Posts Tagged: partnership
Allowance Under Salary
- Definition of Allowance U/S 10 of Income Tax Act 1961.
- House Rent Allowance — Section 10(13A)
- Prescribed special allowances — Section 10(14)
- Entertainment Allowance – Section 16 (ii)
- Format for Computation of Income from Salary
Allowances are given to employees for their services or as compensation for working in unusual conditions. Section 10 of the Income Tax Act covers many allowances such as Leave Travel Allowance, Uniform Allowance, Travelling Allowance, House Rent Allowance and some more.
It is a regular Extra monetary amount given by employer to employee apart from basic salary.
Money Given for Accommodation ,Medical ,Children & Travelling Etc.
Allowance given to employee to meet his accommodation expenses.
Minimum of the following will be exempted
- Actual HRA received
- Rent Paid – 10% of Salary
- 50% (metro Cities)/40% (others cities) of salary
Salary = Basic salary + DA Conditional+ Fixed Commission(%)
DA conditional= “if under the terms of employment” or “for retirement benefit “or “dearness pay’
Taxable = Actual received – Exempted
Brief Summary of Allowances U/S 10(14), which has been divided in to four category.
- FULLY EXEMPT
- FULLY TAXABLE
- PARTLY TAXABLE
- EXEMPT UP TO CERTAIN LIMIT
- Allowances to a citizen of India, who is a Government employee, rendering services outside India.[Section 10(7)].
- Allowances to High Court judges under section 22A(2) of the High Court Judges(Conditions of Service) Act, 1954.
- Sumptuary allowance given to High Court and the Supreme Court judges. Sumptuary allowance are in the nature of entertainment allowance.
- Allowance received by an employee of United Nations Organization (UNO) from his employer.
- Dearness Allowance (DA)
- City Compensatory Allowance (CCA)
- Fixed Medical Allowance: Fully taxable, irrespective of whether any amount has been spent on medical treatment or not.
- Lunch Allowance/tiffin allowance
- Overtime Allowance 6.Servant Allowance
- Warden Allowance
- Non-practicing Allowance
- Family Allowance
- Deputation Allowance
- Capital Compensatory Allowance
- Project Allowance
- Entertainment Allowance for non-government employee
- Water and Electricity Allowance
- Holiday Trip Allowance
- Marriage Allowance
Special allowances for performance of official duties [section 10(14)(i)]
Taxable = Actual received – Actual paid
- Conveyance Allowance
- Daily Allowance
- Travelling Allowance
- Transfer Allowance
- Helper Allowance
- Academic/Research Allowance
- Uniform Allowance
The above allowances shall be exempt to the extent of minimum of the following:
- Actual Allowance Received.
- Actual amount spent for the purposes of duties of office or employment.
Allowances to meet personal expenses [section 10(14)(ii)]
- Children Education Allowance – Rs.100 pm, Per Child up to 2 Children
- Hostel Expenditure Allowance – Rs.300 pm per child upto 2 children
- Tribal Area, Scheduled / Agency Area Allowance(UP, Karnataka, Tamilnadu , Odisa , Assam & Tripura) – Rs.200 pm
- Hilly Area / High Altitude Allowance – Rs.300 to Rs.7000 pm
- Border / Remote / Disturbed Area Allowance – Rs.200/- to Rs.1300/-pm
- Field Area Allowance(J&K, Nagaland , UP, AP, Sikkim & Manipur) – Rs.2600/-pm
- Modified Field Area Allowance (military duties and where imminence of hostilities/violence and risk exist)–Rs.1000/-pm
- Counter Insurgency Allowance – to Armed force member – Rs.3900/-
- Transport Allowance – Rs.1600/- Pm & Rs.3200/-pm for handicap employee
- Underground Allowance – Rs.800/-pm
- High Altitude (Uncongenial climate) Allowance – armed forces for altitude of 9000 ft to 15000 ft Rs.1060/-pm and for altitude above Rs.1600 pm
- Highly Active Field Area Allowance – Rs.4200/-pm
- Island (duty) Allowance – Rs.3250/-pm
- Allowance to Transport Employees – 70% of Allowance maximum to Rs.10000/-pm.
This deduction is allowed only to a Government employee. Non-Government employees shall not be eligible for any deduction on account of any entertainment allowance received by them.
In case of entertainment allowance, the assessee is not entitled to any exemption but he is entitled to a deduction under section 16(ii) from gross salary. Therefore, the entire entertainment allowance received by any employee is added in computation of the gross salary. The Government employee is, then, entitled to deduction from gross salary under section 16(ii) on account of such entertainment allowance to the extent of minimum of the following 3 limits.
- Actual entertainment allowance received during the previous year.
- 20%of basic salary exclusive of any allowance, benefit or other perquisite.
- ₹5,000.
– Smita Kumari
Account Executive
RCM under GST
- Introduction.
- Flow of GST.
- Reverse Charge.
- Liability to Pay under RCM
- Time of Supply of Services under Reverse Charge.
- Input Tax Credit
Introduction :
- Under GST, usually the supplier of goods or services has to pay the tax to the Government.
- However, under the Reverse Charge Mechanism, the liability to pay GST is cast on the recipient of the goods or services.
- Reverse Charge Mechanism means the liability to pay taxes lies with the recipient of the goods or services in respect of notified categories of supply
Flow of GST :
Reverse Charge :
- Sec 2(98) of the CGST Act, 2017 states that reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub- section (4) of section 5 of the Integrated Goods and Services Tax Act;
- Sec 9(3) & 5(3) states “The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both”
- Sec 9(4) & 5(4) states “The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.
Liability to Pay under RCM :
- The time of supply is the point when the supply is liable to GST.
- One of the factors relevant for determining time of supply is the person who is liable to pay tax.
- In reverse charge, the recipient is liable to pay GST. Thus, time of supply for supplies under reverse charge is different from the supplies which are under forward charge.
Time of Supply of Goods under Reverse Charge :
As per Section 12(3) of the CGST Act, 2017 in case of supplies of goods in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates, namely :-
- date of receipt of goods; or
- date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or
- the date immediately following 30 days from the date of issue of invoice or any other document, or similar other document thereof by the supplier
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply.
As per Section 13(3) of the CGST Act, 2017 in case of supplies for Services in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates, namely:-
- the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or
- the date immediately following 60 days from the date of issue of invoice or any other documents, similar other document thereof by the supplier :
Provided, where it is not possible to determine time of supply by using above methods under clause (a) and clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply.
Input Tax Credit :
- A supplier cannot take Input Tax Credit of GST paid on goods or services used to make supplies on which the recipient is liable to pay tax under reverse charge.
- The recipient can avail Input Tax Credit of GST amount that is paid under reverse charge on receipt of goods or services by him.
- GST paid on goods or services under reverse charge mechanism is available as ITC to the registered person provided that such goods or services are used or will be used for business or furtherance of business.
- The ITC is availed by recipient cannot be used towards payment of output tax on goods or services, the payment of tax under reverse charge only on cash.
