Blogs

What factors affect your interest Rate 

There are several factors that affect interest rates, including: 

1.Credit score: 
Yes, a credit score is a very important factor in determining the interest rate of a loan: 

Credit score and interest rates
A higher credit score is usually associated with a lower interest rate, and a lower credit score is associated with a higher interest rate. This is because lenders consider a higher credit 
score to indicate a lower risk borrower. 

Credit score and loan approval
A higher credit score can also increase the chances of getting a loan approved. Lenders may be more likely to decline loan applications from people with lower credit scores. 

Credit score and other benefits
A higher credit score can also lead to other benefits, such as better repayment terms and a quicker loan approval process. 

2.Loan term: The length of a loan can affect the interest rate, especially for loans that use factor rates. 

Longer loans are riskier
Lenders charge higher interest rates for longer loans because they are riskier. This is because there is more time for the borrower to default, and the economy or market could fluctuate during that time. 

Shorter loans can save money
Shorter loans can save money because you pay interest for a shorter period of time. They also usually have lower interest rates, sometimes by as much as a percentage point. However, 
shorter loans have higher monthly payments. 

Lenders make more money from longer loans
Lenders make more money from longer loans because the debt has more time to accrue interest. 

3.Down payment: A larger down payment can result in a lower interest rate. 

Yes, the down payment you make on a loan can have a direct impact on the interest rate you're offered:

Lower interest rate
A larger down payment can lead to a lower interest rate. This is because a larger down payment reduces the lender's risk, as the borrower has more equity in the property from the start.

Lower monthly payments
A larger down payment can also lead to smaller monthly payments. This is because a smaller loan balance means smaller monthly payments.

Avoid mortgage insurance
A down payment of 20% or more can help you avoid paying private mortgage insurance (PMI) on a conventional loan. PMI is usually a monthly fee that's added to your monthly mortgage payment. 

4.Loan amount: A higher loan amount can result in a higher interest rate because it's riskier for the lender. 
Yes, a down payment is an important factor that can affect the interest rate of a loan: 

Lower loan amount
A larger down payment reduces the amount of the loan, which lowers the loan-to-value ratio. 

Lower risk for lender
Lenders view a larger down payment as a lower risk, and are more likely to offer better interest rates to borrowers who present less risk. 

Demonstrates commitment
A down payment shows the lender that the buyer is committed to the purchase. 

Builds equity
A down payment is the first step in building equity in a home. 

5.Loan-to-value ratio: Lenders consider this ratio when deciding how much to lend and at what rate. 
Yes, a loan-to-value (LTV) ratio is a key factor in determining a loan's interest rate: 

What it is
The LTV ratio is the percentage comparison of a mortgage's size to the value of the home being bought or refinanced. 

How it's used
Lenders use the LTV ratio to assess the risk of a loan application. A higher LTV ratio indicates a higher risk to the lender, so loans with higher LTVs tend to have higher interest rates. 

Why it's important
A lower LTV ratio is generally better for borrowers because it indicates a lower risk to the lender, which can lead to lower interest rates and better loan terms. 

How to calculate it
To calculate your LTV ratio, divide the amount you owe on your current mortgage by the new value of your home, and then multiply that number by 100. 

6.Income: A higher income can result in a lower interest rate because it shows the lender that the borrower can more easily repay the loan. 
Yes, income is a key factor that lenders consider when determining interest rates for loans: 

Income stability
Lenders want to see that you have a steady income to cover monthly loan payments. A stable job and a consistent income can lead to better interest rates. 

Income level
A higher income can mean a lower interest rate because it shows that you can repay debt well. 

Length of employment
The longer you've been employed at a company, the better your chances of negotiating a lower interest rate. 

Employer's reputation
Working for a reputable company or being a government employee can help your interest rate. 

Income verification
Lenders may ask for salary slips, bank statements, and employment history. 

Monthly disposable income
Lenders may consider your monthly disposable income after debt payments. If a large portion of your income goes toward debt, it can increase the risk of default.

7.Loan type: The type of loan, whether it's secured or unsecured, and other factors can affect the interest rate. 
Yes, whether a loan is secured or unsecured is important when deciding on interest rates:

Secured loans
Generally have lower interest rates than unsecured loans because they are less risky for lenders. This is because the lender can use the collateral as repayment if the borrower defaults.

Unsecured loans
Generally have higher interest rates than secured loans because they are riskier for lenders. This is because there is no collateral for the lender to recover if the borrower defaults. 
When deciding between a secured or unsecured loan, you can consider your financial situation and needs. For example, if you have a strong credit history and need a loan for something specific, an unsecured loan might be a good option. If you have assets that you can use as collateral, a secured loan might be a better choice. 

8.Economic conditions: The current economic conditions can affect interest rates. 
Yes, economic conditions are a major factor in determining interest rates on loans: 

Inflation
Higher inflation can lead to higher interest rates because it increases the cost of goods and services and erodes the value of money. 

Economic growth
A strong economy typically leads to lower interest rates because lenders are more willing to take on risk to finance business growth. 

Liquidity
The ease with which money flows in the economy can influence interest rates. 

State of the economy
When the economy slows down, people may cut back on borrowing and spending, which can lead to lower interest rates. 

9.Interest Rate Type: There are several types of interest rates for loans, including fixed, floating, and hybrid: 
Fixed interest rate: The interest rate remains the same throughout the loan term. This type of rate is easy to calculate and understand, and it's the most common type of interest rate. 

Floating interest rate: The interest rate changes over time based on market conditions, such as inflation, credit supply and demand, and monetary policy. This type of rate is     usually charged on home loans. 

Hybrid interest rate: This type of rate combines fixed and floating interest rates. It has a fixed interest rate for a set period of time, and then switches to a floating interest rate. 
    
Fixed interest rates offer more predictability in repayments, while floating rates can be more cost-effective if market rates decrease. 

10. Employment History: Your employment history can affect your loan rate and eligibility in a number of ways, including: 
    
Employment type: Salaried employees are generally considered the most desirable because of their regular paychecks. Self-employed and contract workers may face more scrutiny because their income can fluctuate. 

Employment stability: Lenders may be concerned if you've had multiple jobs in a short period of time. A consistent employment history can be a positive factor. 
    
Income stability: Lenders want to ensure that you have a stable income to support your loan payments. 
    
Length of employment: A longer employment history can be a positive factor. 
    
Career advancement: A history of career advancement can be a positive factor. 
    
Gaps in employment: Lenders are understanding of common and logical gaps, such as maternity leave, school, company layoffs, and temporary disability. However, frequent job changes or     an employment history of only two years or less may be red flags. 

11. Location of Property: 
Yes, a property's location is a factor that can affect the interest rate of a loan:

Location Properties in desirable locations with good connectivity and infrastructure are more likely to have lower interest rates. Properties in less desirable locations, like the outskirts of a city or rural areas, may have higher interest rates.

Resale value
Properties with a higher resale value are less risky for lenders, so they may have lower interest rates. 

12.Co-Borrower:
A co-borrower can affect the interest rate of a loan in several ways: 

Credit history
Lenders consider the credit history of both applicants when evaluating a loan application. A co-borrower with a good credit history can help you negotiate a better interest rate. 
Income

A co-borrower with a large income can help you get a larger loan amount at a competitive interest rate. 

Joint responsibility
Both borrowers are equally responsible for paying the loan, which can help alleviate financial pressure and improve household cash flow. 

Tax benefits
In some countries, both co-borrowers may be eligible for tax deductions on interest and principal repayments. 

13.Property Type: 
Yes, the type of property is an important factor that can affect the interest rate of a loan, especially for a loan against property (LAP): 

Property type: Interest rates can vary for different types of properties, such as residential and commercial properties. 

Property location: A property's location can affect its interest rate, as lenders consider the property's potential for appreciation. A property in a good location with a high resale value may result in a lower interest rate. 

Property age: The age of the property can affect the interest rate. 

14.Supply and demand:
Yes, supply and demand are important factors that affect interest rates on loans: 

Demand
When demand for money or credit increases, interest rates rise. This is because lenders can increase the cost of borrowing when there's a strong demand. 

Supply
When the supply of money increases, interest rates fall. This is because people move into bonds when the money supply increases, which causes bond prices to rise. 

Loanable funds
The supply of loanable funds is based on savings, while the demand is based on borrowing. The interaction between these two determines the interest rate and how much is loaned out. 

15.Debt to Income Ratio: 
Yes, your debt-to-income (DTI) ratio is an important factor that lenders consider when deciding interest rates for loans: 

What it is
Your DTI ratio is the percentage of your monthly income that goes towards paying your monthly debts. 

How it's calculated
To calculate your DTI ratio, divide your monthly debt payments by your monthly gross income and multiply by 100%. 

Why it's important
Lenders use your DTI ratio to determine how well you manage your debt and your ability to repay a loan. A lower DTI ratio indicates that you have a good balance between debt and income, and you're less risky to lend to. 

What's considered ideal
Most lenders prefer a DTI ratio of less than 40%. A DTI ratio of 21–35% is considered ideal. 

What happens with a higher DTI ratio
A higher DTI ratio may indicate that you have too much debt, and you may have difficulty managing your monthly payments. This can make it harder to get a loan, and if you do, the interest rates and terms may be less favorable. 

#Financialliteracy#financehelp#financeassistance#financecompany#financeoffice

Are your planning to set-up warehouse business in Rajasthan then you can avail the following incentives:

Eligibility: 2Cr Minimum Investment

Benefits:

Capital Subsidy: @25% of equipment value max.1Cr.

Or

Interest subsidy @7%

+

Green incentive: 25% of cost of capital max. 50 Lakh(EV,Rain-water harvesting etc.)

+

100% exemption of electricity duty, mandi fee & land taxes for 7 years 

100% Stamp Duty benefit will be given in stages as notified by the State 

100% conversion charges benefits given in stages as notified by the State

#RIPS2019 #RIPS 2022 #Incentive by rajasthan goverement

1. On which type of Assessee section 194Q applies?

Ans. Any person, being a buyer whose total sales/gross receipts/turnover from the business carried on by him exceed 10 crore rupees during the F.Y. immediately preceding the F.Y. in which the purchase of goods is carried out, not being a person, as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.
and who is responsible for paying any sum to any resident (i.e. seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year.

2. What will be Rate of TDS?

Ans. TDS shall be deducted at an amount equal to 0.1 % of such sum exceeding 50 lakh rupees as income-tax, if the seller has furnished his PAN or Aadhaar, otherwise, the tax shall be deducted at the rate of 5%.

3. Time of Deduction of TDS?
Ans. At the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier.

4.Wheter section 194Q applies if any sum referred to in sub-section (1)of Sec.194 is credited to any account, whether called "suspense account" or by any other name, in the books of
account of the person liable to pay such income?

Ans. Yes, the said section will be applicable as such credit of income in Suspens a/c or any other a/c shall be deemed to be the credit of such income to the account of the payee.

5. On Which transaction provision of the section 194Q not applicable?

Ans. The provisions of this section shall not apply to a transaction on which

(a) tax is deductible under any of the provisions of this Act like sec. 194O; and
(b) tax is collectible under the provisions of section 206C other than a transaction to which sub-section (1H) of section 206C applies.]

6.IS the provision is applicable on transactions carried through various Exchanges:(Stock exhanges and clearing corporations)?

Ans. No, Since it has been clarified vide Guidelines under section 194Q of the Income-tax Act, 1961 - dated 30.06.2021 vide Circular No. 13 of 2021 on Point no 4.1.
https://www.incometaxindia.gov.in/communications/circular/circular_13_2021.pdf

7.Wheter the provision of sec 194Q Applicable on payment or credit made before 30th June2021?

Ans. The provision of this sub-section shall not apply on any sum credited or paid before 1 st July 2021. If either of the two events had happened before 1st July 2021 , that transaction
would not be subjected to the provisions of section 194Q of the Act.

Hence, if a person being buyer has already credited or paid fifty lakh rupees or more up to 30th June 2021 to a seller, the TDS under section 194Q shall apply on all credit or payment
during the previous year, on or after I st July 2021 , to such seller.

8.Whether non-resident can be buyer under section 194Q of the Act?

Ans. It is clarified that the provisions of section 194Q of the Act shall not apply to a non-resident whose purchase of goods from seller resident in India is not effectively connected with the permanent establishment of such non resident in India.
For this purpose, "permanent establishment" shall mean to include a fixed place of business through which the business of the enterprise is wholly or partly carries on.

9.Whether tax is to be deducted when the seller is a person whose income is exempt?

Ans. No, as It has been clarified that the provisions of Section 194Q of the Act shall not apply on purchase of goods from a person, being a seller, who as a person is exempt from income tax under the Act (like person exempt under section 10) or under any other Act passed by the Parliament (Like RBI Act, ADB Act etc.).

Similarly, with respect to sub-section (1 H) of section 206C of the Act, it is clarified that the provisions of this sub-section shall not apply to sale of goods to a person, being a
buyer, who as a person is exempt from income tax under the Act (like person exempt under section 10) or under any other Act passed by the Parliament (Like RBI Act, ADB Act etc.).

The above clarifications would not apply if only part of the income of the person (being a seller or being a buyer, as the case may be) is exempt.

10.Whether tax is to be deducted on advance payment?

Ans. Yes, as it has been clarified that the provisions of section 194Q of the Act shall apply to advance payment made by the buyer. It is clarified that since the provisions apply on payment or credit whichever is earlier, the provisions of section 194Q of the Act shall apply to advance payment made by the buyer to the seller.

11.Whether provisions of section 194Q of the Act shall apply to buyer in the year of incorporation?

Ans. No, as It is clarified that under section 194Q of the Act a buyer is required to have total sales or gross receipts or turnover from the business carried on by him exceeding
10 crore rupees during the financial year immediately preceding the financial year in which the purchase of good is carried out.
Since this condition would not be satisfied in the year of incorporation, the provisions of section 194Q of the Act shall not apply in the year of incorporation.

11.How the APPLICATION OF SECTION-194O, 206C(1H) & 194Q?

Ans. *If TDS Deducted By E-Commerce Operator U/S 194O, Then Transaction Will Not Be Subjected To TDS U/S 194Q

*If Transaction Is Both Within The Purview Of 194O & 194Q, Then The Tds Will Be Deducted U/S 194O & Not 194Q.
*If Transaction Is Both Within The Purview Of 194O & 206C(1H), Then The TDS Will Be Deducted U/S 194O & Not 206C(1H).
*If Transaction Is Both Within The Purview Of 194Q & 206C(1H), Then The TDS Will Be Deducted U/S 194Q & Not 206C(1H).

12.Whether Section-194Q Applies If Buyer’s Turnover In Preceding Year Is Rs 10 Crore Or Less ?

Ans. If Turnover From Business Carried On By Buyer Exceeds Rs 10 Crore Then Section-194Q Will Be Applicable. Non Business Income Will Not Be Considered In The Ten Crore Limit.

13.Wheter TDS u/s 194Q is required to be deducted on GST Component?

Ans. Accordingly with respect to TDS under section 194Q of the Act, it is clarified that when tax is deducted at the time of credit of amount in the account of seller and in terms of
the agreement or contract between the buyer and the seller, the component of GST comprised in the amount payable to the seller is indicated separately, tax shall be deducted under section 194Q of the Act on the amount credited without including such GST.

However, if the tax is deducted on payment basis because the payment is earlier than the credit, the tax would be deducted on the whole amount as it is not possible to identity that
payment with GST component of the amount to be invoiced in future.

14. How the treatment of Purchases return to be made for section 194Q?

Ans. Further, with respect to purchase return it is clarified that the tax is required to be deducted at the time of payment or credit, whichever is earlier. Thus, before purchase return happens, the tax must have already been deducted under section 194Q of the Act on that purchase. If that is the case and against this purchase return the money is refunded by the seller, then this tax deducted may be adjusted against the next purchase against the same seller.
No adjustment is required if the purchase return is replaced by the goods by the seller as in that case the purchase on which tax was deducted under section 194Q of the Act has
been completed with goods replaced.

15.Is section 194Q applicable to the purchase of capital goods?

Ans. Yes, section 194Q applies to purchase of all goods whether on capital or on revenue account.

16.Whether TDS to be deducted on the purchase of immovable property by a developer?

Ans. Goods' means every kind of movable property subject to certain exceptions and inclusions. Thus, the immovable property shall not be treated as 'goods'. Consequently, the TDS shall not be deducted from the purchase of immovable property by a developer.

17.Whether TDS is liable to be deducted on purchase of Jewellery not connected with business?

Ans. In section 194Q, there is no condition that the purchases should be connected with the business only. Thus, if a person is falling within the definition of the buyer, tax is required to be deducted even
if such purchase is not connected with the business carried on by him Jewellery, being a movable property, is covered within the term goods. There is no specific exclusion under Section 194Q for deduction of TDS on purchase of jewellery. Thus, the tax
shall be deductible on purchase of jewellery if other conditions are also fulfilled.

18.Whether additional, allied and out-of-pocket expenses form part of the purchase value of goods?

Ans. Where these expenses have been reflected in the purchase invoice itself, it should form part of purchase value. If they are charged through a separate invoice, it should not form part of purchase value.

19.Whether tax to be deducted on the purchase of goods by one branch from another?

Ans. NO, Since TDS under this section is required to be deducted by any person, being a buyer, responsible for making payment to the seller for the purchase of goods. Thus, the existence of two distinct parties as 'seller' and 'buyer' is a pre-requisite to construe a transaction as a purchase. The condition of purchase is not fulfilled in the context of branch transfer.
Therefore, the provisions of this section shall not apply in the case of branch transfers.

20.Whether buyer shall be treated as assessee in default if the seller pays the tax due on the income declared in the return of income?

Ans. Section 201 of the Income-tax Act provides that a deductor, who fails to deduct tax at source, is not deemed to be in default if the payee has considered such amount while computing income in the return and has paid the tax due on such declared income. The deductor will have to obtain a certificate to this effect from a Chartered Accountant in Form No. 26A and submit it electronically.
Thus, the buyer shall not be deemed as assessee-in-default if the seller has taken into account the purchase amount while computing his income and has paid the tax due on the income declared in the return.

21. If the seller has multiple units, whether purchases made from different units need to be aggregated?
Ans. In other words, if different units of the seller are under the same PAN or Aadhaar number, the amount paid or payable to all such units shall be aggregated to compute the limit of Rs. 50 Lakhs.

22.In which cases Sec 1 94Q is not applicable?

Ans. The provisions of this section shall not apply to a transaction on which—

(a) tax is deductible under any of the provisions of this Act (Actual deduction is not required it is only tax is deductible) ; and

(b) tax is collectible under the provisions of section 206C other than a transaction to which sub-section (1 H) of section 206C

i.e if the tax collected U/s 206(1H) – Still the Provisions of Sec 194Q is applicable irrespective of tax collected, provided all the conditions satisfied U/S 194Q.

if the tax collected U/s 206C – then the Provisions of Sec 194Q is not applicable.

If the tax deductible U/s 194Q – then the provisions of Sec 206(1H) not applicable. (Sec 206(1 H) not applicable, if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount).

(c) Not applicable in case of seller is Non Resident (i.e Seller must be resident and there is no restriction on buyer).

23.From which date the provisions of Sec 194Q Applicable?

Ans. The provision of Sec 194Q notified in Finance Act, 2021 and applicable from 01st July 2021.

24.What are the consequences of not deducting or not depositing TDS?

Ans. As per sec 40(a)(ia), if TDS is not deducted or Deducted but not deposited then 30% of the amount on which TDS is to be deducted and deposited will be added to the Income of that person.

However on payment of such TDS in the subsequent year, the 30% of such amount added back in the previous is allowed as deduction in the year in which Tax deducted is paid.

25.Is this applicable for all types of assesses like individuals and firms?

Ans. The provisions are applicable to all types of assessees whoever satisfies the definition of buyer. At present, there are no exclusions made.

26.Is it applicable for the goods alone or includes services also?

Ans. The new provision is applicable on purchase of goods only and not services.

27. Which is the base year for the threshold limit of Rs.50 lakhs?

Ans. Limit of 50 lakhs is considered in each financial year. The 50 lakhs exemption is for one financial year for a single seller.

28.Transfer of goods on testing purpose?

Ans. Section 194Q provides that buyer shall deduct TDS on purchase of goods. Considering that the goods are transferred for the purpose of testing and no purchase made, this provision will not apply.

In connection to the new provision (S.194Q) relating to TDS with effect from 01 July 2021 on the goods purchased by you from Supplier !

Section 194Q shall be applicable if the following conditions are fulfilled:
Gross Turnover of your enterprise exceeds Rs. 10 Crores for FY 2020-21;
AND
Aggregate value of purchases made from Supplier exceeds Rs. 50 lakh in the FY 2021-22;

Then TDS @ 0.1 % shall be deducted at source.

The above TDS provision shall co-exist with TCS provisions and is tabulated below.

For Customer reference

For Supplier reference

Primary Responsibilty is on Customer for TDS u/s 194Q. If TDS provision not applicable then TCS provisons need to apply..

Further, as per new provision (S. 206CCA) with effect from 01 July 2021, tax shall be collected at higher rate where the customer have not filed income-tax return for preceding two assessment years.(I.e. for AY 2019-20 and AY 2020-21.)
 

*Introduced by Finance Bill 2021, inserted two new section 206AB & 206CCA. The said section provide for higher rate of TDS/TCS to be applied for the non-filers of income tax return.
* for “NON-FURNISHING OF PAN”, TDS/TCS was already deducted or collected at higher rates u/s 206AA & 206CC respectively.

206AA Tax is required to be deducted at:
(i) at the rate specified in the relevant provision of this Act;
(ii) at the rate or rates in force; or    
(iii) at the rate of 20%:    

206CC Tax is required to be collected at: 
(i) at twice the rate specified in the relevant provision of this Act;
(ii) at the rate of 5%:

Finance bill 2021 Introduced 2 sections 206AB and 206CCA in the line of these sections 

section 206AB: 
Applicability on specified person as defined in the provisions.

206AB(1)TDS rate: To be applied if the amount is paid or credited to a specified person being higher of the below rates: -

*At twice the rate specified in the relevant provision of the Act; or
*At twice the rate or rates in force; or
*At the rate of 5%.

Non applicability: The provision of sub-section (1) of section 206AB does not apply in case where tax is required to be deducted under 1942, 192A, 194B, 194BB,194LBC or 194N.

Sec. 206AB(2): provides that where both the section 206AA & 206AB are applicable i.e., the specified person has not submitted PAN as well as not filed the Income tax return, the tax 
shall be deducted at higher rate amongst the both sections respectively.

Specified Persons” Meaning:  who satisfies the following conditions:

*A person who has not filed the Income Tax Return for two previous years immediately prior to the previous year in which tax is required to be deducted;
*The time limit of filing return of income under sub-section (1) of section 139 is expired; and
*The aggregate tax deducted at source or tax collected at source, as the case maybe, is Rs. 50,000 or more in each of the two previous years.
*However, the specified persons shall not include a Non-resident who does not have Permanent Establishment (PE) in India.

Section 206CCA
206CCA(1): Rate of TCS
(i) at twice the rate specified in the relevant provision of the Act; or
(ii) at the rate of 5%.

Further, the sub-sections (2) & (3) of section 206CCA are similar to the provision of sub-sections (2) & (3) of section 206AB as explained above.

Startup India, initiated by the Government of India is a flagship initiative launched in January 2016. This initiative is taken by the government of India to boost the ecosystem for supporting innovation and startups in India. Through this scheme, the government is looking forward to driving sustainable economic development and enhances employment opportunities in India. The government of India recently announced Startup India action plan to meet the requirements of this initiative.

Startup means an entity, incorporated and registered in India 

• The Startup should be incorporated as a Private Limited Company or Limited Liability Partnership or Registered as a Partnership Firm.
• With an annual turnover not exceeding Rs. 100 crore for any of the financial years since incorporation/registration.
• Working towards innovation, development or improvement or of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.
• An entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.
• Shall not be more than  10 years old for Startup recognition OR not incorporated before April 2016 to claim Tax Exemption certificate.

An entity shall cease to be a Startup,

• On completion of 10 years from the date of incorporation/registration.
• If its turnover for any previous year exceeds Rs. 100 crore

Benefits of Startup India Registration

Tax Exemption

Once your company gets Startup recognition you may get exemption on capital gain and investment above fair market value for 3 consecutive years. You have to apply for Income Tax Exemption benefits available u/s 80IAC and U/s 56(2) viiib relief for Angel Tax relief (Tax on Share Premium).

Easier Public procurement Norms

Public procurement refers to the process by which governments and state-owned enterprises purchase goods and services from the private sector. As public procurement utilises a substantial portion of taxpayers' money, governments are expected to follow strict procedures to ensure that the process is fair, efficient, transparent and minimises wastage of public resources.

In many Tenders, Govt. and PSU gives relaxation for Startups to Participation in public procurement job through tenders. Relaxation in Prior experience, EMD or Turnover criteria.

Govt. Funding Opportunity

Government allotted Rs 10,000 crores funds for investment into startups through Alternate Investment Funds. SIDBI is managing this fund. Startups can apply under this quota.

Participate in various Govt. Scheme

Government issues day to day various schemes for startup to participate. For example, sustainable finance scheme, bank credit facilitation, raw material assistance, etc.

Participate Startup Grand Challenges

Many reputed companies encourage startup entrepreneurs for their solutions. Here gives an opportunity for startup to participate in the scheme and win funding. Recently, Whatsapp, Mahindra, Aditya Birla, many more companies organising such financial assistance scheme with Startup India.

IPR Govt. Fee Concession

In IPR Registration 50%-80% Govt. fee concession available. Example in Trademark, Patent application.

Self Certifications

The process of conducting inspections shall be made more meaningful and simple! Startups shall be allowed to self-certify (through the Startup mobile app) with 9 labour and environment laws. In case of the labour laws, no inspections will be conducted for a period of 3 years.

Startups may be inspected on receipt of credible and verifiable complaint of violation, filed in writing and approved by at least one level senior to the inspecting officer:

The Startups may self-certify compliance in respect of following Labour Laws:

Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
The Payment of Gratuity Act, 1972
The Contract Labour (Regulation and Abolition) Act, 1970
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
The Employees’ State Insurance Act, 1948

Easy Winding up

Windup company in 90 days under insolvency & Bankruptcy code 2016.

Connect Networks

Search and find various startups and connect with them. Get Mentorship, connect with investors and industries.

GEM Portal Seller Registration and Bid

Startup India (DIPP) require for registration at GEM Portal of govt. https://gem.gov.in/

Documents Requirement for Startup India Registration

• .Certificate of Incorporation / Registration Certificate and PAN
•  Email ID and Mobile number
• .Company Details ( Industry, Sector, Category, Regd. Office Address etc)
• Directors/Partners Details ( Name, Photo, Gender, Mobile No. Email ID, Full Address)
• Details of Authorised Representative ( Name, Designation, Mobile No. Email ID)
• A Brief about business and products/services and notes on innovations
•  Revenue model and Uniqueness of the Product
• Website/Pitch Deck/Video/Patent ( anyone)

How to Apply for Tax Exemption Certificate U/s 80-IAC of Income Tax Act

As per Revised Rule vide Notification dated 11th April '2018 issued by Ministry of Commerce and Industry ( Department of Industrial Planning and Promotion) - 

A Startup being a Private Limited Company or Limited Liability Partnership (LLP) incorporated after 1st April 2016 may, for obtaining a certificate for the purpose of section 80-IAC of the Income Tax Act, make an application in Form-I along with documents specified theirein to the Board and the Board may after calling for such documents or information and making such enquires, as it may deem fit -

Either

i) Issue Tax Exemption Certificate.

or

ii) Reject the application by providing reasons.

How to Apply for Tax Exemption Certificate U/s 56 (2) (viib) of Income Tax Act (Angel Tax)

As per Revised Rule vide Notification dated 11th April '2018 issued by Ministry of Commerce and Industry ( Department of Industrial Planning and Promotion) and subsequently amended on 19th February 2019- 

ELIGIBILITY CRITERIA:-

A Startup being a Private Limited Company or LLP recognised as Startup shall be eligible to apply for approval for the purpose of Section 56(2)(viib) of the Income Tax Act ( popularly known as ANGEL TAX), if the following conditions are fulfilled:-

(i)   the agreegate amount of paidup share capital and share premium of the startup after the proposed issue of share capital does not exceed Rs 25 crores.

(ii)   the investor/proposed investor, who proposed to subscribe to the issue of share of the startup has

         a) the average returned income of the Rs 25 Lakhs or more for the proceeding three financial years, or

         b) the networth of Rs 2 Crores or more as on the last date of the proceeding financial year, and

(iii)   the startup has obtained a report from a merchant banker specifying the fair market value of share in accordance with rule 11UA of the Income Tax Rule, 1962.

(iv) Benefit available for 10 years.

APPLICATION & APPROVAL PROCESS:-

The application for approval under this para shall be made in Form-2 to the Board and shall be accompanied by documents specified therein.

And Board may after calling for such documents or information and making such enquires, as it may deem fit -

Either

i) Grand approval for the purpose of Section 56(2)(viib) of the Act, specifying the relevant details, including details of investors, amounts of premium on which shares are to be issued and the latest date by which the shares are to be issued; 

or

ii) Decline to grant the said approval after providing reasons.

Blog by aruna Jain

Indian Income Tax Act 1961 gives you some deductions under Chapter VIA to avail tax relaxation in Income Tax. In which 80C is the most popular and well known section. So here in this article we will discourse point to point about Section 80C.

How much deduction can you get-

Maximum Rs. 1,50,000

How can you avail 80C deduction-

1- By make Investment in-

                        (i) Equity Linked Saving Scheme (ELSS)

                             * Lock in period of 3 Years.   

                             * Return benefits are Tax-Free to the limit of 1 Lakh.

                        (ii) Unit Linked Insurance Plans (ULIPs)

      * Lock in period of 3 to 5 Years.

      * Return benefits are also Tax-Free u/s 10(10D)

                        (iii) Life Insurance Premium

                              * Premium of Taxpayer & his dependent.

2- By Pay for-

                        (i) Children’s Tuition Fees

                        (ii) Home Loan (Principal Only) Repayment

3- By Save money in-

                        (i) Sukanya Samridhi Yojana (SSY)

                              * Lock in period is 18/21 Years.

                              * Minimum Rs. 1,000 to Maximum Rs. 1,50,000 per annum.

                              * Interest received towards the scheme is also Tax-Free.       

                        (ii) Public Provident Fund (PPF)

                              * Lock in period of 15 Years.

                              * Extendable by 5 Years.

                              * Partial withdrawable after 7 Years.

                              * Interest is also Tax-Free.

                        (iii) Employee’s Provident Fund (EPF)

                               * Minimum tenure 5 Years.

                               * Minimum salary Rs. 15,000 per month.

                               * Interest is Tax-Free after 5 years or retirement.

                        (iv) National Saving Certificate (NSC)

                               * Lock in period of 5 Years.

                               * Interest is Taxable.

                        (v) Senior Citizen Saving Scheme (SCSS)

                               * Lock in Period of 5 Years.

                               * Interest is Taxable.

                        (vi) 5 Year Tax Saving Fixed Deposits

                               * Lock in Period of 5 Years.

                               * Interest is Taxable.

Benefits of 80C-

            See, saved and invested money in above schemes is not only your savings for the future but also you will get tax relaxation in present tax period. So all we can say that you have Laddoos in both of your hands.

Who can avail 80C benefits-

            Every taxpayer who have Invested, Saved in or Paid for above mentioned points, can avail benefits of section 80C deduction.

In this article we discuss about the ways a person or Individual can save the within the Law bracket/ Tax planning ways

1. House rent deduction
If your are employee and you are getting HRA then this is one of the way you can save your tax
How to calculate HRA Exemption 10(13A)

The deduction available is the least of the following amounts:

a. Actual HRA received;

b. 50% of [basic salary + DA] for those living in metro cities (40% for non-metros); or

c. Actual rent paid less 10% of basic salary + DA

If you do not get HRA but pay rent, you can claim a deduction under Section 80GG up to maximum Rs 60,000 per Annam i.e 5000 per Month.

2.Interest on your Home loan:
If you have taken the loan for purchase/construction of a house and the construction of the house must be completed within 5 years from the end of financial year of the house then the Interest paid on such loan can be claimed U/s 24(b) maximum of Rs. 2 Lakh.

Benefit of Home loan
1. Interest benefit u/s24(b) Max. Rs. 2 Lakh
2. Principal payment deduction U/s 80C Max. Rs.1.5 Lakh

3.Interest in saving Bank:
Interest on saving account Exempt up to Rs.10000 for individual as per section 80TTA and senior citizen maximum Rs. 50000 for Interest on saving and FD account as per section 80TTB.

4.Medical insurance:
Any individual paying medical insurance can get deduction u/s 80D of Rs. 25000 of individual and for senior citizens Maximum Rs. 50,000. i.e maximum 75000 for self and parents for person contributing in medical insurance.

5. National pension scheme(NSC):
As per section 80CCD(1B) an individual can avail deduction by contributing in NPS of Maximum Rs. 50000. The NPS allows you to invest in equity and debt pension funds and build a retirement corpus. Maturity can be taken on 60age. This is over and above 1.50Lakh.

6.Contribution in section 80C different plans:
Maximum limit 1.5 Lakh

*FD for 5 Years(Interest is taxable).

*PPF- Tenure is 15 years, Interest on PPF is tax free.
*ELSS Fund: Lock in period is 3 year.
*NSC:
*Home loan principal payment
*LIC
* Tuition fee:I.e school fee
*EPF:
*Senior citizen saving scheme: Tenure is for 5 years and is available to those above 60 and interest on that is taxable.
*Sukanya Samriddhi Yojana: Parents of a girl child below the age of 10 can get this deduction, Maximum tenure is 21 year or until the girl marries after turning 18.Interest is tax free.

7. Donation:

For certain government NGO it has 100% dedution of your contribution
for other NGO this is 50% subject to maximum 10% of Your adjusted total income

8. Higher education loan: as per sec. 80E Interest on loan taken for Higher education is qualified for deduction from Taxable income. Maximum period is 8 year.
9.Interest on NRE Account: Interest on NRE account either from saving or FD is not taxable in India. A NR can take loan from other country at cheaper rate and can inverse in India to earn income more.
His earning is taxable in the country in this his income is taxable.
10. Donation to Political party:
As per section 80GGC donation to political party qualifies for 100% Deduction. No maximum limit is there.
11. Section 80CCG Rajiv gandi equity saving scheme:
If a person having Total income less than 12 lakh P.A.is allowed an additional deduction by investing first time in specified securities and mutual funds. Investor should be first time investor is shares and MF.
12. Saving of capital Gain Income:

A person can save their tax by investing in schemes made by government of depositing the capital gain or total consideration in different ways.

Bird eye view
Considering you are contributing maximum

Standard deduction : 50000/-
Section 80C : 150000/-
Section 80CCD(1B) : 50000/-
Section 80D : 75000
section 24(1B) : 200000