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Letter by CA~ Estimate of fees for carrying on Internal Audit

Sunil Bhave
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0

Date: 2-Dec-2020

To

XXXXXXXXXXXXXXXX

Respected Sir / Madam

Subject:            Estimate of fees for carrying on Internal Audit – shared as per your request over phone / email

Reference:        Based on phone call / email from your representative Mr. ________________ on _________

In connection with the request made by Mr. / Mrs. _____________________ (Designation: ___________ ) of your concern, we have furnished hereunder an estimate of fees for the assignment proposed:

Sl.No.Description of WorkEstimate of Days / Hours / Units involvedAmount (INR)
1Internal Audit FeesFlat Rate0.0
2Certification Fees (For Internal Purposes)Rs.____/- per certificate issued0.0
3Certification Fees (For External Purposes)Rs.____/- per certificate issued0.0
Total0.0
4Travel ExpensesAs the work requiresAs per Actual Claim Forms and/or proofs submitted

Kindly note that the estimate of fees shared above is based on the facts and statements made during the conversation with the aforementioned representative of your concern. Any deviations therefrom in the scope of work, reporting formats and certificates to be issued requiring additional professional hours from our part shall warrant an increase in fees stated above.

Other Payment terms:

All our bills are due within 10 days of being generated.Yours truly

For ZZZZZZZZZZZ

Chartered Accountants

(FRN: 0000000)

YYYYYYYYYYYYYYY

Chartered Accountant

M. No. 000000

Insurance Letter TDL in Tally ERP

Sunil Bhave
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0

Insurance letter TDL : This coding to be copied in text file and place in Tally or any folder
Step 1. Go to Gateway of Tally.
Step 2. Then Press Ctrl+Alt+T button
Step 3. Now Press F4 Button or Click on “Manage Local TDL” button
Step 4. Now do “Yes” to “Load TDL Files on Startup” option
Step 5. Now in the next line “List of TDL Files to preload on Startup” Enter the TDL File Path or Location Like “C:\Tally.Erp9\indurance.tdl”
Step 6. Now save the settings
Be sure to take your Tally Data Backup before doing any Tdl work

;;——————————————–

[#Form : Sales Color]
;Delete:Print
Add : Print : Ins Fwd Letter

[Report : Ins Fwd Letter]
Object : Voucher
Form : Ins Fwd Letter
PrintSet : Report Title : “Forwarding Letter”
PrintSet : Report SubTitle : “Forwarding Letter”

[Form : Ins Fwd Letter]
Part : Ins Fwd Letter Company Name,Ins Fwd Letter Address Part,Ins Fwd Letter Details Part,Ins Fwd Letter Matter Part,+
Ins Fwd Letter Entries Part,Ins Fwd Letter Bottom Part
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Line : Ins Fwd Letter Company Name
;; Height : 8% Page
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Border : Thin Bottom

[Line   : Ins Fwd Letter Company Name]
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[Style: Ins Large Bold]
Use : Large
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Line : Ins Fwd Address Line,Ins Fwd Address Line Phone No
;; Height : 7% Page
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Child of : ##SVCurrentCompany

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    Field   : Ins Fwd Address Line Phone No

    [Field  : Ins Fwd Address Line Phone No]
        Use : Name Field
        Set as  : "TEL No: " + $PHONENUMBER:company:$$CurrentCompany + " E-Mail: " + $Email:Company:$$Currentcompany
        Width   : 100% Page
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        Style   : Normal Bold

[Part : Ins Fwd Letter Details Part]
Part : Ins Fwd Letter Buyer Details,Ins Fwd Letter Other Details
Height : 15% Page
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[Part : Ins Fwd Letter Buyer Details]
Line : Ins Fwd Letter Messrs Line,Ins Fwd Letter Cust Line,Ins Fwd Letter Buyer Name Line,Ins Fwd Letter Buyer Address Line
Repeat : Ins Fwd Letter Buyer Address Line : BASICBUYERADDRESS
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    [Field  : Ins Fwd Letter Messrs Line]
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        Set as  : "Insurer The Oriental Insurance Company Limited CBO2 Udaipur-313001"
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[Line   : Ins Fwd Letter Buyer Name Line]
    Field   : Ins Fwd Letter Buyer Name Line


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[Collection : Ins Fwd Letter Buyer Address Line Collection]
Type : Address : Company
Childof :$$CurrentCompany

[Part : Ins Fwd Letter Other Details]
Line : Ins Fwd Letter Other Details Reference No,Ins Fwd Letter Other Details Date
Height : 15% Page
Width : 50% Page
Space Top : 1

[Line   : Ins Fwd Letter Other Details Reference No]
    Right Field : Ins Fwd Letter Reference No,Ins Fwd Letter Reference No Details
    Space Bottom    : 0.25
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    [Field  : Ins Fwd Letter Reference No]
        Use     : Name Field
        Set as  : "Ref. No.:"
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    [Field  : Ins Fwd Letter Reference No Details]
        Use     : Name Field
        Set as  : $VoucherNo
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[Line   : Ins Fwd Letter Other Details Date]
    Right Field : Ins Fwd Letter  Other Date,Ins Fwd Letter Other Date Details
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        Set as  : $Date
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    [Field  : Ins Fwd Letter Sub Line]
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        Set as  : "Sub  : Supply of Granite / Marble / Engg. Stone / Nano Slab / ________"
        Width   : 70% Page
        Align   : Left

    [Field  : Ins Fwd Letter TH]
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        Set as  : "TH :" + $BASICSHIPPEDBY
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    Field   : Ins Fwd Letter Dear Line
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    [Field  : Ins Fwd Letter Dear Line]
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        Set as  : "Dear Sir,"
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    Field   : Ins Fwd Letter We Line
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    [Field  : Ins Fwd Letter We Line]
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        Set as  : @@VCSInsFWQtyA + @@VCSInsFWQty + @@VCSInsFWQtyB
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              Ins Fwd Letter Name of TransPort

    Border  : Thin Bottom 

    Local   : Field : Ins Fwd Letter Invoice No         : Set as    : $$Upper:"Invoice No."
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[System : Formula]
VCSInsFWQty : $$STring:@@VCSInsFWQtyC
VCSInsFWQtyC : ($$CollQtyTotal:InventoryEntries:$BilledQty)
VCSInsFWQtyA : “We have Despatched “
VCSInsFWQtyB : ” Granite / Marble / Engg. Stone / Nano Slab / __ to you as per particulars below :”

Direct and Indirect Tax Proposals in Budget 2019 – Highlights

Sunil Bhave
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0

Budget 2019-20 on Direct Tax

  1. Tax rate reduced to 25% for companies with annual turnover up to Rs. 400 crore
  2. Surcharge increased on individuals having taxable income from Rs. 2 crore to Rs. 5 crore and Rs. 5 crore and above.
  3. India’s Ease of Doing Business ranking under the category of ‘paying taxes’ jumped from 172 in 2017 to 121 in the 2019.
  4. Direct tax revenue increased by over 78% in past 5 years to Rs. 11.37 lakh crore

Tax Simplification and Ease of living – making compliance easier by leveraging technology:

Interchangeability of PAN and Aadhaar
• Those who don’t have PAN can file tax returns using Aadhaar.

• Aadhaar can be used wherever PAN is required.

Pre-filling of Income-tax Returns for faster, more accurate tax returns
• Pre-filled tax returns with details of several incomes and deductions to be made available.

• Information to be collected from Banks, Stock exchanges, mutual funds etc.

Faceless e-assessment
• Faceless e-assessment with no human interface to be launched.

• To be carried out initially in cases requiring verification of certain specified transactions or discrepancies.

Affordable housing

• Additional deduction up to Rs. 1.5 lakhs for interest paid on loans borrowed up to 31st March, 2020 for purchase of house valued up to Rs. 45 lakh.

• Overall benefit of around Rs. 7 lakh over loan period of 15 years.

Boost to Electric Vehicles

• Additional income tax deduction of Rs. 1.5 lakh on interest paid on electric vehicle loans

• Customs duty exempted on certain parts of electric vehicles.

Other Direct Tax measures

• Simplification of tax laws to reduce genuine hardships of taxpayers:

• Higher tax threshold for launching prosecution for non-filing of returns

• Appropriate class of persons exempted from the anti-abuse provisions of Section 50CA and Section 56 of the Income Tax Act.

Relief for Start-ups

• Capital gains exemptions from sale of residential house for investment in start-ups extended till FY21.

• ‘Angel tax’ issue resolved- start-ups and investors filing requisite declarations and providing information in their returns not to be subjected to any kind of scrutiny in respect of valuations of share premiums.

• Funds raised by start-ups to not require scrutiny from Income Tax Department

• E-verification mechanism for establishing identity of the investor and source of funds.

• Special administrative arrangements for pending assessments and grievance redressal

• No inquiry in such cases by the Assessing Officer without obtaining approval of the supervisory officer.

• No scrutiny of valuation of shares issued to Category-II Alternative Investment Funds.

• Relaxation of conditions for carry forward and set off of losses.

NBFCs

• Interest on certain bad or doubtful debts by deposit taking as well as systemically important non-deposit taking NBFCs to be taxed in the year in which interest is actually received.

International Financial Services Centre (IFSC)

  1. Direct tax incentives proposed for an IFSC:
    a. 100 % profit-linked deduction in any ten-year block within a fifteen-year period.

b. Exemption from dividend distribution tax from current and accumulated income to companies and mutual funds.

c. Exemptions on capital gain to Category-III Alternative Investment Funds (AIFs).

d. Exemption to interest payment on loan taken from non-residents.

Securities Transaction Tax (STT)

STT restricted only to the difference between settlement and strike price in case of exercise of options.

Indirect Tax

  1. Electronic invoice system will be introduced to prefill the taxpayers return. Roll out from January 2020
  2. There will be no need for separate for e-way bill.
  3. A simplified single monthly return.
  4. Taxpayers with less than 5 crores annual turnover will file only quarterly return.
  5. A fully automated GST refund module will be implemented.
  6. Multiple tax ledgers for GST payers will be replaced by just one.
  7. GST reduced on EV from 12% to 5%.
  8. Defence imports not manufactured in India to be exempted from Custom Duty.
  9. Increased Custom Duty on gold & other precious metals from 10% to 12.5%.
  10. Non-calamity & contingent duty imposed on tobacco products.

Tds On Cash Withdrawals

Sunil Bhave
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0

In the Finance Budget, 2019, it was proposed to levy TDS of 2% on cash withdrawals exceeding Rs.1 crore annually by a person from a bank account or co-operative bank or post office.

It was proposed that the threshold limit of Rs.1 crore shall be seen account-wise.  Hence, if a person is having more than one bank account with a bank, then the threshold limit of Rs.1 crore shall be considered separately for each bank account.However, the Finance Act, 2019 as passed in the Lok Sabha has substituted the words ‘from an account’ to ‘from one or more accounts’.  Thus, now for the purpose of calculation of threshold limit of Rs.1 crore, the aggregate amount of cash withdrawn during the previous year from one or more accounts maintained with a bank shall be considered, i.e., the threshold limit of Rs.1 crore shall now be seen bank-wise.

Format of declaration for creation of HUF

Sunil Bhave
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0

DECLARATION

I, ________________ son of __________________ residing at ______________________ aged ___Adult do hereby declare-

  1. That I am Karta of ___________________________________________ .
  • That I received on behalf of the H U F gift of Rs. ___________ by way of CASH/CHEAUE from my FATHER/MOTHER ___________________________(name of relative of karta of HUF) on dt.  _______________ this formed the corpus of the HUF.
  • That the HUF at present is consisting of the followings members
  1. Shri _____________________, Adult, Residing at _________________
    1. Smt. _____________________, Adult, Residing at _________________
    1. Kumari _________________-Minor, Residing at ___________________
  • That the above statements are true to the best of my knowledge & belief. Declare this on ______Day  ________of _______

For __________________ HUF

KARTA

WITNESS:

  1. ————————————–   (_____________________)
  • ————————————–   (_____________________)

Online Tds Payment Process

Sunil Bhave
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0

Online Tds Payment Process

FIRST ENTER TO

https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp

          ↓

   
CHALLAN NO./ITNS 281 (Tax Deducted at Source / Tax Collected at Source (TDS/TCS) from corporates or non-corporates)

          ↓

Select the Payment (Company Deductee(020) or Non company Deductee (021))

          ↓

TAX DEDUCTION ACCOUNT NUMBER (TAN NO. EXAMPLE(SRTR04580N)

          ↓

SELECT THE ASSESSMENT YEAR (NOT TO F.Y.)

          ↓

ENTER THE ADDRESS DETAILS

          ↓

SELECT THE TYPES OF PAYMENT IF NORMAL PAYMENT CLICK ON 

 (200)TDS/TCS OTHERWISE SELECT THE (400) ASSESSMENT TAX

          ↓

NATURE OF PAYMENT (Like a Contractors Payment (94C),TDS INTEREST (94I),PROFESSIONAL TAX (94J) OR ETC.)

          ↓

SELECT MODE OF PAYMENT

          ↓

ENTER THE CAPTCHA

          ↓

PROCEED

          ↓

CHECK THE CHALLAN 

          ↓

PAY NOW

          ↓

ENTER USER NAME & PASSWORD

Stock audit of bank borrowers

Sunil Bhave
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0

Working capital finance in the form of cash credit/overdraft facility against the security of hypothecation of stock and debtors is one of the most common modes of finance frequently adopted by various bankers. The borrowers in such cases are expected to submit the details of stock and debtors every month on the basis of which Drawing Power after reducing the prescribed margin is calculated by the banks. Stock and debtors being the primary security, bankers for ascertaining the genuineness & correctness of such statements appoint chartered accountant firms at frequent time intervals to conduct stock audit specifically where the exposure exceeds the predetermined threshold limit (generally over Rs. 100 Lacks). The stock audit involves audit of latest stock and debtor’s information of the borrower and the report should give the position of stock and debtors ideally on the date of visit. Further it will also make examination of past data submitted by the borrower to the bank and appearing in the books of accounts of the borrower, to check reliability of information submitted by the borrower.

The banker appointing the CA firm for conducting stock audit has main objective of ascertaining whether the security (borrower’s stock and debtors) against which finance has been made is safe and is valued correctly.

Objectives of Stock Audit

The various purposes expected to be achieved through stock audit may be summarized as follows:-
• To ensure proper preservation/storage and handling of stock. •
• To identify whether there exist any obsolete stock & if yes, whether it has been segregated & written off.
• To verify whether the stock is adequately insured against fire and other natural calamities (in appropriate cases against other risks like theft, burglary, marine, riots etc. as per sanction terms) •
• To ascertain whether physical stock tally with the stock statement submitted to the banker
• Checking for diversion of funds. •
• To find out reasons when there are too many qualifying remarks about stocks and receivables in the Auditor’s report on the Balance Sheet of the borrower
• Ensuring that the terms and conditions of limit sanctioned have been complied
• To ascertain whether hypothecated stock is realizable. •
• To confirm that stock is owned by the borrower and finance is made against value of paid stock only. •
• To examine the age wise debtors outstanding as per books and as per statement submitted by the bank, steps taken for recovery of long pending debtors and likely instances of debtors turning bad, if any.
• Any other matters of interest to the bank.

Steps involved in stock audit

Stock audit is necessarily required to be conducted at the borrowers place for obvious reasons. But before visiting the borrower, understanding the entity, its banking operations and financial affairs is must. Therefore, it is advisable to visit the respective branch where the borrower is having the account so as to gather the information relating to Sanction, account operations, nature of business, performance of the borrower and other fundamental information along with the comments / observations noted by other auditors (like Internal Auditors, Concurrent Auditors etc) to have a brief understanding about the borrower and its financial affairs. You should get an appointment before visiting the branch as well as borrowers office.
(A) Visit to Borrower’s Branch –
Banks generally has the system of maintaining two folders (in few cases only one folder) for each borrower of which one is used for keeping original documents executed by the borrower (viz. Demand Promissory Note, Hypothecation Deed, Guarantee Bond etc.) while other folder contains Application form, project report, Sanction Letter, Audited Financial Statements, previous stock audit report etc. Stock statements submitted each month by the borrower are filed with the correspondence file or may be kept in a single file meant for keeping stock statements of all the borrowers. Scrutiny of both the files along with the account operations and DP Register with reference to terms of Sanction helps stock auditor to gain insight about the borrower’ affairs and conduct audit of the account.
Important:- If the borrower operates any other bank account e.g.-Term loan, you have to verify for diversion of funds. •
Documents Required From the Bank Branch Officials:

  1. Sanction Letter and latest renewal letter.
  2. Stock Statements (latest 6).
  3. Bank Statement for the last 6 months.
  4. Turnover report for last financial year and current financial year (till date)
  5. In case of Company, Copy of Form No. 8 & 32 for creation/ modification of Charge or ROC search report.
    OR
    CERSAI copy in case of other than company.
  6. Balance Outstanding in All Accounts with the bank.
  7. DP register.
  8. QMR/QMS/QIS/QPR for the last 2 quarters.
  9. Branch inspection report (for last 2 quarters).
  10. Latest 3 GST/excise returns(It could be taken from borrower also).
  11. Valuation report for collateral securities.
  12. Audited FS for the last financial year ended (It could be taken from borrower also).
  13. Half yearly/Quarterly book debt CA certified book debt statement.
  14. Insurance policy copy for both primary and collateral securities (It could be taken from borrower also).
  15. If the major transactions with same party reflects in account statement, than relation with such party and genuineness of such transaction should be verified at party place.
  16. Any other document related to stock audit to conduct more effective audit or reporting.

(B) Visit to borrower and verification of stock –
Once the basic information is collected from the bank branch, it is time to visit the borrower. It is advisable to carry audit questionnaire at the time of visit so that no important point / area is missed out (You should draft a detailed questionnaire with help of audit format). Visit to borrower involves verification of stock and debtors, inquiry about internal control, and analysis of past results and bank operations. Although audit is related to stock and debtors only, understanding of overall financial scenario and inquiry as to sister concerns & their businesses may also help the stock auditor to finalize the report in a better manner.
Before you start stock verification you need to understand the nature of goods, especially with regard to the storage- whether stored at multiple locations, whether they are deteriorating nature etc.
The process involved in manufacturing, production and ascertaining whether any part of the work is to be sent out of the entity for further processing.
Physical verification of stock
 Godown inspection with regard to its location, condition, rent payments (if godown on rent), maintenance etc.
 Actual counting of stock and match it with book figures) reconciliation with the book figures if there is any difference.
 Check on record- Opening stock, purchases, production, sales and closing stock.
 Age wise analysis of stock and movement of stock.
 Check abnormal increase/decrease in stock.
You have to verify all major creditors and debtors.
Documents required from the Borrower:

  1. Stock position as on date of Verification.
  2. Trial balance or Provisional Balance Sheet as on date of Verification.
  3. Copy of latest audited balance sheet.
  4. Insurance Policy (Incl. Bank Hypothecation Clause for primary as well as secondary Collateral Security.
  5. Figures of Purchase and Sales for last 6 months as well as for current month till date of Verification.
  6. Invoices of Purchases & Sales, Stock Register & other supporting Documents for verifying internal controls.
  7. Method of valuation followed for Inventory with detailed working.
  8. Copy of latest Excise/GST Returns filed.
  9. Break up of Sales into export and domestic.
  10. Details of non-moving and obsolete stock and also stock held for more than 6 months.
  11. ABC analysis of stocks based on the value of annual consumption of major items. (Only if Available)
  12. Products manufactured with details of licensed capacity, installed capacity and actual utilized capacity.
  13. Month wise details of purchases and sales, stock, debtors and creditors for last 6 months
  14. Major creditors (operational) and debtors and their transaction should be verified on random basis.

Common irregularities / observations in stock audit –
The common irregularities that may be observed by the CA firm during stock audit can be summarized as follows –
Observations about statement submission & Scrutiny –
• Stock Book Debts statements not submitted/ submitted but not within time. •
• Inadequate details viz. rate, quantity and amount of different type of stock items not stated in the statement. •
• DP Register not written up to date. •
• Age wise analysis of Debtors not given / done.
• Debtors over 90 days (or as per sanction) considered for drawing power. •
• Drawing power not correctly calculated. •
• Latest visit report by branch official not on record. •
• Operations in the accounts not scrutinized with reference to projections,
• QIS statements, audited accounts etc. not in records. •
• Defects pointed out by the Internal Auditors / Concurrent Auditors are not complied.
• Account not renewed / belated review.
Observations about account operations –
• All sales as per financial statements not routed through account. •
• Account not operated actively. •
• Cash withdrawal during current period is abnormal. •
• Frequent overdrawing in the account. •
• Balance over drawing power although within Sanctioned Limit.
Observations about Insurance coverage – •
• Under insurance of stock. •
• Insurance expired and not renewed. •
• Premium for renewal policy paid but policy not on record. •
• Insurance Policy without Bank Clause. •
• No coverage of all risks as per sanction. •
• Wrong items / description of goods on insurance policy. •
• Location of goods wrongly stated. •
• All locations of stock not covered.
General Observations – •
• Stock book not maintained/ not updated. •
• Obsolete stock not excluded from stock figures submitted to bank. •
• Deteriorating stock turnover ratio. •
• Stock, debtors, and creditors figures submitted at the year end in stock statement and as per financial statement not matching.• •
• Confirmation for inventory with third party not obtained or physical verification of Inventory not done. •
• Material received from third parties for job work not excluded while calculating drawing power.

Findings of Stock Audit and its uses –
Stock audit by external CA firm is one of the important tools of credit monitoring for the bank. Apart from ensuring safety of realizable security, it also helps the bank to discipline the borrower or may act as a warning signal against probable future NPA. It may aid the bank to take timely remedial measures to avoid substantial future losses. It also highlights the weaknesses, if any in the existing monitoring system of the branch through comments about maintenance of DP register, scrutiny of statements, and review of accounts and compliance of audit findings.
Over and above, stock audit also has the utility for the borrower. Comments about insurance inadequacies, wrong product description and locations stated in the policies, if rectified timely may save the borrower from avoidable future losses.
Therefore, in my opinion unlike Statutory Audit where there is thrust only on the compliance under respective statute, the Stock Audit is a knowledge value addition exercise for both – bankers as well as borrowers.

Income tax benefits for Senior Citizens

Sunil Bhave
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In budget 2018 the finance minister announced some special tax benefits for Senior Citizens.

Definition of Senior Citizen-
A person becomes senior citizen under Income Tax Act after attaining age of 60 even for one day. Once he attains 60 years, his status as senior citizen in that financial year and a person whose age is 80 years he becomes super senior citizens.
“Senior Citizen” has been defined under Income Tax Act, as an individual resident in India who is the age of 60 years or more at any time during the previous year.

“Super Senior Citizen” has been defined under Income Tax Act, as an individual resident in India who is of the age of 80 years or more at any time during the previous year.

Benefits for Senior Citizens-
1. Increase in Basic Exemption Limit- Under Income Tax Act, basic exemption limit has increased for Senior citizens up to Rs. 3,00,000 or for Super Senior Citizens up to Rs. 5,00,000, means Senior citizens having income up to Rs. 3,00,000 there is no tax liability or for Super Senior Citizens having income up to Rs. 5,00,000 they have also not to pay any income tax.
Example 1-
Mr. X, age of 62 years having total income of Rs. 2,95,000 during the financial year 2018-19. What is his tax liability for the financial year 2018-19?
Answer-
Mr. X is senior citizen so the basic exemption limit under Income tax is allowed up to Rs. 3,00,000. Therefore Mr. X has No Tax Liability for the financial year 2018-19.

Example 2-
Mr. X, age of 82 years having total income of Rs. 4,80,000 during the financial year 2018-19. What is his tax liability for the financial year 2018-19?
Answer-
Mr. X is super senior citizen so the basic exemption limit under Income tax is allowed up to Rs. 5,00,000. Therefore Mr. X has No Tax Liability for the financial year 2018-19.

2. Increase an amount of deduction under section 80D- Under section 80D, the deduction is allowed for premium paid on health insurance and health check is allowed up to Rs. 50,000 for senior citizens.
EXAMPLE- 3
If, Mr. Ramesh age of 55 years, pays medical insurance premium of Rs. 28,000/- on his health and health of his wife and dependent children and pay Rs. 42,000/- on the health of his parents which are senior citizens. What will be the amount of deduction under section 80D during the financial year 2018-19?
Answer: –
Mr. Ramesh would be eligible for a deduction under section 80D for Rs. 67,000/- (Rs. 25,000 + Rs. 42,000) during the financial year 2018-19. In such case where assessee is not senior citizen while his parents are senior citizens, so the deduction is allowed Rs. 25,000 in respect of his family and Rs. 50,000 in respect of insurance of their parents.

Preventive Health checkup covered under section 80D- Preventive health checkup expenses to the extent of Rs 5,000/- can be claimed as tax deductions. Keep in mind, this is not over and above the individual limits.
Example 4 –
If, Mr. Samir (65 years) has a Mediclaim policy and paid Rs 55,000 as premium. He also spent Rs 8,000 towards health check-up. What will be the deduction amount under section 80D?
Answer-
Mr. Samir is a senior citizen, he can claim deduction to the extent of Rs 50,000 only under Section 80D. Even he has paid Rs. 63,000/- (Rs. 55,000+ Rs. 8,000). The deduction of health checkup is included in tax deduction slab.
Special deduction for Super Senior Citizens under section 80D -If you or any member of your family or either of your parents is a super senior citizen (i.e. 80 years or above in age) but is not covered under any health insurance, you can still get a tax deduction of Rs. 50,000 (w.e.f. 2018-19). The deduction is allowed for medical expenses.

3. Increase an amount of deduction under section 80DDB- Under Section 80DDB, the deduction is allowed for actual expenses incurred on medical treatment of specific diseases or Rs. 1,00,000 whichever is lower.
Example 5-
During the financial year 2018-19, Mr. X spent Rs. 90,000 on medical treatment of specified diseases of his father with the age of 65 years. He has received Rs. 35,000 by way of reimbursement of such expenditure from a medical insurance policy. Can he claim any deduction in respect of expenditure incurred by him on medical treatment of specified diseases under section 80DDB?
Answer–
Mr. X can claim deduction under section 80DDB of Rs. 55,000 [i.e., Rs. 90,000 (Maximum limit of Rs. 1,00,000 or Actual Expenses of Rs. 90,000 whichever is less) – Rs. 35,000 reimbursement from a medical insurance policy].

Example 6-
During the financial year 2018-19, Mr. X spent Rs. 1,20,000 on medical treatment of specified diseases of his father with the age of 65 years. He has no medical insurance policy. What amount can he claim for deduction in respect of expenditure incurred by him on medical treatment of specified diseases under section 80DDB?
Answer–
Mr. X can claim deduction under section 80DDB of Rs. 1,00,000 (i.e. Maximum limit of Rs. 1,00,000 or Actual Expenses of Rs. 1,20,000 whichever is less)

4. Increase an amount of deduction under section 80TTB- Under Section 80TTB, the Interest earned from banks, cooperative societies or post offices under Saving accounts/Fixed Deposits/Recurring Deposits etc. is exempted up to Rs. 50,000.

5. Increase to invest money under Pradhan Mantri Vaya Vandana Yojna- The Investment limit under Pradhan Mantri Vaya Vandana Yojana has increased up to Rs. 15,00,000. The limit on maximum investment has now revised to per senior citizen (and not per family). So now in a family if both husband and wife are senior citizen. Both can invest 15 lakhs each as purchase price (total 30 lakhs)

6. Non-Deduction of TDS on Interest under section 194A- If the total taxable income of any person who is senior citizen not exceeding their basic exemption limit they can file form 15H for non-deduction of TDS on Interest to any banks or post offices.

7. Standard Deduction- If any person who is senior citizen having income from pension can claim standard deduction of Rs. 40,000.

8. Exemption from payment of Advance Tax- If any person who is senior citizen, is exempted from payment of advance tax if they do not have income under the head “Income from business or professions”. They have to pay their tax liability at the time of filing or their income tax return.

TDS on Sale of Immovable Property Section 194IA

Sunil Bhave
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TDS on Sale of Immovable Property Section 194IA

Applicability-

TDS on sale of Immovable Property comes under section 194IA, is inserted by Finance act 2013 w.e.f. 01.06.2013. If any person purchased any immovable property (other than agricultural land) is required to deduct TDS from the amount payable to the seller, if the property value is greater than Rs. 50.00 lakhs. The seller should be “Resident in India”.
There is no requirement for obtaining Tax deduction account number (TAN) to the buyer. Only PAN of the buyer is required for filing form 26QB.

Rate of TDS-
If the property value is greater than Rs. 50.00 lakhs then the TDS will be deducted as the rates below-
• TDS will be deducted @ 1% on the amount payable to the seller.
• If the seller has no PAN, then the TDS will be deducted @ 20%.

(If the property value is greater than Rs. 50.00 lakhs)

Example 1- (If seller has PAN number)
Mr. Ram sells the Residential House to Mr. Sham, at a consideration amount of Rs. 65.00 lakhs. Whether TDS will be applicable, if applicable what is the amount of TDS?
Answer-
Yes, the TDS will be charged @ 1% on Rs. 65.00 lakhs i.e. come to Rs. 65,000/-
(TDS will be charged because the property value is exceeding to Rs. 50.00 lakhs and the seller has PAN so, TDS will be deducted @1%)

Example 2- (If seller has NO PAN number)
Mr. Ram sells the Residential House to Mr. Shyam, at a consideration amount of Rs. 65.00 lakhs. Whether TDS will be applicable, if applicable what is the amount of TDS?
Answer-
Yes, the TDS will be charged @ 20% on Rs. 65.00 lakhs i.e. come to Rs. 13.00 lakhs.
(TDS will be charged because the property value is exceeding to Rs. 50.00 lakhs and the seller have No PAN so, TDS will be deducted @20%)

(If the property value is Less than Rs. 50.00 lakhs)

Example 3- (If seller has PAN number)
Mr. Ram sells the Residential House to Mr. Sham, at a consideration amount of Rs. 45.00 lakhs. Whether TDS will be applicable, if applicable what is the amount of TDS?
Answer-
No, TDS will be charged because the property value is below to Rs. 50.00 lakhs.

WhenTDS under section 194IA is not applicable-

• Where section 194LA regarding compulsory acquisition is applicable.
• If the seller is non-resident or NRI then TDS is to be deducted under section 195 on basis of capital gains.

Time of Deduction-
TDS will be deducted at the time of credit of such sum to the account of the payee or at the time of payment whichever is earlier. If the payment received in installments, TDS will be deducted at every installment not at final installment.
Due date of payment of TDS-
The purchaser of the property should deposit the deducted amount of TDS on Form 26QB, within 30 days from the end of the month in which payment is made.

TDS Certificate-
The buyer has to provide TDS certificate in form 16B to the seller within 15 days from the day of filing Form 26QB.
Interest charged under section 201-A- The interest amount will be calculated on monthly basis not day to day basis, part of month will be calculated as full month.

1. Non-Deduction of TDS- 1% per month from the date on which TDS was due till the date it was deducted.
2. TDS deducted but not deposited- 1.50% per month from the date of deduction till the date it was deposited.
Example 4-
If you have failed to deducted TDS of Rs. 10,000 on 05.07.2017 but deducted on 12.10.2017 and deposited on same day, you have to pay interest of 4 months @ 1% i.e. comes to Rs. 400/- for non-deduction of TDS.
Example 5-.
If you have deducted TDS of Rs. 10,000 on 05.07.2017 and deposited on 12.10.2017, you have to pay interest of 4 months @ 1.50% i.e. comes to Rs. 600/- due to not deposited in time.

Penalty for Delay or Non-filling of Form 26QB-
1. Late filing Fees- Under Section 234E, the buyer has to pay Rs. 200 per day for late filling of form 26QB till the date default continues. The penalty should not exceed the total amount of TDS.
2. Non-Filling Fees- Under Section 271H, the buyer has not filled form 26QB within one year from the due date, the penalty should not be less than 10,000 or more than Rs. 1,00,000.

 

16 Rules for the Master Swing Trader

Sunil Bhave
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Swing trading can be a great way to profit from market upswings and downswings, but as I’ve always said, it’s not easy. Mastering the swing- trading techniques takes time and effort. To help get you started, I am giving you 16 Rules to think about as you begin – and ultimately master – swing trading.

Rule 1: Trends depend on their time frame.
Make sure your trade fits the clock. Price movement aligns to specific time cycles. Success depends on trading the right ones.

Rule 2: Price has memory.
What happened the last time a stock hit a certain level? Chances are it will happen again. Watch trades closely when price returns to a battleground. The prior action can predict the future.

Rule 3: Stand apart from the crowd at all times.
Trade ahead, behind or contrary to the crowd. Be the first in and out of the profit door. Your job is to take their money before they take yours. Be ready to pounce on ill-advised decisions, poor judgment and bad timing. Your success depends on the
misfortune of others.

Rule 4: Buy at support. Sell at resistance.
Trend has only two choices upon reaching a barrier: Continue forward or reverse. Get it right and start counting your money.

Rule 5: Short rallies, not selloffs.
Shorts profit when markets drop, so they start to cover. This makes it a terrible time to enter new short sales. Wait until they get squeezed and shaken out, then jump in while no one is watching.

Rule 6: Manage time as efficiently as price.
Time is money in the markets. Profit relates to the amount of time set aside for analysis. Know your holding period for every trade. And watch the clock to become a market survivor.

Rule 7: Trades that work in hot markets destroy accounts in cool ones.
Stocks trend only 15% to 20% of the time. Price ranges cause grief to momentum traders the rest of the time.

Rule 8: The best trades show major convergence.
Watch for the bull’s eye. Look for a single point in price and time that points repeatedly to a trade entry. The market is trying to tell you something.

Rule 9: Don’t confuse execution with oppourtunity.
Save Donkey Kong for the weekend. Pretty colors and fast fingers don’t make successful careers. Understanding price behavior and market mechanics does. Learn what a good trade looks like before falling in love with the software.

Rule 10: Control risk before seeking reward.
Wear your market chastity belt at all times. Attention to profit is a sign of immaturity, while attention to loss is a sign of experience. The markets have no intention of offering money to those who do not earn it.

Rule 11: Big losses rarely come without warning.
You have no one to blame but yourself. The chart told you to leave, the news told you to leave and your mother told you to leave. Learn to visualize trouble and head for safety with only a few bars of information.

Rule 12: Bulls live above the 200-day moving average, bears live below.
Are you flying with the birds or swimming with the fishes? The 200-day moving average divides the investing world in two. Bulls and greed live above the 200-day, while bears and fear live below. Sellers eat up rallies below this line and buyers come
to the rescue above it.

Rule 13: Enter in mild times, exit in wild times.
The big move hides beyond the extremes of price congestion. Don’t count on the agitated crowd for your trading signals. It’s usually way too late by the time they act.

Rule 14: Perfect patterns carry the greatest risk for failure.
Demand warts and bruises on your trade setups. Market mechanics work to defeat the majority when everyone sees the same thing at the same time. When perfection appears, look for the failure signal.

Rule 15: Trends rarely turn on a dime.
Reversals build slowly. Investors are as stubborn as mules and take a lot of pain before they admit defeat.

Rule 16: See the exit door before the trade.
Assume the market will reverse the minute you get filled. You’re in very big trouble when it’s a long way to the door. Never toss a coin in the fountain and hope your dreams will come true.

 

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