Assignment Of Corporate Tax Planning

Title : ITRs as Applicable For A Company

Submitted To: Prof. S.P.Padhi

Prepared By; Ekta. 10DF030 PGDM(FC) 2010-12

Income Tax Return

A tax return is a form or set of forms one fills to show his income and calculate his income tax. We file a tax return to "pay our share" of the governments income for their operating expenses and all the government programs and entitlement programs. By filing a return, one can get back any over payments of taxes paid in. A company must also file an annual return. If an annual return is not filed by the due date, the company risks being removed from the register as the Registrar may be satisfied that the company has ceased to carry on business. The main reason for every company for filing a return is to avoid paying higher taxes. If the returns are not filed in time, the penalty is also charged by the income tax department and this may also hamper the reputation of the company. For companies, the form ITR-6 has to be filled. This Form can be used by a company, other than a company claiming exemption under section 11. The due date for filing the returns of income are : Different Situation y Where the company is required to furnish a report in form no. 3CEB under section 92E pertaining to international transactions (applicable from the assessment year 2011-12) Any other company Due date of submission of return November 30

September 30

IMPACT OF LATE FILING 1. Interest: You will be liable for penal Interest u/s 234A @ 1% per month on the amount of tax due from the due date of filing returns. 2. Carry Forward of Losses: Losses like Business Loss (speculative or otherwise), Capital Loss (short term or long term), and Loss from owning and maintaining race horses are not allowed to be carried forward. Other losses, if any can be carried forward. 3. Deductions: Deductions u/s 10A, 10B, 80-IA, 80-IAB, 80-IB and 80-IC are not allowed 4. Revision: Late returns cannot be revised except if it is in pursuance of a notice under section 142(1)

5. Penalty: A penalty of Rs.5000 may be imposed u/s 271F if belated return is submitted after the end of assessment year (after 31-March-YYYY, e.g. for FY 2007-2008, end of assessment year is 31-March-2009)

Steps to file ITR-6

1. Part A Gen : y Under this category, all the details about the address or location of the company is to be mentioned. Pan number of the company is also mandatory. By giving the Pan Number, the tax liability is reduced as if the Pan Number is not provided, a higher tax has to be paid by any company. The type of company also has to be mentioned. (resident or non-resident, public or private) In case the return is being filed in a representative capacity, PAN has to be quoted in PAN of the representative assessee. In case the PAN of the person being represented is not known or he has not got a PAN in India, the item for PAN in the first line of the return may be left blank. In the first line of this form, the name of the person being represented should be filled. Details about the managing director, director etc has also to be written.

If the company has gone for any merger or amalgamation, it also needs to be shown during the filing of returns

2. Part A-BS : y The Balance Sheet as on 31st March and the profit and loss account for financial year in the formats provided in these parts have to be filled in respect of proprietory business or profession carried out by you during the financial year if we were required to maintain accounts of the business or profession during the year. In case, accounts of the business or profession were required to be audited, the items of balance sheet and profit and loss account filled in the these parts should broadly match with the audited balance sheet and profit and loss account.

3. Part A-OI : y y If the accounts of the business or profession were not required to be audited under section 44 AB, it is optional to fill these parts. For a person carrying his business, if the total sales, turnover or gross receipt for the previous year relevant to the assessment year exceeds or exceeds Rs 60 lakh, he needs to get his account audited compulsarily. Premium for insurance, interest for loans, payment for provident fund, VAT, service tax etc includes other income. Amount of income or expenditure of prior period credited or debited to the profit and loss account (net) is computed.

y y

4. Part A-QD : y y Every detail about trading concern and manufacturing concern needs to be entered. Purchases are to be shown exclusive of taxes and the details of taxes paid on the purchases are to be indicated separately in the relevant rows. However, where it is not possible to segregate the details of the different taxes paid on the purchases, the same may be included and shown in the details of purchases.

5. Part B-TI : y y y For computation of total income, income under the various heads are to be mentioned. Gross total income is calculated. Thereafter, the deductions are also removed and finally we come to the total income.

6. Part B-TTI : y y Total tax that is needed to pay for that particular year is calculated. If there is any refund to be made, that is also done.

7. Verification: The person who is authorized to verify and sign the ITR are:y Resident : Managing Director or, where there is no Managing Director or he is not able to sign and verify the return due to any unavoidable reason, by any director thereof.

Non-Resident : The return may be signed and verified by a person holding a valid Power of Attorney from the Company, which should be attached to the return. Wound up/taken over by the Govt : The return should be signed and verified by the Liquidator or the Principal Officer as the case may be.

8. Schedule BA : y MICR code of the bank has to be entered for receiving the amount of refund through ECS.

9. Schedule-HP : y Income from three house properties has to be entered. If there are more than three house properties, then the income from other than three has to be mentioned in a different sheet and should be attached with this return. Deduction is available for unrealized rent incase of let out property.

10. Schedule-BP : y y y y The computation is done on the basis of profit before tax as in item 43. Income from speculative business Income from non speculative business subject to various deductions Income chargeable under the head profits and gains.

11. Schedule DPM, DOA, DEP, DCG : y Computation of depreciation allowable under the Income-tax Act, has been divided into two parts i.e. in schedules DPM (depreciation on plant and machinery)and DOA (depreciation on other assets). The summery of depreciation as per these schedules has to be shown in schedule DEP. Deemed short term capital gain, if any as computed in schedule DPM and DOA has to be entered into schedule DCG.

12. Schedule ESR : y Deduction under section 35 (expenditure on scientific research): In column (2) of this schedule, the details of deduction to which one is entitled under provisions of this section is mentioned. In column (1), the amounts of expenses of the nature covered by section 35 are entered. No deduction for depreciation is available in respect of capital asset for which deduction under section 35(1)(iv) has been claimed.

13. Schedule CG : y y Combined computation of all short term capital gain asset and all long term capital gain is made. For computing long term capital gain, the indexed cost of acquisition and indexed cost of improvement is taken.

14. Schedule OS : y y Amount is entered against various spaces. Total of each is taken Winnings from lotteries, crossword puzzles, races, etc., are subject to special rates of tax; hence a separate item is provided and the income from these cannot be adjusted against the losses arising under the head Income from other sources.

15. Schedule CYLA : y y Only positive incomes of the current year is mentioned in column 1, Total current years loss, if any, from house property, business or profession and other sources (other than losses from race horses) in the first row against the heading loss to be adjusted under the respective head. These losses are to be set off against income under other heads. The amount set off against the income of respective heads has to be entered into columns 2, 3 and 4. The end-result of the above inter-head set-off(s) is mentioned in column 5. Total of loss set off out of columns 2, 3 and 4 have to be entered. The losses remaining for set off have to be entered.

y y y

16. Schedule BFLA : y y y Only positive income of current year after set off has to be entered. The brought forward losses that can be set off will be entered. The end result of set off will be written after which we get the gross total income.

17. Schedule CFL : y y Summary of losses from earlier years, set off during the year and to be carry forward is entered. The losses under the various heads of income are allowed to carry forward for 8 years but loss from speculative business like horse race can be only passed on for 4 years.

18. Schedule 10A, 10AA, 10B, 10BA, 80G, 80IA,80IB,80IC and 80IE : y y These sections are subject to various deductions which a company can avail. By availing these deductions, the tax liability on a company reduces.

19. Schedule SI : y Those income which are at special rates are mentioned.

20. Schedule EI : y Those income which are exempted from tax are mentioned such as dividend, interest, agricultural income etc.

21. Schedule MAT : y MAT stands for minimum alternate tax. A minimum of 10% tax is charged on the total income under MAT.

22. Schedule DDT : y The principal officer of the company is liable to pay the tax on distributed profits to the credit of the Central Government within 14 days from the date of declaration of any dividend or distribution of any dividend or payment of any dividend, whichever is earliest. Simple interest is chargeable under section 115P at the rate of 1% of delay for every month or part thereof in payment of the tax on distributed profits to the credit of the Central Government.

23. Schedule IT : y Details of payment of advance income tax and ncome tax on self assessment is filled here.

24. Schedule TDS : y Details of tax deducted at source are filled.

25. Schedule TCS : y Details of tax collected at source are filled.

26. Schedule DDTP : y It includes the details of dividend distribution tax.

Once the filling of the form is over, the next big thing is submitting it. The forms can be submitted at the concerned Income Tax Office or specially set up counters. Furthermore, the Income tax department has also designated some post offices which are authorized to receive Income Tax Returns. With the power of e-governance, Income Tax Return can also be filed online. Income Tax Department has launched the Electronic Furnishing of Return of Income Scheme, under which eligible assessee can file their returns of income electronically through persons authorized to act as e-return intermediaries. The intermediaries will digitize the data of such returns, and transmit the same electronically to the e-filing server of Income Tax Department under their digital signatures. An eligible person opting to file his return of income under this Scheme shall approach and give his consent to any one of the e-intermediaries to act as his agent for the purpose of furnishing his e-return for the relevant assessment year.