Month: June 2021

TDS On Purchase: Everything You Need To Know

Posted on by @nkpal25

Managing personal accounts and handling income and expenses is a significant yet confusing and exhausting task due to the frequent reforms and changes in tax laws. In India, GST (Goods and Service Tax) is followed for the same, which came into effect on 1st July 2017.

The article outlines the tax reforms that have been introduced in recent years and enlists the reasons as to how they directly affect one’s income bifurcation in terms of TDS or Tax Deducted at Source.

New TDS Section 194Q

The recent budget has proposed certain changes that are expected to impact every business operating in India drastically. The changes pertain to TDS on Purchase Transactions.

One needs to be updated with the latest but significant changes in all commercial and business laws. Such crucial changes wrt TDS on Purchase Transactions will be in effect on 1st July 2021, as proposed by Honorable Finance Minister Ms. Nirmala Sitharaman in her budget speech.

Key Elements of TDS Section 194Q

Section 194Q is proposed to be applicable from 1st July 2021 for business transactions:

  • All Purchase Transactions are proposed to be subject to TDS provisions.
  • Such a transaction can be effective with TDS and will have to be deducted at 0.1% of the purchase transaction or payment thereof, whichever is earlier.
  • The applicability of this section will also extend to an assessee whose aggregate turnover in the immediate previous year exceeds ten crores.

Applicability

The new section 194Q is going to be applicable from 1st July 2021.

TDS Rate

Under section 194Q, Tax Deducted at Source (TDS) shall be applicable at 0.1% on aggregate purchases over and above 50 lakhs from a supplier in India in a financial year.

When to Deduct?

When the value or aggregate of purchases from a supplier or payment, whichever is earlier, exceeds Rs.50 lakhs during the previous year, the provision will be effective as TDS will have to be deducted at 0.1% of the Purchase Transaction or payment.

Who should Deduct?

The buyer is responsible for making payment to a resident to purchase goods when the value of purchases from a supplier exceeds 50 lakhs during the previous year. The Purchaser, hence, is responsible for deducting TDS as applicable.

Consequences of non-deduction by the Purchaser

If the Purchaser fails to comply with the provision to deduct TDS as applicable, Section 40A(IA) provides that the value of such Purchase Transactions will be subject to 30% disallowance.

How can cloud-based TDS accounting software help?

Cloud-based accounting software provides a digital platform and end-to-end financial services such as bookkeeping, GST, tax filing, Company Law, FDI, TDS return filing, etc. Try Ankpal.

It is the best cloud-based TDS software that offers absolute security for your data and provides convenience in every step.

Clarifications

  • If there is a transaction under any other section of the Income Tax Act, other than TCS collected under section 206 C (1H) of the Act, TDS is not required to be deducted on that particular transaction.
  • However, if TDS is required to be deducted under this section, then the same Transaction TCS on sales will not be Collected by Sell.
  • TDS on a Gross amount involves cash flow reductions.

Example

Mr. Z Turnover in FY 20-21 is more than 10Cr. His purchase from Mr. A till 30.06.2021 is Rs 45 L. No on 07.07.2021 He Purchases goods Rs 7 L from Mr. A. Mr. Z is required to deduct TDS on that purchase of Rs 7 L only.

Ankpal can make your TDS filing faster and streamlined. Make use of the opportunities available and choose the best accounting software.

For more info, call at 63588 58915 and get started with the 30 days free trial of your TDS return filing software today!

Forex Accounting (Accounting For IT Industries)

Posted on by @nkpal25

Forex Accounting is the term given to Foreign Exchange Accounting that refers to the process of recording the transactions between different currencies. The transactions are recorded in the functional currency as per the exchange rate at the date of completion of a transaction.

With the rapid development in the IT sector, there has been an accelerated change observed in the structure of global and domestic forex markets. Liberalization and the development of currency and forex derivatives have even pushed the RBI to revise its policy of Internal Control Over Foreign Exchange Business.

Forex accounting is carried out through a dealing department which includes dealers, mid, and back-office staff. The staff is responsible for following and tracking the deals made by dealers in foreign currencies.

Forex Accounting and Compliances in India

During a foreign currency exchange, the dealers need to observe the compliances followed in India. RBI lays down these regulatory requirements. According to the regulations, the dealers need information about the transaction in written form.

For any sector, one needs to follow the accounting standards for all foreign currency income and expenditure. It includes a reevaluation of outstanding liabilities and assets in foreign currency.

Forex Accounting and IT industry

As India grows to become an IT hub, the services provided by the IT industry are continuously enhancing the foreign currency inflow in India.

As with other sectors, forex accounting is an essential aspect of accounting in the IT industry to understand its finances better and streamline the expenses.

With sole trader accounting software such as Ankpal, one can ensure that the invoices of their IT company are maintained. Along with it, the sales report provided by the software can ensure that one keeps track of the receivables.

Forex Accounting: Online Course

Forex accounting is a highly specialized function that needs proper training and an immense knowledge base about the respective industry.

The online course offered at Ankpal, a leading trading accounting software in India, provides a practical outlook. The program has been initiated to provide practical and accurate guidance so that the learners can determine functional currency along with understanding the principles and reporting transactions that involve changes in foreign exchange rates.

The course will guide the learners through the step-by-step method of preparing the cash flow statement that involves foreign exchange and handling foreign exchange derivatives. Along with that, it will also detail the effect of hyperinflationary effects on foreign exchange operations.

The trainer employs various case studies and real-life examples to illustrate the issues and clear the doubts arising in foreign exchange accounting and resolve them.

The course is offered in three formats:

Basic (free)

Intermediate

Advanced

The learners can avail numerous videos that detail the course outline for free under the basic plan. For an in-depth and complete course outline, one will have to buy the intermediate or advanced plan.

The outline of the course is as follows:

Introduction to the effects of changes that occur in foreign exchange rates.

Accounting the differences that occur in the foreign exchange rate in a company’s financial statement.

Difference between the functional and presentation currency of the entity.

The impact of foreign exchange differences on business combinations and fair value adjustments.

Translation of functional currency of a subsidiary in different forms of presentation currency of the group.

Accounting the difference in foreign exchange that is caused by the net investment in foreign subsidiaries.

Statement of cash flow and effect of foreign exchange on it.

Foreign exchange derivatives and their accounting.

Foreign currency risk disclosure and disclosure requirements.  

Contact us at 6358858915 or visit our website and start your 30 days free trial today.

E-Invoice (as per GST Law)

Posted on by @nkpal25

In the past few years, various countries across the globe have adopted E-Invoicing (Electronic Invoicing) to manage and regulate the documentation of B2B (business to business) invoices for distinct taxation purposes.

To join the league with these countries, the GST Council of India has also recently adopted and permitted the use of this e-invoicing process, which commenced from the 1st of January 2020. This e-invoicing process will be mandatory for all Indian companies that hold an inclusive turnover of Rs 500 crores and above.Whether you are a business owner or a salaried employee, the process of e-invoicing has a number of benefits. The blog attempts to find answers to all your questions and queries about the same. Read further to know how.

What is E-invoicing under GST?

Electronic Invoicing is a method in which all the B2B (business to business) invoices generated by various
invoice accounting software will be electronically verified by the Goods and Service Tax Network (GSTN). There are a lot of delusions concerning E-invoice amongst various business owners.

For example, they think that this introduction of e-invoicing by the GST council implies that every invoice will be generated from the central platform of the tax department, and they further think that this unification will cause an unnecessary constraint on how the trade is carried out.

However, this is just a myth, and there is no such constraint on business owners. Under this E-Invoice process, a unique identification or verification number will be assigned against each business invoice by the
IRP (Invoice Registration Portal) governed by the GSTN.

All this e-invoice data will be transferred from this platform to both the GST (Goods and Service Tax) portal and the e-way bill platform in real-time. Hence, it will eliminate the requirement for hand-operated data entry at the time of filing GSTR-1 return and the creation of part-A of the e-way (Electronic Way)bills, as the Invoice Registration Portal directly assigns the information to the GST platform.

What was the need for e-invoice under the GST Law?

Before the introduction of this e-invoice process under the GST law, business owners used to generate invoices with the help of a distinct cloud invoice software. Due to this adoption of distinct software, there was no uniformity in the invoicing process.

However, after this introduction of the e-invoice process, all the invoicing methods got systematised and regulated. This regulation will be accomplished by importing data with the assistance of a JSON or an excel tool or through API (Application programming interface) integration, either directly or with the aid of a GSP (GST Suvidha Provider).

The invoice data will effortlessly flow to GSTR-1 filing and for the e-way bill creation too. This e-Invoicing applied from 1st October 2020 to all businesses whose annual turnover exceeds Rs 500 crore in three preceding financial years.

Moreover, this e-invoice process further became applicable from 1st January 2021 to businesses whose annual turnover exceeds
Rs 100 crore in three preceding financial years.

How can these E-Invoice assist businesses?

Mentioned below are some of the major advantages of E-Invoicing for businesses.

  • E-invoice fixes and fills a significant gap in information reconciliation under the GST to overcome mismatch mistakes.
  • E-invoices generated on one cloud invoice software can be interpreted by another, enabling interoperability and assisting in subdue data entry mistakes.
  • Synchronised tracking of invoices generated by the vendor is authorised by e-invoice.

Hence, it can be inferred that the e-invoice process holds many advantages for the business owners as it can easily systematize their invoicing process. However, many business owners often get perplexed about which
cloud invoice software to use for e-invoicing.

Looking for an E-Invoicing software to perform your online invoicing process?
Ankpal is your one-stop solution. We are an invoice accounting software company providing end-to-end e-invoicing solutions to our clients. Contact us at 63588 58915 know more.