Tax Planning in 2024: Strategies for Maximizing Benefits
Today, people and companies actively seek strong tactics to improve their 2024 tax planning. A proactive approach is required due to the dynamic nature of tax legislation and the constantly shifting economic environments. Keeping up with these changes is critical so people and companies can take advantage of new opportunities while minimising hazards. In the quickly developing fiscal landscape 2024, taxpayers must be well-versed in tax laws and economic trends to optimise advantages and avoid liabilities. This awareness will enable them to make well-informed decisions consistent with their financial goals. Here, know the tax planning strategies to help you navigate the complex world of taxation in 2024, which are given below: Stay Informed About Tax Law Changes: Tax rules are constantly being revised and amended, emphasising how important it is for people and businesses to stay informed about recent developments. It will be crucial to carefully monitor any modifications to municipal, state, and federal tax laws in 2024. Effective adaptation of tax planning methods necessitates a detailed grasp of these adjustments. People and organisations may quickly take advantage of new opportunities and incentives by remaining knowledgeable. It ensures their financial plans adapt to the constantly changing tax environment in a way that maximises benefits and minimises potential liabilities. Leverage Tax Credits and Deductions: Harnessing tax credits and deductions presents a potent means to substantially diminish your tax liability. In 2024, you must delve into the available credits and deductions relevant to your circumstances. Notable examples encompass education credits, incentives for energy-efficient home enhancements, and business research and development credits. Strategic utilisation of these opportunities allows for the maximisation of tax benefits, potentially contributing to an augmentation of overall financial well-being. A meticulous examination of applicable tax incentives empowers individuals and businesses to optimise their economic standing in the upcoming year. Optimise Investment Strategies: The interplay of capital gains and losses is pivotal in effective tax planning. A meticulous review of your investment portfolio is essential, prompting strategic moves to optimise your tax situation. In 2024, delve into tax-efficient investment strategies, such as tax-loss harvesting and strategically offsetting capital gains with losses. Further, explore tax-advantaged investment avenues, such as municipal bonds. Aligning your investment strategy with specific tax goals becomes paramount. It offers the potential to minimise tax liabilities and bolster your overall financial position through a reasonable approach to wealth management. Embrace Charitable Contributions: Giving back to the community has rewards outside of it, such as significant tax advantages. Look for ways to give to charities in 2024 that align with your principles. Tax deductions are available for contributions made to certain charitable organisations, which can reduce your taxable income. Try creative strategies like creating a donor-advised fund to get the most out of your donations. By carefully coordinating your charitable contributions with tax optimisation, you can improve the quality of life for others in your community and increase the possibility of receiving tax benefits. This helps to create a more thorough and significant approach to financial planning. Final thoughts: As mentioned above, consulting with a tax professional can provide personalised guidance tailored to your specific situation, ensuring you make the most of available opportunities and confidently navigate the evolving tax landscape. As you embark on your tax planning journey in 2024, these strategies will be valuable in your quest for financial success.
Tips on effective debt management for the consumer
Debt management can be difficult for many employees, managers, and CEOs, but it is critical for effective financial management and stability. Effective Debt Management Plans offer an organised strategy for successfully managing debts and achieving local financial program objectives, whether your goal is to improve your credit score or manage capital debts. In this post, you can learn effective debt management by knowing pertinent techniques, suggestions, and best practices to aid in debt reduction, credit score improvement, and financial freedom. Set a Budget and Goals A well-crafted credit policy and agreement is the first step toward effective debt management. Setting short- and long-term goals and creating an annual budget is also essential. A credit budget helps gather essential data regarding expenses, provides notes to assess your repayable debts, and grades reasonable monthly payments. It also aids in implementing debt payback plans for your financial commitments. Negotiate Interest Rates and Terms Take control of your financial destiny by settling terms with creditors. Discussions about reduced interest rates and better payback conditions are frequently initiated when a genuine commitment to debt repayment is shown. When borrowers are having difficulties, many lenders are eager to work with them. Reducing the interest rate can significantly lessen the total amount repaid, reducing the debt load. Be proactive by contacting your creditors, being open and honest about your circumstances, and looking into possible debt restructuring possibilities. Such discussions may result in a more manageable and long-lasting route to financial stability. Ask for Professional Financial Help If you find it challenging to handle your debt or credit independently, seeking assistance from a professional can be advantageous. Financial agencies offer customised advice and guidance to assist you in creating a comprehensive strategy for effectively managing debt. It is important to note that professional financial help is valuable even for small businesses that may not have the resources to hire a dedicated treasurer. In such cases, outsourcing money management services to a certified online provider can be a viable alternative. Build an Emergency Fund One of the most important aspects of debt management is creating an emergency fund to protect against unforeseen expenses. Prioritising a financial safety net is crucial because unexpected expenses can potentially derail your debt-reduction journey. Aim for an emergency fund that can cover three to six months’ worth of living expenses so that you can deal with unforeseen expenses. Creating and keeping an emergency fund is a calculated step toward achieving financial stability. Constantly Update Financial Plan Maintaining a current financial plan is essential to effective debt management. Regular meetings with a financial advisor provides an ongoing assessment of your finances and debt. These recurring check-ins are proactive steps that enable you to modify budgets and investigate possible tactics. You give yourself the authority to make wise decisions by remaining monitor and modifying your financial plan as necessary. Final thoughts Effective debt management is essential for financial stability. Consumers can regain control of their economic destinies by employing the above mentioned techniques. Proactive debt management relieves immediate financial stress while laying the groundwork for a more secure and prosperous future.
Outsourcing Vs. In-House Accounting – What’s Right for Your Business?
While every business operation is specialized and requires an exclusive workforce managing it, accounting is a tad different. As it deals with money, businesses should have a proper vision and strategy in place to manage it accurately and effectively. Strategy refers to the decision of whether to outsource accounting or keep it in-house. To many, it might seem a trivial concern. So, calling it a strategy might surprise them. But closely looking at both would help understand how vital it is to make the right decision. So, let’s see outsourcing vs. in-house accounting and what’s right for your business. Outsourcing Vs. In-House Accounting – What to Choose? While the ultimate goal is to maintain sound financial health, ensure compliance and build pecuniary sustainability, the strategy you choose matters. So, let’s look at a few differences between outsourced accounting and in-house accounting. Towards the end, these differences can help you achieve more clarity and make an informed decision. Criteria Outsourced Accounting In-House Accounting Accounting Expertise Outsourced accounting involves hiring external resources through an accounting outsourcing company. Based on your needs, the outsourcing company can provide resources with varying expertise levels and experience. It can help you create and maintain the right blend of freshers, mid-level and experienced accounting professionals in your team. In-house accounting can also help you have extensive expertise by your side. However, hiring each can involve a significant effort, money and time. The most experienced resources will demand a higher salary, which in some cases, might be beyond your financial reach. Operational Costs While outsourcing your accounting, you save a lot of costs associated with hiring, training, infrastructure and employee administration. The onus of each of these tasks remains with the outsourcing company. Although the savings vary with the company, resources hired and the business volume, usually, companies can save about 35-55 percent by outsourcing accounting. In-house accounting involves spending on everything from searching for hiring agencies to managing employee salaries and employee administration costs. Scalability Scaling up your team is much more straightforward and quicker with an outsourced team. All you have to do is put forth your requirement and onboard resources. That’s because accounting outsourcing companies have access to extensive and diverse talent pools from which they handpick resources. Similarly, you can scale down your team as and when you need, without the embarrassments of layoffs. With in-house accounting, scalability could be a challenge. While scaling up would involve efforts and costs in new hiring, scaling down could put in awkward situations like terminating employment! Operational Control There’s a myth, with outsourced accounting, you might lose control of your accounting operations. But that’s not necessarily the case. Partnering with experienced and reliable outsourced accounting companies can help you stay in control, while ensuring the highest possible levels of efficiency. In-house accounting lets you be in control of your accounting operations. However, relying excessively on employees might cause a shift of authority concerning process changes, decision-making, etc., in the hands of the employees handling it. Dedicated Operations With outsourced accounting, you can enjoy dedicated services of the team you hire. That can help increase accounting efficiency, accuracy, and ensure compliance. With in-house accounting, although you’d have a dedicated team at your disposal, the employees will simultaneously have many other aspects like strategy, financial management, etc. to manage. Managing all of them could prove challenging and affect efficiency. 24/7 Operations With outsourced accounting, you can run your accounting operations 24/7. It proves useful especially for companies with operations in multiple geographies spread across various time zones. In-house accounting usually begins at 9 AM and ends at 5 PM in the evening. You may not have anyone to address a particular need beyond the office hours. So, outsourced accounting vs. in-house accounting – what to choose? The more strategically beneficial choice is to outsource. It helps save costs, is easier to scale, and lets you focus on your core business. We hope this blog helps you make the right choice.
Budget 2023: Highlights
On February 1, 2023, The Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman announced the Union Budget 2023-24. It is the fifth budget of Hon. PM Modi’s second term as the country’s prime minister. Let’s look at some of the budget’s direct tax highlights, overview what it aims to include and its seven priorities. Direct Tax Highlights New Tax Regime Changes The new tax regime is the default one. The government has taken various measures to make the new tax regime more attractive. But taxpayers may opt for the old tax regime. FY 2023-24 (AY 2024-25) – Changes in the Slabs of the New Tax Regime Range of Income Income Tax Rate Up to Rs. 3,00,000Rs. 3,00,000 to Rs. 6,00,000Rs. 6,00,000 to Rs. 9,00,000 Rs. 9,00,000 to Rs. 12,00,000 Rs. 12,00,000 to Rs. 15,00,000 Above Rs. 15,00,000 Nil5% on income which exceeds Rs 3,00,000Rs 15,000 + 10% on income more than Rs. 6,00,000 Rs 45,000 + 15% on income more than Rs. 9,00,000 Rs 90,000 + 20% on income more than Rs. 12,00,000 Rs 1,50,000 + 30% on income more than Rs 15,00,000 The new budget has introduced a rebate on income of Rs. 7 lakhs. So, you don’t have to pay tax if your taxable income is below 7 lakhs under the new regime. The standard deduction of Rs 50,000 has been introduced under the new regime. The highest surcharge under the new regime is reduced to 25% from 37% for people who earn more than Rs. 5 crores. Thus, the tax rate has been brought down from 42.74% to 39%. Presumptive Taxation Limits Revised for FY 2023-24 Category Previous Limit Revised Limit Sec 44AD: For small businessesSec 44ADA: For professionals like doctors, lawyers, engineers, etc. Rs. 2 croresRs. 50 lakhs Rs. 3 croresRs. 75 lakhs The limits may be increased if 95% of the receipts are through online channels. Startups Startups Previous Limit Revised Limit Incorporation date for income tax benefitsTime limit for set-off and carry forward of losses 31.03.20237 years from incorporation 31.03.202410 years form incorporation Here, the only condition is that shareholders with a minimum of 51 percent of shareholding should continue to hold shares in the year such loss is to be set-off and carried forward. Let’s now look at some objectives of Budget 2023. Objectives of Budget 2023 Providing abundant opportunities to citizens, especially the youth Providing momentum to growth and employment creation Augmenting macro-economic stability Women empowerment To help women self-help groups to graduate to the next stage of economic empowerment To provide self-help groups with raw material supply, product marketing and branding Saptarishi: Budget 2023 7 Priorities Inclusive Development Reaching the last mile Infrastructure and investment Unleashing the potential Green growth Youth power Financial sector So, these are some of the direct tax-related budget highlights. Connect with a qualified chartered accountant to understand the meaning of a particular Budget 2023 highlight.
How To Launch an IPO? – Complete Process, Eligibility
Are you planning to launch an IPO? Doing so involves various aspects that you should know as a company eyeing public investments. Accordingly, this article overviews the basics like IPO process and IPO eligibility in India. Let’s get started. What is an IPO? As a company planning to go public, you must surely be knowing about this. But for beginners, it could help to explain in short, what an IPO is. IPO stands for Initial Public Offering, wherein an earlier unlisted company sells new or existing securities and offers them to the public for the first time. Once the IPO is issued, the company becomes a public listed entity on a recognized stock exchange. IPO Process Issuing an IPO requires companies to go through a lengthy and complex process. It can take around six months to a year for a company to complete the IPO process. So, let’s overview the various steps involved before a company launches an IPO. 1.Choose an Investment Bank/Merchant Banker At the outset, you must choose an investment bank to seek expert advice on the IPO and avail underwriting services. You must choose an investment bank, based on its reputation, previous IPO experience, research quality, IPO expertise, and distribution capabilities (it involves checking if the investment bank can provide issued security to more institutional investors or to a higher number of individual ones) 2.Complete Due Diligence and Regulatory Filings Underwriting involves an investment bank mediating between the IPO issuing company and investors to help the former sell its initial shares. It includes making the below arrangements available to the issuing company. Firm Commitment Best Efforts Agreement Syndicate of Underwriters All or None Agreement An underwriter should draft the following documents, as part of the IPO process. Engagement Letter – Including reimbursement clause and underwriting discount) Letter of Intent – Including Underwriter’s commitment to get into an underwriting agreement with the issuing company. A commitment by the issuing company to provide the underwriter with all the required and relevant information and cooperate in due diligence. An agreement by the IPO issuing company to give the underwriter a 15 percent overallotment option. In addition to the above, underwriters must draft the below. Underwriting Agreement Registration Statement – Including two parts – the prospectus and private filings Red Herring Document 3.Determine the Offer Price Once the SEC approves the IPO, both parties decide an effective date. A day prior to the issuing date, the issuing company and the underwriter determine the offer price and the number of shares to be sold to the public. It is a critical step as it is the price at which the company will raise capital. Some factors that influence the offer price include the below. The company’s objectives Market economy condition Roadshow success/failure Many companies often underprice IPO to achieve a full or oversubscription by the public investors. They do it even if they don’t receive the full value for their shares. Besides, an underpriced IPO raises expectations within potential investors about the increase in the share price on the offer day. It helps increase the IPO’s demand. 4.After-Market Stabilization Once the issue is brought to the market, the underwriter should provide analyst recommendations, after-market stabilization and build a market for the IPO. After-market stabilization is done if there’s an imbalance by purchasing shares at the offered price or below that. But stabilization can be done only for a short period. During this period, the underwriter can trade and influence the issue price. 5.Transition to Market Competition This is the IPO process’s last stage. It starts 25 days after the IPO, once SEC’s ‘quiet period’ mandate ends. In this period, investors transition from depending on the mandated disclosures and prospectus to that on the market forces for share insights. Once the 25-day period ends, underwriters can provide estimates of the issuing company’s earnings and valuation. IPO Eligibility in India Per SEBI, the eligibility criteria for companies intending to issuing IPO includes, At least Rs. 3 crores in net tangible assets in each of the previous three years Out of that Rs. 3 crores, not more than 50% should be cash or cash equivalent Net worth of at least one crore rupees for each of the three previous years An average operating profit of a minimum of Rs. 15 crores (pre-tax) in each of any three years among the previous five years In case of a new name, 50% of the total revenue earned in the previous one year should be from activities performed by the company after taking the new name Of course, there’s much more to the IPO issuance process and eligibility.
Three Most Overlooked Tax Deductions
Did you know, as a taxpayer, you can claim a tax deduction on the interest you pay on loan borrowed for higher studies for yourself, your children or your spouse under section 80E? And there’s no upper limit on the deduction under this section! If you hadn’t, you know it now. But here are a few more overlooked or lesser-known tax deductions in India. Parents Medical Expenses Taxpayers, who pay medical bills for parents aged 60 years or above, and are not covered by medical insurance, can claim a deduction for it. Section 80D allows taxpayers to claim a deduction of up to Rs. 50,000 on medical expenses. But there’s a condition. Taxpayers can claim these expenses only if they have paid them in any mode other than cash. Those who had to pay the money in cash due to unavoidable circumstances can also claim a tax deduction. But they will have to provide a proper explanation for the cash payment. Stamp Duty on Property Purchase While taxpayers can claim a deduction on principal repayment on home loans under Section 80C, they can also claim the stamp duty they’ve paid on property purchases. But taxpayers often forget to claim a deduction on reinvested interest on the National Savings Certificate (NSC). NSC interest isn’t paid every year. It gets reinvested. Taxpayers can claim a deduction on the reinvested interest. Preventive Medical Tests Only a few taxpayers can claim a deduction on preventive health checkup expenses. For parents 60 years or above, taxpayers can claim Rs. 7,000 under preventive health checkups. Medical tests conducted to detect the possibility of diseases are considered preventive health checkups. While this is an overview of the various overlooked tax deductions, consulting a tax expert can help you understand the technicalities, conditions, etc., involved.
Complete Guide on GST on Renting of Residential Immovable Property
Are you looking for information on GST on renting residential immovable property? Then, this article explores various aspects related to it. Per the GST Act, renting out an immovable property would be considered a supply of services. But GST is applicable only to particular rent types, including, When a property is given on rent, lease, easement, or licensed to occupy. When any property like an industrial, commercial or residential property is leased out to a business partially or wholly. Such a renting is considered goods supply. Hence, it would attract tax. When you provide a property for residential reasons, it is exempt from GST. But any other type of renting or leasing out of an immovable property for the business purpose would attract 18% GST. That’s because it would be considered a supply of service. Who Should Register if the Property is Rented Out to Business? Taxpayers earning beyond the exempted threshold should register under GST and pay taxes. So, if you have provided property to a business, then it is taxable. If you are earning income from a business, such as rent and any other exempted income of over INR 20 lakh annually, you should register yourself under GST. The threshold limit for GST applicability for those providing only services is INR 20 lakh yearly, beyond the service tax limit of INR 10 lakh. Thus, landlords covered under the Service Tax regime will be relieved up to another INR 10 lakh earned. GST Treatment of Properties Rented Out for Commercial Reasons For commercial properties on rent, GST will be applicable at 18% on the taxable value, and rent would be considered a taxable supply of service. If a registered religious trust or charitable trust owns and manages a religious place for the public, it will be exempt from GST. The room rent is less than INR 1,000 daily The space rent for business is less than INR 10,000 monthly The community hall or open area rent is less than INR 10,000 daily How to Calculate GST on Rented Out Properties? For commercial spaces given on rent, GST is calculated and charged on the total rent amount to be collected periodically. When an invoice is generated every period, the GST (9% CGST and SGST or 18% IGST) will be calculated on payable rent. ITC Provisions When GST is Levied on Rent People paying GST on rent can usually take credit for the tax paid to pay their other taxes. If all provisions to claim input tax credit are fulfilled, the taxpayer can claim ITC on the GST paid on rent. Provision for a Tax Deduction on Income Tax for the Rented Property The owner of the rented property has to collect GST from the rent payer on the rent. The rent payer has to deduct income tax at source at 10% if the property rent is beyond INR 2.40 lakh annually from AY 20-21. TDS will be applicable to residential and commercial properties. GST will not be charged on TDS.
Do You have to Pay GST on Foreign Exchange Gain/Loss in Case of Import of Services?
As understood commonly, GST is applicable on import of service, subject to place of supply provisions. But in foreign transactions, the invoice value in the foreign currency remains the same. However, it may change when one converts the value to the local currency. Of course, it is owing to currency value fluctuations. But what about the taxable value and how to pay the right tax amount without incurring any fines or penalties? Let’s discuss it through this article. In import of services (apart from associated enterprises), the taxable amount is valued per the below (Section 13(3) of the CGST Act Rule 34(2) of the CGST rules). When the supplier payment is made within 60 days from the invoice date, the exchange rate per GAAP on the date of the payment. When the supplier payment is made after 60 days from the invoice date, the exchange rate per GAAP on the 61st day. Now this value may vary from the actual value paid finally to the supplier. The linkage between the value of payment in books and the value on which GST is paid should be avoided. The tax becomes due on or before the 20th of the succeeding month per the time of supply derived based on the above two situations. Delays in payments attract heavy penalties and interests. Thus, GST must be paid on time, regardless of whether the vendor is paid or not – per the second scenario above, as it is not essential that the consideration should have been paid during the valuation of the taxable value. But how to pay tax on value not even paid as a consideration to the supplier until then? The value of the taxable supply provision contained u/s 15(1) of the CGST Act says paid or payable. Thus, it isn’t customary for the value to have been paid, which is it could be paid later as well. The definition of the word consideration u/s 2(31) confirms the understanding that the consideration includes any payment made or to be made. So, whether a foreign exchange or loss would attract GST or not has two references addressing the concern. First, the foreign exchange or loss is considered as tax paid on the supplier’s final amount. Second, the foreign exchange or loss till the 61st day only is considered since GST becomes due on the 61st day. We hope this answers your question. Call +91-7722063311 to know more.
What is TDS: TDS Meaning, Concept Everything Explained
Are you looking for insights on TDS? Then, this article can help. It looks at the meaning of TDS, TDS forms and filing dates, and a few more aspects of TDS. What is TDS? TDS, Tax Deducted at Source, is part of income tax. It is the person who makes the payment that deducts the TDS while paying money to someone. These payments could be of various types like salary, commission, rent, professional fees, etc. Usually, the payment receiver is liable to pay the income tax. But deducting TDS ensures advance tax payment. The receiver receives the net amount after the deduction of TDS. The TDS will be adjusted against the person’s final tax liability. The receiver takes credit for the amount deducted and paid on their behalf. When is TDS Deducted? Any individual who makes payments mentioned under the Income Tax Act should deduct TDS while making such specified payments. But the payer does not have to deduct TDS if the person making the payment is a person or HUF whose books do not require an audit. But let’s look at some exceptions. For rent payments made by HUF and individuals above INR 50,000 per month, 5 percent TDS should be deducted if the payer isn’t liable for a tax audit. Also, such people do not have to apply for TAN. Employers deduct TDS per the applicable income tax rates. Banks deduct 10 percent of TDS. They may deduct it at 20 percent if they do not have the receiver’s PAN information. When Can TDS Be Not Deducted? If the receiver submits investment proofs (to claim deductions) to their employer and their taxable income is below the taxable limit, then they do not have to pay tax. Thus, no TDS will be deducted from the income. Speaking of banks, receivers can submit Form 15G and Form 15H to the bank if the total income is below the taxable limit. On submitting the forms, the bank will not deduct TDS on the interest income. Suppose the receiver couldn’t submit the proof and the employer or the bank have already deducted TDS, and the receiver’s total income is below the tax limit. Then, the receiver can file a return and claim a TDS refund. How is TDS Deposited? TDS has to be deposited through Challan ITNS-281 on the government portal. When and How to File TDS Returns? Filing TDS returns is imperative for people who deduct TDS. It is to be done quarterly and requires providing details like TDS amount deducted, TAN, deductee’s PAN, type of payment, etc. The government prescribes various filing return forms based on the TDS deduction purpose. Let’s look at them. Form Number Transactions Reported in the Returns Due Date Form 24Q Salary Q1 – 31st July, Q2 – 31st October, Q3 – 31st January and Q4 – 31st May Form 27Q All payments made to non-residents, except for salaries Q1 – 31st July, Q2 – 31st October, Q3 – 31st January, and Q4 – 31st May Form 27QB Property sale 30 days from the month end in which the TDS is deducted Form 26QC Rent 30 days from the month end in which the TDS is deducted Form 26QTDS All payments except salaries Q1 – 31st July, Q2 – 31st October, Q3 – 31st January, and Q4 – 31st May We hope, this article provided you adequate insights on TDS.
ITR Update: Filing Tax Return is Compulsory if TDS, TCS Amount Exceed INR 25,000
As per the new income tax rules, those with an aggregate TDS or TCS of INR 25,000 or more during a financial year must file their returns compulsorily. For senior citizens, the amount extends to INR 50,000 or above. The central government has decided to bring more people into the tax database. As per the finance ministry’s notification, more income groups and people with income will be required to file ITR. The new changes, applicable from April 2022, will help bring more people under the tax. Another update requires people with deposits of INR 50 lakh or more in a saving bank account to file ITR during a fiscal year. It is regardless of their income levels. The Finance Act, 2019 inserted the seventh provision into Section 139. It provided a particular criterion that made it compulsory to file ITR, despite an income lesser than the exemption limit. The criterion includes deposition of INR one crore or more in a current account, expenses over INR two lakh for foreign travel, or more than INR one lakh for electricity during the year.