Accounting and Taxation

An audit is an objective examination and evaluation of the financial statements of an organization to make sure that the records are a fair and accurate representation of the transactions they claim to represent. The audit can be conducted internally by employees of the organization, or externally by an outside firm.

The Maksim consultants can perform audits to verify the accuracy of a taxpayer’s returns or other transactions. When our Consultants audits, it usually carries a negative connotation and is seen as evidence of some type of wrong doing by the taxpayer.

Book keeping service offers a three-tiered approach to developing and maintaining your company’s overall financial processes and management. The first prong is created by the accounting software specialist. He or she creates your accounting data file so that it’s tailored to the specific needs of you and your business. He or she will ensure that you have access to the software and reports you need.

Tax planning is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of the financial plan work together in the most tax-efficient manner possible. Tax planning is an essential part of a financial plan. Reduction of tax liability and maximizing the ability to contribute to retirement plans are crucial for success.

A financial system (within the scope of finance) is a system that allows the exchange of funds between lenders, investors, and borrowers. Financial systems operate at national, global, and firm-specific levels.[1] They consist of complex, closely related services, markets, and institutions intended to provide an efficient and regular linkage between investors and depositors.

A payroll is a company’s list of its employees, but the term is commonly used to refer to:

• the total amount of money that a company pays to its employees
• a company’s records of its employees’ salaries and wages, bonuses, and withheld taxes
• the company’s department that calculates funds and pays these.[1]

Payroll in the sense of “money paid to employees” plays a major role in a company for several reasons.

From an accounting perspective, payroll is crucial because payroll and payroll taxes considerably affect the net income of most companies and because they are subject to laws and regulations (e.g. in the US, payroll is subject to federal, state, and local regulations).

From a human resources viewpoint, the payroll department is critical because employees are sensitive to payroll errors and irregularities: Good employee morale requires payroll to be paid timely and accurately. The primary mission of the payroll department is to ensure that all employees are paid accurately and timely with the correct withholdings and deductions, and that the withholdings and deductions are remitted in a timely manner. This includes salary payments, tax withholdings, and deductions from paychecks.

An income tax is a tax imposed on individuals or entities (taxpayers) that varies with respective income or profits (taxable income). Income tax generally is computed as the product of a tax rate times taxable income. Taxation rates may vary by type or characteristics of the taxpayer.

The tax rate may increase as taxable income increases (referred to as graduated or progressive rates). The tax imposed on companies is usually known as corporate tax and is levied at a flat rate. However, individuals are taxed at various rates according to the slab in which they fall. Further, the partnership firms are also taxed at flat rate. Most jurisdictions exempt locally organized charitable organizations from tax. Capital gains may be taxed at different rates than other income. Credits of various sorts may be allowed that reduce tax. Some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income.

The purpose of Tax Audit is to ensure that books of Accounts have been maintained in accordance with the provisions of the Income Tax Act. Tax Audit also ensures that the Accounts are properly being presented to the Assessing Officers when called for. However there are cases when person is required to get his accounts audited even though his turnover is less than Rs. 1 Crore in case of business and less than Rs. 25 lakhs in case of profession. Through this article, I am trying to put light on the provisions of Income Tax Act in regard to persons required to get their books of accounts audited.

The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.

Rates for deduct of tax at source

Taxes shall be deducted at the rates specified in the relevant provisions of the Act or the First Schedule to the Finance Act. However, in case of payment to non-resident persons, the withholding tax rates specified under the Double Taxation Avoidance Agreements shall also be considered.

Advance tax is the income tax payable if your tax liability exceeds Rs 10,000 in a financial year. Advance tax should be paid in the year in which the income is received. Hence, it is also known as the ‘pay-as-you-earn’ scheme.

Advance Tax is applicable when an individual has sources of income other than his/her salary. For instance, if one is earning through capital gains, interest on investments, lottery, house property or business, the concept becomes relevant.

Advance tax or self-assessment taxes have to be paid on the 15th of September, December and March, in instalments of 30 per cent, 30 per cent and 40 per cent, respectively, for non-corporates. Corporates need to pay it on the 15th of June, September, December and March.

The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. In effect, GST provides revenue for the government.

BREAKING DOWN ‘Goods and Services Tax – GST’

The goods and services tax (GST) is an indirect federal sales tax that is applied to the cost of certain goods and services. The business adds the GST to the price of the product and a customer who buys the product pays the sales price plus GST. The GST portion is collected by the business or seller and forwarded to the government. It is also referred to as Value-Added Tax (VAT) in some countries.

Customs Duty is a tax imposed on imports and exports of goods.

The rates of customs duties are either specific or on ad valorem basis, that is, it is based on the value of goods. Rule 3(i) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 states that the value of imported goods shall be the transaction value adjusted in accordance with the provisions of its Rule 10.

If objective and quantifiable data do not exist with regard to the valuation factors, if the valuation conditions are not fulfilled, or if Customs authorities have doubts concerning the truth or accuracy of the declared value in terms of Rule 12 of the said Valuation Rules, 2007, the valuation has to be carried out by other methods in the following hierarchical order:

• Comparative Value Method – Comparison with transaction value of identical goods (Rule 4);
• Comparative Value Method – Comparison with transaction value of similar goods (Rule 5);
• Deductive Value Method – Based on sale price in importing country (Rule 7);
• Computed Value Method – Based on cost of materials, fabrication and profit in country of production (Rule 8); and
• Fallback Method – Based on earlier methods with greater flexibility (Rule 9).