Tax Compliance

Tax compliance for business House

Prospect Legal Private Limited is a leading firm in India specializing in business incorporation and company registration services. With a team of dedicated legal professionals and corporate law experts, we offer comprehensive support to entrepreneurs, start-ups, and established businesses looking to establish their presence in the Indian market. Our services cover GST registration and compliance, income tax compliance, and MCA compliance, ensuring that our clients meet all regulatory requirements and operate smoothly within the legal framework.

GST Compliance:  At Prospect Legal, we understand the complexities of Goods and Services Tax (GST) compliance in India. Our expert team assists clients in GST registration, filing of GST returns, and compliance with GST laws and regulations. Whether it’s determining the appropriate GST registration category, calculating GST liabilities, or ensuring timely filing of returns, we provide tailored solutions to meet our clients’ specific needs. With our proactive approach and in-depth knowledge of GST laws, we help businesses navigate the GST landscape efficiently, minimizing compliance risks and optimizing tax benefits.

Income Tax Compliance: Income tax compliance is a critical aspect of running a business in India, and at Prospect Legal, we offer comprehensive support to ensure our clients meet their income tax obligations effectively. Our team assists in income tax registration, filing of income tax returns, and compliance with income tax laws and regulations. Whether it’s optimizing tax planning strategies, claiming eligible deductions, or responding to income tax notices, we provide personalized guidance to help businesses stay compliant and minimize tax liabilities. With our proactive approach and expertise in income tax matters, we empower clients to navigate the complex tax environment with confidence.

MCA Compliance: Compliance with the Ministry of Corporate Affairs (MCA) regulations is essential for companies operating in India, and Prospect Legal is committed to helping clients meet their MCA compliance requirements seamlessly. Our services cover annual filings, maintenance of statutory registers, board meetings, and other MCA compliance obligations. Whether it’s filing annual returns, updating changes in company structure, or ensuring adherence to corporate governance standards, our experienced team provides reliable guidance and support at every step. With our focus on efficiency and accuracy, we help businesses maintain legal validity and operate with confidence in the Indian market.

Prospect Legal Private Limited is your trusted partner for comprehensive GST, income tax, and MCA compliance solutions in India. With our team of legal professionals and corporate law experts, we offer personalized support and guidance to businesses of all sizes, ensuring they meet their regulatory obligations and operate smoothly within the legal framework. From business incorporation to ongoing compliance, we are committed to delivering exceptional service and value to our clients, empowering them to succeed in the dynamic Indian market.

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Goods and Services Tax  For Sole Proprietor/ Partnership Firms/Limited Liability Partnership / Private Limited Company/ Public Limited Company or any other

Tax compliance for Goods and Services Tax (GST) in India involves several key aspects:

  1. Registration: Businesses with an annual turnover above the threshold limit (which varies based on the nature of the business) are required to register for GST. They obtain a GST Identification Number (GSTIN) and need to display it on their invoices and communication.
  2. Tax Invoices: Registered businesses must issue tax invoices for all taxable supplies made, including details such as GSTIN, invoice number, date, customer details, item details, and GST rates.
  3. GST Returns: Registered businesses need to file regular GST returns, typically on a monthly or quarterly basis, depending on their turnover. The main returns include GSTR-1 (outward supplies), GSTR-3B (summary return), and GSTR-9 (annual return).
  4. Input Tax Credit (ITC): Businesses can claim credit for the GST paid on their purchases (input tax) against the GST liability on their sales (output tax). However, to claim ITC, businesses must ensure that their suppliers have filed their GST returns and paid the GST collected.
  5. E-way Bill: For the movement of goods above certain thresholds, businesses need to generate e-way bills electronically on the GST portal. This helps in tracking the movement of goods and ensuring tax compliance.
  6. Reverse Charge Mechanism (RCM): Under RCM, the recipient of goods or services is liable to pay GST instead of the supplier. Businesses need to comply with RCM provisions where applicable.
  7. Tax Deduction at Source (TDS) and Tax Collection at Source (TCS): Certain businesses are required to deduct TDS on payments made to suppliers and collect TCS on specific transactions. They need to comply with the respective provisions and file TDS/TCS returns.
  8. Compliance Rating: GST compliance rating is assigned based on the timely filing of returns and payment of taxes. It is displayed on the GST portal and may affect business reputation and eligibility for certain benefits.
  9. Audit and Assessment: Businesses may be subject to GST audits conducted by tax authorities to ensure compliance with GST laws. Additionally, assessments may be carried out to verify the accuracy of GST returns filed.
  10. Penalties and Interest: Non-compliance with GST laws may attract penalties, interest, and other consequences, such as suspension or cancellation of GST registration.

Staying updated with GST laws, maintaining proper documentation, and timely filing of returns are crucial for businesses to ensure GST compliance in India. Seeking assistance from tax professionals or using automated compliance solutions can help streamline the process and avoid errors.

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Basic income tax compliance involves several key steps that individuals and businesses need to follow to meet their tax obligations. Here’s a simplified overview:

Obtain PAN (Permanent Account Number):Individuals and entities need to obtain a PAN from the Income Tax Department. PAN is a unique identification number used for various tax-related transactions.

Maintain Proper Records: Keep accurate records of income, expenses, investments, assets, liabilities, and other financial transactions.

Determine Taxable Income: Calculate taxable income by subtracting eligible deductions and exemptions from total income.

File Income Tax Returns (ITR): Individuals, businesses, and other entities need to file income tax returns annually with the Income Tax Department.

Choose the appropriate ITR form based on the taxpayer’s category and sources of income.

Ensure timely filing by the due date specified by the tax authorities.

Pay Taxes Timely: Pay taxes due by the due dates specified by the Income Tax Department.

Individuals may need to pay advance tax if the tax liability exceeds a certain threshold.

Comply with TDS (Tax Deducted at Source): Deduct TDS on specified payments like salaries, rent, professional fees, etc., as per the rates prescribed by the Income Tax Department. Deposit the deducted TDS with the government within the specified timelines. File TDS returns regularly.

Claim Deductions and Exemptions: Individuals and businesses can claim deductions and exemptions allowed under the Income Tax Act to reduce their taxable income.

Examples include deductions for investments in tax-saving instruments, expenses related to specific activities, etc.

Maintain Compliance with Other Tax Laws: Comply with other tax laws and regulations applicable to specific transactions or activities, such as Goods and Services Tax (GST), customs duty, etc., depending on the nature of the business or individual’s activities.

Keep Updated with Changes in Tax Laws: Stay informed about changes in tax laws, rules, and regulations issued by the government or tax authorities.

Respond to Notices and Assessments: Respond promptly to any notices or communications received from the Income Tax Department.

Cooperate with tax authorities during assessments, audits, or inquiries.

Maintain Documentation: Keep all relevant documents, receipts, invoices, bank statements, and other financial records for a specified period as per the requirements of the Income Tax Act.

Seek Professional Advice: Consult with tax professionals, chartered accountants, or tax advisors for guidance on tax planning, compliance, and resolving tax-related issues.

By following these basic compliance steps, individuals and businesses can fulfil their income tax obligations and avoid penalties or legal consequences for non-compliance.

Income Tax Compliance for Sole Proprietor/ Partnership Firms/Limited Liability Partnership / Private Limited Company/ Public Limited Company or any other

Income tax compliance varies depending on the type of business entity in India. Here’s an overview of income tax compliance for different types of entities:

Sole Proprietorship:

  • The business income is treated as the proprietor’s personal income.
  • The proprietor needs to file income tax returns (ITR) under their own PAN.
  • They must maintain proper accounting records and documents to support their income and expenses.
  • Tax rates applicable to individuals are applicable to sole proprietors.

Partnership Firm:

  • Partnership firms are not taxed as separate entities. Instead, the partners are taxed individually on their share of profits.
  • The firm needs to file its annual income tax return (Form ITR-5) disclosing its income, expenses, and allocation of profits among partners.
  • Each partner needs to include their share of partnership income in their individual income tax returns.
  • Partnership firms are also required to maintain proper accounting records and undergo tax audits if applicable.

Limited Liability Partnership (LLP):

  • LLPs are taxed similarly to partnership firms.
  • LLPs need to file income tax returns (Form ITR-5) disclosing their income and expenses.
  • Each partner’s share of LLP income is taxed individually, and they need to include it in their personal income tax returns.
  • LLPs must maintain proper accounting records and may be subject to tax audits if applicable.

Private Limited Company:

  • Private limited companies are taxed as separate legal entities.
  • They need to file income tax returns (Form ITR-6) disclosing their income, expenses, and tax computation.
  • Corporate tax rates are applicable to private limited companies.
  • Companies must comply with various provisions of the Income Tax Act, including TDS, advance tax payments, transfer pricing regulations, etc.
  • They must maintain proper accounting records, hold board meetings, and obtain tax audit reports if applicable.

Public Limited Company:

  • Public limited companies have similar income tax compliance requirements as private limited companies.
  • They need to file income tax returns (Form ITR-6) and comply with corporate tax rates.
  • Public limited companies may have additional compliance requirements due to their size and public listing status.
  • In addition to the above, all types of entities need to comply with general income tax provisions such as TDS, advance tax payments, tax audits, transfer pricing regulations (if applicable), and other relevant provisions of the Income Tax Act, 1961. Maintaining proper records, filing accurate returns, and meeting compliance deadlines are crucial for all businesses to ensure income tax compliance in India.

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Ministry of Corporate Affairs (MCA) Limited Liability Partnership / Private Limited Company/ Public Limited Company or any other

Compliance with the Ministry of Corporate Affairs (MCA) is crucial for private and public limited companies as well as Limited Liability Partnerships (LLPs) in India to ensure legal validity and smooth operations. Here’s an overview of MCA compliance requirements for each entity:

Private Limited Company:

  • Annual Filings: Private limited companies must file annual returns (Form MGT-7) with the MCA, which includes details of shareholders, directors, etc.

They also need to file financial statements (Form AOC-4) containing balance sheet, profit and loss account, director’s report, etc.

  • Board Meetings: Private limited companies are required to hold board meetings at regular intervals, with minutes of meetings maintained as per the Companies Act.

Appointment and Resignation of Directors:

Any appointment or resignation of directors needs to be intimated to the MCA through prescribed forms.

  • Changes in Capital Structure: Any changes in the company’s share capital, such as issuance of shares, buyback of shares, etc., need to be reported to the MCA.
  • Annual General Meeting (AGM): Private limited companies need to convene an AGM annually within the prescribed time frame to discuss various matters including approval of financial statements.
  • Compliance Certificate: Certain private limited companies need to obtain a compliance certificate from a practicing company secretary and file it with the MCA.
  • Filing of Charges: If the company creates any charge over its assets, it needs to file details of such charges with the MCA.

Public Limited Company:

In addition to the compliance requirements mentioned for private limited companies, public limited companies typically have stricter regulations due to their public listing status. These may include additional disclosures, compliance with SEBI (Securities and Exchange Board of India) regulations, and other specific requirements for listed entities.

Limited Liability Partnership (LLP):

  • Annual Filings: LLPs need to file annual returns (Form 11) with the MCA, containing details of partners, designated partners, etc.
  • Statement of Accounts and Solvency: LLPs are required to file a Statement of Accounts and Solvency (Form 8) with the MCA annually.
  • Changes in LLP Agreement: Any changes in the LLP agreement need to be filed with the MCA within 30 days of such changes.
  • Appointment and Resignation of Partners: Any appointment or resignation of partners needs to be intimated to the MCA through prescribed forms.
  • Compliance Rating: LLPs are assigned a compliance rating based on timely filing of returns and other compliances, which is displayed on the MCA portal.
  • Other Compliances: LLPs need to maintain proper accounting records, comply with tax laws, and other applicable regulations.

Non-compliance with MCA regulations can lead to penalties, fines, and other legal consequences. Therefore, it’s crucial for companies and LLPs to stay updated with their compliance obligations and ensure timely filing of all necessary documents with the MCA. Seeking assistance from professionals like company secretaries or legal advisors can help ensure smooth compliance.

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