Direct Tax Compliances
1.Scope -Assistance in computation of advance tax
Advance tax is payable in four instalments on estimated taxable income for the financial year. Short payment of advance tax attracts interest, which is not tax deductible. Excess payment of advance tax results in funds being blocked in tax refunds. Hence, it is beneficial that the advance tax liability is required to be appropriately estimated.
Our scope of work would be:
- Overview of the Projected Profit and Loss Account prepared by the Company
- Preparing a broad computation of income and estimating the advance tax liability for each quarter
2. Scope - Tax withholding on domestic vendor payments
Under the ITA, the Company is required to withhold tax from various payments. If there is a failure to withhold taxes correctly, a specified portion of the relevant expenditure is non-tax-deductible. The company is also be required to make good the shortfall of withholding tax with applicable interest and penalty.
Our scope of work would be:
- To advise on tax withholding on day-to-day domestic vendor payments on queries raised by the company
- To review the books of account on periodic basis to verify whether taxes are appropriately withheld
Any issue which requires in-depth study and research, particularly, when the applicability of withholding tax provisions is not clear, would be a separate engagement. This would be intimated to the company before the commencement of the engagement.
Withholding tax returns for domestic vendor payments: -
The Company is required to file four quarterly statements for taxes withheld on domestic vendor payments. Our scope of work would be:
- Entering the information compiled by the company in the formats required by the Tax Authorities
- Validating the information using the validation utility provided by the Tax Authorities
- Filing the withholding tax statements
Where the withholding tax statements are required to be revised, the scope of work would be similar to the above
Withholding tax default notices: -
Withholding tax default notices are electronic notices issued by the Computerized Processing System of the Tax authorities. The tax demands raised through the withholding tax default notices are payable by the company unless the defaults are resolved through filing of revised withholding tax statements.
Our scope of work would be:
- Examining the email communication received from the Tax Authorities
- Downloading the Default Justification Report from the website of the Tax Authorities (This report provides the calculation of tax demand raised against the company)
- Analyzing the Default Justification Report
- Advising on making payment of tax, wherever required
- Preparation and filing revised withholding tax statements
3.Scope – Tax Audit
Section 44AB of the Income-tax Act, 1961, governs the provisions of Tax Audit. It mandates certain categories of taxpayers to get their accounts audited by a Chartered Accountant and submit a Tax Audit Report in prescribed forms (Form 3CA/3CB and 3CD).
Tax Audit is applicable in the following cases:
Turnover exceeds ₹1 crore in a financial year.
Threshold enhanced to ₹10 crore if:
- Cash receipts are ≤ 5% of total receipts, and
- Cash payments are ≤ 5% of total payments.
Objectives of Tax Audit
Ensure proper maintenance of books of accounts and other records.
Report prescribed information, such as:
- Compliance with various tax provisions,
- Deductions claimed,
- Loans and deposits (Section 269SS/269T),
- Related party transactions,
- Quantitative details of stock, etc.
- Discourage tax evasion and malpractice.
Forms Involved
- Form 3CA: Where audit under any other law (e.g., Companies Act) is already done.
- Form 3CB: Where audit is not done under any other law.
- Form 3CD: Detailed statement of particulars required under Section 44AB.
Due Date for Tax Audit
- Generally, 30th September of the assessment year (i.e., for FY 2024-25, the due date is 30th September 2025).
- Penalty for non-compliance under Section 271B:
- 0.5% of total sales/receipts/gross receipts,
- Maximum penalty: ₹1,50,000.
4.Scope – Transfer Pricing Audit
Broadly speaking, this assignment will include the following elements:
- Evaluating the existing transfer pricing policy of the group, if any, and the basis / methodologies for determining prices of international transactions with your associated enterprises.
- A detailed functional analysis of the Indian company and the overseas associated enterprises
- The functional analysis will involve an assessment of the functions performed, assets utilized and risks assumed by the Company and its AEs in relation to the intra-group transactions entered during the financial year. Wherever required, we will undertake functional analysis interviews with the Company’s personnel in key functional areas. These interviews and other information, the Company may be asked to provide will form the basis of the functional analysis.
- Perusing the contractual agreement between associated enterprises, if any
- An economic characterization of the associated enterprise’s transaction(s)
- Preparation of detailed Transfer Pricing Report and assistance in maintenance of prescribed documentation under Indian transfer pricing legislation
- Performing the Transfer Pricing Economic Analysis, which will include:
- Analysis of each of the methods under the Indian Transfer Pricing regulation and selection of the most
- appropriate method to determine the arm’s length price
- Examining the nature of internal and external comparable available, if any, and advising on their use for the purpose of the study
- Running a benchmarking search on Indian transfer pricing database in accordance with the standard international norms with a view to benchmark the international transactions, if required
5.Scope - Corporate Tax Return
Every Indian company is required to file its Return of Income by 30 September/November (subject to amendments effected in each Fiscal Year as per Budget) every year.
Our scope of work would be as under:
- Examining the financial statements of the company
- Examining the Auditors Report and Directors Report
- Scrutinizing the major heads of expenses and income
- Submitting a Management Report regarding critical points relating to the return of income
- Discussion with the Management on risk-mitigation measures for critical points observed
- Filing in the ITR Form and uploading the same with the website of the Income-tax Department
- Verification of intimation under section 143(1) and suggesting suitable course of action
- Preparation/review of the computation of income to ensure that:
- Expenses which are not tax deductible are disallowed
- Items which are not taxable are claimed as a deduction
- Depreciation is appropriately computed
- Available tax incentives are evaluated and claimed
- Proper notes are given to the computation of income
6.Scope – SFT Filing
- Obtain unique registration number from the Government (applicable only for first time filer)
- Appoint a director to act as a Designated Director responsible for undertaking the reporting requirements.
- Electronically key in information on reportable transactions in Form 61A as notified by the Government. This form is to be signed by the Designated Director through his Digital Signature
- Upload the Form 61A on the website of the Tax Department.
Deliverables
Assistance in computation of advance tax
Statement showing computation of income and tax liability thereon based on estimated profits given by the Company.
Withholding tax advice
Brief Narrative summarizing the withholding tax advice
Withholding tax returns
- Review and filing of the quarterly withholding tax returns
- TDS review report in case of contentious issues, if any
Tax Audit
- Final signed copy of Form 3CA/3CB
- Signed Form 3CD
- Signed financials (for consistency)
Transfer Pricing
A comprehensive Transfer Pricing Documentation Report covering the Transfer Pricing Analysis in respect of international transactions entered into between the Company and its associated enterprises for the financial year mentioned in this scope of services under the Indian transfer pricing regulations.
Return of Income
Income-tax Return with all the supporting documents attached
SFT Filing
- Post-upload, an acknowledgment number is generated.
- This is proof of timely submission and should be stored for records.