Tag - atul khurana articles

23 Jun

Section 44AE

Section 44AE Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages This section applies specifically on assessees carrying on business of plying, hiring or leasing good carriages. This section states that if an assessee is carrying on the above mentioned business then the income of such business chargeable to tax under the head "Profits and gains of business or profession" shall be deemed to be the aggregate of the profits and gains, from all the [...]

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13 Jun

Section 44AB vs 44ADA

Section 44AB vs 44ADA As Section 44AD is applicable on business (click here to read in detail), Section 44ADA applies on professionals. It says that if an eligible assessee (professional) who declares 50% or more than that of his gross receipts as profit, then he is not required to get his accounts audited under the Income Tax Act, 1961. But, this section has specified a limit on the gross receipts too. As per this section, the gross receipts should not be more [...]

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12 Jun

Tax Audit & The Presumptive Taxation

Section 44AB vs 44AD Tax Audit & The Presumptive Taxation: When we talk about Presumptive Taxation, then it automatically relates to Tax Audit under Income Tax Act, 1961. At student level, I have seen students getting confused in Sections 44AB & 44AD because 44AB says about the limit of Rs. 1 crore while Section 44AD says about the limit of Rs. 2 crore. Don’t worry; today your doubt is going to be resolved permanently.   Let’s begin: Tax Audit comes under the purview of [...]

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30 Dec

SCN-9 “FACTORING”

Hello Readers, Welcome to the SCN series. Today’s term is: Factoring Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. The seller sells the goods and generates invoice for the same. The seller then sells all the generated invoices to the third party called Factor. The reason behind the same is immediate money. Factor pays the money to the seller after deducting some discount and then itself collects the payments from the debtors. In this [...]

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27 Dec

SCN-8 “CONTROLLED FOREIGN COPRORATIONS”

Hello Readers, Welcome to the SCN Series. Today's Term is CONTROLLED FOREIGN COPRORATIONS (CFC): It is an anti tax avoidance measure where a parent company opens a subsidiary in low tax jurisdiction and then evade the tax by non distribution of dividend or profits to the shareholders of parent company. Here it is..... Controlled Foreign Corporations (CFCs) are corporate entities incorporated in an overseas low tax jurisdiction and controlled directly or indirectly by residents of a higher tax jurisdiction (Parent State). Since each corporate entity [...]

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23 Dec

SCN-6 “CbC REPORTING”

Hello Readers. Welcome to the SCN Series. Today's term is from International Taxation part of the Income Tax: CbC Reporting: In order to prevent tax avoidance, Multinational Enterprises (MNEs) whose consolidated revenue of International Group is more than Rs. 5,500 crores (as reflected in the consolidated financial statements for the preceding accounting year) are required to report to the income tax department annually for each tax jurisdiction (each country) in which they do business the information set out therein. This reporting is called the Country-by-Country (CbC) Reporting. Click here for the [...]

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22 Dec

SCN-5 “SLUMP SALE”

Hello Readers, Welcome to the SCN series. Today’s term is: Slump Sale As per section 2(42C) of Income -tax Act 1961, ‘slump sale’ means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. In simple words, it is a sale of whole undertaking for a lump sum amount. Assests and Liabilities are not measured individually. Click here for the previous posts of [...]

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21 Dec

SCN-4 “PERVASIVE EFFECT”

Hello Readers, Welcome to the SCN series. Today's term is one amongst the most confusing terms of the auditing: Pervasive Effect of Misstatement. The effect of misstatement is pervasive when such misstatement is not confined to one element, account or item of financial statement and even if it is so confined, it represents a substantial portion of financial statements. Click here for the previous posts of this series. For Tax Consultancy, Mail us at [email protected]  

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20 Dec

SCN-3 “SECURITIZATION”

Hello Readers, Welcome to the SCN Series. Today’s Topic is: Securitization It is the process of converting the illiquid assets of the company into the securities. The company (originator) transfers its illuquid financial assets to the Asset Reconstruction Company (ARC) which in turn pay cash to the originator and then ARC with the involvement of Special Purpose Purpose Vehicle (SPV) convert the assets into securities and sell the same to the investors. #Originator gets immediate cash for illiquid assets. #The money collected from issuing of securities [...]

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19 Dec

SCN-2 “Financial Leverage”

Hello Readers, Welcome to the SCN Series. Today's Topic is: Financial Leverage It basically relates to process of borrowing capital i.e. the debt and equity securities by the company. The more the debt, the more is the financial leverage. Higher financial leverage means higher interest payments by the company which is considered as little bit risky in terms of the growth of the company. For Tax Consultancy, Mail us at at [email protected]

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