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Types of activities performed by business organizations

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Types of activities performed by business organizations

The forms of business entities can be classified according to the type of ownership of the business entity.

1. Proprietorship Firm
2. Partnership Firm
3. Company 
4. LLP

Business entities can also be grouped by the type of business activities they perform:

1. Service Entities
2. Merchandising Entities,
3. Manufacturing Entities.

Any of these activities can be performed by companies using any of the four forms of business organizations.

• Service Entities perform services for a fee. This group includes accounting firms, law firms, and dry cleaning establishments. The early chapters of this text describe accounting for service companies.

• Merchandising Entities purchase goods that are ready for sale and then sell them to customers. Merchandising companies include auto dealerships, clothing stores, and supermarkets.

• Manufacturing Entities buy materials, convert them into products, and then sell the products to other entities or to the final consumers. Manufacturing Entities include steel mills, auto manufacturers, and clothing manufacturers.

All of these entities prepare “financial statements” as the final end product of their accounting process. These financial statements provide relevant financial information both to people those inside the entities —management—and to those outside the entities—creditors, stockholders, and other interested parties.

Cost Inflation Index Upto 2014-15

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What is Cost Inflation Index:

The cost of inflation index has been notified by the Central Government year wise, commencing from the financial year 1981-82, having regard to seventy-five percent of average rise in the Consumer Price Index for urban non-manual employees for the immediately preceding previous year to such previous year by notification in the Official Gazette specify. The cost of acquisition/improvement will, thus, be indexed with reference the rate of applicable for the relevant year.

Financial Year                                                                      Cost Inflation index(CII)
2014-15
1024
2013-14
939
2012-13
852
2011-12
785
2010-11
711
2009-10
632
2008-09
582
2007-08
551
2006-07
519
2005-06
497
2004-05
480
2003-04
463
2002-03
447
2001-02
426
2000-01
406
1999-2000
389
1998-99
351
1997-98
331
1996-97
305
1995-96
281
1994-95
259
1993-94
244
1992-93
223
1991-92
199
1990-91
182
1989-90
172
1988-89
161
1987-88
150
1986-87
140
1985-86
133
1984-85
125
1983-84
116
1982-83
109
1981-82
100

 

I-T to look into credit history, loan repayment pattern of taxpayers

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To recover maximum tax arrears with the optimum use of manpower, the income-tax department has decided to look into the credit history and loan repayment pattern of taxpayers and prioritise cases for recovery of past dues based on a defaulter’s ability to pay.

For this, the department would consult the Credit Information Bureau of India (Cibil) that assigns credit scores and maintains details of loans taken by individuals, partnerships and corporations, along with their PAN. Sources said tax officials would be able to get an idea of the assets and the financial health of an assessee against which a tax arrears recovery demand has to be pursued vigourously.

The I-T department which claims a massive Rs 6.74 lakh crore in arrears to be recovered is able to pursue cases accounting for only a small part of it every year due to appeals pending in various courts, inadequate assets to recover from defaulters and due to non-traceability of assessees. For FY15, it has set a target of recovering about Rs 42,000 crore of arrears, about 6% of the R7.4 lakh crore the government wants to collect this year by way of corporation tax, personal income tax and wealth tax, 15% more than what it raised last fiscal.

However, I-T will vigourously pursue recovery of arrears from defaulting partnerships and large corporations even via attaching the assets of partners and directors. In the case of individual taxpayers who have expired, it intends to reach out to their legal heirs, said a field officer, who asked not to be named.

The tax authority wants to cut down the quantum of arrears to be recovered and would consider writing off smaller demands.

http://www.financialexpress.com/news/it-to-look-into-credit-history-loan-repayment-pattern-of-taxpayers/1290155

Work From Home – Cyber Crime Scams: Are you a Victim

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The Work From Home concept is very attractive for most people, as the advertisements offer huge sums of money for a few hours of simple work. But would you really be paid well for doing nothing much! If it is too good to be true, then it probably is not true!

The modus operandi is usually attractive advertisements on websites, public places and social media. The application procedure involves filling up a form with all your details and you have to purchase a welcome kit. If you refer more people then you get paid a percentage for each reference that materializes, so basically you make other people also fall prey to the scam.

The scope of work is mostly like:
– Envelope stuffing (mailing programs)
– Assembly work
– Gifting programs
– Email processing
– Rebate processing
– Repackaging
– Payment processing
– Jobs that ask for money to hire you
– Businesses that don’t have an evident product or service.

If you are a victim of a work from home scam, then cyber laws has recourse for you.If the scammers use your personal data to make fake profiles and commit any crimes, then they are liable under Section 66-D for Cyber Personation, which is punishable with imprisonment upto 3 years and a fine.

The scammers are liable for Identity Theft under Section 66-C if they use your password or any other unique identification feature.

The scammers are liable under Section 43 of the Information Technology Act makes unauthorized access an offence, and Section 43 A makes a Company liable for breach of privacy and confidentiality by payment of compensation to the victim for failure to protect data.

The data that you provide to the scammers is priceless. Along with your personal information they have your credit card data too and misuse the same. When you purchase the welcome kit you may not be directed to a safe payment portal. This renders you vulnerable credit card frauds. And your personal data is sold to marketing companies without your consent.

A leading case of this type of scam was when the Cyber Crime Cell of Crime Branch, C.I.D., Mumbai Police arrested a person by name Sripathi Guruprasanna Raj, aged 52 years old, who is the Chairman and Managing Director of Sohonet India Private Ltd., a company based in Chennai. Many complainants based in Mumbai had complained to the Cyber Crime Investigation Cell, that the said company has duped them each for Rs. 4,000/- and Rs. 6,000/- by promising them with monthly income of Rs. 15,000/-.

Cyber Crime Cell of Crime Branch, C.I.D., Mumbai Police have arrested a person by name Sripathi Guruprasanna Raj, aged 52 yrs who is the Chairman and Managing Director of Sohonet India Private Ltd., a company based in Chennai. Many complainants based in Mumbai had complained to the Cyber Crime Investigation Cell, that the said company has duped them each for Rs. 4,000/- and Rs. 6,000/- by promising them with monthly income of Rs. 15,000/-. The company had through its website having URL http://www.sohonetindia.com and through various attractive advertisements in the news papers as well as by holding seminars in five star hotels, in various metropolitan cities like Mumbai, Delhi, Kolkata, Bangalore etc. had lured the various computer literate people with attractive schemes named Instant Treasure Pack (ITP) and Green Channel The company then asked the interested people to register with their company for which they charged the registration fees of Rs. 4,000/- which was later increased to Rs. 6,000/-. The company CMD, Mr. Raj promised the people so registered that they would be provided with the data conversion job which would enable them to earn Rs. 15,000/- per month. The company then collected huge amount from the gullible computer users. Some of the users were provided with the job work whereas others were not even provided the job work (data conversion job) assured to them. The users who worked hard and completed the assignments did not receive any payment for the same, and when they tried getting in touch with the company, they received no response.

TDS Rates Chart for F.Y. 2014-15 A.Y. 2015-16

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Every deductor need to deduct TDS as prescribed in Income Tax Act (not more than that and not lower than that). No doubt, there is no penalty to deduct more or wrongly deduction of TDS. However, deductor will issue TDS certificate (Form 16/Form 16A) as per actual deduction. The payee should claim the refund as per TDS certificate whether is wrongly deduction or higher deduction as the case may be.However, TDS can be adjusted against any other payment made or credited if TDS has been wrongly deducted from a payment on which there is no liability to deduct TDS. However, the penalty for non-deposit of TDS will be imposed by Income Tax Department. So TDS rates plays very important part for payer and payee to get easily and timely income tax refund.

Section Payment Nature Payment in excess of TDS Rate  TDS Rate 
for Individiual for Others
194A Interest from a Banking Company 10000 10% 10%
194A Interest other than from a Banking Co. 5000 10% 10%
194C Contractors (including Advertising & Sub-Contractor) 30000 (per payment) or 75000 p.a. 1% 2%
194C Transport Contractors (Providing PAN and enganged in the business of plying, hiring or leasing of goods carriages Nil Nil Nil
194D Insurance Commission 20000 10% 10%
194H Commission or Brokerage 5000 10% 10%
194I Rend of Land & Building 180000 10% 10%
194I Rent of Plant & Machinery and Other Equipments 180000 2% 2%
194IA Transfer of Immovable Property other than Agriculture Land 5000000 1% 1%
194J Payment for Professional Services, Technical Services & Royalty 30000 10% 10%
194J(1)(ba) Payment to Directors any remuneration or fees or commission by whatever named called if the same is not covered u/s 192 – 10% 10%

Financial Statement Analysis & Interpretation – [Part –I]

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Financial Statement Analysis & Interpretation – [Part –I]

Financial Statement Includes:

  1. Trading & Profit & Loss Account; which gives the result of year’s working.
  2. Profit & Loss Appropriation Account; which gives details about the disposal of the retained earning.
  3. Balance Sheet; which gives the financial position of the undertaking as on the accounting date.

“The most important function of financial statements is to serve those who control and direct the business and may be answered the questions, how efficiently the capital of the business is being utilized, how well credit standards are being observed, and whether the financial condition is being improved.”
The Meaning of Analysis and Interpretation
The financial statements are of much interest to number of groups of persons. Apart from the management there are other interested parties like shareholders, debenture holders, potential investors, bankers, trade creditors and legislature.
**Interpret means to put the meaning of a statement into simple terms for the benefit of a person.
** Analysis comprise resolving the statements by breaking them into simpler statements by a process or rearranging, regrouping and the calculation of ratios, interpretation is the mental process of understanding the terms of such statements and forming opinions or inferences about the financial health, profitability, efficiency and such other aspects of the understanding.
Objectives of Analysis and Interpretation
–          To evaluate the financial health of the understanding.
–          To evaluate the earning performance of the undertaking.
–          To evaluate the ability of the undertaking to pay interest, amortized debt and other outside liability.
–          To evaluate the solvency of the undertaking. By the understating of solvency of the undertaking above points can be well understand.
–  Whether current assts are sufficient to pay off the current liabilities.
–  Proportion of liquid assets (cash and book debts) to current assets.
–  Whether the debenture holders are secured by a floating charge of the currents assets.
–  Future growth of undertaking and earning.
Example: Bankers who provide short term working capital loan and medium term credit they generally look into the following matter:
–          The purpose of loan.
–          The manner in which the borrower proposes to repay the loan.
–          The capacity of company to repay as evaluated by trends of profits.
–          Banker’s position in the event of forced liquidation.
–          The quality of management.
–          History of accounts in the history.
Types of Analysis:

  1. Trend Analysis: which is made by analyzing the financial statements over a period of years. This indicates of such variable, as sales cost of production profits, assets and liabilities. For this it is better to prepare financial statements horizontally.
  2. Structural Analysis: which is made by analysis of single set of financial statements as are prepared on a particular date. Under this analysis relationship between different accounting variables is studied as for example, the ratio of net profit on sales or the ratio of current assets over current liabilities.

Tools of Financial Analysis:

  1. Comparative Balance Sheet and Income Statements
  2. Common Size Percentage: it is used for big balance sheet when it is very difficult to understand the figures. Generally Income Statement is converted into % statement on some common base. Sales figures assumed 100 and other figures are analyzed on % of sales. In case of balance sheet total of assets and liabilities considered as 100 and all other figures are expressed as % of total.
  3. Trend Ratios
  4. Ratio Analysis:

(i)           Balance Sheet Ratio:
(a)  Current Ratio or Working Capital Ratio
(b)  Liquid Ratio or Acid Test Ratio
(c)   Proprietary Ratio
(d)  Assets Proprietorship Ratio.
(ii)          Profit & Loss Statement Ratio
(a)  Gross Profit Ratio
(b)  Operating Ratio
(c)   Expenses Ratio
(d)  Net Profit Ratio
(e)  Stock Turnover Ratio
(iii)        Balance Sheet and Profit & Loss Statement Ratio
(a)  Return on total resources
(b)  Return on Own Funds
(c)   Turnover of Fixed Assets
(d)  Turnover of Debenture
(e)  Earning Per Share

How to Deposit Advance Tax

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How to Deposit Advance Tax

The procedure to deposit advance tax is similar to income tax. Advance tax is itself a income tax. We call it advance tax as we deposit it advance before due date of income tax. So the procedure is the same as income tax. You can deposit advance tax offline or online.

Offline Procedure to Deposit Advance Tax

You have to fill up challan No.280 and deposit advance tax installment along with Challan No.280 in any authorized bank branch.

You should write your name in full, complete address, permanent account number, assessment year, assessing officer’s ward or circle where the assesse is assessed or assessable and the amount of tax and surcharge, if any, separately and properly.

Online Procedure to Deposit Advance Tax

All asesseess may deposit advance tax electronically. There are no restrictions for any assesse for depositing online advance tax. But for some assesse online deposit of advance tax is mandatory like companies, assesses whose accounts audited u/s 44AB.

You can deposit advance tax online by internet banking.You can deposit advance tax throught your own account or you can use another bank account. But you have to fill challan no. 280 online clearly by stating your own name, address, PAN and other details properly.

Date of Payment/Relisation of Advance Tax

Date of payment of tax is important not only for the purpose of reckoning the payment towards the relevant advance tax installment, but also for the purpose of computing interest for delay, if any. If the payment is made by a cheque along with the challan into the Government treasury or the bankers authorized to collect Government receipts, and if the cheque is not dishonored later, it shall be deemed that payment has been made on the date the cheque was so tendered.

Advance Tax Payment Due Dates – Last Dates to Deposit Advance Tax 

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Advance Tax Installment Due Dates for F.Y.2014-15 (A.Y.2015-16)

Advance tax has to paid by the assessee on the following dates specified by the Income Tax act. The delay in the payment of advance tax attracts penalty.

1 st Installment of Advance tax –15 June 2014

For non-company assessees – NIL
For Company assessees – 15% of advance Tax

2 nd Installment of Advance Tax — 15th September 2014

For non-company assessees – 30% of advance Tax
For Company assessees – 30% of advance Tax

3rd Installment of Advance Tax 15th December 2014

For non-company assessees – 30% of advance Tax
For Company assessees – 30% of advance Tax

4 th Installment of Advance Tax –15th March 2015

For non-company assessees – 40% of advance Tax
For Company assessees – 25% of advance Tax

Last Payment — 31st March 2015

Tax on capital gains or any income earned after 15th March.

Important Points for Advance Tax Payment

In the case of salary Income the tax is deducted by the employer. So TDS is also treated as prepaid taxes. So salaried person pay advance tax but in the shape of TDS. So the Salaried person need to pay tax, if the tax is less than TDS. But if the TDS is less than actual Tax then they are also liable to pay advance tax.

But TDS should be deposited latest by 31st March of the financial year. If on the due dates is Sunday or any holiday then the assesee can deposit the advance tax on next working day. It will treated as advance tax and no penal interest will be charged.

Latest amendment for Advance Tax Payment
Senior citizens (Over 60 Years) need not to pay advance tax if not having any business income. (w.e.f.1-4-2012).

The Stilt Fisherman In Srilanka

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Stilt fishing is a method of fishing unique to the island country of Sri Lanka, located off the coast of India in the Indian Ocean. The fishermen sit on a cross bar called a petta tied to a vertical pole and driven into the sand a few meters offshore. From this high position, the fishermen casts his line, and waits until a fish comes along to be caught. Although the approach looks primitive and ancient, stilt fishing is actually a recent tradition.

The practice is believed to have started during World War II when food shortages and overcrowded fishing spots prompted some clever men to try fishing on the water. At first they started fishing from wrecks of capsized ships and downed aircraft, then some began erecting their stilts in coral reefs. The skills were then passed on to at least two generations of fishermen living along a 30 km stretch of southern shore between the towns of Unawatuna and Weligama.

F.No.153/53/2014-TPL (Pt.I) Extension of due date for filing of Return of Income from 30th Sept, 2014 to 30th Nov, 2014

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F.No.153/53/2014-TPL (Pt.I)
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
(CENTRAL BOARD OF DIRECT TAXES)
****

North Block, TPL Division
New Delhi, the 26th September, 2014
Press Release

Subject: Extension of due date for filing of Return of Income from 30th Sept, 2014 to 30th Nov, 2014 in specified cases, regarding.

As per the provisions of the Income-tax Act, 1961 (‘the Act’), for an assessee, who is required to obtain Tax Audit Report (TAR) under section 44AB of the Act, the due date for furnishing his return of income is 30th September of the
Assessment Year.

2. The Central Board of Direct Taxes (‘the Board’) vide order dated 20th August, 2014 extended the due date for obtaining and furnishing of Tax Audit Report under section 44AB of the Act for Assessment Year 2014-15 from 30th September, 2014 to 30th November, 2014. Subsequently, a number of representations were received in the Board requesting for extension of the due date for furnishing of return of income also. Writ petitions were also filed in various High Courts for directing the Board to extend the due date for furnishing of return of income from 30th September, 2014 to 30th November, 2014 in conformity with the extension of the due date for filing of Tax
Audit Report.

3. The Gujarat High Court vide judgement dated 22.09.2014 directed the Board to extend the due date for furnishing the return of income to 30th November, 2014, except for the purposes of charging of interest under section 234A of the Act for late filing of return of income. Other High Courts also directed the Board to look into the practical difficulties of the petitioners and take a just and proper decision in this matter.

4. In compliance to the judgments of various High Courts and after considering the representations received for extension of the due date, the Board, in exercise of its power conferred by section 119 of the Act, has extended the `due-date’ for furnishing return of income from 30th September, 2014 to 30th November, 2014 for the Assessment Year 2014-15 for all purposes of the Act in the case of an assessee, who is required to file his return of income by 30th September, 2014, and is also required to get his accounts audited under section 44AB of the Act or is a working partner of a firm whose accounts are required to be audited under section 44AB of the Act.

5. There shall be no extension of the “due date” for the purposes of charging of interest under section 234A of the Act for late filing of return of income and the assessees shall remain liable for payment of interest as per the provisions of section 234A of the Act.

6. For removal of doubt, it is clarified that for an assessee (other than working partner of a firm which is required to obtain and furnish Tax Audit Report), who is required to file its return of income by 30th September, 2014 but not required to obtain and furnish Tax Audit Report under section 44AB, the due date for furnishing of return of income for assessment year 2014-15 remains as 30th September, 2014.

(Rekha Shukla)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT

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