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Whether you own an Indian entity or have incorporated a subsidiary company in India, you will need a reliable accounting partner who can handhold you through the complexities of Indian corporate and tax laws.
Legal, tax and administrative regulations are updated regularly to ensure that there are no leakages in the system. This in turn requires companies to be constantly updated on every new reform that is introduced. In case of infringement of any of these laws, hefty penalties are imposed. As such, accounting and taxation becomes a key factor for all entities registered or seeking registration in India.
In a nutshell, you will operate within the regulatory framework of the Income Tax Act 1961, Goods and Services Tax Act 2017, Companies Act 2013 or Limited Liability Partnership Act 2008 and Foreign Exchange Management Act 1999. But wait, do all the provisions of these above-mentioned acts apply to you? Not really. In fact, that is what we help you figure out. We ensure that your entity is 100% compliant with the existing legal framework and prepare you for any imminent amendments to tax and company laws.
The Accounting and Tax function of an entity includes the following:
Bookkeeping
Accurate and timely bookkeeping is essential to lay the foundation of a financially solid company. Bookkeeping entails entering transactions related to assets, liabilities, sales, purchases, expenses, payables, receivables, reconciling the transactions with the bank account(s) and creating provisions for future expenses/ liabilities. If you believe that an AI-powered system will magically create your company’s financial statements as per the applicable laws, you are mistaken. It will only mean garbage in, garbage out. We help you streamline the entire accounting function to give you the perfect output using the cloud accounting software of your choice such as Quickbooks, Zoho, Xero, you name it.
Goods and Services Tax (GST)
Goods and Services Tax (GST), also referred to as Value Added Tax (VAT), was implement in India in July 2017. GST is a destination-based tax on consumption of goods and services in which transactions are classified into Intra-state or Inter-state transactions.
To break it down in simple terms, the GST system in India is based on a self-governing mechanism. In this, your company will charge GST to the customers for all goods or services sold and claim Input Tax Credit (ITC) for GST paid on business expenses such as marketing expenses, telephone charges, office rent etc. This ITC can be set off against the GST charged to the customers, provided that your suppliers also file their GST returns. So not only do you have to analyse each transaction for the GST implication, you also have to ensure that your suppliers / vendors file their GST returns accurately for the GST Input Tax Credit to show up on your GST dashboard. Filing of GST returns is online and one has to register on the GST department’s website.
Tax Deducted at Source (TDS)
TDS or Tax Deducted at Source is income tax paid to the Government by the payer of the income rather than by the recipient of the income. In other words, it is the amount of tax withheld or reduced from the total money paid to the recipient of income. The amount of TDS or tax withheld is instead deposited with the Government. It is important to note that the provision of TDS applies to specified payments only.
In simple terms – If a person/company is making certain payments such as rent, commission, salary, professional fee, etc. be sure to remember that a part of this payment (say 10%) is to be paid to the Central government and only the remaining part (90%) is to be paid to the landlord, employee, service provider. The amount paid to the government is TDS i.e. Tax Deducted at Source.
Since you will have to deposit TDS monthly with the tax department and file a TDS return quarterly, it is imperative to analyze all transaction for their TDS implication which includes analysis of Tax Deducted at Source (TDS) certificates provided by vendors over the Financial Year, reconciliation of TDS receivable from each customer, entering accounting adjustment entries and claiming the tax benefit accrued.
Income Tax Return
An annual income tax return is to be mandatorily filed by each entity at the end of a financial year. The income tax is calculated once the financial statements are prepared and an audit report is shared by the statutory auditor of the company. An Income Tax Return includes computation of income tax payable, adjustment with TDS receivable, disclosure of assets and liabilities, income and expenses and carrying forward losses, if any.
Compliances with the Registrar of Companies
It is mandatory for all companies to comply with the regulations laid down under the Companies Act 2013 or Limited Liability Partnership Act 2008. A set of forms as prescribed by the Ministry of Corporate Affairs “MCA” or Registrar of Companies (RoC) must be duly filed to avoid any penalty. While there are different forms applicable under each circumstance, some of the mandatory forms are listed below:
This is not an exhaustive list*
