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Tax Advisory

For a resident company, the Government of India levies a tax on its worldwide income. However, a non-resident company is taxed only on income received in India, or that accrues or arises, or is deemed to accrue or arise.
There are two categories of taxes applicable in India – Direct and Indirect Tax.

Direct Tax

Direct Tax is a non-transferable tax paid by an entity/company directly to the Government of India. There are two types of direct taxes - Corporate Tax and Minimum Alternative Tax. Let’s learn a bit more about them.

  • a) Corporate Tax: According to the Income Tax Act of 1961, Corporate Tax is levied annually by the Government of India upon the net profit earned by companies, domestic or foreign. Here are the current rates of Corporate Tax:
    • For Domestic company not availing exemptions
      The tax rate for any domestic company which opt to not avail any exemptions is 22%, and effective rate after adding surcharge and cess works (MAT inapplicable) out to be 25.17%.
    • For Domestic company not availing exemptions
      The tax rate for any domestic company which opt to not avail any exemptions is 22%, and effective rate after adding surcharge and cess works (MAT inapplicable) out to be 25.17%.
    • For other domestic companies with annual turnover up to INR 4000 Million, Corporate Tax is 25%
      In case annual income is between INR 10 Million to INR 100 Million, Surcharge and Cess is 7%. For the companies whose annual income exceeds INR 100 Million, Surcharge and Cess is 12%
  • b) Minimum Alternative Tax (MAT): Minimum Alternative Tax was introduced by the Finance Act, 1996, to ensure that corporate entities pay a minimum amount of tax to the government. It is a provision under direct taxation laws to limit tax exemptions availed by companies so that they mandatorily pay a minimum amount of tax to the government.

As per Section 115JB, all companies are required to pay Corporate Tax at least equal to the higher of the following:

  • i) Normal Tax Liability: Calculated as per the normal provisions of the Income Tax Act, i.e. by applying the relevant tax rate to the company's taxable income.
  • ii) Minimum Alternate Tax (MAT): For FY 2019-20, tax payable is computed at 15% (previously 18.5%) on book profit plus applicable cess and surcharge.

Indirect Tax

Indirect taxes are generally levied by the government on consumption of sellers of goods and services who then pass on the buyers' tax liability. Since the end consumer directly does not pay the tax to the government; hence, it is categorized as an indirect tax. At present, applicable indirect taxes are:

  • Goods & Services Tax (GST)
  • Customs Duty

Goods and Services Tax (GST): GST is an important indirect tax which is a comprehensive, destination-based tax with uniform tax rates across the country. It was introduced as a major reform in taxation on 1st July 2017.

Introduction of GST has facilitated free movement of goods throughout the country and has subsumed almost all the indirect taxes (except a few). The major benefit of GST is that the entire country is treated as a single market with uniform tax rates. At present, we have four GST rates 5%, 12%, 18% and 28% besides zero-rated and exempted goods.

Current Structure of GST
  • CGST – This is the tax applicable on intra-state transactions (carried out within the state and UTs). This is collected by the Central Government. This is 50% of the GST rate applicable on goods and services.
  • SGST - This is the tax applicable on intrastate transactions (carried out within the state and UTs). This is collected by the State Government. This is 50% of the GST rate applicable on goods and services.
  • IGST - This is the tax applicable on inter-state transactions (carried out between the states and UTs). This is collected by the Central Government. This is 50% of the GST rate applicable on goods and services.
GST Compliances
  • GST registration- Registration required for places of business
  • Calculation and deposit of tax monthly
  • Filing of returns GSTR1 and GSTR 3B – monthly/quarterly basis
  • Filing of Annual Return
  • Filing of Annual Reconciliation
  • GST Annual Audit
  • Filing of Declaration (RFD-1) annually for export of services without payment of GST
  • GST refund for unavailed ITC (Input Tax Credit)
How we can help

Our expert team of professionals provides a complete solution with end to end services of GST. This includes:

  • GST Registration – all places of business
  • Ascertaining HSN/SAC for items/services and rates applicable
  • Doing/advising on invoicing complying with GST format
  • E-way Bill generation as and when required
  • Calculation of GST payable, generating challans
  • Preparation and filing on returns on the GST portal
  • Reconciling and providing a report for unmatched ITC
  • Carry out GST audit and filing of the same
  • Preparing replies to all the queries, notices, appeals, assessments, and demands
  • Representation with authorities whenever needed
  • Coordinating with Statutory Auditors for GST related work
  • Composite scheme documentation, if applicable
  • Keeping management informed about new notifications/changes /announcements from time to time.
  • Event-based compliances such as address change, authorized signatory change etc
  • Any other work related to GST

Custom Duty: Levied on imports and exports with Government regulations on amount collection, Customs Duty is another important variant of Indirect Tax and is a major revenue source for the Government of India. It is formulated and governed by the Indian Customs Act, 1962. Central Board of Excise & Customs, which falls under the Ministry of Finance – Department of Revenue, is the designated authority for all matters related to customs duty.

Whenever any goods are imported or exported from India, the process of customs clearance needs to be followed. To fix the rate of customs duty, all goods have been classified under Harmonized System Nomenclature (HSN). The World Customs Organization (WCO) developed it as a multipurpose international product nomenclature that first came into effect in 1988 with the vision of facilitating the classification of goods all over the world in a systematic manner.

How we can help

For all your import and export requirements:

  • Study your taxation needs and provide comprehensive and cost-effective solutions
  • Develop customized strategies to prepare a manageable tax optimization plan
  • Obtain all regulatory registrations and import-export codes for the smooth operation of the business
  • Advise and provide services compliant to the statutory regulations
  • Assistance to deposit tax, file returns and conduct audits & reconciliations
  • Identify permissible tax exemptions and help obtain incentives and benefits under various schemes
  • Get registered IEC with different custom ports
  • Assist in obtaining custom clearances from designated authorities
  • Advice on custom duty structure for the items being imported or exported
  • Prepare responses to queries, notices, appeals, assessments, and demands
  • Representation with authorities whenever needed
  • Get shipments cleared through our associate.
  • Advise and apply for export incentives under various schemes
  • Help make informed decisions in accordance with new notifications / changes / announcements
International Taxation & Transfer Pricing

The high pace of globalization of businesses has resulted in a considerable increase in cross-border business transactions. Multifold growth has been registered in the international business of companies all across the world. This has drawn attention (and is under heavy scrutiny) of the respective governments to ensure that due tax is paid in their country and there is no direct/indirect benefit to the other country at their cost.

Thus, the globalization of businesses has resulted in the formation of complex international tax laws, that describe the various transfer pricing methods, impose extensive annual transfer pricing documentation requirements, and contain harsh penal provisions for non-compliance. These need the expertise to handle and comply with them successfully.

The Government of India, thus, inserted a separate code on transfer pricing under Sections 92 to 92F of the Indian Income Tax Act, 1961, which covers intra-group cross-border transactions. Non-compliance with the same can result in paying interest on late tax payments – plus substantial penalties.

How we can help

Our experts can help you formulate robust Transfer Pricing policy, setting up processes for maintaining records related to Transfer Pricing, audit, study, filing returns, and appeals to all other related compliance. We help you assess your future needs and provide best-suited solutions for the current business with respect to international business and transfer pricing.

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