How your vacation helps you in tax deduction

There are many ways of tax deduction but many people prefer vacation. Here’s how they do it.

You need to make all your business appointments before you leave for your trip. Most people believe they can go on vacation and in the end they hand out their bill and get deductions. But you must have at least one business appointment before you leave in order to make it looks like business purpose. You can set up business appointment with your business colleagues in the various cities that you plan to visit.

You need to make sure that your trip is all business trip. You can deduct all your on-the-road expenses only when you are travelling on business. Suppose you go to a regional meeting which is only two-hour drive from your home. If you have some problem there like traffic problem and you need to sleep for one night then that expenses also count in business travel.

You need to make sure that you are deducting all your on-road-expenses for each day you are away. For every day you are on business travel, you can deduct 100 percent of lodging, tips, car rentals, and 50 percent of your food.

Suppose you have a weekend between your business days. If you have a business day on Friday and another one on Monday, you can deduct all on-the-road expenses during the weekend.

Make the trip days count as business days. You can deduct transportation expenses if business is the primary purpose of the trip. A majority of days in the trip must be for business activities.

To make sure that you can legally deduct your vacation when you combine it with business, call the office before you plan your trip.

It is good to take advice from tax advisor before you plan such an event.

Things to do if you forget to fill a tax return

All the tax returns should be file by the taxpayers which are due. A taxpayer may qualify for the payment plan depending upon the situation. The most important thing to know is that full payment of taxes can save your money.

Things to do when your return is late

You need to gather return information and need to bring all information related to income and deductions for the tax years for which a return is required to be filed. There are different ways of doing payment on your taxes. Payments can be made by credit card, electronic funds transfer, check, cashier’s check, or cash. There are also payment options for those who cannot pay full payment at a time. By paying as much as possible now, the penalties and amount of interest will be lessened. Based on situation, a taxpayer could qualify for an extension of time to pay, a temporary delay, an installment agreement or an offer of compromise.

There are generally two types of extensions. One is short-term payment extension and other is monthly payment plan.

A taxpayer gets 60 to 120 days to pay in short term extension. No fee is charged, but the late-payment penalty plus interest will apply. Generally taxpayers will pay less in penalties and interest if the debt were repaid through an installment agreement over a greater period of time. Penalties and interest will continue to be charged on the unpaid portion of the debt throughout the duration of the installment agreement/payment plan. When you are going to pay tax bill, it is necessary to check penalties and interest imposed. It is possible that your interest and penalties amount is more than the interest rate on a loan or credit card. You should pay as much as possible before entering into an installment agreement. You can also pay your tax via credit card or debit card. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee. There is user fee you need to pay if the installment agreement is approved.

It is necessary to understand consequences of not filing a past due return and the steps that the IRS will take. Taxpayers who continue to not file a tax return and failed to respond to IRS requests for a return may be considered for a variety of enforcement actions.

If you haven’t filed a tax return yet, please contact a tax consultant for assistance.

Proposed changes for budget 2015-2016

These are the proposed changes for budget 2015-2016

Particulars	Existing Provisions for FY 2014-15 OR AY 2015-16	Proposed Changes in Budget for FY 2015-16  OR AY 2016-17
Surcharge on taxable income exceeding Rs. 1 Crore for Individuals, Senior Citizens, Very Senior Citizens, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative societies and local authorities	10% of Income Tax	12% of Income Tax
Comparison of Benefits under various IT Sections
Exempted amount of transport allowance	Rs. 800/- per month	Rs. 1,600/- per month
Section 80D - Deduction for Health  Insurance premium	Rs. 15,000/-	Rs. 25,000/-
Section 80D - Deduction for Health  Insurance premium for Senior Citizens	Rs. 20,000/-	Rs. 30,000/-
Investment in Sukanya Samriddhi Scheme	-	Eligible for deduction u/s 80C and any payment from the scheme shall not be liable to tax.
Section 80DDB - Deduction in case of very senior citizens on expenditure on account of specified diseases	Rs. 60,000/-	Rs. 80,000/-
Section 80DD - Maintenance, including medical treatment of a dependent who is a person with disability	Rs. 50,000/-	Rs. 75,000/-
Section 80DD - Maintenance, including medical treatment of a dependent who is a person with severe disability	Rs. 1,00,000/-	Rs. 1,25,000/-
Section 80U - Person with disability	Rs. 50,000/-	Rs. 75,000/-
Section 80U - Person with severe disability	Rs. 1,00,000/-	Rs. 1,25,000/-
Section 80CCC - Contribution to provident fund of LIC or IRDA approved insurer	Rs. 1,00,000/-	Rs. 1,50,000/-
Section 80CCD - Contribution by the employee to National Pension Scheme (NPS)	Rs. 1,00,000/-	Rs. 1,50,000/- The budget also proposes to provide a deduction of upto Rs. 50,000 over and above the limit of Rs. 1.50 lakh in respect of contributions made to NPS.

Registration of Proprietorship Firms

Resident individuals can start business in very basic form. That individual is the only owner of the firm. This is most simple and quick method of starting a business, especially where the individual wants the 100% ownership and a  complete business privacy, start-ups can always experiment using this form of organization.

We can help you in registering the firm with required Authorities. With simply opening of bank account and some other basic things like an office space, letterheads, visiting cards, phone numbers, you can start the registered Proprietorship firm.

 

How we help you:

·         Advising on choice of formation and suggesting the best suitable form of organization, especially with start-ups.

•          Getting necessary registrations with required Authorities such as VAT (for trading firms), Service Tax (for service industries) and Excise (for the Manufacturing concerns)
•          Securing business name and logo by registering with Trade Mark and Service Mark authorities
•          Assistance in opening Current Account in bank
•          Advising on necessary compliances after registrations

Once the registration is done, you can start your business. To further help you, we also provide a monthly package accounting system designed especially for small and medium sized business at very compelling prices and facilitating a designated contact person and monthly visits and reporting.

This enables you cut the cost since separate full time accountants are not required to be hired and also the compliances and reports are updated for a bird’s eye glance.

For more information: www.raaas.com

Do you Worry of Profit Margins

You can achieve profit margins with same customers, physical sales, same systems, no more staff or extra overhead costs, existing premises and capacity. There are several ways of achieving it using simple methods.

First you need to figure out your profit margin. It’s no good using estimated inventory figures or working from the figure in your last Annual Financials.

Second, analyze your profit margins.  Find out the gross profit margin on each of your products and services, and, in addition, analyse your gross margins over different business divisions, product categories, suppliers or customer categories according to your business. This way you can identify both low margin or loss-making items and profitable activities or products. Then you can stop selling low margin lines and focus on the ones that work.

Third thing you should increase prices. It is quite difficult. In this process we can lose the odd customers . If your margin is 50%, a 10% increase in prices means you can lose 17% of your customers yet be no worse off!

You should offer no discount. Discounting can be the death of many businesses that don’t realise how badly this destroys your margins. At that same margin of 50%, if you discount your prices by 10%, you need a 25% increase in sales just to stand still. Say goodbye to your day off!

Take cash discounts from customers. It’s normally a much better deal than trying to delay payment, even if you’re borrowing.

You should prevent theft of any kind. Whether stolen by staff, customers, losing cash is very costly. Do you have anti-shoplifting or theft prevention systems in place, even for staff? Do you balance your tills? Who does your banking?

Increasing your margins is all about making the most of what you sell right now.

India’s GDP growth rate to reach 8% by 2017: World Bank

The World Bank has predicted a GDP growth rate of 8 per cent for India by 2017 and said that a strong expansion in the country, coupled with favourable oil prices, would accelerate the economic growth in South Asia.

In India, GDP growth is expected to accelerate to 7.5 per cent in fiscal year 2015/16. It could reach 8 per cent in FY 2017/18, on the back of significant acceleration of investment growth to 12 per cent during FY 2016-FY 2018, the bank said in its semi-annual report.

The country is attempting to shift from consumption to investment-led growth, at a time when China is undergoing the opposite transition, it said.

The bank’s twice-a-year South Asia Economic Focus report projected steady increase in regional growth from 7 per cent in 2015 to 7.6 per cent by 2017 on grounds of strong consumption and increasing investment.

Read more at:

http://economictimes.indiatimes.com/articleshow/46915422.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

How to keep tax benefits when exiting investments

You might be ready to book the losses from the investment, but are you okay with tax benefits being rolled back?
We often make hasty investments during the tax season and end up investing in bad products. If we stay with these investments, we have a liability that doesn't match our financial goals.

If we decide to forgo, we lose returns and the tax benefits.Here is a quick list of common tax saving investments and things you should take care of before you tinker with them.

Employees' provident fund
If you withdraw your EPF before 5 years of service, the entire amount, including the interest earned on it, gets added to your income and therefore is taxable.This can actually make a big dent in your pocket.

Even a small salary of Rs 25,000, the 12% EPF contribution works out to be Rs 3,000 a month. That is, Rs 36,000 a year. The rule applies even if you quit the job and then withdraw your EPF , unless, the reason for termination is beyond your control.

Unit-linked insurance plans (ULIPs) have a lock-in period of five years and terminating the policy before that would mean the premium along with the returns earned so far gets added to your net income.The Irda guidelines apply the five year lock-in criteria on top-up premiums as well. 

Endowment Plans
Tax benefits get rolled back if you terminate the plan before two years. Ending an endowment plan before three years is anyway a losing proposition as you receive the guaranteed surrender value only when you have paid premium for at least three years.

The benefits claimed under section 80 C gets added to your taxable income in the year of withdrawal. Which means, if you have invested Rs 1 lakh so far (two annual premiums of Rs 50,000), you'll have to cough up an additional tax of at least Rs 10,000. 

Home loans

Last budget increased the limit under Sec 24 B by Rs 1 lakh and now you can claim a deduction of up to Rs 2 lakh every financial year for interest paid on home loans. The catch here is that you should get the possession of the property within three years of purchase.

However, this rule is only applicable for self-occupied properties. A rented second house, or deemed as rented, is not bound by such restrictions Also, for the second house, there is no cap on the amount claimed as interest paid.

If you sell the house on loan within 5 years of purchase, for that year, the principal amount gets added to your income and you will be taxed according to your income slab. 

Sale of Property
Some people invest in new properties to avoid capital gains tax arising from sell transfer of an older property . However, remember that, selling of property , which is exempt from capital gains (section 5454F), within three years of purchase will make the transaction taxable. Similarly, specific security bonds issued by NHAI and REC, exempted under Section 54 EC, are also bought to save capital gains tax. 

For Guidance Visit: http://www.raaas.com