Income Tax Slab Rate(12-13)

For example: Let us consider a net taxable income of Ravi as Rs. 8, 00,000.

As a male assessee, here’s how his tax is calculated.

   

Calculation (Please refer to the chart above for tax rates and surcharge) 

Tax up to Rs. 1,80,000: Nil

Tax on Rs.1,80,000 to Rs.5,00,000 @ 10%: 32,000

Tax on Rs. 5,00,000 to Rs. 8,00,000 @ 20%: 60,000

Total: 92,000

Educational Cess - 3% of Total Tax: 2,760

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Basic Aspect of Service Tax

Service tax and GST are taxes of 21st century. Service tax was imposed for first time on 3 services w.e.f. 1-7-1994 and its scope is increasing every year. Highlights of service tax are as follows –

Liability of service tax
General background	Service tax comes under powers of Entry 97 of List I of Seventh Schedule to Constitution of India. Service tax was introduced w.e.f. 1-7-1994 and its scope is being expanded every year. Service tax is not payable if service is provided in J&K or if provided outside India.
Taxable event in service tax	Service tax is imposed under section 66 of Finance Act, 1994, which is the charging section [There is no separate Service Tax Act s such]. ‘Service provided or to be provided’ is ‘taxable event’. Thus, service tax is payable when advance is received.
Taxable services	Service tax is payable under Finance Act, 1994; on about 117 taxable services as defined in section 65(105) of Finance Act, 1994.
Service requires two parties	Service requires two parties. One cannot give service to himself.
Tax only on value of services not on value of goods	Service tax cannot be levied on value of goods. Service tax and Vat are mutually exclusive.
Rate of service tax	General rate of service tax is 10.30% (including education cess and SAH education cess) w.e.f. 24-2-2009 [During period 11-5-2007 to 23-2-2009, it was 12.36%]. In some cases, abatement is available.
Education cess to be shown and paid separately	Education cess and SAHE cess should be shown separately in invoice and should be paid under separate accounting head.
Person liable to pay service tax
Liability of service provider	Service tax is payable by service provider. In few cases, tax is payable by service receiver, under reverse charge method [Section 68(2)].
Reverse charge	In case of Goods Transport Agency (GTA), Import of Service, Sponsorship service and Agent of mutual fund and insurance, service tax is payable by service receiver.
Value for purpose of service tax
Service Tax on gross amount charged	Service tax is payable on gross amount charged for taxable service provided or to be provided [section 67] (excluding material cost)..
Tax on reimbursement of expenses	Tax is payable on reimbursement of expenses which are part of service, but not on payments made by service provider as ‘pure agent’ of service receiver
Service tax not payable if amount received only as agent of service receiver	Service tax is not payable on amounts collected by service provider from service receiver which are not part of service but are paid by service provider to third parties for administrative convenience and then recovered from service receiver, even if all requirements of definition of ‘pure agent’ are not satisfied.
Value on basis of similar service or cost	If value is not ascertainable, valuation can be on basis of similar service or on basis of value which shall not be less than cost.
Gross amount charged is inclusive of service tax	Gross amount charged for taxable service is taken as inclusive of service tax and then tax should be calculated by making back calculations.
Exemption from service tax
Exemption to small service providers	Small service providers whose total value of services provided (including exempt and non-taxable services) is less than Rs 10 lakhs in previous year are not required to pay service tax in current financial year till they reach turnover of Rs 10 lakhs. Clubbing provisions can apply. Registration is required if turnover exceeds Rs 9 lakhs per annum.
No exemption if service provided under brand name of other	The exemption is not available if service is provided under brand name of other person.
No exemption when service tax is payable under reverse charge method	This exemption is not available when service tax is payable by service receiver under reverse charge method.
Abatement and simplified method of payment of taxes	In case of some services, abatement is available. In case of some services, simplified method of calculating value of service has been prescribed.
Services to SEZ and SEZ Developer	Services provided to SEZ unit or developer are exempt if wholly consumed within SEZ. In case of services consumed by SEZ outside SEZ, refund claim has to be filed.
Services provided by RBI exempt but services provided to RBI taxable	Services provided by RBI are exempt but service provided to RBI are not exempt.
Classification of service
Service to be classified	The classification of services will be determined according to terms specified in various sub-clauses of section 65(105). [section 65A(1)].
Rules for classification of service	If prima facie, a taxable service is classifiable under two or more sub-clauses of section 65(105), classification shall be effected as per following rules – (a) Specific description to be preferred over a general description [section 65(2)(a)] (b) Classification should be as per essential character in case of composite services [section 65(2)(b)] (c) Service which appears earlier in list of section 65(105), if service cannot be classified on above basis [section 65(2)(c)]
Exception in case of port and airport services	Exception is made in case of port services and airport services, where, if service is rendered wholly in port or airport, the service will be classified as port/airport service irrespective of its classification as per section 65A,
Service should be predominantly taxable	Service should be predominantly a taxable service. A composite contract consisting various services cannot be vivisected.
Composite contract consisting of goods and services can be vivisected	An indivisible/composite contract of goods and services can be vivisected and service part of it subjected to service tax.
New service head means service was not earlier taxable	Introduction of new service head means the service was not taxable earlier.
Service excluded from one head	Service specifically excluded from one head cannot be classified under other head.
Cenvat Credit
Credit of tax/duty paid on input goods, input services and capital goods	Service provider can avail Cenvat credit of service tax paid on input services and excise duty paid on inputs and capital goods. The credit can be utilised for payment of service tax on output services.
Any service in relation to business is input service	Definition of input service is wide. Any service in relation to business is ‘input service’.
Duty paying document for availing Cenvat credit	Credit can be availed on basis of proper and complete specified original duty paying documents.
Cenvat credit when taxable as well as exempted services provided	If assessee is providing both taxable and exempt services and if input services are common, Cenvat credit can either be taken on proportionate basis or 6% ‘amount’ is required to be paid on value of exempted services.
Registration
Procedure for registration	Service provider should register within 30 days from date of commencement of providing taxable service. Application should be in form ST-1 [Rule 4(1)]. Income Tax PAN, address proof, evidence of constitution of firm/company, list of directors/partners are the most important document required. Registration will be deemed to have been granted if not received within seven days [Rule 4(5)]. Application for registration is to be filed electronically. The PAN based registration number is generated by system immediately. However, registration certificate is issued by Superintendent in form ST-2 after the documents are submitted.
Centralised registration	Person providing services from more than one premises or offices can apply for centralised registration, if he has centralised billing system or centralised accounting system [Rule 4(2)]
Input Service Distributor	Input Service Distributors (ISD) require registration. HO or branch or depot can register as ISD and distribute credit to centres which are providing taxable services
Procedures to be followed
Invoice by service provider	Assessee should prepare invoice in respect of his services. The Invoice should be prepared within 14 days from date of completion of taxable service or receipt of payment towards the value of taxable service, whichever is earlier. Invoice should contain prescribed details [Rule 4A]
Payment of service tax	If the assessee is an individual or proprietary firm or partnership firm, the tax is payable on quarterly basis within 5 days at the end of quarter (within 6 days in case of e-payment) except in March. Service tax is payable by other assessees by 5th of the month following the month in which payments are received toward value of taxable services (by 6th in case of e-payment) except in March [rule 6(1) of Service Tax Rules].
Payment of service tax in March	Service tax on value of taxable services received during month of March or quarter of March is required to be paid by 31st March in case of all the assessees.
Payment of service tax
Service tax payable on receipt basis	Service tax is not payable on basis of amounts charged in the bills/invoice, but only on amounts actually received during the relevant period, except in case of associated enterprises. If partial amount is received, tax will be payable on pro rata basis.
Exception in case of associated enterprises	The exception is that in case of service provided to associated enterprises, service tax is payable as soon as book entry is made in the books of service provider (when he is liable) or service receiver (when he is liable to pay service tax under reverse charge method).
Advance payment of service tax	A person liable to pay service tax can pay any amount in advance towards future service tax liability. After such payment he should inform Superintendent of Central Excise within 15 days [Rule 6(1A)]. When he adjusts the advance, he should indicate details in the subsequent return filed
GAR-7 challan and e-payment	Tax is payable by GAR-7 challan using appropriate accounting code. E-payment is compulsory to those who are paying service tax of more than Rs 10 lakhs per annum. For others, e-payment is optional.
Interest for late payment of service tax	Mandatory interest for late payment of service tax is 13% [section 75]. It cannot be reduced or waived.
Returns under service tax
Half yearly return	Every person liable to pay service tax has to submit half yearly return in form ST-3 in triplicate within 25 days of the end of the half-year [Rule 7]. Late fees upto Rs 2,000 are payable if return is filed late.
Self Assessment	Assessment is basically self assessment. Provisional assessment is permissible.
Demands
Administration by excise department	The service tax is administered by excise department. Adjudication order is issued by excise officer.
Demand if tax short paid	If service tax was short paid, demand can be raised within period of one year from ‘relevant date’. If the short payment or non-payment was on account of suppression of facts or wilful mis-statement with intention to evade, demand can be raised within period of five years.
Rectification of order	Order passed by Central Excise Officer can be rectified by him within two years. Only mistake apparent from records can be rectified [section 74].
Appeal against order of demand	Both department or assessee can file appeal before Commissioner (Appeals) against order of demand of duty and penalty of officer lower than Commissioner.
Penalties and appeals
Penalty for late payment of service tax	If service tax is not paid or belatedly paid, penalty will be minimum Rs. 200 per day or @ 2% per month, whichever is higher, starting with the first day after due date till date of actual payment of outstanding amount. Penalty cannot exceed the service tax which was payable [section 76]. Penalty can be reduced if sufficient cause is shown [section 80].
No penalty if service tax and interest paid on own before SCN	No penalty can be imposed if service tax and interest is paid before show cause notice, except in case of fraud, suppression of facts etc. [Explanation 2 to section 73(3)]
Penalty for contravention of rules	There is heavy penalty for contravention of rules, not obtaining registration, not maintaining books of account, not paying tax electronically etc [section 77]. Penalty can be reduced if sufficient cause is shown [section 80]. No penalty can be imposed if service tax and interest is paid before show cause notice, except in case of fraud, suppression of facts etc. [Explanation 2 to section 73(3)]
Penalty for fraud, suppression of facts. Wilful mis-statement	If non-payment was on account of fraud, suppression of facts etc., penalty shall not be less than amount of service tax but can be upto twice the amount of service tax amount of service tax not levied or not paid or erroneously refunded. Penalty will be reduced to 25% if paid with tax and interest within 25 days of receipt of order [section 78]. Penalty can be reduced if sufficient cause is shown [section 80].
Appeals to Commissioner (Appeals)	Appeal against order of authority lower than Commissioner lies with Commissioner (Appeals), by assessee or as well as by department [section 85].
Next appeal to Tribunal	Appeal against order of Commissioner (Appeals) or Commissioner lies with Appellate Tribunal (Customs, Excise and Service Tax Appellate Tribunal) [Section 86]. Further appeal lies with High Court and Supreme Court. Appeals can be filed both by assessee and department.
Export of Service
No tax on export of service	No service tax is payable if taxable service is exported as per Export of Service Rules.
Refund if tax paid on exported service	No tax is payable on export of service. If paid, it is refundable. Rebate/refund of service tax paid on input services is obtained if taxable service is exported
Conditions to treat a service as ‘export’	Common condition in respect of all taxable services, for treating the service as export of service is that payment for such service is received by the service provider in convertible foreign exchange. In addition, there are some conditions based on the category of service (e.g. immovable property outside India, service performed outside India, recipient is located outside India).
Import of service
Tax payable by recipient under reverse charge	In case of import of service, tax is payable by recipient of services under method of ‘reverse charge’. Tax should be paid by cash i.e. GAR-7 challan and then Cenvat credit can be availed of the tax so paid, as it is his input service.
Tax only if service is received in India	Tax is payable only when service is received in India. Services provided and used outside India cannot be taxed in India.
Conditions to treat a service as ‘import’	To determine the issue whether a provision of service is ‘import of service’, services have been classified in three categories. Criteria for each category has been specified e.g. immovable property India, service performed in India, recipient is located in India

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Annual filing eForms

Roc Compliance

Description	e-Form with Instruction kit	e-Form
Form for filing annual return by a company having a share capital with the Registrar	Form 20B	Form 20B
Particulars of annual return for the company not having share capital	Form 21A	Form 21A
Form for filing balance sheet and other documents with the Registrar	Form 23AC	Form 23AC
Form for filing Profit and Loss account and other documents with the Registrar	Form 23ACA	Form 23ACA
Form for submission of compliance certificate with the Registrar	Form 66	Form 66

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Free Twitter Backgrounds - Twitter Themes

Free Twitter Backgrounds - Twitter Themes

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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.

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