The taxation system in India is an elaborate structure overlooked by both Central and state Governments. It is primarily divided into two categories, direct and indirect taxes. Direct taxes are levied on taxable income of both individuals and corporate entities whereas indirect taxed are levied on the sales and provision of all types of products and services.
The entire structure saw several policy reforms in recent years. Both the State and Central Government undertook restructurings to streamline the entire process and bring more transparency, automation, and predictability. It resulted in the nation’s new position in the top 100 of the World Bank’s Ease of Doing Business ranking in 2017 and also saw a significant rise in the number of tax consultancy services providing helpful insights to the taxpayers.
Accounting firms help taxpayers follow the procedure accurately and within time, and aid them in the process to avail additional benefits like input credits, tax incentives, etc. These organisations also offer various tax consultancy and chartered accountant practice opportunities where they can assess and work across different scenarios.
Tax incentives are one of the most lucrative added benefits offered by the Indian Taxation structure. It is available for organisations of different scales, and the amount of incentive is calculated based on economic activity, type of industry they cater to, and even the location of a particular business.
CA firms work along with such businesses and help them avail benefits while abiding by the regulations and instructions set by the Income Tax Department of India. Investors can be eligible for most of the tax benefits after registering their business with the Ministry of Corporate Affairs.
However, an intricate matter like tax benefits is likely to have several complicated details involved in its rules and regulations. Let’s take a look at some of them and understand the role of a chartered accountant in the process.
Can an individual apply for multiple incentives?
Availing tax benefits in one particular sector may prohibit an individual from applying for additional incentives. India offers tax relief at both federal and state levels, and additional incentives are also available for businesses in a specific sector. However, not all tax benefits available in India are mutually inclusive.
Can the authorities revoke the benefits?
Although relatively rare, authorities can revoke one’s tax incentives if an individual fails to comply with all the conditions. It is better to take assistance from tax consultancy services to avoid such incidents.
Is there one government body overseeing all the legislation?
Specific government bodies oversee specific Central Government taxes and their incentive process. For example, Income Tax is administrated by the Ministry of Finance while GST is overseen by the Central Board of Excise and Customs.
So, if an individual applies for a chartered accountant loan after completing their CA articleship, the loan interest will not fall under that individual’s income and will be excluded from their IT slab. However, that chartered accountant firm’s income will fall under the supervision of the Ministry of Finance as the advance availed is a professional loan.
The taxes levied on credits like a CA loan remain largely same after the recent reform. Borrowers can easily avail credits at affordable interest rates, flexible tenors, and minimum fees and charges.
Businesses, as well as tax consultancy services, can work in conjunction to navigate through the regulations of the taxation system of the country. These firms can help an organisation identify the tax breaks and frame a step-by-step procedure to apply and avail the same.