Income Tax Services

Income tax is one of the key taxation laws in India that taxes people based on their income. Taxes directly reduce your overall profits and therefore, it is important for businesses to plan their operations and investments in the most tax efficient manner. In order to promote savings and investments and provide opportunities to grow, the government has inserted various deductions, exemptions and tax holiday provisions under the income tax law. But many taxpayers aren’t aware of these provisions, thereby missing the chance to avail of the benefit. That raises the significance of the income tax services in India.

What is Covered Under Income Tax Advisory Service?

The entire income tax in India is governed by the Income Tax Act, 1961 read with Income Tax Rules, 1962. The income tax consultancy services in India encompasses the following services:

• Tax Planning: Having the best tax advisors can assist you with efficient tax planning to help you conduct your business operations in the most tax efficient manner. Taxes have a big say in most of your financial decisions and therefore, it is important to have good tax advisors in India in your panel to help you understand the tax implications on your income and financial decisions.
   
• Restructuring Organisational Structure: In India, there are different tax rates for different organisational structures. Further, the deductions, exemptions and rebates also vary across these structures. Therefore, it is important to select the structure that best fulfils your needs while also being the most tax efficient one. Some of the common organisational structures in India are sole proprietors, partnership firms, Limited Liability Partnerships (LLP), companies, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), trusts, societies etc.
   
• Deductions & Exemptions: The government has inserted various provisions providing tax deductions and exemptions to taxpayers. This was done with the motive of encouraging and cultivating the habit of savings and investments amongst the citizens. Some of the common deductions that you can claim include life insurance premiums, medical insurance premiums, investment in ELSS mutual funds, NPS, provident fund, home loan principal repayment, home loan interest payment, term deposit etc. Further, to encourage the purchase of electric vehicles, taxpayers can also claim a deduction of interest paid on electric vehicle loans.
   
• Tax Holidays: The government has provided income tax exemption to certain sectors in order to promote growth and incentivise more people to enter into these sectors. Some of these sectors include startups, units working in the SEZ, sovereign and pension funds etc. Getting tax exemptions in India can save a lot of money for these sectors in the form of taxes.
   
• International Taxation: The Income Tax Act, 1961 also lays down provisions relating to the taxation aspects of international transactions. This basically involves the taxability of international transactions including purchase, sale, expenditures, purchase of assets, investments, lending etc.
   
• DTAAs: Double Taxation Avoidance Agreements (DTAAs) are the agreements entered into between two nations aimed towards avoidance of double taxation on the same income. Double taxation can happen due to source and residence rules. In case a taxpayer earns income from a foreign country, the foreign country can tax such income as the income accrued there whereas the home country can tax such income as the taxpayer is resident in such country. This can lead to double taxation of the same income leaving a meagre portion of such income with the taxpayer. To avoid such double taxation, taxpayers need to be aware of the provisions of the DTAA.
   
• Transfer Pricing: Transfer pricing is an important element in the case of international transactions. The income tax law contains provisions relating to transfer pricing that aim to ensure that the transaction price at which the international transactions take place is at arm’s length price. Manipulation in transfer pricing can lead to shifting of profits from one country to another where tax rates are lower leading to avoidance of taxes.
   
• Taxation of NGOs: The income tax law has laid down separate provisions relating to the taxation of charitable and religious organisations. The provisions also contain conditions for exemption from taxes based on usage or investment of funds. In order to claim tax exemption, one needs to obtain registration under section 12A of the Income Tax Act, 1961.
   
• ITRs and Audits: Filing of income tax returns and audit reports are at the centre of income tax compliances in India. When filing your income tax returns, you need to report your total income earned from different sources and pay tax accordingly. Further, if your turnover exceeds the specified limit, then you have to get your books of accounts audited by a practising Chartered Accountant.
   
• Compliances: Apart from the income tax returns and audit, there are various other compliances under the income tax law. This includes TDS, TCS, advance tax etc. TDS & TCS provisions were introduced by the government to ensure that incomes are accurately reported. The diductor and collector are required to file TDS / TCS returns in specified forms. Further, if the taxpayer estimates that his tax liability could be more than Rs. 10,000 for the concerned financial year, then such taxpayer needs to pay advance tax. Apart from these compliances, there are various forms specified under the income tax provisions dealing with different situations and compliances.
   
• Appeals & Revisions: In case you are not satisfied with any order or decision of the income tax officer, you may prefer an income tax appeal against such order with the higher authorities. Here’s how the flow goes:
   

Commissioner of Income Tax (Appeals) > Income Tax Appellate Tribunal > High Court > Supreme Court

Further, you can also apply for revision in certain cases. As the appeals and revisions are sensitive and complex matters, it is important to obtain expert opinion from best income tax advisors before investing your time and resources.

• Litigation Support: As the appeal reaches to the higher authorities, especially the high court or supreme court, you need expert litigation assistance. Representation before authorities and completion and settlement of the dispute can take a significant amount of time and deposit and in order to get a decision in your favour, you need expert assistance. Presenting your case backed with concrete facts, documents and appropriate legal interpretation is important to get a favourable decision and appropriate relief.
   
• Search & Seizure Support: In case the department conducts search and seizure operations, then the legal complexities may increase. Having a strong professional and legal team becomes of utmost importance to navigate through the complexities.
   

Major Compliances Under Income Tax

Following are some of the major compliances under income tax law:

• Income Tax Return: All taxpayers earning taxable income are required to file their returns in the applicable form and discharge their tax liabilities.
• Auditing: In case the turnover or receipts of the taxpayer exceeds the prescribed threshold limit, then such taxpayer is required to get its books of accounts audited and submit the tax audit report in the prescribed format.
• TDS/TCS: The taxpayers satisfying the threshold are required to deduct/collect the tax as per the TDS/TCS provisions. The TDS/TCS is required to be deposited with the government each month. Further, these taxpayers are required to furnish their TDS/TCS return in the prescribed form.
• Advance Tax: Taxpayers whose tax liability during the financial year exceeds Rs. 10,000 are required to deposit the advance tax with the government on or before the specified due dates. Non-deposit of advance tax can lead to a levy of interest.
• International Taxation: In case you are engaging in international transactions, then you need to adhere to the income tax provisions and regulations applicable to such transactions. Further, you should ensure that you adhere to the provisions of DTAAs entered into by India with the other countries.
• Transfer Pricing: In case you enter into international transactions with an associated enterprise, then you need to adhere to the transfer pricing provisions. This ensures that the transaction price is in consonance with the arm’s length price.

Exim Advisors is an esteemed professional organisation that can help you with all the compliances under our income tax services. Here’s how:

• Preparation and filing of applications for various registrations under the income tax law including PAN, TAN, charitable organisation registration etc.
• Timely and accurate filing of income tax compliances including income tax returns, audits, TDS/TCS compliances etc.
• Handling and guidance on income tax appeals and revisions.
• Assistance in accurate compliance and assistance on international transactions and transfer pricing.
• Registration and compliance support for charitable and religious organizations.
• Handling matters of departmental actions including issues of show cause notices, scrutiny assessment, income escaping assessment etc.
• Helping with robust tax planning, including taking benefits of deductions, exemptions and tax holidays under the income tax laws.