The Union Budget 2025 has introduced significant tax reforms aimed at reducing the financial burden on the Indian middle class while simplifying tax compliance. Presented by Finance Minister Nirmala Sitharaman on February 1, 2025, this year’s budget brings a much-awaited revision to the income tax slabs and several key taxation updates that will benefit individuals and businesses alike.

New Income Tax Slabs for FY 2025-26

The most notable change in the budget is the introduction of new income tax slabs under the revised tax regime. Here’s a breakdown of the updated tax structure applicable from April 2025:

• Up to ₹4 lakh – No tax
• ₹4 lakh to ₹8 lakh – 5%
• ₹8 lakh to ₹12 lakh – 10%
• ₹12 lakh to ₹16 lakh – 15%
• ₹16 lakh to ₹20 lakh – 20%
• ₹20 lakh to ₹24 lakh – 25%
• Above ₹24 lakh – 30%

Additionally, individuals earning up to ₹12,75,000 will have no tax liability after considering the ₹75,000 standard deduction and a full rebate for incomes up to ₹12 lakh. However, this rebate does not apply to incomes taxed under special rates, such as capital gains under section 112A.

Impact of the Revised Tax Slabs

These tax reforms are expected to have a significant impact on taxpayers, particularly the middle class. Some of the key benefits include:

• Lower Tax Burden: The increase in the basic exemption limit to ₹4,00,000 (from ₹2,50,000) provides direct relief, leaving more disposable income in the hands of taxpayers.
• Encouraging Compliance: A simpler and more transparent tax regime is expected to boost tax compliance and reduce tax evasion.
• Economic Stimulus: The government has foregone ₹1,00,000 crores in direct tax revenue to stimulate consumer spending and investment.

Key Taxation Announcements

Apart from revised tax slabs, the government has introduced several other important tax-related measures to ease compliance and enhance benefits for taxpayers:

1. Enhanced TDS Limit for Rental Income

• The threshold for Tax Deducted at Source (TDS) on rental income has been raised to ₹6,00,000 per annum from the previous ₹2,40,000 per annum.
• This change will significantly reduce the number of landlords subject to TDS deductions, providing relief to small property owners.

2. Removal of Limitation on Declaring Self-Occupied Property (SOP)

• Homeowners can now declare up to two properties as self-occupied without restrictions.
• This benefits taxpayers with multiple residential properties, reducing tax liabilities on notional rent calculations.

3. No TCS up to ₹10 Lakh under the Liberalized Remittance Scheme

• The Tax Collected at Source (TCS) exemption limit under the Liberalized Remittance Scheme (LRS) has been increased from ₹7 lakh to ₹10 lakh.
• Additionally, TDS exemptions on educational loans for foreign studies will ease financial burdens on students and families.

4. Updated Returns Can Be Filed for Preceding 4 Years

• Taxpayers can now file updated income tax returns for the previous four years, providing an opportunity to declare past incomes and settle dues without penalties.
• This move encourages voluntary compliance and helps taxpayers avoid legal complications.

Conclusion

The Union Budget 2025 has introduced progressive tax reforms that offer significant relief to taxpayers while making compliance more flexible. The revised income tax slabs, increased rebates, and additional tax relief measures ensure higher disposable income, encouraging economic growth and consumption.

With a focus on simplifying taxation and boosting compliance, these changes mark a significant step towards a more efficient and fair direct tax regime. For the Indian middle class, this budget brings welcome financial relief and a greater scope for savings and investments in the years ahead. To make the most of these changes, it’s essential to know before filing ITR and stay informed about the latest tax regulations.

GST has revolutionized India’s tax structure since its implementation on July 1, 2017. By merging numerous indirect taxes into a single system, GST introduced much-needed simplicity and uniformity. Fast-forward to today, and its impact is felt across all sectors of business, especially the ever-growing e-commerce industry.

This blog delves into how GST has transformed e-commerce, its benefits, and the challenges it brings for sellers. Whether you’re a seller or just curious about the e-commerce tax landscape, keep reading for valuable insights.

Understanding GST in E-Commerce

Let’s set the record straight: GST isn’t just another tax—it’s a complete overhaul of how taxes work. For e-commerce sellers, it has changed everything, from compliance to profitability.

Before GST, sellers grappled with double taxation (remember VAT, CST, and service tax?) and inconsistent tax laws across states. GST streamlined this by implementing a single tax system nationwide, making it easier to conduct business across borders.

But this simplification comes with its challenges. Sellers on platforms like Amazon and Flipkart are now required to:

• Register for GST.
• Maintain detailed transaction records.
• File regular GST returns.
• Display their GSTIN (GST Identification Number) on their websites.

Sounds manageable? Well, the reality for small and medium sellers is much more complex.

How GST Impacts E-Commerce Sellers

1. Compliance: A New Reality

GST brought stricter compliance norms. Every e-commerce seller, regardless of size, must:

• Register for GST.
• File monthly and annual returns.
• Maintain detailed records of transactions and expenses.

For small businesses, this administrative burden can be overwhelming.

2. The Tax Burden

E-commerce sellers must pay an additional 1% Tax Collected at Source (TCS) on their gross turnover, apart from GST on their products. This added layer of tax disproportionately affects sellers of low-margin, low-priced goods.

3. Profitability Challenges

With increased compliance and tax burdens, profitability has taken a hit for many sellers. Add to that the lengthy and tedious GST refund process, and small businesses often find themselves under financial strain.

Benefits of GST for E-Commerce Sellers

Not everything about GST is a headache—it has its share of advantages:

1. A Streamlined Tax System

Before GST, sellers dealt with a maze of taxes like VAT and CST. Now, it’s one nation, one tax. This simplicity is especially beneficial when businesses expand operations.

2. A Level Playing Field

GST eliminates the cascading tax effect, meaning taxes are no longer levied on top of other taxes. This allows sellers to price their products competitively, leveling the playing field for small businesses against larger players.

3. Transparency and Accountability

With digital invoicing and return filing, GST ensures greater transparency and significantly reduces tax evasion. This builds consumer confidence in the e-commerce ecosystem.

4. Ease of Doing Business Across States

GST removes the need for additional taxes like CST when selling across states. This encourages small sellers to expand their markets beyond local boundaries.

Challenges Faced by Sellers with GST

While GST simplifies taxation, it isn’t without its flaws. Here are the top hurdles e-commerce sellers face:

1. Complex Rules and Processes

GST registration, refund claims, and return filing can be daunting, especially for newcomers. A single misstep can lead to penalties, making compliance a stressful task.

2. Confusing Tax Rates

GST rates vary based on the product category, creating confusion for sellers handling multiple product lines.

3. Poor IT Infrastructure

Not all small businesses have the digital tools or resources needed to meet GST’s online compliance requirements. This puts them at a disadvantage.

Ways to Overcome GST Challenges

Facing GST challenges head-on is tough but not impossible. Here are some tips to ease the process:

1. Invest in Automation: Use GST-compliant accounting software to handle invoicing, record-keeping, and return filing. This minimizes errors and saves time.
2. Hire Professionals: If compliance feels overwhelming, hire a GST consultant or lawyer. Their expertise can save you from costly mistakes.
3. Stay Updated: GST laws and rates evolve frequently. Stay informed to avoid surprises and penalties.

How GST Affects Consumers

As a consumer, you might wonder, “What’s in it for me?” The answer is simple: clarity. With GST, the total tax burden on goods and services is streamlined, resulting in a clearer final price. While sellers face challenges, consumers benefit from reduced cascading taxes, making products more affordable.

A Mixed Bag for E-Commerce

GST has undoubtedly transformed the e-commerce landscape in India. On the one hand, it simplifies taxation, promotes transparency, and creates growth opportunities. On the other hand, it brings challenges like increased compliance and operational costs, especially for small businesses.

For e-commerce sellers, preparation is key. Whether it’s automating processes or seeking expert help, being proactive can turn GST’s challenges into opportunities.

If you’re an e-commerce seller navigating GST, remember: you’re not alone. With the right strategies and resources, you can not only survive but thrive in this new tax era

The year 2024 has ushered in substantial income tax reforms aimed at simplifying tax compliance and enhancing taxpayer benefits. These updates affect tax slabs, deductions, capital gains, and more, shaping the way taxpayers will approach filing their Income Tax Returns (ITR) in 2025. Here’s a detailed breakdown of the 9 most significant changes and their implications:

1. Revised Income Tax Slabs Under the New Regime

The new tax regime introduces updated slabs offering relief to individual taxpayers. Here’s the revised structure:

• Income up to ₹3,00,000: Exempt from tax.
• Income from ₹3,00,001 to ₹7,00,000: Taxed at 5%.
• Income from ₹7,00,001 to ₹10,00,000: Taxed at 10%.
• Income from ₹10,00,001 to ₹12,00,000: Taxed at 15%.
• Income from ₹12,00,001 to ₹15,00,000: Taxed at 20%.
• Income above ₹15,00,000: Taxed at 30%.

These changes could save taxpayers up to ₹17,500 annually compared to the previous slabs, making the new regime more attractive for many.

2. Increased Standard Deduction Limit

Under the new regime, the standard deduction limit for salaried individuals has been raised from ₹50,000 to ₹75,000. Family pensioners also benefit, with their deduction increasing from ₹15,000 to ₹25,000. While the old regime retains its existing limits, the higher deductions in the new regime enhance its appeal.

3. Enhanced NPS Deduction for Employer Contributions

The deduction for employer contributions to the National Pension System (NPS) has been increased from 10% to 14% of the basic salary under the new regime. However, contributions exceeding ₹7.5 lakh across EPF, NPS, and superannuation funds remain taxable, balancing benefits within specified limits.

4. Simplified Capital Gains Taxation

Capital gains taxation has undergone simplification:

• Short-Term Capital Gains (STCG): Tax rate increased from 15% to 20%.
• Long-Term Capital Gains (LTCG): Uniformly taxed at 12.5% for all assets.

While these changes simplify tax calculations, they also limit indexation benefits for certain assets, requiring taxpayers to assess their investment strategies.

5. Claiming TDS and TCS Credit Against Salary

Salaried individuals can now adjust TDS or Tax Collected at Source (TCS) deductions from other income sources against TDS on their salary. This change eases cash flow concerns and increases monthly take-home pay.

6. Changes in TDS on Property Sales

For property sales exceeding ₹50 lakh, TDS is now applicable on the entire sale value, regardless of individual sellers’ shares. This measure improves compliance and prevents TDS evasion.

7. Vivad Se Vishwas Scheme 2.0

The reintroduced Vivad Se Vishwas Scheme offers taxpayers an opportunity to resolve tax disputes amicably. By settling ongoing cases, this scheme reduces uncertainties and streamlines dispute resolution processes.

8. Aadhaar Mandatory for ITR and PAN Applications

Effective October 2024, Aadhaar is mandatory for filing ITR and applying for PAN. Aadhaar enrolment numbers will no longer be accepted, necessitating action from those without Aadhaar to avoid delays.

9. Reduced Time Limit for Old ITR Revisions

The time frame for reopening old ITRs has been shortened to five years for cases involving income escaping assessments above ₹50 lakh. This change aims to minimise prolonged litigation and provide greater certainty for taxpayers.

Implications for Filing ITR in 2025

These tax reforms emphasize simplification, compliance, and savings. Taxpayers should carefully evaluate the old versus new regimes to determine the best fit for their financial situation. Key takeaways include:

• Optimizing Savings: Leverage increased deductions and revised slabs.
• Simplified Compliance: Benefit from streamlined processes like rationalised TDS rates.
• Strategic Planning: Reassess investment portfolios in light of revised capital gains rules.

Conclusion

The 2024 income tax changes present both opportunities and challenges for taxpayers. By staying informed and proactive, individuals and businesses can maximize their benefits while ensuring compliance. Partnering with a professional accounting firm like Clearbiz can further ease this transition, ensuring you’re well-prepared for the 2025 ITR filing season.

Tax laws and regulations keep changing making it hard to keep up for the common man. This is why tax experts and professionals like chartered accountants are extremely helpful. They know how to cut your tax expenses and make the most of your deductions within the income tax provisions. 

Tax laws notified under the Income Tax Act, of India, change with every budget. An unemployed person pursuing any other profession might find it very difficult to understand. This is true in 2024 when tax rules have gotten more complex. This scenario makes it even more important to get help from a professional.

Why It’s Good to Work with Tax Experts

Working with a tax expert has many advantages:

• Know-how: Tax experts know all about tax laws and rules. They can spot deductions and loopholes you might miss.
• Saves a lot of  time: Entrusting your compliance-related matters to an expert helps free up a lot of time for business as well as leisure
• Less worry: When a skilled expert takes care of your taxes, you can relax. You’re less likely to make mistakes or face penalties.

Tax Deductions You Might Miss When Filing on Your Own

When you don’t have a tax expert for assistance, you and your business could be overlooked and miss out on certain deductions. Here are some tax write-offs people often forget about:

• Education expenses: You can claim deductions for tuition fees, books, and other costs related to education, which can be claimed as a Chapter VI A Deduction under the old regime
• Charitable donations: Giving money to qualified charitable groups can help lower your taxable income.; known as 80 G Deductions
• Business expenses: You can deduct various costs linked to running a business.

How the Best Tax Advisors Boost Your Tax Plan

Top tax advisors use several methods to maximize your tax deductions and reduce what you owe. These methods include:

• Tax planning: They can help you arrange your finances to lower your tax burden over time.
• Tax compliance: They make sure you follow all tax rules to avoid fines and extra charges.
• Audits and scrutiny: If the tax office picks you for a closer look, a tax advisor can help you find an accountant to speak for you and guide you through the process.

Online Tax Help: Get Expert Advice When and Where You Need It

As tech gets better more people are using online tax advisors. This option offers more ease and access for small companies and people working from home. The Impact of GST and Income Tax Consultants on Deduction Optimization

GST and income tax consultants have a significant influence on deduction optimization for companies doing business in India. These experts manage both indirect and direct taxes to help businesses claim all deductions they qualify for under GST and income tax regulations.

How to Pick the Best Tax Consulting Firm for Your Needs

When you’re looking for a tax consulting firm, keep these points in mind:

• Experience: Search for a company with a solid history and know-how in handling your particular tax issues.
• Client feedback: Check out what past clients say to understand how happy they were with the firm’s work.
• Service options: Make sure the firm offers all the tax services you need.

To Sum Up: Boost Your Tax Savings with Expert Help

Hiring a tax consultant can be a smart move that leads to big financial gains. By tapping into their knowledge, you can make the most of your deductions and keep your tax bill as low as possible.

Want help drop in a mail at info@clearbiz.in 

In today’s complex and ever-changing business environment, effectively identifying and managing risk is a life skill for the long-term success of a business. Risk and strategic management are two faces of the same coin, as the decisions made at the strategic level can significantly impact an organization’s exposure to various risks. Also on the reverse strategic decisions depend on the risk identified during the risk assessment exercise. No business can ever operate in a zero-risk environment. A smart and efficiently managed business will always identify its risk and address it strategically.

This blog aims to shed some light on the key concepts, strategies, and frameworks that businesses can use to navigate the challenges and capitalize on the potential rewards of risk management.  

Understanding Risk and Strategic Management

In simple words Risk means  to any event or situation that could lead to a negative impact on an organization’s objectives or roadmap. It can be attributable to both internal and external factors, For instance, economic downturns, technological disruptions, regulatory changes, and natural disasters, are the external factors. These are factors that are beyond the control of the entity. On the other hand, there are internal risk such are machine failure, employee strikes, production loss etc. A well managed an entity can greatly avoid these risks.

Strategic management is the process of setting long-term objectives for an organization and developing plans to achieve them. In simple words a well drawn strategy serves as a roadmap for the business. A good strategy is formulated based on 4 factors 

• Strength
• Weakness
• Opportunities
• Threat

It involves studying the external environment, evaluating the organization’s internal strengths and weaknesses, and making strategic decisions about resource allocation, market positioning, competitive advantage, etc..

Risk and strategic management are interconnected because the strategic choices made by an organization can determine its level of exposure to certain risks. For example, a company that expands into a new market may face increased risks related to cultural differences, regulatory compliance, and competition.

The Importance of Risk Management

Effective risk management offers numerous benefits for organizations, including:

• Improved decision-making: Understanding the risk profile of your business is a valuable input for making the right decision. For instance, your business is into export of wooden furniture. There is a new legislation coming up further restricting the export of wooden products. Now this input or knowledge of  existence of risk helps you to strategically cut down on exports and focus on dominating domestic markets
• Enhanced resilience: A business that has clearly identified its risk and is prepared to manage it has better resilience to bounce back. In the unfortunate event of the risk manifesting, the business also knows to tackle it well
• Increased profitability: In business, we say higher the risk , higher the returns. But risk must always be well calculated and within the capacity of the business. Once risk is managed it would open up venues for better profits
• Enhanced reputation: More over, an entity that survives risk would stand in the business for longer and will be very credible and trustworthy.

Key Steps in Risk Management Strategies

• Risk Identification and Assessment:
  • Identify potential risks: The first and most important step in risk management is identifying the risk. Only once we identify the risk , we can handle it . There are various identification techniques like SWOT analysis, PEST analysis, etc.. that can be employed to identify risk. It needs to be further classified as external and internal
  • Assess risk likelihood and impact: Once risk is clearly identified , one must understand what is the likelihood that such risk will manifest and if so what would be the impact on the entity
  • Prioritize risks: Based on the above study , risk would be ranked . For instance, a regulatory risk that might put the entity out of business will have to be prioritised over an operation risk that might contribute to a longer production cycle. 

Here are a few techniques for managing the risks identified

1. Risk Avoidance:
   • Eliminate or reduce exposure: This means we totally give up doing the activity that can lead to risk. For eg: if there is a risk flood (external risk) in the location identified for setting up your factory, this risk can be altogether avoided if a new location identified
2. Risk Mitigation:
   • Reduce the impact: Here the focus is reducing the impact of risk. For instance waterproofing important documents or machines from the above examples if flood hits the factory
3. Risk Transfer:
   • Shift the burden: Here the risk is addressed by a third party. For example the earlier factory takes insurance against natural disasters. So that any loss suffered from the floods is borne by the insurance company
4. Risk Acceptance:
   • Acknowledge and prepare: Finally its acceptance. This means we acknowledge the possibility of risk and be well prepared if it materialises. Its more like a contingency or disaster recovery plan 

Risk Management Frameworks

To implement effective risk management practices, organizations often adopt frameworks that provide a structured approach to identifying, assessing, and managing risks. Some common frameworks include:

• COSO Enterprise Risk Management (ERM) Framework: A comprehensive framework that provides a five-component approach to risk management.It was established in year 1992 and shed lights on various risk factors commonly seen in a business
• ISO 31000: An international standard that provides guidance on risk management principles, processes, and practices.This standard helps in establishing a good risk management framework within the entity to address any risk
• NIST Risk Management Framework (RMF): A framework developed by the National Institute of Standards and Technology for managing cybersecurity risks.This standard focuses on cyber security and risk associated with such environment . This is an important framework is present IT driven business environment.

Importance of Continuous Monitoring and Improvement

Risk management is not a one time activity.It must be adopted as an ongoing process that requires continuous monitoring and improvement. Risk must be actively managed on each day of operations. Ensuring the risk is managed each day helps in greatly avoiding its manifestation or helps in bouncing back if it does occur. Organizations should regularly review their risk assessments, update their risk management plans, and measure the effectiveness of their risk mitigation strategies.

There is no business that is free from risks 

Conclusion

Risk and strategic management are essential components of a successful business. No business is free from risks. The success of a business depends on how well it manages the risk

By understanding the key concepts, strategies, and frameworks, organizations can easily  identify, assess, and mitigate risks, improve their decision-making, enhance their resilience, and create a business of high value. 

To know more about business management and services, follow us.

Financial audits are extremely important! Not just because audit is a statutory requirement for all companies to comply, but also because it helps business to get true insights into the status of business health. Audits help ensure companies follow the law and stay compliant. In India, it’s not just about rules; audits boost the transparency of the business..

Understanding Financial Audits: A Comprehensive Overview

So, what are financial audits? They’re careful checks of a company’s financial records to review if everything’s accurate and meets accepted accounting standards. Financial statement audits mainly check if financial transactions are reported accurately, and further dig deeper to find mistakes, misstatements, or issues. 

The Role of Financial Statement Audits in Indian Businesses

Financial statement audits matter a lot for businesses in India because they show how healthy a company is financially. The audit process examines records closely, checks internal controls, & makes an audit report. This report shows where the company stands financially & keeps things compliant on all aspects. Companies that focus on audits gain confidence from investors & meet regulations better.

How do accounting audits promote accountability and transparency?

Accounting audits help make sure a company’s records are correct and as per recommended accounting standards . Audits aim to identify fraud & misstatements within financial statements. Audits ensure companies stick to high standards of transparency in financial reporting. 

Why should Indian companies opt for professional financial audit services?

Choosing professional auditors, that is qualified Chartered Accountants from the best Indian accounting firms, brings a lot of quality to the audit process. Moreover, financial audit can be undertaken only by ICAI members in India. Regularly getting audited helps businesses reduce risks plus improve governance practices

The Role of Indian Auditing Firms in Ensuring Compliance and Transparency

Chartered Accountants provide complete financial audit services that adhere to regulatory needs and statutory compliances.They also hold a reputation for outstanding work supporting strong standards .By engaging professional audit firms , companies can face India’s complex finance laws while keeping their reputation intact.

Strengthening Accountability through Financial Audits 

To sum it all up financial audits are key for Indian companies wanting accountability while making sure everything runs smoothly—and they’re great at promoting transparency when discussing about finances position of the company . This is apart from the fact that it is also a mandatory requirement under the provisions of the Companies Act 2013.

For more chartered accounting services, get in touch with ClearBiz.

FAQs

• What’s the goal behind doing a financial audit?

   It makes sure your company’s financial statements are disclosed accurately

• How do you tell apart financial statement vs accounting audits?

   Well its one and the same on a broader level and Statutory audit under the Companies Act covers both

• Why does being transparent matter so much?

   Building trust helps lots when dealing with investors or regulators; it’s crucial long-term!

• How frequently should anyone consider doing an audit?

   It must be done every year

Developing a clear understanding about the income tax return filing is extremely important for a person earning income from India. As we are discussing ITR , its also important to note taxability that is the rate of taxes would depend on the residency status as well as the nature of entiry. Now lets have an in-depth discussion on ITR and related topics

Understanding the Income Tax Filing Deadline

The deadline for filing your income tax return depends on the type of business you undertake, entity type, Turnover, etc. Generally, the Indian Income Tax Department sets specific dates for different categories of taxpayers as given below

Key deadlines to remember:

• Individuals with income from salary, business, or profession: For individual  persons earning income in India the due date is always July 31st of the succeeding year. For instance, the return for the financial year 2023-24 (Assessment Year 2024-25) must be filed by July 31, 2024.Only excpetion is for a partner of a firm that undergoes tax audit
• Individuals opting for presumptive taxation: For persons declaring income under the presumptive tax scheme also due date is the 31st of July of the succeeding year
• Companies: For Corporate entities, that is Companies due date is Oct 31st of the succeeding year.
• Tax Audit cases: Irrespective of the nature of the person if income is filed subject to audit then the due date is 31st of October of the succeeding year. Additionally in such cases, Tax Audit Report in Form 3CB /3CD also needs to be filed within the 30th of September.

The Importance of Filing Income Tax Returns on Time

Filing your income tax return on time is crucial for several reasons:

• Avoid Late Fees: Failure to file ITR within due date will result in late fee u/s 234F . It can vary between Rs 1000  to Rs 10,000
• Claim refunds: In case you have excess tax credit comparing to your tax liability , filing return of income is the only way to claim the excess tax paid as refund
• Loan approvals: ITR serves as proof of income. Details of ITR filed for 3 preceding years are commonly requested for loan approvals
• Visa applications: ITR being an accepted document for Income Proof is required for processing VISA Request

Steps to File Your Income Tax Return

Follow these steps to ensure a smooth filing process:

• Keep ready all necessary documents: Collect your income proof, investment details, deductions, bank statements and other relevant documents.This list would depend based on your nature of activities
• Choose the right income tax form: Select the correct ITR you for reporting your income. If not your return might get marked defective 
• Calculate your income and tax liability: Compute your total income and determine your tax liability using income tax online utility. If you require an expert hand feel free to reach out to team Clearbiz
• Claim deductions and exemptions: Ensure you have a good understanding of the deductions and exemptions to minimize your tax burden, Claim them in your ITR
• Verify and submit your return: Carefully review the details and submit your form online

Types of ITR

ITR-1 (Sahaj)

• Can be Individuals residing in India with a total income of up to Rs. 50 lakh.
• Income Sources that can be reported under this ITR are salary, income from house property, Interest income, etc.
• Do note Non-Residents cannot file ITR1

ITR-2

• Can be used by Individuals or HUFs having income other than business income
• Income that can be reported includes all income reported under ITR 1 plus capital gains

ITR-3

• This form is for individuals having income from business or profession
• All income sources can be reported under this form

ITR-4 (Sugam)

• This form is for individuals/HUF /Partnership firms having income declared under presumptive taxation
• Income Sources: For businesses with a turnover up to Rs. 2 crore under Section 44AD and professionals with a turnover up to Rs. 50 lakh under Section 44ADA.
• Suitable for: Small businesses and professionals opting for the presumptive taxation scheme.

ITR-5

• This form is for reporting of income by Partnership Firms , AOP, BOI

ITR-6

• This form must be used by corporates or Companies of all kinds.

ITR-7

• Specified institutions /entities like Trusts , political parties use ITR 7 for reporting their income

Common Mistakes to Avoid

To prevent delays and penalties, avoid these common mistakes:

• Missing the deadline: Always plan and complete the filing before the due date. Waiting till the last date might lead to unnecessary rush and tension.
• Incorrect information: Furnishing incorrect information or wilfully covering up details can lead to tax assessments and demands.
• Ignoring verification: E Verifying your return is a very important step that many people forget to do. The ITR is valid if and only if it is verified and taken for processing after verification.

Tips for a Stress-Free Filing Experience

• Start early: Begin gathering documents and information well before the deadline. If you are salaried make sure your employer issues Form 16 correctly
• Organize your finances Make sure  you have a clear record of all your financial transactions to report income accurately
• Utilize digital tools: Take advantage of the income tax department’s e-filing portal and utilities to make filing easier.
• Seek professional help: If you find the process complex, never hesitate to take help from professionals

What Happens if You Miss the Income Tax Filing Deadline?

Missing the income tax filing deadline has serious consequences:

• Late filing fees: Late filing fee. of Rs 1000 to 10,000 can be levied by the department
• Interest: Interest will be levied on the unpaid tax amount amounting to 1% for each or part of each month

FAQs About Income Tax Filing Deadline

Q: What happens if I file my income tax return after the due date? 

A: Every person whose income is over and above RS 250,000 needs to file an ITR for the Financial Year. Hence filing of ITR under such cases is an offence. A late fee of Rs 1000 (Upto total Income of Rs 500000 and Rs 5000 for others ) subject to minimum of Rs 10,000 can be levied

Q: Can I get an extension for filing my income tax return? 

A: There is no such process available. However, taxpayers can file ITR as a belated return or Updated return as the case applies 

Q: What documents are required for income tax filing? 

A: Depending on the income Form 16 , statement, Details of Credits etc would be sufficient for filing ITR

Q: Can I file my income tax return online?

 A: Yes, visit the official portal of the income tax department to file your ITR online

Q: What are the benefits of e-filing income tax returns?

 A: The income tax department accepts only E returns now. Also with digitalisation the process is simpler and faster

Conclusion

Making sure that the income tax filing is done before the  deadline is important for avoiding penalties and late filing inetrest. By following the guidelines outlined in this here, you can finish the income tax filing process accurately with confidence. Always remember, staying organized, starting early, and seeking professional help when needed can significantly reduce your tax-related stress.If you need help feel free to reach out at info@clearbiz.in

Outsourcing Accounting services today offers a wide range of benefits for businesses. Outsourcing helps in streamlining business operations and helps in cost reduction. Outsource your bookkeeping to expert accountants to ensure accurate reporting. This in turn helps in keeping track of business receivables and payables management too. Also, by entrusting your accounting functions to expert professionals, you can free up valuable time and resources to focus on core business activities. Now let us look at some of the major benefits of outsourcing the Accounting functions of your business:

Cost Savings with Accounting outsourcing services

One of the primary reasons, people outsource Bookkeeping functions because it provides a major cost-saving advantage. Maintaining an employee on payroll is expensive. Usually, apart from basic pay, a whole lot of allowance and perks need to be provided. Also, the work hours are fixed and so support is only during such period. In several cases, the business will have to invest in training the employees too. However, if a professional accountant is hired, the entire exercise becomes task-based. Hence irrespective of the time required the monthly tasks are the responsibility of the bookkeeper. Additionally, your business will not have to invest in any training or even accounting software

Enhanced Accuracy and Expertise through Outsourced Accounting Firms

Next comes Quality. A good reason to hire a professional accountant is the quality of work and expertise. Entrusting your business accounts with an expert accountant ensures the record keeping is accurate. In most cases, companies hire inexperienced staff on a lower salary. They create a mess out of the books and later at the time of statutory filings, business owners are forced to set things right by hiring a professional hand. This exercise not only makes the whole process tedious but also expensive. It’s a waste of both time and money

Time Efficiency and Focus on Core Business Activities

A significant saving the business will experience apart from money is time. In small businesses more often than not, the business owner itself tries to keep records also. They try their hand at some DIY accounting. But what they do not realize is that , they investing their precious time in a less important task. On the contrary, they must focus on the core business activity and outsource the accounting functions to an expert. In this manner, they can enjoy the best of both worlds

Scalability and Flexibility with Outsourced Finance and Accounting

Outsourced finance and accounting services offer the benefit of operating at all scales. For a professional accountant, no volume of transactions can be too big to handle. As your enterprise grows, the outsourcing function can also scale up to provide more extensive services. For instance here at Clearbiz, we have several bookkeeping packages based on the volume of transactions and business needs of our clients. Some people need only basic bookkeeping, whereas others would require monthly reports and budgets. A professional accounting firm can handle both

Improved Cash Flow Management through Outsourcing Accounts Receivable

Apart from the cost and time angle, outsourcing your business account ensures accurate financial reporting. This in turn helps in keeping track of payables and receivables. You can gently remind your debtors at the right time and ensure a quick realization. Similarly, with payable accounts, you can ensure timely settlement and prevent any loss of credibility

Cons of Accounting Outsourcing Services

Though outsourcing accounting is a big yes, you need to assess the following factors and choose the right professional

• Data security risks & Confidentiality: Sharing sensitive financial information with an external provider can raise concerns. You must ensure they maintain data security and confidentiality
• Communication challenges: You must be able to interact with them easily. They must be accessible always effective communication is important for successful outsourcing.
• Loss of control: Now This rule applies to all business functions. No matter what, as a business owner you are responsible for ensuring all business functions are performed in a timely and accurate manner. You can entrust accounting with the best firm, but even then you are responsible in ensuring they deliver what they promised

When should you consider outsourcing your accounting services?

Outsourcing accounting can be beneficial for businesses of all sizes, but it’s very advantageous for:

• For small businesses with limited resources, a professional bookkeeper can free up a lot of resources for use on core business
• Businesses experiencing rapid growth and need an expert who can keep up with your changing accounting needs
• Companies with seasonal fluctuations maintaining an accounting staff throughout the year is not viable
• Businesses facing complex accounting challenges and need expert help

Things to look for before outsourcing your accounting services

When selecting an outsourced accounting provider, consider the following factors:

• Security: Ensure robust data security measures are in place.
• Cost: Compare pricing structures and services offered.
• End-to-end accounting services: Look for providers offering comprehensive accounting solutions.
• Flexibility: Evaluate the provider’s ability to adapt to your changing needs.

Conclusion

By outsourcing your accounting services you can experience not just cost reduction but also significant quality improvement. Accurate financial reporting helps you stay on the right side of the law and claim all expenses that you can claim rightfully. You can invest your valuable time in business management and strategy. Focus on product quality instead of being tied down by mundane accounting

Contact us today to learn more about how our accounting outsourcing solutions can benefit your business.

FAQs

What are accounting outsourcing services?

As the name suggests, outsourcing means hiring an expert to handle an internal function. Accounting is a business function that is widely outsourced due to its cost advantage. Also since accounting has a universal language, an accountant will be able to render the service irrespective of his or her location

How can outsourced bookkeeping services save my business money?

Accounting service outsourcing eliminates the need to maintain staff on payroll and provides all allowances and other benefits apart from salary. By outsourcing your accounting, you need not have staff on payroll and incur all that additional expense

Are outsourced accounting firms reliable?

Like in any other field, selecting a genuine professional has to be done. But this is not just specific to hiring a professional bookkeeper. It equally applies to all business vendors

Can small businesses benefit from accounting outsourcing services?

Absolutely. Small businesses can significantly benefit. They can free up their time without incurring a huge cost and invest their resources for the betterment of business

Will outsourcing my accounting services compromise data security?

Choosing the right accounting firm is important. A background check needs to be done and referrals, if possible

How do I choose the right outsourced accounting firm for my business?

When selecting an outsourced accounting provider, factors such as the firm’s expertise, industry experience, pricing, communication capabilities, etc need to be kept in mind.

What is the cost of outsourcing accounting services in India?

The cost of outsourcing accounting services in India varies depending on the services required, the size of your business, and the provider you choose. Generally, outsourcing can offer cost savings compared to maintaining an in-house accounting team.

What is a Trade License in Kerala?

Trade license is a common layman’s term for registering your business under the Shops& Establishment Act, Kerala. The provisions of this act are equally applicable to all organizations undertaking any kind of business / commercial transactions in Kerala. Also, it is worth noting that in case you have multiple offices in the state, spread across multiple districts, then the license must be taken for each office premise

Types of Trade Licenses in Kerala

For the purpose of classifying an Entity, the act proposes three classes of business: Small, Medium & Big. In case the entity employs less than  5 persons, it’s classified as Small, 6-19 people it’s medium and greater than 20 persons it’s a big enterprise.

Validity of  Trade Licenses in Kerala

Once your business gets registered, it has to renew the license every year. Also, any changes to the details furnished at the time of registration must be made and intimated to the authority within 30 Days

Documents Required for Trade License Application in Kerala

To apply for a trade license in Kerala, you’ll need the following documents:

• Identity proof: Aadhaar card, PAN card, passport
• Address proof: Ration card, electricity bill, voter ID
• Property documents: Sale deed, lease agreement, rent agreement
• No Objection Certificate (NOC): If renting the premises, nOC from the original owner
• Other relevant documents: Depending on the nature of your business
• Declaration on no of employees

Step-by-Step Guide to Obtaining a Trade License in Kerala

Securing a trade license in Kerala is a straightforward process:

1. Online Application: Visit the official portal to file your application online 
2. Filling the Application Form: Provide accurate details about your business and owner.
3. Submitting Required Documents: Upload the necessary documents as specified.
4. Payment of Fees: Pay the prescribed application and license fees.
5. License Issuance: Upon verification, the authorities will issue the trade license.

Penalties for Operating Without a Trade License in Kerala

Operating without a valid trade license in Kerala is a serious offence. Penalties can include:

• Fine up to ₹ 5,000.
• Additional ₹ 250 per day post-conviction.
• ₹ 250 per day after notice for breach discontinuation. This may be restricted to Rs 10,000

FAQs

1.How to take a trade license in Kerala? 

Obtaining a registration under Kerala Shops & Establishment Act is an online procedure. Visit the portal to, Fillup the details and submit for processing

2.What is local trade license? 

It is the common name for Reg under Shop and Establishment Act, it is required by all organisations undertaking commercial transactions

3.What are the benefits of having a trade license in Kerala

More than a benefit, it is a legal requirement to get registered

4.How long does it take to get a trade license in Kerala? 

It can be obtained in a week.

5.How do I renew my trade license in Kerala? 

Its similar to the registration process. Contact ClearBiz for more business services. For more help mail us at info@clearbiz.in

Income tax penalty is a word many people dread. The Indian Income Tax Department has the power to impose penalties for various non-compliance and deviations from the provisions of the act. This includes late filing of Income Tax Returns (ITRs),  penalties for incorrect reporting of income, wilful non-compliance, and many more provisions. It is worth noting that many of these offences under the Income Tax Act are criminal offences. This means contravention can result in jail terms for the responsible persons 

There is a Latin saying, ignorantia juris non excusat which translates as “Ignorance of Law is not an excuse” Understanding and adhering to the law of the land is the responsibility of every citizen. However, for many people understanding the complex provisions of law and preparing documents according to it might be difficult. However, contravention is not a solution. The best way out is to engage a trusted professional who will help you through the process

How is the Income Tax Penalty Calculated ?

The income tax penalty is calculated based on different parameters, Here are some of the most common grounds for charging late fees or penalties

• Late filing of ITR: If the return of Income is filed beyond the due date (31st July for Non-Corporate Business and 30th September for Corporate Assesees.A penalty of Rs. 5,000 is levied for individuals with a total income exceeding Rs. 5 lakhs. For those with income below Rs. 5 lakhs, the penalty is Rs. 1,000.
• Delayed payment of advance tax or self-assessment tax: Advance tax has to be remitted by all taxpayers in 4 installments and the entire liability must be discharged before the 31st of March every financial year interest is charged at the rate of 1% per month from the due date of payment to the actual date of payment in case there is a shortfall or non-payment
• Incorrect or false information: These are some serious non-compliance provisions. If the taxpayer wilfully conceals his income or provides false information in ITR.Penalties can range from 50% to 200% of the tax evaded.
• Non-compliance with TDS/TCS provisions: Penalties can be imposed on the deductor/collector if TDS is not remitted to the government within the 7th of the succeeding month. An interest of 1% per month is charged. Also for delay in filing of TDS Returns, per day late fee of RS 100 is payable subject to a maximum of tax payment

Penalty Chart Under Income Tax Act, 1961

Note: This is a simplified chart. Actual penalties may vary based on specific circumstances.

What is the Fine Slab for Late Income Tax?

The fine slab for late income tax depends on the income level and the delay period. As mentioned earlier, individuals with an income exceeding Rs. 5 lakhs face a higher penalty compared to those with lower incomes. Additionally, late payment interest is payable at 1% per month for such delay

Can the Income Tax Penalty Be Reduced?

In certain cases, taxpayers can request a reduction in the income tax penalty. This usually requires providing valid reasons for the delay or error. However, the success of such requests depends on the specific circumstances and the discretion of the tax officer.

How Can Avoid Penalty Tax?

To avoid income tax penalties, follow these tips:

• File ITR on time: Adhering to the due dates is important. July 31st for Individuals (Non-Tax Audit ) and 30th September for Audit cases
• Pay advance tax and self-assessment tax on time: Avoid late payment penalties and interest by strictly following the advance tax installments
• Maintain accurate records: Proper documentation helps prevent errors while filing ITR. This in turn ensures there is no mismatch with data available with the Income Tax Authorities
• Seek professional help: Consult a tax expert for guidance, to minimize the possibility of errors and ensure you stay compliant

The Benefits of Filing ITR on Time

Filing your Income Tax Return on time offers several advantages:

• Avoid penalties: As discussed, late filing attracts penalties and interest
• Claim refunds: If you have paid excess in taxes, you can claim a refund by filing the ITR. Now refunds are processed even within a week and disbursed to the tax payer
• Loan approvals: Many financial institutions require ITR for loan processing. ITR are taken as a record for income proof. Usually bankers request for previous three years of ITR as income proof of the applicant
• Visa applications: Some countries require ITR for visa purposes.

Conclusion

Developing an overall understanding of the existing tax laws is a must if you earn income in India. This is not just if you are doing any business here. Even in case you are a salaried person, knowing the basic provisions of Income Tax is extremely important

FAQs On Income Tax Penalty

• What is the maximum penalty for not filing ITR?

The Maximum penalty for non filing of ITR is Rs 5000 , however if your income is below Rs 500,000 late fee u/s 234F will only be RS 1000

• Can we file ITR for last 3 years?

Well now there is a provision to file ITR-U (Updated Return). This can be done for previous 2 years . However this cannot be used for claiming any refund

• What is the penalty for not filing TDS report?

The penalty is Rs 100 per day, limited to the amount of tax remitted

• How to pay late filing penalty?

Income Tax payment can be made by using the E Pay Tax Facility on the ITD Portal

• What is the normal penalty in income tax?

The Maximum penalty for non filing of ITR is Rs 5000 , however if your income is below Rs 500,000 late fee u/s 234F will only be RS 1000, Likewise for each case of contravention from act penalty provision varies under the act

• What is the maximum exemption for ITR?

All individual whose income falls below basic exemption limit (Rs 250000) are not required to file ITR

• What are the steps to Epay Tax

Step 1: Navigating to ‘e-Pay Tax’ Section

1. Visit the Income Tax Portal
2. On the homepage, locate the ‘Quick Links’ section on the left side.
3. Click on the ‘e-Pay Tax’ option or use the search bar to find ‘e-Pay Tax’.

Step 2: Enter PAN/TAN and Mobile Number

1. Enter your PAN and re-enter to confirm it.
2. Provide your mobile number and click ‘Continue

Step 3: Select the correct Assessment Year and Payment Type

1. Select the first box labelled as ‘Income Tax’ and click ‘Proceed’

Step 4

      1. From the ‘Assessment Year’ dropdown, select ‘2024-25’ for FY 23-24

2. Under the ‘Type of Payment’, select ‘Self-Assessment Tax (300)’ and click on ‘Continue’. Enter the payment amounts accurately under the relevant categories.

Step 6: Verify Payment Information

1. After clicking ‘Continue’, you can preview the challan details.
2. Double-check the payment information for accuracy.
3. Click ‘Pay Now’ to make the payment or ‘Edit’ to modify the details.

Step 7: Submit the Payment

1. Tick the checkbox to agree to the Terms and Conditions.
2. Click ‘Submit To Bank’ to proceed with the payment.

Step 8: Receive Payment Confirmation

1. You will receive a confirmation once your tax payment has been successfully submitted.

Note: Remember to download the challan as you will need the BSR code and Challan number to complete the return filing process.