Income tax - Provisions

  Section 18(4) of the Central Goods and Services Tax (CGST) Act, 2017 deals with the reversal of input tax credit (ITC) when a registered person switches from regular scheme (taxable supply under Section 9) to the composition scheme (under Section 10), or when they become exempt from payment of tax. ✅ CGST Act – Section 18(4) – Summary : Section 18(4) : Where any registered person who has availed input tax credit opts to pay tax under Section 10 (Composition Scheme) or, where the goods or services become wholly exempt , then such person shall pay an amount , by way of debit in the electronic credit ledger or electronic cash ledger , equivalent to the credit of input tax in respect of: Inputs held in stock , and Inputs contained in semi-finished or finished goods , and Capital goods (reduced by prescribed percentage), on the day immediately preceding the date of such switch (composition/exemption). After payment of such amount, the balance of input tax ...

powers of the Assessing Officer (AO) under Section 145(3) of the Income Tax Act, 1961 in a clear way. 📌 Powers of AO under Section 145(3), Income Tax Act, 1961 1. Scope of Section 145 Section 145(1): Income chargeable under “Profits & Gains of Business/Profession” or “Income from Other Sources” shall be computed in accordance with: Cash or Mercantile system of accounting regularly employed by the assessee , and ICDS (Income Computation & Disclosure Standards) notified by CBDT. Section 145(2): CBDT can notify accounting standards for compliance. Section 145(3): If AO is not satisfied with the correctness/completeness of accounts, or with accounting method/standards, he may reject the books . 2. Powers Vested in AO u/s 145(3) The AO has the power to: a. Examine Books of Account Scrutinize purchase/sale invoices, stock register, vouchers, ledgers, bank statements. Verify compliance with notified accounting standards (ICDS). b. Reject Boo...

comprehensive checklist that a small/medium business in India should maintain to safely discharge the burden of proof under Income Tax & GST laws . The department does not have to prove that the expense is false — it’s the assessee who must prove that it is genuine . ⚖️ Judicial Support CIT v. Calcutta Agency Ltd. (1951) – The Supreme Court held that the onus is on the assessee to prove the claim of expenditure. 📑 Checklist of Documents to Justify Expenses 1. Purchases & Raw Materials Tax Invoices from suppliers (with GSTIN, HSN/SAC, description). E-way bills for movement of goods (if applicable). Goods receipt notes, delivery challans. Payment proof → bank transfer/cheque/UPI records. Supplier agreements / purchase orders. 2. Sales & Revenue Sales tax invoices with GSTIN. E-way bills for dispatch. Customer agreements / work orders. Proof of receipt of payment (bank statement, UPI, etc.). 3. Labour & Wages Wage regist...

partner remuneration under the Indian Income Tax Act for Assessment Year (AY) 2026-27 , i.e., the financial year 2025-26: 1. Remuneration Limits Under Section 40(b) – New Higher Ceiling Effective April 1, 2025 (FY 2025-26; applicable for AY 2026-27): The allowable deduction for remuneration paid to working partners has doubled . Revised limits under Section 40(b) : On the first ₹6,00,000 of book profit (or in case of loss): higher of ₹3,00,000 or 90% of book profit. On the rest of the book profit : 60% of book profit. Previously , this limit was: On the first ₹3,00,000: ₹1,50,000 or 90% of book profit (whichever higher) On the balance: 60% of book profit. 2. Introduction of Section 194T – Mandatory TDS on Partner Payments Also effective April 1, 2025 : A new section, Section 194T , mandates 10% TDS on payments to partners when total annual payments exceed ₹20,000 . Applies to payments like salary/remuneration, commission, bonus, interest . ...