"It's not about how much money you earn; it's all about how much money you keep, how that earned money works for you, as well as how many generations you keep it for."
The biggest mistake that many of us make is to work hard for our entire life for money and not expect money to work for us in return. As the behemoth of all the investors, Mr. Warren Buffet says “If you have only one source of income, you will work until you die.” This statement makes more sense during covid period wherein those who have only one source of income (mainly salary) struggles to meet their livelihood, on the other hand, those who have multiple sources (consisting active as well as passive income) spent their lockdown in ease in comparison. Hence it is the need of the hour that each citizen of India should understand the importance of Financial Literacy and Financial Freedom right from their schools. Although its never too late to know these things, but earlier the better, so that one can reap the benefits of 8th wonder of the world i.e. Compounding. Hence in this blog, we will try to understand these things. We will start from meaning of Financial Literacy, Financial Freedom, the need of it, consequences if you don’t know about it etc. and then procced to the Types of Asset classes, Importance of Diversification etc. So let’s start now. WHAT IS FINANCIAL LITERACY? To be financially literate means having the capacity not to let money – or the shortage of it – get in the way of your ease as you work hard and build your dreams complete with a long and fulfilling retirement.
WHAT IS FINANCIAL FREEDOM? Financial freedom generally means that one has enough savings, investments, and money in hand to live the life one wants to live for himself and his family too, without relying on anyone. The best way to achieve financial freedom is by making the timely investment. As it has been rightly said, "THE EARLIER YOU START YOUR RETIREMENT PLANNING, GREATER IS THE POTENTIAL RATE OF RETURN ON YOUR INVESTMENT." WHY THERE IS A NEED FOR FINANCIAL AWARENESS? For each person, financial awareness is as vital as any other basics as it will help you manage all your hard-earned money effectively for your safe plus secure future. It helps to become self-sufficient and self-governing. The same shortage will lack a solid foundation for your actions and choices concerning savings and investments. A crucial indicator of people’s expertise to make financial decisions is their level of financial literacy. Financial literacy is not only the awareness and understanding of financial notions and risks but also the skills, motivation, and courage to apply such knowledge and understanding to make efficient decisions across a range of financial contexts, to improve the financial well-being of selves and society, furthermore to enable participation in economic life. Effective and efficient financial planning has become part and parcel to lead a peaceful life in today's constantly changing environment. EFFECTS OF FINANCIAL ILLITERACY
INVEST YOUR MONEY ON LONG TERM BASIS An investment made for the long term is the best way to maximise the growth potential of your savings. Long term investments provide more tax benefits on capital gains than short term investments. Furthermore, it also reduces the risk factor of market volatility. The best reason to invest for a long duration is the benefit of compounding. 50/30/20 RULE The basic 50/30/20 RULE is very manageable in real-life practice. As the rule suggests to diversify our income into three subsequent parts, 50% of our earnings should contribute toour needs and necessary expenses, 30% should satisfy our wants, and the remaining 20 % of our earnings should be kept for savings and investment purposes. Most of us spend most of our earnings and save a little bit. So, the 50/30/20 RULE helps us to limit overspending and contribute to healthy financial habits. SHOULD WE DIVERSIFY OUR SAVINGS? It is one of the most common questions that most of us think should we finance all our savings in one investment tool or diversify? So, diversification is the most simplistic way to boost your returns and reduce the asset price movement risk. It is one of the crucial components of reaching long term financial objectives while lowering risk. EXAMPLES OF SOME INVESTMENT OPTIONS AVAILABLE:
LET’S CONCLUDE- Financial literacy is a vital part of eliminating financial blunders for a robust, safe and secure future. So, don't consider savings as punishment; invest your money wisely and at the right time. Being financially literate will help you make better financial decisions and cause you less financial stress and anxiety. So, your stress-free future depends on the financial decision you make today; for that each of us needs to understand the essence of being financially literate. Source:https://www.manishanilgupta.com/blog-details/what-is-financial-freedom-have-you-ever-thought-of-achieving-this
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Blockchain is a topic that is the most popular among the crowd at the moment. It's a topic that is disruptive, accelerating and that may be your elevator pitch. Let's have a bird-eye view on this.
Imagine yourself as a bird flying high in the sky, and down you observes that the world is divided into blocks, blocks of massive information. But how can this information work for good if there is no common link between them? Here is the point when the word "Chain" comes into the picture. Blockchain is the most talked-about form of distributed ledger technology. It works on decentralized & distributed ledger technology that stores transactional records in blocks, and it is accessed by the participants globally over the network. Every time a transaction takes place, a block is formed, which further develops a chain. It creates an irrevocable record of transactions that could not be undone. Blockchain organizes a peer-to-peer network that provides participants with a platform to communicate among themselves over the web & increases confidence, security, transparency, and the traceability of data shared over a network and delivers cost savings with new efficiencies. Blockchain will gain you an edge as it is an open-source ledger; every transaction made is public, which leaves no room for fraud. The integrity is monitored by minors who have their eyes on all the transactions; hence it is more secure. It is responsible for keeping a record of all the transactions that cannot be revoked or manipulated. The user public can view transactions data at any point. This makes online transactions even more secure. Blockchain solutions can offer a speed of 100 to 10,000 transactions per second, hence saving your time. But to implement this technology, you need to take care of a few critical things, such as the application must be updated on both ends of the P2P network. If any end doesn't accept the amendments, technology will fail. If you plan to have business applications, then they must have some business logic behind them. This logic specifies how applications will perform within the sphere of business needs. By nature, blockchain uses more stringent logic that won't allow you to redesign without leading to the need for logical business changes to be acceptable to the blockchain solution. Now, blockchain is a complex set of protocols that require a big brain to solve Hyperledger, multichain, Corda, quorum theorems which one can't manage at the sole level; hence enrising the need to involve some third party help to add new features and expand the application without redeployment of the network. Types of Blockchains: Deciding which one is better for your business. The most basic function of this technology is to carry out transactions or exchange of information through a secure network. But the way people use blockchain varies from case to case. For instance, if we talk about Stock Market/Crypto, the reason blockchain got hyped into the scenario. Shares are digital holding certificates that get traded through blockchain technology. It is a type of blockchain in the nature of a public network giving the right to people from all over the world to become a node, verify other nodes and trade shares. On the other hand, let us take an example of a bank using a private blockchain network. It is a restricted network where only concerned persons/employees of the bank can access confidential information. Thus, anyone out of this closed network can not gain access to the bank database. A private network is more bound to have only authorized nodes that a network admin must initially monitor. The information transmission through a private blockchain remains within the network. Any new node that wishes to become a part of a private network needs permission from the network admin. The bank decides the scale of their private blockchain for all their branches in a country. Another famous type of blockchain that exists is Hybrid Blockchain. Some information can be circulated in a private blockchain network, and some parts can be mutually agreed to flow in a public blockchain network. The hybrid blockchain is so flexible that users can quickly join a private blockchain with multiple public blockchains. A transaction in a private part of a hybrid blockchain is usually authenticated within that network. But users can also shoot it in the public blockchain to get verified. The public blockchains increase the hashing and involve more nodes for verification, which enhances the security and transparency of the blockchain network. Worry not with Blockchain Technology
To sum up, the blockchain is a peer-to-peer framework that offers the potential to transform current business processes by disintermediating central processes, thus improving efficiencies and creating an immutable trail of transactions. This provides the opportunity to reduce costs, interaction times and improve transparency for all the users. This transformational framework could change the way financial institutions conduct business as many transactions are peer to peer in nature. While the benefits are in front, there are many risks that may be imposed by this nascent technology. Understanding of blockchain technology and its associated risks may evolve as this technology endures to mature. It’s therefore imperative for all organizations to continuously monitor for the scope of development in this technology and its application to various cases. Blockchain technology contains the potential to reengineer business models from a human-oriented model to an algorithm oriented model, which might expose businesses to risks that they have not encountered before. In order to react to such risks, businesses should consider establishing a robust risk management strategy, governance, and controls framework. Future Of Blockchain Blockchain is already picking up the pace, here are examples of successful blockchain projects: Helium is a decentralized wireless infrastructure. The network allows everyone worldwide to connect to the infrastructure wirelessly without having any expensive data plan. By using their plug-and-play hotspots, anyone from anywhere can join the Helium network. Forward Protocol is a decentralized knowledge protocol that emancipates education by rewarding the users with the “earn well, learn well” model. It incentives students for completing a course and provide royalties to teachers when their students finish a project. The protocol aims to link job seekers with the vacancies such as Monster, Upwork, and Fiverr. Theta TV is a decentralized video streaming network that allows us to watch content, earn virtual currency and give total administration to the content maker. Many YouTubers are also publishing videos on Theta since they can get 100% of the profit generated. Future of Blockchain in Accounting In the long run, Blockchain proves to be a disruptive technology for accounting like digital photography disrupted the conventional film photography, pagers & land-line phones were utterly disrupted by mobile phones. Blockchain is a multi-faced technology that also plays the role of accounting technology, which helps with the transfer of ownership of assets and maintaining a ledger with accurate financial figures. Implementation of blockchain assists in increasing the potential of the accounting profession by reducing the cost of maintaining and reconciling ledgers. This strength may be a threat to accountants as automation in reconciliations cut the work of accountants. But, Blockchain empowers the accountants that assets exist with proven authenticity. We have always come across double-entry bookkeeping when talking about accounting, but Blockchain works on triple entry bookkeeping. Now it will be, with Blockchain, each transaction will be recorded by the third party/all blocks, and the third party/block verifies each transaction (Cryptographically), and a receipt will be issued. What will be the outcome of the same? Every transaction will be simultaneously recorded in the books of a third party to be verified by the Blockchain. As the transactions are entered in three places, and hence called as Triple entry system. How will it change the attitude of Accountants towards the work? Well, Blockchain proves to be disruptive, but when coming to betterment, it has its gain over in the following manner: Accountants are experts in recording, bookkeeping,application of taxation and related rules, with theBlockchain Technology; they get opportunities to becomeBlockchain advisors and can join the blockchain network. Accountants can spend less time on identifying errorsand mistakes and reconciliation work; instead, they canconcentrate on areas like technical knowhow, advisory and related activities. To conclude, while the landscape for Blockchain technology is still in its infancy, its potential is transformational. Blockchain protocol offers the greatest opportunities for change in various accounting mechanisms and creates a new platform to reshapethe world of business and transform the accounting and auditing profession. Its potential disruption in theaccounting industry cannot be overlooked. Various past developments, such as the emergence of computers, ERPsystems, and cloud computing, have just changed theauditors’ work instead of making them irrelevant. Auditorswill need to develop a more data-centric approach anduse it with a forward rather than historical perspective.In this way, the auditors will be able to provide a veryhigher-valued service. Firms adopting new technologies pretty earlythat account for these potential disruptions will be better off in the long run. Authored by Himanshu Sharma & assisted by Simar DS For any queries or suggestions, reach at [email protected] Source: https://www.manishanilgupta.com/blog-details/blockchain-beyond-cryptocurrency Rental Income - Income Under the Head ‘House Property’ or ‘Business Income’, Where to Disclose?11/21/2021 Treatment of income from renting immovable properties for the purpose of calculating taxes has been a common point of dispute between the Income Tax department and the taxpayers. Rental income of property has different connotations depending on whether it is treated as house property or business income. Accordingly, such income may broadly fall under the following two heads of income in the Income Tax Act –
In case the property income is declared as income from house property, then according to section 24 of the Income Tax Act, 1961, a maximum tax deduction of 30% of Net Annual Value may be claimed. This deduction is towards the repair and maintenance of the property. Besides standard deduction, only municipal taxes and interest paid on capital borrowed for the purposes of acquisition, construction, reconstruction, repair, etc. (subject to limitations provided under the Act) are allowed as a deduction against the rental income. This deduction is irrespective of the actual expenses incurred by the owner. It limits the overall tax benefits available to the assessee. On the other hand, if taxed as income from business, any expense incurred wholly and exclusively for the business of renting shall be permitted as a deduction for tax determination. As there are no constraints on deductions under the head PGBP, assessees prefer classifying rental income received from the lease of immovable property as income from business, which will, in turn, mean revenue loss for the government. Therefore, the Income Tax department scrutinizes every such case to dissuade taxpayers from claiming it as business income. The stand taken by the department in such cases is based on the judgement in the case of East India Housing and Land Development Trust Ltd vs CIT wherein the Hon’ble Supreme Court held that specific provisions prevail over general provisions and hence the income derived by the company from shops and stalls is income received from property and falls under the specific head ‘Income from House Property’ only as it is received by the company formed with the object of developing and setting up markets. Hence, the department believes that when there is a particular head for property income, i.e., ‘Income from House Property’ under the Act, then the income earned from renting of immovable property should be charged under such head only. This is the point of dispute between taxpayers and the department on the taxability of rental income earned from leasing the immovable property. However, over time and after many judicial pronouncements, certain fundamental principles have emerged as cornerstones for characterizing rental income under the head PGBP. Prominent principles to classify Rental Income as Business Income –
To have a better understanding of the principles as mentioned above, let’s have a look at some of the related case judgements – Chennai Properties and Investment Ltd. vs Commissioner of Income Tax, (2015) In this case, the assessee company was incorporated with the primary objective, as mentioned in the Memorandum of Association, to procure the properties in the city and let out those properties. The Hon’ble Supreme Court held that since holding the properties and earning income by letting them out is the main objective of the company, as stated in the Memorandum of Association, the income so derived is in the nature of business income and shall be disclosed under the head ‘Income from Business or Profession’ and not under ‘Income from House Property’. Rayala Corporation (P.) Limited vs ACIT, (2016) In this case, the assessee company was in the business of renting its properties and was receiving rent as its business income. The assessee company claimed that the said income should be taxed under the head ‘Profits and Gains from Business or Profession’ and not under ‘Income from House Property’. In the appeal filed before the High Court, the revenue department argued that leasing and letting out of shops and properties was not the main business of the assessee-company as per the Memorandum of Association and, therefore, the income earned by the assessee-company should be treated as income earned from house property. However, the Apex court held that the assessee company has only one business: leasing its property and earning rental income. Therefore, the income so derived should be treated as its business income. Raj Dadarkar & Associates vs ACIT, (2017) In the above-mentioned case, the Hon’ble Supreme Court held that apart from relying on the object clause, the assessee would be required to provide or refer any other material to prove the conduct of activities according to its constitution documents. Based on the material provided by the taxpayer, it was held that the assessee was not able to establish that he was engaged in any systematic or organized activity of rendering services to the occupiers of the shops to consider receipts from them as income from the business. Sultan Brothers (P) Ltd. vs Commissioner of Income Tax, (1964) In this case, the Appellant had let out the building fully equipped and furnished for a period of six years for running a hotel and for other ancillary purposes. The Apex court observed that whether a particular letting is business has to be determined as per the circumstances of every case. Further, it was observed that “every case has to be looked at from the point of view of a businessman to find out whether the renting out was the doing of a business or the utilization of his property by an owner”. Accordingly, in the facts of the above case, the Supreme Court held the income to be in the nature of business income. Karanpura Development Co. Ltd. vs Commissioner of Income Tax, (1961) The facts before the Supreme Court, in this case, were that the income had been received pursuant to the leasing of coal mining rights. The assessee company was incorporated with the object of acquiring and disposing of the underground coal mining rights in specific coal fields. It had limited its activities to procuring coal mining leases over large areas, developing them as coalfields and then sub-leasing them to collieries and other companies. The taxpayer had shown the income as business income. The Supreme Court observed that the objective and the manner of its activities and the nature of its dealings with its properties need to be taken into account. Accordingly, it had held the income to be in the nature of business income for the above case and not as house property income. Interpretation Hence, the trend of judicial pronouncements and directions issued by the Central Board of Direct Taxes (CBDT) show that the authorities are now accepting that owning a property and renting it out may also be done as part of a business, besides as a mere owner of the property. The Hon’ble Supreme Court, in several cases, held that the deciding element is not the ownership of the property but the nature of the activity of the assessee and the nature of the operations concerning the same. Further, it has emphasized that for income to be characterized as business income, the activities actually carried out by the assessee need to be in line with its primary object, according to its constitution documents. As seen above, in the case of Raj Dadarkar & Associates vs ACIT, Supreme Court held that apart from depending on the object clause, the assessee would be required to provide or refer any other material to show that the conduct of activities is as per its constitution documents. Therefore, reduced litigation is expected on this issue if taxpayers are able to provide factual material to prove that their activities are in the nature of their business and according to their constitution documents. Moreover, the CBDT released circular no. 16/2017 on 25th April 2017, wherein it has been clarified that the income from renting out of premises/developed space with other facilities in an industrial park/ Special Economic Zone is to be leviable to tax under the head PGBP and has instructed the revenue department to not file any appeals on this matter and to withdraw/not press upon appeals already filed. Another point worth noting here is that residential and commercial properties are treated in the same way from a tax perspective. The deciding factor is the main line of business of the owner, irrespective of the fact that whether the property is residential or commercial. If the individual is in the business of letting out property, then the rental income, even from the residential property, will be accounted for as a business income. Conclusion
Disclaimer-The information given above is to provide a general guidance to the readers. This information should not be sought as a substitute for legal opinion. Source:https://www.manishanilgupta.com/blog-details/rental-income-income-under-the-head-house-property-or-business-income-where-to-disclose Covid-19 was a challenging phase for the entire economy. But at the same time, it proved to be a boon for the e-commerce industry. The pandemic has forced consumers to switch from shops, supermarkets, and shopping malls to online portals to purchase products, ranging from essential commodities to branded goods.
Before we jump on to the central aspect of this article, let us first revise the definition of e-commerce. E-Commerce means a business model that allows companies and individuals to buy and sell goods and services over the internet. The e-commerce transactions can be of different types such as business to business (B2B) (Eg. Alibaba), Business to Consumer (B2C) (Eg. Walmart) and Consumer to Consumer (C2C) (Eg. eBay). Hence, e-commerce does not require any brick-and-mortar buildings to sell goods or services, which is why this was the only option left for people during the pandemic. The pandemic brought about a notable shift in shopping behaviour, with more and more customers and businesses relying on e-commerce. The necessity for social distancing and prioritising safety throughout the pandemic led to millions of people adapting to e-commerce platforms. Statistics
Consequences of Increased Reliance on E-commerce Opportunities for consumers E-commerce, driven by digitisation and internet penetration in the rural market, creates enormous options for consumers. Competitive prices, deals, and efficient delivery, along with the convenience of avoiding long queues, have entirely altered the buying experience. Moment for Start-ups The continuous change in the buying patterns of Indian consumers led to the growth of start-ups in the e-commerce market. Online retailers have maintained and grown their base of online consumers by granting options for payment on delivery and return policies with attractive deals and discounts. Increased Competitiveness E-commerce in India is booming because of increased access to the internet. This generates diverse business opportunities that will encourage organisations to become more up-to-date and enable increased competitiveness. Government Initiatives to Promote E-commerce Many initiatives/schemes have been announced by the Government of India, namely Digital India, Make in India, Start-up India, Skill India, etc., to promote e-commerce. The proper implementation of such programs will likely support the growth of e-commerce in the nation. Some of such initiatives taken by the government to support e-commerce in India are as follows – National Retail Policy The government had recognised five areas in its national retail policy: ease of doing business, rationalisation of the licensing process, digitisation of retail, focus on reforms, and an open network for digital commerce, stating that offline retail and e-commerce need to be administered integrally. MoU for cashless and transparent payment Government e-Marketplace signed a Memorandum of Understanding with the Union Bank of India to facilitate a cashless, paperless, transparent payment system for various services in October 2019. Digital India Movement Under the Digital India movement, the Government of India launched various initiatives like Umang, Start-up India Portal, Bharat Interface for Money (BHIM), etc., to boost digitisation. Hike in Limit of FDI To enhance the participation of foreign businesses in E-commerce, the Indian government hiked the limit of FDI in the E-commerce marketplace model to up to 100% (in B2B models). Imposition of tax on foreign e-commerce operators In October 2020, the government amended the equalisation levy rules of 2016 and mandated foreign companies running e-commerce platforms in India to have permanent account numbers (PAN). It levied a 2% tax in the Financial Year 2021 budget on the sale of goods or delivery of services by a non-resident e-commerce operator. Strategies for the E-commerce Boom in India E-commerce in India has undergone rapid growth driven by the Covid-19 outbreak. However, there are some factors that form the base for the expansion of e-commerce. Some of such elements are as follows– Ease of access Growing internet usage at affordable rates and the rise of smartphones lead to easier access to e-commerce. This connectivity enables services like booking train/hotel/cab/movie tickets, mobile and electric bill payments, placing online orders, etc. Logistics Logistics is one of the significant challenges confronting e-commerce players. Local logistics firms in India are usually not up to satisfying the requirements of e-tailers; hence e-commerce firms have to make substantial investments to build their own logistics. Infrastructure E-commerce players also need to upgrade the infrastructure to overcome payment difficulties, create offline presence, execute more push-marketing, manage price-sensitive consumers, and compete globally. Competitive Analysis E-commerce companies have to focus on matters pertaining to rapid additions of customer segments and product portfolios. Information should be gathered related to market intelligence on growth, size and share, and managing multiple customer engagement platforms to expand into new geographies, brands & products; while simultaneously controlling a very competitive pricing environment. Mode of Transactions Concerns about security, privacy, and tracking fraudulent purchases are some outside forces that affect a business. Other factors like back-end service tax, cross-border tax, and regulatory issues can have severe implications for e-commerce companies. Other concerns e-commerce businesses must address include the incompetence of the organisational structure to keep pace with the speedy changes, cybersecurity for curbing fraudulent transactions and insider threats, tax restructuring, and legal compliance. The expansion in the number of people buying online suggests that e-commerce companies should concentrate on customer experience and technological advancements to accelerate growth. Apart from this, to provide a range of goods & services and extend reach, companies should ensure faster speed for their websites and devise easier-to-use mobile apps to improve user experience. Summary: E-commerce is a combination of convenient shopping, competitive pricing, discounts, flexible and speedy purchasing, etc. The E-commerce industry has been directly influencing micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training. The Indian e-commerce sector has been on track with upward growth. It is anticipated to surpass the US to become the second-largest E-commerce market in the world by 2034. Technology-enabled innovations like digital payments, hyper-local logistics, analytics-driven customer engagement and online advertisements will apparently promote growth in the sector. The expansion of the e-commerce industry will also raise employment, increase revenues from export, raise tax collection by ex-chequers, and render better products and services to customers in the long term. A richer user experience will substitute traditional foundations based on price and quality through guidance on selecting the right product, personalisation, etc. The growth of online retailers in India is making brick-and-mortar stores revamp their operations across regions. Looking at the customers' preference in the new normal, it can be inferred that e-commerce has now come to stay, well beyond Covid-19. Disclaimer-The information given in this article is for general guidance to the readers. This information should not be sought as a substitute for legal opinion. Source:https://www.manishanilgupta.com/blog-details/covid-19--a-turning-point-for-e-commerce-industry As per the present statistics, there are over 1.3 million accountants only in the US, and with the growing pace of the businesses in India, people need the assistance of professional accountants to take care of the important aspects of their company. It does not matter, whether you are an entrepreneur or an established businessman, you need a professional accounting service to do the needful tasks such as trademark registration in Delhi and other such essential odd accounting jobs.
In this article, you will know about some of the services that you get on hiring the professional accounting firms for your business in India. Bookkeeping The business owners fail miserably to keep track of the business whereabouts and especially bookkeeping. Most of the business owners are also unaware of this aspect. Do not worry as professional accounting services in West Delhi can help in explaining to you about bookkeeping and can also offer you an accountant to do the needful. Under bookkeeping, the accountant will keep track of business accounts, cashbooks, transactions, ledgers and all the expenses of the business. Business asset management Coming together to the business asset management, they help you in managing your business assets and channel them adequately to give productive outcomes to your business. They will also help you compile all the business reports to find the loopholes and negative aspects to correct them for better management. Taxation Processes Along with the management tasks, the professional accountants will also handle all the taxation jobs for your businesses. They will handle the ROC filing services in Delhi, Income tax filing and all other works associated with it. It might be difficult for the business owners to keep a track about all the taxation details and end up paying the extra amount to the authorities. A professional accountant can help you come up with better ideology and taxation schemes to save you the right amount of money in the long run. These are a few of the services that you get on hiring a professional accountant for your service. There are many other services that one gets on hiring the professional accounting firms in Delhi. Manish Anil Gupta & Co. is one of the top companies in Delhi and has a team of professional accountants to deal with all types of business management jobs. If you want an affordable but efficient accounting service, then contact them today to know more and get a free price quote. Source:https://manishanilgupta.blogspot.com/2021/11/hiring-professional-accountant-for-your.html Which one suits you the most?
Brainstorming the idea for a business is a difficult task but deciding the appropriate form of organisation to shape your business idea is just next in the row. Choosing the right form and structure of organisation for a business is crucial as it has long term implications. It requires careful, thorough thinking and analysis to determine the number and nature of future obligations and compliances. Factors like owner's liability, taxation, control, applicable laws, compliances, life span etc., should be collectively considered to make a sound judgment. To help you analyse and decide better, in this text, we have tried to cover the various forms of organisation and their suitability that one can opt for his business. SOLE-PROPRIETORSHIP FIRM To start with, let's discuss the simplest form of business which is the sole proprietorship firm. If you desire to start and operate your business single-handedly, this form is the best for you. It is the most suitable when one is looking for an organisation that allows and offers-
Less fit due to the following reasons-
In India, its registration is not mandatory, but it is advisable to get it done to avail of all the benefits given by the government. Some acts like the Shops and Commercial Establishments Act, Micro, Small and Medium Enterprises Development Act, 2006, Intellectual Property laws may require a sole proprietorship firm to get registered. All in all, a sole proprietorship firm is best for those who desire to start a small business with the full authority of their own and lesser compliances and tax liabilities. Businesses that provide only personal services, like retail shops, tailoring services, professional services, etc., should opt for this. PARTNERSHIP FIRMS Next on the list is a Partnership Firm which the Indian Partnership Act, 1932 govern. To overcome all the constraints faced in the sole proprietorship firm, one can opt for this type of business form. Partners can pool their resources together and overcome the problem of capital. One demerit it has is related to the taxation aspect. It is taxed at a flat rate of 30% and cannot benefit from the slab rates like individuals and HUF. Also, there is a limit of a maximum of 100 partners (as per the Companies Act, 2013 in a partnership firm. But the Central Government has prescribed maximum number of partners in a firm to be 50 by the rules issued in 2014 limiting the number of partners to 50 only, which can become a constraint if a point comes where the partnership requires more funds and the partners don't have it. This can limit its expansion. One more limitation is that the liability of the partners is unlimited. Its formation is very simple as it is created with merely drafting a partnership deed among the partners, and its registration is not compulsory but yet advisable. A registered partnership, of course, has the edge over an unregistered one as it cannot sue any third party for the enforcement of any right arising from the contract. This form is suitable for starting a business on a small scale where few agreements and debts are entered into. LLP (LIMITED LIABILITY PARTNERSHIP) If you are confused to choose one between a company and a partnership firm, choose an LLP. LLP is a very convenient form of business to start with as it offers the benefits of both a partnership firm and a company. Unlike a general partnership firm, the partners can be unlimited in number and have limited liability. Compared to a company, it has lower compliance costs. Its structure is less complicated, and MCA also gives relaxation to it from time to time. An LLP requires to get its account audited only if the partner's contribution exceeds Rs 25 Lakhs or the turnover exceeds Rs 40 Lakhs. Partners have the flexibility to decide the terms and conditions governing their partnership as per their choice. Only two partners are enough to start an LLP with the condition of at least one partner being a resident in India. As we say, everything has its pros and cons; LLPs also have some downsides related to compliances. LLPs are regularly required to submit some forms and comply with the governing laws, and if it fails to do so, heavy penalties get attracted. In India, people often ignore the compliances, so an LLP is not an attractive option for a compliance ignorant person. And it is not easy for a non-compliant LLP to wind up. For winding up an LLP, it is necessary to become fully compliant first by filing annual returns and statements of accounts with the registrar. HINDU UNDIVIDED FAMILY BUSINESS This form of business organisation can only be found in India. It is created by the operation of law and has no separate act to rule it. Provisions of the Hindu Law governs it. A vast difference between a HUF and others is that a person becomes a member of the HUF only by birth or by marrying a male member of the family. There is no requirement for any consent or agreement by the members to admit a member to the HUF. The person who manages all the works and leads the HUF is called KARTA of the HUF. He has the final say in all the decisions taken by the HUF and has unlimited liability. The liability of all the other members is limited to the extent of their shares. A minor can also be admitted as a member of it. If the members want to dissolve the HUF, it can only be done with every member's consent. This form is suitable for those with a joint family with a business the members run jointly with mutual compatibility and affection. The taxability of a HUF is the same as an individual, so it enjoys the benefits of slab rates that an individual does. A deed is entered into and registered by the members; after that, the HUF can obtain a PAN and open a bank account in its name. COMPANIES Forming a company is the most appropriate choice to start a business on a massive scale with many investors to invest in. Unlike partnership firms, a company can have an unlimited number of members (public companies). A company has many advantages and peculiarities like better market reach, limited liability, etc., but the number of compliances is beyond number compared to others. There are various types of companies that one can start, but each has different features that help us choose. Here, we have briefly talked about the three most common types and their peculiarities.
In India, this company emerged as a new type of company with the Companies Act, 2013. Small entrepreneurs can start their business in the style of a company without complying with n number of compliances. An OPC is a company incorporated by only one member. But it is mandatory to appoint a nominee for the member so that in case if the member becomes incompetent in any way, then the nominee takes the place of the member. Only an Indian citizen who is a natural person and a resident in India can be the member or the nominee of an OPC. A question that often arises is that why a person should choose OPC over sole proprietorship? The answer to this question is related to the liability aspect in both forms. A sole proprietor's liability is unlimited, whereas, in the case of a member of OPC, the member's liability is limited. An OPC is a very beneficial revolution for the small entrepreneurs as the benefits a company gets; an OPC receives almost all of them. It is very privileged because it has very few compliances. To know a few, here is a list-
From the above, we can conclude that no form is perfect for every type of business. When weighing the pros and cons of the form of entity and selecting the best, it must be kept in mind that these factors do not exist in isolation and have to be taken into account collectively as they are interdependent. Source:https://www.manishanilgupta.com/blog-details/thinking-of-starting-a-new-business Hiring a chartered account is an efficient decision to give a financial direction to your small business. Most of the new businesses are operating on a limited budget, and one needs to cut additional business costs in order to invest it somewhere more productive. Therefore, hiring professional CA in Janakpuri can help your business thrive by helping you handle your business finances on a great scale. For your records, for a country of 125 crore population, 3 lakh CAs serve as financial guides for around 6.8 crore taxpayers as per 2017-18. Currently, India has 2.82 lakh CAs.
In this article, you will know some of the similar ways by which a professional Chartered accountant contributes to helping small businesses grow. 1. Process of starting up a business While a business start-up, there are many aspects that require financial advices especially when you are making the core business plan. They will also help you plan on your investments for buying the right kind of software or tools for running the business. Before starting up a business, you need to create a bank account for the same, and a professional CA in Janakpuri can help you complete the procedures for the same. 2. Regular Business Operation planning The accounting system needs constant management practices when it is on the production track. The professional accountants will help you make your financial statements to help you derive the business investments and earnings. The chartered accountant will also look at the payment processes along with the payroll system for your employees. Not only that, but they will also help you make your financial reports. 3. Business Growth process contribution While the growing phase of the business, the chartered accountant provides the ultimate advice to manage the work processes of the organization to help you emphasize on the growth areas. With their help, the cash flow, business financing, inventory management, and other aspects can be managed and improvised to contribute to further growth of the company. These are the three most important ways in which the professional chartered accountants extend their helping hands to the small businesses to grow to immense heights in all steps. Manish Anil Gupta & Co. is one such top firm of Delhi with a team of professional chartered accountants who are experienced and skilled in handling all your new and existing business needs. Source:https://manishanilgupta.blogspot.com/2021/10/chartered-accountant-can-help-small.html Goods and Services Tax or GST is the greatest tax reform of India. As per the statistics are concerned, the GST implementation was expected to give about 9% growth to the Indian Economy. The businesses and all the other commoners had to pay this tax to the government, which was collective one-time taxation for all schemes.
The businesses found it tough to handle the load of Income-tax return filing in Delhi and now another taxation filing burden. Therefore, the professional Audit firms in Delhi are now introducing GST consultants, CA, and CMA assistance to help the businesses file their taxes easily without hassle. Here, you will know about some of the related information about hiring GST consultants for filing the taxes of the business. Role of the GST consultant By hiring a professional audit firm, you will be assigned a GST consultant in Delhi who will be capable of handling all the roles that are designated for him/her. Here are some of the roles that are handled by the GST Consultants:
These are few of the roles that every GST consultant who is either a CA or CMA can handle for your business. Why is it essential to hire a GST consultant? Hiring a GST consultant from any of the top audit firm in Delhi is quite essential to support the business in the growing phase. By having assistance for financial aspects, you will eventually save a lot of money in the long run. Here are some of the benefits of hiring a professional firm for getting GST taxation filing services:
These are a few of the essential details that you must know about while hiring a GST consultant. If you are looking for a renowned company offering such service, then you can refer to Manish Anil Gupta & Co. for immediate services at affordable pricing. Source:https://manishanilgupta.blogspot.com/2021/10/importance-of-hiring-gst-consultant-for.html As per the requirement of the Income Tax Act, 1961, all the individuals who qualify the basic exemption limit applicable to them have to file their Income Tax Returns mandatorily. Nevertheless, they can file it voluntarily also as there are many benefits attached to the same. However, since the Income Tax law is as vast as an ocean, it is common for an ordinary taxpayer to commit certain errors while filing his Return of Income. Let's walk through the following article to understand some of the general mistakes made by individual taxpayers while filing their returns -
Selecting the Wrong ITR-Form A basic mistake that taxpayers usually make while filing the ITR is choosing the wrong ITR form. Filing an Income Tax Return using the wrong form is considered “defective” under the tax laws, and it can lead to the return not getting processed by the Income Tax department. That is why it is essential to have a thorough knowledge of the applicable income tax forms. The choice of the ITR form is based on the type of income earned by the taxpayer or the category to which the taxpayer belongs. Quoting the Incorrect Assessment Year While filing the returns, it is essential to mention the relevant Assessment Year accurately. It is normal for taxpayers to confuse the Financial Year with the Assessment Year. It must be noted that Assessment Year is the year following the Financial Year. For example, for FY 2020-21, the correct corresponding AY is 2021-22. Quoting the wrong Assessment Year increases the possibilities of double taxation and attracts unnecessary penalties. Furnishing Incorrect Bank Account details Since the Income Tax department credits the Income Tax refund in the bank account directly, it is pertinent for a taxpayer to make sure that the details of the bank account selected for the Income Tax refund credit are accurate. In the situation of the taxpayer having provided the wrong information about his bank account chosen for refund, the credit will get blocked. Providing Wrong Personal Information Personal details such as name, mail id, contact number, address, date of birth, etc. must be correctly declared in the Income Tax Return by the assessee. He must be extra careful with his email ID and mobile number and make sure that these details provided to the department are updated ones because, in this era of digitization, the department communicates with the assessees and sends them notices and orders, if any, on their registered email ID and mobile number only. Not Cross-checking TDS with Form 26AS Another error usually made by a taxpayer is not verifying Form 26AS before filing his return of income. Form 26AS includes all the details related to a taxpayer's income, Tax Deducted at Source (TDS), advance tax paid, self-assessment tax, etc. A salaried individual must cross verify the details with Form 16 issued by his employer with Form 26AS. If the TDS showing in Form 16 of an employee is not reflected in his Form 26AS, he will not get a credit for tax deductions that are not specified in Form 26AS. The taxpayer must ensure that the information in Form 26AS is accurate to claim appropriate credit of the tax deducted at source. Inconsistencies between a person's Form 26AS and Form 16 or TDS certificates may result in getting a lesser refund. Not Revising the ITR after Spotting the Erroneous Return After filing the Income Tax Return, if the taxpayer discovers any error, he must rectify his mistake and file the revised return. A return can be revised up to 31st December following the relevant Financial Year. The Income Tax Department can serve a notice under the relevant provisions of the Income Tax Act if any inconsistencies are detected in the ITR. Hence, it is imperative to revise the original return if any mistakes are spotted therein to comply with all the provisions of the Act and disclose all the information accurately. Failure to E-verify the Return or Dispatch ITR V on Time Once the Income Tax Return is filed successfully, it must either be e-verified via net banking, Aadhaar OTP, EVC on the Income Tax website or through DSC, or the ITR V must be verified physically by the assessee through self-attestation, and it should be sent to CPC via ordinary or speed post only. The time limit for ITR verification is 120 days from the date of e-filing of the return. It is necessary to verify the return because the IT department starts processing it only after it is verified. Not Paying Self-Assessment Tax Another common mistake committed by a taxpayer is filing the Income Tax Return without paying the computed self-assessment tax. The tax amount must be paid at the time of filing the ITR to avoid getting the filed return being declared as a defective return and getting any notice from the Income Tax department. Not Filing Return if Tax has been Deducted at Source Many assessees think that if the tax has already been deducted at source on their income, they are not supposed to file their return. However, this is not true. No matter if the tax has been deducted from his income or not, it is mandatory for every assessee to file an Income Tax Return if his annual income exceeds the basic exemption limit applicable to him. Also, the ITR must be filed to claim credit for TDS, if any. Reporting Income Net of TDS Many a time, the assessee enters the income on the receipt basis, i.e., net of tax deducted at source in the column of a particular income in the ITR. It must be remembered that the TDS amount has to be added to the net income received by the assessee, and the gross amount has to be disclosed in the ITR. Non-reporting of Exempt Income Many persons have a common misconception that the income exempt from tax such as PPF interest, maturity proceeds of insurance policies, agricultural income, etc. is not required to be disclosed in the Income Tax Return. In fact, since the income from all the sources of an individual is supposed to be disclosed in the ITR, such exempt income must also be reported and mentioned in a separate annexure of the ITR. Not Reporting Income from the Previous Job In cases where assessees switch jobs in a financial year, they often skip disclosing income from their previous job while filing the ITR. Having worked with more than one employer in a particular year, the assessee ends up having different Form 16s from each employer at the time of filing his return. In such cases, the taxpayers have to aggregate their income from all the employers during the relevant financial year and report such amount under the head 'Income from Salary' in the ITR. Not Reporting Income from Investments The assessees often forget to report the income derived from the sale of investments such as long-term capital gain on sale of shares, short-term capital gain on sale of property, gain/loss arisen on sale of stocks, etc. Whether the gain arising on the sale of such assets would be long-term or short-term would depend upon their period of holding in the hands of the assessee, and accordingly, their tax treatment will vary. However, in any case, the assessee must make it a point to disclose all the income earned from such investments in the ITR. Conclusion: It is crucial to file the Income Tax Return correctly. Although there are a lot of aspects that need to be taken care of while filing the return of income, but it is not difficult to do so. All that is required is reading the instructions carefully and patiently filling in all the required details step by step. Authored by CA Manish Gupta & assisted by Kriti Agrawal For any queries or suggestions, reach at [email protected] Disclaimer-The information given above by the author is to provide a general guidance to the readers. This information should not be sought as a substitute for legal opinion. Source:https://www.manishanilgupta.com/blog-details/common-mistakes-to-be-avoided-while-filing-itr Registering a company is the first step while you plan on starting up something of your won. It is a very big step as you need to go through a lot of procedures to produce adequate documents to come up to a point. Therefore, you should seek professional help to get your company registered without putting many hassles upon your mind.
In this article, you will know about some of the things that will explain to you the need of hiring professionals for Company registration in Delhi Taxation controls will be handled by the consultants The agents who will handle your company or NGO registration in Delhi will actually be a CA, CMA or GST consultant. Therefore, they have all the expertise in deriving and executing all the taxation processes. If you plan on handling it all by yourself, you will most likely make errors that will lead you to go for multiple processes that would create hassles for you. Therefore, it is better if you take professional help from either a GST consultant in Delhi or CA to help you in your taxation job for registering a company. Avoid conflicts between the founders and co-founders With the help of a professional consultant, you can sit and discuss the ownership shares that founder and co-founder must possess. It will eventually define their control over the company. There might be conflicts if you try and deal it yourself. But a consultant can guide you with the right advice after listening to either contribution towards the business idea and help you come to a conclusion. Believe it or not, but a professional accountant or consultant can help you with better advices. Better brand awareness and legitimacy With the professional guidance towards company registration, you will also have a brand value attached to it. The top accounting firms who offer assistance in company registration usually acts as a kind of promotion for your new business. Therefore, if you are planning on starting a company, then hiring the CA, CMA, or GST consultants in Delhi from the top accounting firms is a better decision. Manish Anil Gupta & Co. is a top name in Delhi that provided accounting services to the new and old business owners. Not only that but they are also big names to help the entrepreneurs register their company without many hassles. Get in touch with them today to know more about their services and get a free price quote as well. Source:https://manishanilgupta.blogspot.com/2021/10/think-you-need-professional-help-for.html |