greetings.
  • Avoid making grammatical errors, syntactical errors and other minor mistakes. It’s important to thoroughly proofread the emails which you would send to your clients.
  • Write concisely and crisply. 

All the points discussed in this section must be remembered by every budding tax professional and they might reap a lot of benefits if they take up a taxation course. A tax practitioner course in Ahmedabad might help them immensely.

Takeaways

All tax professionals in the making must be mindful of the fact that if somebody wants to be respected, they must respect others first. If you act by the codes of conduct, a lot of opportunities might come along your way. 

As Clarence Thomas puts it: “Good manners will open doors that the best education cannot.” That is why prospective tax professionals need to follow certain professional etiquettes. Do you want to discover more about it and gain some valuable first-hand experience concerning professionalism? In that case, you may consider taking up the best tax course in Ahmedabad without further delay.

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Fixed Asset Accounting

Accounting involves keeping and maintaining the record of a corporation’s financial transactions in a…

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Accounting involves keeping and maintaining the record of a corporation’s financial transactions in a given year. The annals are further used for analysis by the stakeholders, agencies, and tax collection bodies making accountants a crucial wedge in the company’s innards.

Of the concepts an accountant should be well-versed with, the ones of assets and liabilities are the most basal yet indispensable. Here we introduce you to the fundamentals of fixed assets and their accounting.

What Are Fixed Assets?

Fixed assets are the non-liquid physical possessions an organization holds to generate income over the long haul. They are also referred to as capital assets or property, plant, and equipment (PP&Es). 

Fixed assets are not to be done away with in the same accounting year. The list comprehensively includes land, vehicles, office spaces, computers and software licensing, buildings, etc.

The principal criterion for anything to identify as a fixed asset is that it should be held by the company for more than one accounting year. Also, they are tangible and intangible. Long-term bonds and securities don’t make it to the list.

An esoteric aspect of fixed assets is that their book values usually exceed the capitalization limit as set by the organization. However, a company must be careful while setting a cap limit. A too higher or lower value can have far-reaching impacts on its balance sheet.

How? That requires us to delve deeper into the topic. Here is a verified Accounting Certificate Course in Ahmedabad you can take.

Initial Asset Inclusion

It is done at the time of purchase of an asset. 

Now, before adding to its capital stock, a corporation makes the requisite assessments. It compares the total cost incurred on the asset with the gross amount of cash flow it leads to. If the deal seems profitable, it is sealed. 

The initial recordation incorporates the cost of the assets, their transportation and installation amount, testing and preparation fees, taxes, and other such expenditures. Meanwhile, administrative charges, general overhead costs, and expenses not directly enhancing its utility are not recorded here.

When an asset is purchased at its market value, we note its fair value. On the other hand, the interest amount has to be mentioned while documenting for an asset bought on credit. 

The case of an asset being exchanged for another one calls for recording the fair value of the new body. While if it is not possible to assess its cost, the price of the one given up is considered.

Depreciation of Assets

Assets start losing their productivity or we say, they get used up with time. We need to make allowances for this downturn. In accounting, depreciation is apportioning the cost of an asset over its useful life.

Of all the techniques to account for the depreciation of assets, the written down value method is extensively used. As it shows the fair value of the asset at every end of the year. In this method, depreciation is more in the initial year compares to subsequent years. Another method of depreciation is the straight-line method. Here, the accountants are required to subtract the salvage value of the asset from its cost. The resulting difference is then divided by the number of years the company intends to hold the asset for. The figure they arrive at is the yearly monthly depreciation of the asset. In this method, the Depreciation of asset is uniform during the life of the asset.

Companies can choose their modus operandi. However, as per the caveats of the IAS (International Accounting Standards), they are allowed to change it only once. To know more about the IAS and their impact in the field, you can go for this Accounting Course in Ahmedabad as recommended by our experts.

Disposal Of Assets

After a certain point, when assets cease to be profitable, they are to be exscinded. It is usually done when their useful lives come to an end. Sometimes, an unforeseen circumstance (for instance, unexpected obsolescence) forces the company to discard an asset. 

It is however not necessary to throw a valuable possession away when it can be liquidated. The company can exchange the asset for newer ones. Also, they may sell it off. A price higher than the then book value of the asset marks a profit and a lower one points towards a loss.

Whatever the case may be, the loss of a company’s asset shows on its balance sheet. Fresh investments need to be undertaken.

Asset Impairment

Impairment of an asset is where its current carrying value exceeds the gross profits it is estimated to bring in. It is usually the result of unexpected predicaments. 

In simpler words, asset impairment has to do with the chance that fixed capital may not be as economically viable as it is computed to be. Impairment leads to a radical slump in a business’ profits. Asset impairment on the balance sheet is associated with a corresponding loss in the income statement. 

Intangible holdings such as copyrights and trademarks stand higher chances to get impaired. However, under circumstances like unexpected obsolescence, natural calamities, adverse market fluctuations, judgment failures or may be due to some unaccountable reason, fixed assets may undergo the same fate. 

Accountants are supposed to be on the lookout for such incidents. They must warn the stakeholders and the decision-makers of the company’s state of affairs.

Disclosure Of Assets

A corporation does not want every confidential detail to be presented on its annual financial statements. However, certain norms formulated by the national and international bodies need to be followed. An organization has to make the following disclosures about its fixed assets.

  • The carrying value of the assets at the beginning and the end of each accounting year
  • The useful life of the assets
  • Rate of depreciation and the method used to calculate it
  • The effects of acquisitions, disposals, and net foreign exchange on the value of the assets
  • Impacts of revaluation 

To learn about other disclosures, go to the link for this certified Accounting Training in Ahmedabad and stake in your growing accounting expertise.

The Strict Don’ts

While accounting for fixed assets, you need to eliminate the three commonly made mistakes. 

  • Not considering expense costs transportation charges, taxes, and installation amount while recording the purchase of a new asset
  • Disregarding the alteration in the assets’ use while maintaining them
  • Ignoring record-keeping demands relating to insurance

 

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IL&FS Fiasco and Accounting Statements

Recently, the entire nation has been shocked to see that the institution of the…

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Recently, the entire nation has been shocked to see that the institution of the size, scale and reputation like IL&FS has defaulted on its interest obligations.

It is noteworthy that IL&FS was considered to be one of the most reputed borrowers in India and perceived to be a Government backed institution. We have to understand that what makes such a large institution fail. There may be many reasons, but in the context of this article let us look at the accounting statements only.

Following is a summarized consolidated financial statements highlights of IL&FS in recent past.

Accounting statement

Now we have to understand the items line by line. Because, at Super 20 Training Institute, our aim is to understand these items from a practical perspective. And you are aware that it is the best accounting institute in Ahmedabad. Many accounting institutes in Ahmedabad focus on teaching books. Rather S20 as an Accounting Training Institute has set a benchmark by focussing on such case study based practical approach in learning accounting, taxation, tally, GST etc.

It is apparent that the company was the anyways troubled one looking at the above numbers. The company was borrowing at a fast pace and this has resulted into the highest ever interest expenses being borne by the company. The company’s operating profits are decreasing on one side and on the other side the company’s interest expenses shot up drastically by 21%. The sole reason for this difference was that the company continued to borrow funds from the markets and mostly they were short-term borrowings. As you may be aware that in recent past the short-term interest rates are much higher compared to long-term interest rates. Company’s projects were mostly long-term in nature so they had to ideally raise funds from longer term papers. But the company did the contrary.

So, net if you see revenues of the firm were up by 9% in last one year. That looks quite rosy. Now if we look at the operating profits we have a doubt. Operating profits were down by -13%. That means something is seriously wrong. On rising revenues, the company had negative operating profits.

The company’s depreciation was also not in line with the expectations. It was up about 20%. There also somebody needs to dig deeper. And ultimately that has resulted into the company making cash losses as well as accounting losses. This is very alarming and fishy and only some drastic or magical steps can save this company that we can infer.

Friends, we will examine this case from a financial and accounting ratio analysis perspective in my next article. But as of now what we have understood is that the company was troubled operationally as well as financially. If you do not understand any of this topic discussed above you can approach team S20 for more clarity and understanding. You can also write to us at [email protected]. We provide people of any background a simple, effective and practical training in Accounting, Taxation, GST, Tally. You can know more about our courses at www.s20.in/courses