Accounting Tips:

Accounting tips:
Understand Double-Entry debit/credit accounting:
Definitions of credit/debit:
0) A debit or credit are both types of parts of a money transaction in a double entry bookkeeping system.

1) A credit always does the opposite to a particular account that a debit does.

2) In a complete transaction in a double entry bookkeeping system, the sum of the credits must equal the sum of the debits for the transaction to be in balance.

3) Since in the world there are only two kinds of accounts, your companies, and all the other companies in the world, credits and debits should act one way on your accounts, and exactly the opposite on other companies' accounts, so that money either flows from you to others or from others to you.

4) A chart of accounts represents both types of accounts, so that credits and debits must follow all the rules above.

DEBIT	ACCOUNT CATEGORY	CREDIT
+	1= your company ASSETS	-
-	2 = rest of world LIABILITIES	+
-	3 = rest of world EQUITIES	+
-	4 = rest of world REVENUE	+
+	5-9 = your company EXPENSES	-

Notes on usage: The Assets and Expenses model the activity of your company. The Liabilities, Equities, & Revenues model the rest of the world that lose something when your company gains something. This is why the debits and credits act opposite on you versus your others. If you gain, someone else must lose unless you are just converting some kind of value into another type within your own company. For example: You can reduce your checking balance so as to increase an expense category. One must memorize this table so that any question like: What does a credit do to a liability? One must be able to answer immediately that the credit would increase the liability account. This is how one learns to think about a new complex transaction that your company is having for the first time. One can understand that this new complex transaction must have certain effects on certain accounts and then figure out what the remaining effects must be in terms of a debit or credit of which accounts since the over-riding rule is that in any one transaction in a double entry accounting system the total of all debits must equal the total of all credits.

The plus under the debit column to the left of the Assets account category means that a debit will increase the balance of any Asset account.

For example: A REFUND CHECK COMES IN!

We know that the check will be deposited in the company checking account and that it must increase the checking account balance, right? What other account do I put the deposit to in my cash receipts area? The area where the original expense went is the place that you should put it to, but why and what effect will this have? Since we know that an increase in the checking account can only be caused by a debit because the account is an Asset account, we know that the expense account will be credited by the same amount. What does a credit do to your company's expense accounts. Looking at the chart, we see that the credit will decrease your company's expense. Doesn't that make sense? Make sense out of all your accounting packages transactions by understanding this chart and using it daily. Soon you will understand the Double Entry Accounting system.

Email Us with questions or comments about this web site.
Copyright © umapratap@gmail.com

Read More

RTGS

Q1. What is RTGS System?

Ans. The acronym 'RTGS' stands for Real Time Gross Settlement, which can be defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting).'Real Time' means the processing of instructions at the time they are received rather than at some later time.'Gross Settlement' means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis). Considering that the funds settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable.

Q2. How RTGS is different from National Electronics Funds Transfer System (NEFT)?

Ans. NEFT is an electronic fund transfer system that operates on a Deferred Net Settlement (DNS) basis which settles transactions in batches. In DNS, the settlement takes place with all transactions received till the particular cut-off time. For example, currently, NEFT operates in hourly batches - there are eleven settlements from 9 am to 7 pm on week days and five settlements from 9 am to 1 pm on Saturdays. Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time. Contrary to this, in the RTGS transactions are processed continuously throughout the RTGS business hours.

Q3. Is there any minimum / maximum amount stipulation for RTGS transactions?

Ans. The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is ` 2 lakh. There is no upper ceiling for RTGS transactions.

Q4. What is the time taken for effecting funds transfer from one account to another under RTGS?

Ans. Under normal circumstances the beneficiary branches are expected to receive the funds in real time as soon as funds are transferred by the remitting bank. The beneficiary bank has to credit the beneficiary's account within two hours of receiving the funds transfer message.

Q5. Would the remitting customer receive an acknowledgement of money credited to the beneficiary's account?

Ans. The remitting bank receives a message from the Reserve Bank that money has been credited to the receiving bank. Based on this the remitting bank can advise the remitting customer that money has been delivered to the receiving bank.

Q6. Would the remitting customer get back the money if it is not credited to the beneficiary's account? When?

Ans. Yes. It is expected that the receiving bank will credit the account of the beneficiary instantly. If the money cannot be credited for any reason, the receiving bank would have to return the money to the remitting bank within 2 hours. Once the money is received back by the remitting bank, the original debit entry in the customer's account is reversed.

Q7. Till what time RTGS service window is available?

Ans. The RTGS service window for customer's transactions is available from 9.00 hours to 16.30 hours on week days and from 9.00 hours to 13.30 hours on Saturdays for settlement at the RBI end. However, the timings that the banks follow may vary depending on the customer timings of the bank branches.

Q8. What about Processing Charges / Service Charges for RTGS transactions?

Ans. With a view to rationalize the service charges levied by banks for offering various electronic products, a broad framework has been mandated as under:

a) Inward transactions – Free, no charge to be levied

b) Outward transactions –
` 2 lakh to `. 5 lakh - not exceeding ` 25 per transaction.
Above ` 5 lakh – not exceeding ` 50 per transaction.

Q9. What is the essential information that the remitting customer would have to furnish to a bank for the remittance to be effected?

Ans. The remitting customer has to furnish the following information to a bank for effecting a RTGS remittance:

1. Amount to be remitted
2. Remitting customer’s account number which is to be debited
3. Name of the beneficiary bank
4. Name of the beneficiary customer
5. Account number of the beneficiary customer
6. Sender to receiver information, if any
7. The IFSC Number of the receiving branch

Q10. How would one know the IFSC code of the receiving branch?

Ans. The beneficiary customer can obtain the IFSC code from his bank branch. The IFSC code is also available on the cheque leaf. The IFSC code is also available on the RBI website (http://rbidocs.rbi.org.in/rdocs/RTGS/DOCs/RTGEB1110.xls). This code number and bank branch details can be communicated by the beneficiary to the remitting customer.

Q11. Do all bank branches in India provide RTGS service?

Ans. No, all the bank branches in India are not RTGS enabled. As on 23 February, 2011 there are more than 74,000 RTGS enabled bank branches. The list of such branches is available on RBI website http://rbidocs.rbi.org.in/rdocs/RTGS/DOCs/ RTGEB1110.xls

Q12. Is there any way that a remitting customer can track the remittance transaction?

Ans. It would depend on the arrangement between the remitting customer and the remitting bank. Some banks with internet banking facility provide this service. Once the funds are credited to the account of the beneficiary bank, the remitting customer gets a confirmation from his bank either by an e-mail or sms.

Q13. How can a remitting customer know whether the bank branch of the beneficiary accepts remittance through RTGS?

Ans. For a funds transfer to go through RTGS, both the sending bank branch and the receiving bank branch would have to be RTGS enabled. The lists are readily available at all RTGS enabled branches. Besides, the information is available at RBI website (http://rbidocs.rbi.org.in/rdocs/RTGS/DOCs/RTGEB1110.xls). Considering that more than 74,000 branches at more than 20,000 cities/ towns / taluka places are covered under the RTGS system, getting this information would not be difficult.

Q14. Whom do I can contact, in case of non-credit or delay in credit to the beneficiary account?

Ans. Contact your bank / branch. If the issue is not resolved satisfactorily, the Customer Service Department of RBI may be

Read More

Myspace

IMF Chief denied bail by New York judge…next appearance on May 20.

Read More

TDS

TDS rates for Financial Year 2010-11

Form 24Q:

Male	Female	Senior Citizen	Tax (%)
For Income Between 0 to 1,60,000	For Income Between 0 to 1,90,000	For Income Between 0 to 2,40,000	0
For Income Between 1,60,001 to 5,00,000	For Income Between 1,90,001 to 5,00,000	For Income Between 2,40,001 to 5,00,000	10
For Income Between 5,00,001 to 8,00,000	For Income Between 5,00,001 to 8,00,000	For Income Between 5,00,001 to 8,00,000	20
For Income above 8,00,001	For Income above 8,00,001	For Income above 8,00,001	30
Surcharge			0
Education Cess			3

Form 26Q:

Section	Nature of Payment	Status	Tax (%)
193	Interest on Debentures & Securities		10
194	Deemed Dividend		10
194A	Other Interest > Aggregate sum exceeding Rs. 10,000 for Banking Co’s , etc.per person during the financial year. > Aggregate sum exceeding Rs. 5,000 per person during the financial year		10
194B	Lottery/Crossword Puzzle > Rs.10,000		30
194BB	Winnings from Horse Race > Rs. 5,000		30
194C	Contracts to Transporter, who has provided a valid PAN		0*
	Contracts to Individuals/HUF		1
	Contracts to others		2
194D	Insurance Commission > Rs.20,000		10
194EE	Withdrawal from NSS > Rs.2,500		20
194F	Repurchase of Units by MF/UTI		20
194G	Commission on Sale of Lottery Tickets > Rs.1,000		10
194H	Commission or Brokerage > Rs.5,000		10
194I	Rent > Rs.1,80,000 p. a. Rent of Plant & Machinery		2
	Rent of Land, Building, Furniture, etc		10
194J	Professional or Technical Fess > Rs.30,000		10
194LA	Compensation on Compulsory Acquisition of immovable property >Rs.1,00,000 during the financial year		10
Surcharge			0
Education Cess			0
* If there is no PAN details, then it is 20%. (or at actual, whichever is higher)

Form 27Q:

Section	Nature of Payment	Status	Tax (%)
194E	Payment to nonresident sportsmen or sports association		10
195(a)	Income from foreign exchange assets payable to an Indian citizen		20
195(b)	Income by way of long-term capital gain referred to in sec. 115E		10
195(c)	Income by way of Short-term capital gains u/s. 111A		15
195(d)	Income from other long-term capital gains		20
195(e)	Income by way of interest payable by Government/Indian concern on money borrowed or debt incurred by Government or Indian concern in foreign currency		20
195(f)	Royalty payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern after March 31, 1976, where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to section 115A(1A) to the Indian concern or in respect of computer software referred to in the second proviso to section 115(1A), to a person resident in India -
	1.Where the agreement is made before June 1, 1997		30
	2.Where the agreement is made after May 31, 1997 but before June 1, 2005		20
	3.Where the agreement is made on or after June 1, 2005		10
195(g)	Royalty (not being royalty of the nature referred to in (e) sub para) payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to matter included in the industrial policy, the agreement is in accordance with that policy
	1.Where the agreement is made after March 31, 1961 but before April 1, 1976	COMPANY	50
		OTHERS	30
	2.Where the agreement is made after March 31, 1976 but before June 1, 1997		30
	3.Where the agreement is made after May 31, 1997 but before June 1, 1997		20
	4.Where the agreement is made on or after June 1, 2005		10
195(h)	Fee for technical services payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to matter included in the industrial policy, the agreement is in accordance with the policy -
	1.Where the agreement is made after February 29, 1964 but before April 1, 1976	COMPANY	50
		OTHERS	30
	2.Where the agreement is made after March 31, 1976 but before June 1, 1997		30
	3.Where the agreement is made after May 31, 1997 but before June 1, 2005		20
	4.Where the agreement is made on or after June 1, 2005		10
195(i)	Any other income	COMPANY	40
		OTHERS	30
196A	Income in respect of Units of Non-residents		20
196B	Income and Long-term Capital gain from units of an Off shore fund		10
196C	Income and Long-term Capital Gain from Foreign Currency Bonds or shares of indian companies		10
196D	Income of Foreign Institutional Investors for Securities		20
Surcharge ( On Tax)	Applicable for Foreign Companies if payment/credit exceeds Rs.1 crore of such companies		2.5
Education Cess	on Tax deducted Plus Surcharge		3

Form 27EQ:

Collection Code	Nature of Purchase	Tax (%)
6CA	Alcoholic liquor for human consumption	1
6CB	Timber obtained under a forest lease	2.5
6CC	Timber obtained under any mode other than forest lease	2.5
6CD	Any other forest product not being timber or tendu leave	2.5
6CE	Scrap	1
6CF	Parking Lot	2
6CG	Toll plaza	2
6CH	Mining and quarrying	2
6CI	Tendu leaves	5
Surcharge (On Tax)	Applicable for Foreign Companies if collections exceeds Rs.1 crore of such companies	2.523
Education Cess	Applicable for Foreign Companies	3

Read More