At the time of uploading of the Income tax return, many people commit mistakes that can occur hefty sum of penalties and interest which results in extra cost to the taxpayer. We are discussing herewith some common errors that a taxpayer can commit while computing an Income Tax Return.

Income tax is a bit complicated for those who are Non-Resident Indians (NRIs). In recent times, sending and receiving the money to/from India has grown with time which creates a lot of confusion for Non-Resident Indians (NRIs) at the time of filing Income Tax Return. We are discussing below some frequently asked questions which can be relevant for Non-Resident Indians (NRIs).

Knowing a taxpayer’s residential status is significant in the income tax law. Residential status decides that which income will be liable to be taxed in India and what income will not attract the tax in India at all.

Submitting an Income Tax return needs due diligence as some errors in return may lead to unwanted legal disputes and additional amount of interest and penalty over the tax amount. We have briefed hereunder a few safeguard that a person should look after at the time of filing of Income Tax Return.

Companies created for the public interest only, that is, for not making any profit, fall under section 8 of the Companies Act 2013. These companies are popularly known as Section 8 Companies or Non-Profit making companies. According to Companies Act 2013, the major aim of these companies is to promote research, social welfare, religion, charity, commerce, art, science, sports, education, and the protection of the environment or any such object. The main point is if any gain is earned, from the conduct of the company,  even then it is not possible to give to its  shareholders. However, profit gained can be used for advertisement of their social or public work. The concept of section 8 companies is just like Non-Governmental Organisations (NGO) or trusts but the unique disagreement is that section 8 companies are regulated by the Ministry of Corporate Affairs, on the other hand, NGOs and trust are governed by local state regulations which may vary from state to state. The purpose of forming section 8 companies in place of NGOs and trusts is that sponsors and the government largely place trustworthiness on companies.

A partnership firm is a contractual agreement between two or more persons who join hands for mutual terms and conditions in order to run a business and gain profit from joint efforts. Members of the partnership firm are commonly known as Partners and the union of partners is called Partnership. Partnership firms are regulated by the Indian Partnership Act, 1932. The instrument on which mutual terms and conditions are written is called Partnership Deed. Partnership Deed is executed between partners to form a Partnership. The Indian Partnership Act, 1932, does not compulsorily require registration of partnership firms, but there are certain benefits if the partnership firm is registered. In other words, there is an option available with partners to get the firm registered or not.

If a business is run by a single person in an individual capacity, then it is known as the Sole Proprietorship Firm, and that single person is popularly known as Proprietor. This format of business is most popular in our country as it involves minimum cost and least compliance. There is no specific procedure to form a sole proprietorship firm but a person may need to register his business to open his current account in the Bank. The following registrations can be used to show the legal presence of a business and to open a bank account.

A private Limited Company is a company which is owned by only a few persons/members. While its name indicates it is Private Limited, It is managed privately by its members who are also called shareholders. It is incorporated for certain defined objectives which are decided before starting incorporation of a company. The liability of shareholders is limited to the number of shares subscribed. In other words, if any liability is cast on the company which the company is liable to pay then the said liability cannot be recovered from the personal assets of its shareholders. Shareholders shall be bound to discharge liability to the extent of shares held by them only. There is no requirement of listing shares of Private Limited Company; therefore, shares can be easily transferred from one member to another with some minor paper requirements. Private Limited Companies are regulated by the Companies Act of 2013, India.

Registration is a very important tool in any tax law because it enables the tax department to spot the taxpayer to make sure that he is making all compliances which he is supposed to do. Under the GST Act, GST registration numbers are awarded by the GST department, which contains a PAN number and every GST registration number is unique. GST registration enables the taxpayer to collect tax on behalf of the government, availing input tax credit etc.

The concept of One Person Company was introduced by Companies Act 2013 which brought landmark changes in corporate law to allow only one person to incorporate a company.  It can be started only with one person. The same person can be a director as well as shareholder of the Company.  A separate feature of One Person Company is that the Director has to appoint one separate person as his Nominee. One Person Company enjoys all the benefits and privileges which are allowed to a Private Limited Company. If a person incorporates a One Person Company then he cannot form another One Person Company. In other words, a person can form only a single One Person Company at a time.

The Limited Liability Act (LLP Act) was passed in 2008. Its aim was to provide persons a corporate platform with features of Partnership Firm except that liability of each partner is limited to the extent of their shares, unlike a normal partnership firm in which each partner is exposed to unlimited liability irrespective of their share in partnership firm. To form an LLP there must be at least 2 people and there is no ceiling in the maximum number of partners. Further, it is not necessary that partners can be natural persons only; Body corporate may also become a partner in LLP. If in any circumstances, the number of partners is reduced to 1 (one) and it remains to one continuously till 6 months then LLP will lose its precious feature of Limited Liability and it will become Unlimited. In LLP every partner is bound for his work only. In other words, negligence of one partner cannot cast liability on another partner.

Due to submitting the incorrect information or even not missing to disclose the necessary information in your Tax Return may lead the filing of your tax return as defective.  If a tax return is declared as defective, then tax department will shoot the notices under section 139(9) of the Act. We are talking here about a few causes that leads a return defective under Income Tax Act.:

GST law requires a person to file various returns. GSTR 3B return is a very curious return to GST law which requires utmost care and precaution at the time of filing. We are discussing the below important points and preparations which a registered person should keep in mind at the time of filing of GST return.