General Trading Chat

[siddhant4u]

............. maybe the noose tightens

Income Tax Form 26AS: Hotel bills of over Rs 20,000 will now reflect in your ITR; check other changes
https://www.moneycontrol.com/news/b...-in-your-itr-check-other-changes-5696861.html

hahahaha... how come hotel bill in ITR is reducing complexity... !!! cash payment is option ?

 

[Dr. Jan Itor]

^ Resort politics ka bill kiske naam pe fatega??
I don't see the spirit of "trust not doubt the taxpayers" motto behind all the reforms being put in place...

 

[canikhil]

Waiting for more details / discussion / clarification on this

PM Modi launches country’s first taxpayers’ charter promised in the budget
Experts said the taxation system is still complicated and intimidating that dissuades people to voluntarily come under its net.
https://www.hindustantimes.com/indi...-the-budget/story-2OrX12N5QLdRLIDhG9rC4M.html

Member @canikhil , hope we will hear from you.

Honestly, I would not read too much into these slogans etc.

Problems are simple:

1. This government says one thing and act in diametrically opposite manner - every day we see unnecessary notices and assessments being opened up;

2. The whole system is built on lack of trust - This government neither trusts the tax payer nor the collector. What we need is a emphatic tax officer. Instead we are getting a faceless system where the cost of compliance might only go up for Tier 2 and Tier 3 city tax payers as they would now be expected to handle assessment in written form only, that too in English.

3. Asking tax payers to submit details of foreign travel, hotel bills etc is stupidity. This should form part of your survelliance. Government is only increasing the documentation and compliance cost here. Compare this 44AD scheme that Chidambaram announced. I have no love for the man, but he came up with a clean mechanism to persuade small tax payers to comply without any sword hanging over them.

Rest, we can only hope that this government can for once get its economic policies right. Playing chess with economy is not the best way forward. Use that only for the political games.

 

[PreSap]

Honestly, I would not read too much into these slogans etc.

Problems are simple:

1. This government says one thing and act in diametrically opposite manner - every day we see unnecessary notices and assessments being opened up;

2. The whole system is built on lack of trust - This government neither trusts the tax payer nor the collector. What we need is a emphatic tax officer. Instead we are getting a faceless system where the cost of compliance might only go up for Tier 2 and Tier 3 city tax payers as they would now be expected to handle assessment in written form only, that too in English.

3. Asking tax payers to submit details of foreign travel, hotel bills etc is stupidity. This should form part of your survelliance. Government is only increasing the documentation and compliance cost here. Compare this 44AD scheme that Chidambaram announced. I have no love for the man, but he came up with a clean mechanism to persuade small tax payers to comply without any sword hanging over them.

Rest, we can only hope that this government can for once get its economic policies right. Playing chess with economy is not the best way forward. Use that only for the political games.

@canikhil
Hello,

I had a question about 44AD. With the use of this section doesn’t it allow a lot of people to pay less tax than they normally would have to?

For example an employed person would have to pay at the income tax slab rates.

But if the same person opened up a proprietorship and no tax is deducted at source, I understand that only 8% or 6% is taxable income. For someone earning 30 L this comes to about 2.4 L. So he won’t have to pay any tax - is this understanding correct? Of course GST will have to be paid.


Sent from my iPhone using Tapatalk

 

[Dr. Jan Itor]

SC judegment on AGR today...

 

[tradermodified]

Hello,

I had a question about 44AD. With the use of this section doesn’t it allow a lot of people to pay less tax than they normally would have to?

For example an employed person would have to pay at the income tax slab rates.

But if the same person opened up a proprietorship and no tax is deducted at source, I understand that only 8% or 6% is taxable income. For someone earning 30 L this comes to about 2.4 L. So he won’t have to pay any tax - is this understanding correct? Of course GST will have to be paid.


Sent from my iPhone using Tapatalk

"But if the same person opened up a proprietorship and no tax is deducted at source, I understand that only 8% or 6% is taxable income. For someone earning 30 L this comes to about 2.4 L. So he won’t have to pay any tax - is this understanding correct? Of course GST will have to be paid."
can you define, what is meant by earning in this paragraph

 

[PreSap]

"But if the same person opened up a proprietorship and no tax is deducted at source, I understand that only 8% or 6% is taxable income. For someone earning 30 L this comes to about 2.4 L. So he won’t have to pay any tax - is this understanding correct? Of course GST will have to be paid."
can you define, what is meant by earning in this paragraph

For example instead of doing a regular job as an IT employee, he opens up a proprietorship for IT consulting thereby providing technical services.

So he is not employed and no TDS is deducted. He charges 18% GST which he pays to the government.

Please let me know if I am not clear

 

[timepass]

For example instead of doing a regular job as an IT employee, he opens up a proprietorship for IT consulting thereby providing technical services.

So he is not employed and no TDS is deducted. He charges 18% GST which he pays to the government.

Please let me know if I am not clear

When he was employed, his firm must've paid 18% GST. He received his salary post-GST, and maybe the same applies to his proprietory business.

 

[PreSap]

When he was employed, his firm must've paid 18% GST. He received his salary post-GST, and maybe the same applies to his proprietory business.

Here is what I understood but am not 100% certain.

If he is no longer an employee and sets up his own proprietorship, has turnover less than 2 crores then he can provide technical services and be taxed under section 44AD.

So if he provides services for 30L , he will actually charge the client 30L plus the18% gst. This 18% that he collected is the proprietor’s responsibility to pay to the government.

Now according to section 44AD his profit is considered as 8% or 6%(in case of payments received digitally) of gross receipts. So his profit becomes let’s say 2.4 lakhs. Now tax will be calculated on this 2.4L and since its under slab there is no need to pay tax. So full 30L comes to pocket?

I want to ask if my understanding is correct. @canikhil please help.

 

[canikhil]

@canikhil
Hello,

I had a question about 44AD. With the use of this section doesn’t it allow a lot of people to pay less tax than they normally would have to?

For example an employed person would have to pay at the income tax slab rates.

But if the same person opened up a proprietorship and no tax is deducted at source, I understand that only 8% or 6% is taxable income. For someone earning 30 L this comes to about 2.4 L. So he won’t have to pay any tax - is this understanding correct? Of course GST will have to be paid.


Sent from my iPhone using Tapatalk

not sure what you meant. Not many employed persons really have the option of converting their salaries position into a "business position". Also it leads to the following issues that you really do not account for:

1. Employment also leads to social securities such and PF, ESI, Pension etc. Most of it is lost in a contractual position;

2. In case your offering is considered as profession instead of business, then the tax impact might actually be much worse.

3. Also need to account for the GST compliance cost which includes monthly filings, documentation etc.

4. Now tax example of HRA deduction. For non-employed, the rent deduction is severely restricted.

So, in nutshell, while in some cases it may make sense, generally it is not a very attractive option. Not to forget that a contractual position carries no security of a salaries job.