TRACES (TDS Reconciliation Analysis and Correction Enabling System)
Question and Answer Of Taxable Income
Question and Answer Of Taxable Income
Question (1) : I own shares of various Indian companies and receive dividends. Is it taxable?
Answer : No. Dividend declared by Indian companies is not taxable in the hands of the shareholders because taxes on distributed profits have already been borne by the company.
Question (2) : How does the Government collect Income Tax?
Answer : Taxes are collected by three means:
1) Voluntary payment by persons into various designated Banks. For example, Advance Tax and Self-Assessment Tax
2) Tax Deducted at Source (TDS) on your behalf from the payments receivable by you
3) Tax Collected at Source (TCS) on your behalf at the time of spending. It is the constitutional obligation of every person earning income to compute their income and pay taxes correctly
Question (3) : What is the procedure for depositing tax?
Answer : A form called challan available at Income Tax Department, in banks and on the IT department website should be filled up and deposited in the bank along with the money. Taxes can also be paid online.
Question (4) : I am a small time trader. Do I need to maintain any accounts?
Answer : Any business or profession that has an annual turnover / gross receipts exceeding rupees ten lakh and net profit of rupees one lakh twenty thousand must maintain such books of account and documents from which its income can be reasonably ascertained by the department.
Question (5): Where should the books of account of my business be kept and for how long?
Answer : All the books of account and related documents should be kept at the main place of business, i.e., where the business or profession is generally carried on. These should be preserved for a minimum of six years.
Question (6) : Do I have to keep an accountant to maintain my account?
Answer : This depends upon your ability and need. You may even prefer to use the accounting software available in the market. However, you should remember that in case of turnover exceeding rupees forty lakh per annum in a business and gross receipts exceeding rupees ten lakh per annum in a profession, a professional charted accountant must audit your accounts.
Question (7) : What is meant by audit of books of account?
Answer : Auditing means checking the correctness and genuineness of your accounts and verifying whether accounting principles and standards have been properly followed in conduct of your business and preparation of accounts. Under Income Tax Act, this verification will have to be carried out by an independent Chartered Accountant.
Question (8) : In my business, it is impossible to issue bills for every transaction. How can I be expected to maintain proper accounts?
Answer : There can be no excuse for not maintaining bill books. However, if you are a small time retail trader with your annual turnover less than 40 lakhs, then you are permitted to declare your income on presumption at 5% of your actual sales (u/s 44AF). In this case, no books of account need be maintained. Similarly, the benefit of non-maintenance of books of account is available for civil contractors [u/s 44AD] in case 8% of the turnover is disclosed as profits. Transporters owning less than ten goods carriage can also avail the benefit of presumptive income scheme without maintenance of books of account. However, if you declare your income below the minimum level / percentage provided under the scheme, you will necessarily have to maintain the books and get them audited.
