What are the rules of the corporation tax return as per the Income Tax Act?

A corporation tax return is a levy imposed by the Government on the business or company’s income. The collection of money in the form of corporate taxes is further used as the primary source of revenue for any country. 

A company’s operating earnings are determine through deduction of cost from COGS or cost of the goods sold as well as income depreciation.

What types of companies are required to file corporation tax returns?

A corporation is regard as an individual with an autonomous as well as a distinct legal body in comparison to its shareholders. As per the Income Tax Act, both international and domestic corporations are liable to make the payment of income tax.

The tax of domestic corporations is levied on the universal income, the imposition of tax on a foreign corporation is done if the income is received or earned within India.

There are two types of companies who required to file for corporation tax returns as per the Income Tax such as:-

  1. Domestic Company 

The listing of every domestic company is done under the Indian Companies Act involving the firms owned by Foreign companies whose management and control takes place in India. Both public and private companies are included in a domestic business.

  1. Foreign Company

Foreign Companies are not listed under the India Companies Act. Since both the management and control takes place outside of India.

The basis of corporate tax is on the net income or taxable profit of a company. The operating or net profit of a company is the overall value remaining with the company after deducting numerous expenditures. A company has to bear different expenses to sell products.

What are the provisions of corporation tax returns?

Corporate taxes are generally levied on companies. Although there are few provisions for rebates or deductions of corporate tax. Below are some of them:-

  • Deduction of interest income in some cases.
  • A corporate entity’s capital gains are devoid of taxation.
  • Dividends might be subject to rebate considering applicable conditions and terms.
  • The authorized corporate entity should bear the losses borne in the business for 6-8 years.
  • On setting up new sources of infrastructure or power, owners would receive deductions.
  • Certain deductions are allowed in case of any new undertaking or exports to the corporate.
  • Allowance of numerous provisions or deductions allowed for venturing capital fund or enterprise by the corporate.
  • If the dividends are received through other domestic corporations then there’s a provision to deduct dividends considering them as rebates.

How are Bookkeeping and VAT related?

The functioning of both bookkeeping and VAT is facilitated by compiling proper accounting records while doing bookkeeping for VAT.

 The term bookkeeping means to compile records for the following:-

  • Cashbook or Bank transactions
  • Petty Cash sales invoices or records
  • Sales daybook
  • Purchase daybook
  • Purchase invoice records 

Cash sales business:

  • Recording total amount of sales regularly
  • Drawings, purchases, wages or expenses deduction from cash sales
  • Carried forward cash balance
  • Cash banked

What are some common issues with bookkeeping?

The revelation with issues related to bookkeeping is experienced while preparing final accounts. You can save a lot of money on your accounting fees through consistent checking.  This would make you more clear about the quality of bookkeeping. Some common issues are enumerated below:-

  1. If you are yet to register for VAT then the recording of transactions might be done regularly with summarization once a year.
  2. If you have already registered for VAT then the records require quarterly summarization about VAT returns.
  3. The operation of extensive accounts with suppliers as well as customers then there is the need of a computer package for controlling the accrued and received amount.
  4. Implementation of full computer accounting package for complex business operations for determining monthly profits to facilitate forecasting and cash-flow control.

Why is consulting a company to deal with such matters important?

At Efjconsulting we understand that the operation of such services could be quite complicate, time-consuming and divert management’s attention from the core activities of their business.

 For that, we have a team of professionals to provide full consultancy on such services irrespective of the complexity or size of the business. Moreover, we also train staff so that they avid knowledge in their area of operation.

Some of our services include:-

  • Weekly, quarterly or monthly bookkeeping service in the premises or house of our clients.
  • Advisory and VAT planning to deal with issues like transactions related to land and property, partial VAT exemption and special accounting schemes.
  • Selecting and implementing proper accounting software.
  • Providing services such as staff training as per the convenience of clients via virtual meeting, telephone call or clients premises.
  • Preparing and timely submission of corporation tax returns along with compliance including operation, registration or registration of VAT scheme.

The above services are perform by our certified chartered accountants, experts and tax advisors.

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