Manage Money

Union Budget

HighLights

  1. The government plans on working on higher level of social inclusiveness in the economy. The targeted fiscal deficit for the financial year 2018-19 is fixed at 3.3%
  2. The Union Budget 2018 aims at doubling farmers income y the end of current financial year. The government plans on hiking the Minimum Support Price (MSP) for Kharif crops by 1.5 times of the current price. Also, if the running market prices are lower than the minimum support prices, it plans on compensating the farmers for the gap generated.
  3. Promotion of organic farming
  4. Farming sector will be receiving a credit of 11 lakh crore
  5. Rural sector - The major improvements suggested for the rural sector are-
    1. 6 crore rural women will be receiving gas connection.
    2. 4 crore rural households will be provided free electricity under Pradhan Mantri Saubhagya Yojana.
    3. 2 crore toilets to be constructed under Swacch Bharat Yojana
    4. 51 lakh houses to be constructed in rural areas under Pradhan Mantri Awas Yojana
    5. Rural SHGs to receive 75000 crores in the form of loans
    6. The government allocated 14.34 lakh crore for improving the housing, livelihood and infrastructure projects in rural areas.
  6. Health and education- The highlights in the health and education sectors are-
    1. Incorporating technology into education
    2. Eklavya schools will be opened in every block with more than 20,000 tribals and more than 50% of the neighbourhood population is Scheduled Tribe
    3. Universal health coverage will be offered to all the citizens
    4. Proposals for two new institutions of infrastructure and planning have been laid down
    5. 60 crore bank accounts will be brought under Jan Dhan Yojana
    6. Allocation of  52,719 crores for the welfare of scheduled caste of the country
  7. Industry
    1. 3,794 crores allocated to MSME sector for the development of industrial sector
    2. Excise cut on fuel
  8. Railways
    1. Capital expenditure allocated to Indian railways is 1,48,578 crores
    2. Infrastructures of railway stations to be revamped
    3. Trains to have CCTV cameras and WiFi connectivity
    4. Allocation to Bengaluru metro is 17,000 crores
  9. Taxation
    1. No changes in the structure of tax payments for the salaried class
    2. Salaried taxpayers will get a stipulated tax deduction of 40,000
    3. For long-term capital gains on investments above 1 lakh, the tax charged will be at 10% and for short-term capital gains, the tax charged will be at 15%
    4. Tax exemption limits have been raised to 50,000
  10. Infrastructure
    1. Phase 1 of Bharatmala Project initiated with a funding of 5.35 lakh crore
    2. People travelling on highways will be charged depending on the convenience that they experience on the roadway
    3. Infrastructure of ten key tourist spots to be improved
  11. Trade
    1. Imports imposed a 10% social welfare surcharge
    2. Customs duty on television and mobile phones increased
  12. Employment
    Government will ensure contribution of 12% of the salary to Employees Provident Fund for male employees for the first three years of service
  13. The Finance Minister stated that there will be a boost in the manufacturing sector under the Make in India initiative. The total outlay of this sector is 2.95 lakh crores
  14. The digital India programme will receive an allocation of 3073 crores. The amount collected for installing WiFi connections in five major cities is 10,000 crores. The government also plans on taking measures to curb the circulation of cryptocurrencies
  15. The government plans on encouraging angel investors and venture capital financing and large corporations will be bound to meet one-fourth of the debt requirements from the bond markets
  16. Capacity of airports to be increased by five times and the UDAN scheme would ensure that 64 airports throughout the country have highly developed infrastructure.

Tax Planning

Tax Planning refers to the analysis of financial situation of an individual/business in order to attain maximum level of efficiency in tax payment. Tax Planning takes into consideration several tax exemptions and deductions which are applicable to a person/company. When an individual or a company files for income tax, special exemptions and deductions play an important role in reducing their tax liabilities.

Objectives of tax planning:

  1. Reduction in tax liability
  2. Diversion of resources into more productive investments
  3. Minimisation in litigation costs
  4. Increase in net salary

Types of tax planning:

  1. Purposive tax planning- Tax planning done by keeping certain objectives in mind
  2. Permissive tax planning- Tax planning valid under the framework of the law
  3. Long range and short range tax planning- Long range tax planning is done at the beginning of a fiscal year while short range tax planning is done towards the end of a fiscal year

What is Corporate Tax Planning?

The common ways in which companies reduce their tax liabilities is by claiming tax exemptions for business transport, health insurance of the employees, retirement planning, child care, education expenses of the employees, donation towards charities and non-government organisations etc. Analysing the Income Tax Act carefully could help the companies in reducing their tax liabilities legally. Tax planning is considered to be one of the major tax saving practices. An efficient tax planning could help the companies in reducing the sales costs, marketing costs and maintenance of capital budget. When it is earning higher profits, it is imperative for a company to optimise its costs. Tax planning helps in reducing the direct and indirect tax liabilities, thus optimising the costs to the company.

Tax Calendar for Financial Year 2018-19

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Date

Due Dates for

5 April 2018

  1. Last day of 2017/18 tax year.
  2. Deadline for 2017/18 ISA investments and pension contributions.
  3. Last day to make disposals using the 2017/18 CGT exemption.

14 April 2018

  1. Due date for income tax for the CT61 period to 31 March 2018.

19 April 2018

  1. Automatic interest is charged where PAYE tax, Student loan deductions, Class 1 NICs or CIS deductions for 2017/18 are not paid by today. Penalties may also apply if any payments have been made late throughout the tax year.
  2. PAYE quarterly payments are due for small employers for the pay periods 6 January 2018 to 5 April 2018.
  3. PAYE, Student loan and CIS deductions are due for the month to 5 April 2018.
  4. Deadline for employers' final PAYE return to be submitted online for 2017/18.

3 May 2018

  • Deadline for submitting P46(Car) for employees whose car/fuel benefits changed during the quarter to 5 April 2018.

19 May 2018

  • PAYE, Student loan and CIS deductions are due for the month to 5 May 2018.

31 May 2018

  • Deadline for UNIONBUDGET P60 for 2017/18 to be issued to employees.

1 June 2018

  • New Advisory Fuel Rates (AFR) for company car users apply from today.

19 June 2018

  • PAYE, Student loan and CIS deductions are due for the month to 5 June 2018.

30 June 2018

  • End of CT61 quarterly period.

5 July 2018

  • Deadline for reaching a PAYE Settlement Agreement for 2017/18.

6 July 2018

  1. Deadline for UNIONBUDGET P11D and P11D(b) for 2017/18 to be submitted to HMRC and copies to be issued to employees concerned.
  2. Deadline for employers to report share incentives for 2017/18.

14 July 2018

  1. Due date for income tax for the CT61 period to 30 June 2018.

19 July 2018

  1. Class 1A NICs due for 2017/18.
  2. PAYE, Student loan and CIS deductions due for the month to 5 July 2018.
  3. PAYE quarterly payments are due for small employers for the pay periods 6 April 2018 to 5 July 2018.

31 July 2018

  1. Second payment on account 2017/18 due.

2 August 2018

  1. Deadline for submitting P46(Car) for employees whose car/fuel benefits changed during the quarter to 5 July 2018.

19 August 2018

  1. PAYE, Student loan and CIS deductions are due for the month to 5 August 2018.

1 September 2018

  1. New Advisory Fuel Rates (AFR) for company car users apply from today.

19 September 2018

  1. PAYE, Student loan and CIS deductions are due for the month to 5 September 2018.

30 September 2018

  1. End of CT61 quarterly period.

1 October 2018

  1. Due date for payment of Corporation Tax for period ended 31 December 2017.

5 October 2018

  1. Deadline for notifying HMRC of new sources of taxable income or gains or liability to the High Income Child Benefit Charge for 2017/18 if no tax return has been issued.

14 October 2018

  1. Due date for income tax for the CT61 quarter to 30 September 2018.

19 October 2018

  1. Tax and NICs due under a 2017/18 PAYE Settlement Agreement.
  2. PAYE, Student loan and CIS deductions are due for the month to 5 October 2018.
  3. PAYE quarterly payments are due for small employers for the pay periods 6 July 2018 to 5 October 2018.

31 October 2018

  1. Deadline for submitting ‘paper’ 2017/18 self assessment returns.

2 November 2018

  1. Deadline for submitting P46(Car) for employees whose car/fuel benefits changed during the quarter to 5 October 2018.

19 November 2018

  1. PAYE, Student loan and CIS deductions are due for the month to 5 November 2018.

1 December 2018

  1. New Advisory Fuel Rates (AFR) for company car users apply from today.

19 December 2018

  1. PAYE, Student loan and CIS deductions are due for the month to 5 December 2018.

30 December 2018

  1. Online filing deadline for submitting 2017/18 self assessment return if you require HMRC to collect any underpaid tax by making an adjustment to your 2019/20 tax code.

31 December 2018

  • End of CT61 quarterly period.
  • Filing date for Company Tax Return Form CT600 for period ended 31 December 2017.

1 January 2019

  1. Due date for payment of corporation tax for period ended 31 March 2018.

14 January 2019

  1. Due date for income tax for the CT61 quarter to 31 December 2018.

19 January 2019

  1. PAYE, Student loan and CIS deductions are due for the month to 5 January 2019.
  2. PAYE quarterly payments are due for small employers for the pay periods 6 October 2018 to 5 January 2019.

31 January 2019

  1. Deadline for submitting your 2017/18 self assessment return (£100 automatic penalty if your return is late) and the balance of your 2017/18 liability together with the first payment on account for 2018/19 are also due.
  2. Capital gains tax payment for 2017/18.
  3. Balancing payment – 2017/18 income tax and Class 4 NICs. Outstanding Class 2 NICs also due.

2 February 2019

  1. Deadline for submitting P46(car) for employees whose car/fuel benefits changed during the quarter to 5 January 2019.

19 February 2019

  1. PAYE, Student loan and CIS deductions are due for the month to 5 February 2019.

1 March 2019

  1. New Advisory Fuel Rates (AFR) for company car users apply from today.

3 March 2019

  1. 5% late payment penalty on any 2017/18 outstanding tax which was due on 31 January 2019 and still remains unpaid.

19 March 2019

  1. PAYE, Student loan and CIS deductions are due for the month to 5 March 2019.

31 March 2019

  1. End of corporation tax financial year.
  2. End of CT61 quarterly period.
  3. Filing date for Company Tax Return Form CT600 for period ended 31 March 2018.
  4. Last minute planning for tax year 2018/19 – please contact us for advice.

This Budget Report was prepared immediately after the Chancellor's Budget Statement based on official press releases and supporting documentation. The Budget proposals are subject to amendment before the Finance Act receives Royal Assent. This Report is for guidance only, and professional advice should be obtained before acting on any information contained herein. No responsibility can be accepted by the publishers or the distributors for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

OLTAS

OLTAS or Online Tax accounting System is a system mainly introduced by the Income Tax Department to acquire information and to maintain record of the taxpayers using the details from the challan that is submitted online.

It was introduced in April 2004, and has the following objectives-

  1. Collection and accounting of direct taxes online
  2. Reporting of payment of direct taxes online

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Benefits of OLTAS

  1. Before the introduction of OLTAS, the taxpayers were required to fill four challans, but the new model requires the taxpayer to fill up a single challan
  2. The information on tax payment and can be acquired at a minimal cost
  3. The taxpayer can use the Challan Identification Number (CIN) to verify their evidence of payment of taxes

OLTAS Challan Status Online Enquiry

One of the main feature of Online Tax Enquiry System is that anyone can check their challan status online using this online portal developed by the Income Tax Department.

Challan Status can be viewed online by using the following search tools-

  1. CIN based view
    The taxpayer can get access to the following information by entering the CIN details and the tax amount-

    1. Bank’s BSR code
    2. Date of Deposit
    3. Serial Number of Challan
    4. TAN and PAN details of the taxpayer
    5. Taxpayer’s name
    6. Date in which challan was received by TIN
  2. TAN based view
    By entering the TAN details and the date range in which the challan was given out by the bank, the taxpayer can get access to the following information-

    1. Challan Identification Number (CIN)
    2. Major head-code with description
    3. Minor head code
    4. Details regarding the mode of payment

Employee Stock Option Plan (ESOP) Taxation

Employee Stock Option Plan(ESOP) is also known as Employee Stock Ownership Plan. ESOP is a system which allows the employees to buy shares of a company at a rate that is below the prevailing market value. ESOPs are very popular in start-ups since they act as an incentive for the employee and provides him/her with a sense of ownership.

Advantages of ESOPs to the company

  1. The company can acquire the shares of adeparting owner
  2. Contributions to ESOP are eligible for tax deduction
  3. A company can issue treasury shares or new shares or new shares to an ESOP and it is deducible from the taxable income

Disadvantages of ESOPs to the company

  1. ESOPs could be riskier than normal stocks
  2. The ESOPs can be liquidated only when the exercise on the option is executed
  3. Unclear guidelines on valuation and accounting of ESOPs

TIN

TIN is assigned by the Income Tax Department for monitoring transactions of the business entities. The Commercial Tax Department of various states is responsible for registering enterprises and furnishing TIN. TIN details are important to identify business registered under VAT.

Documents required to apply for TIN

  1. Identity proof
  2. Residential proof
  3. Proof of the address of the business enterprise
  4. PAN details
  5. Reference/Security

How to apply for TIN

TIN is assigned by the state government. Hence the procedure to apply varies from state to state. The steps for applying for TIN are registered under Central Sales Tax Act or CST.

List of state codes for first two digits of TIN

Sl. No.

State Name

TIN number – First two digits

State Code

1

Andaman and Nicobar Islands

35

AN

2

Andhra Pradesh

28

AP

3

Andhra Pradesh (New)

37

AD

4

Arunachal Pradesh

12

AR

5

Assam

18

AS

6

Bihar

10

BH

7

Chandigarh

4

CH

8

Chattisgarh

22

CT

9

Dadra and Nagar Haveli

26

DN

10

Daman and Diu

25

DD

11

Delhi

7

DL

12

Goa

30

GA

13

Gujarat

24

GJ

14

Haryana

6

HR

15

Himachal Pradesh

2

HP

16

Jammu and Kashmir

1

JK

17

Jharkhand

20

JH

18

Karnataka

29

KA

19

Kerala

32

KL

20

Lakshadweep Islands

31

LD

21

Madhya Pradesh

23

MP

22

Maharashtra

27

MH

23

Manipur

14

MN

24

Meghalaya

17

ME

25

Mizoram

15

MI

26

Nagaland

13

NL

27

Odisha

21

OR

28

Pondicherry

34

PY

29

Punjab

3

PB

30

Rajasthan

8

RJ

31

Sikkim

11

SK

32

Tamil Nadu

33

TN

33

Telangana

36

TS

34

Tripura

16

TR

35

Uttar Pradesh

9

UP

36

Uttarakhand

5

UT

37

West Bengal

19

WB

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Income Tax Declaration Scheme

The Income Tax Declaration Scheme was introduced by finance minister Arun Jaitley under the Finance Bill, 2016. Under this scheme, any individual who has evaded taxes by not disclosing their income or assets can reveal the details to the government, can declare their real total tax liability and they would be charged with lesser penalties for tax evasion.

An individual who discloses his/her income under the Income Tax Declaration Scheme would be required to pay 45% less amount of tax penalty than before.

The Income Tax Declaration Scheme was valid through the period June 1, 2016- September 30, 2017.

The entities who could file taxes under income tax declaration scheme are

  1. Individual belonging to HUF
  2. Company
  3. Firm
  4. Local Authority
  5. Any artificial juridical person who doesn’t fall under any of the categories
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