Oct05
2021Cost Audit is the verification of cost accounts to determine the accuracy of cost accounting records. Cost audit ascertains the accuracy of cost accounting records to ensure that they are in conformity with cost accounting principles, plans, procedures and objectives.
A cost audit comprises the following:
Aug19
2021House Rent Allowance (HRA) is the allowance provided by an employer to their employee as a compensation for house rental expenses paid by the employee. It forms part of the salary paid by the employer to their employee.
House Rent Allowance or HRA is a salary component paid to employees by an employer towards the accommodation cost of living in that city. Even though it is a part of your salary, unlike your basic pay, HRA isn’t entirely taxable, subject to conditions (a percentage of HRA is exempted under Section 10 (13A) of the IT Act, 1961).
House rent allowance (HRA) is a basic component of your salary. However, most of us are not familiar about the rules that can help us save tax on it. If you are a salaried employee living on rent, then here's how you can use HRA to reduce your tax liability.
Aug11
2021Dividend refers to a reward, cash or otherwise, that a company gives to its shareholders. Dividends can be issued in various forms, such as cash payment, stocks or any other form. Essentially, a dividend is the distribution of some of a company's earnings to a class of its shareholders, as determined by the company's board of directors. It requires the shareholders’ approval to pay dividend. However, it is not obligatory for a company to pay dividend.
In a nutshell, the dividend is simply an equity (and preference) shareholders profit share in the company and section 194 calls for the deduction of tax on such dividend income given to shareholders.
Aug03
2021Employees' State Insurance is a self-financing Social Security and Health Insurance Scheme for Indian workers. The fund is managed by the Employees' State Insurance Corporation (ESIC) according to rules and regulations stipulated in the ESI Act 1948. ESIC is a Statutory and an Autonomous Body under the Ministry of Labour and Employment, Government of India.
The Employee State Insurance Scheme (ESI) is one of the largest social security schemes, globally. ESI provides primarily sickness benefits and some other benefits to approximately thirteen crores Indians that include Insured Employees and their dependents.
Applicability of the Scheme:
Jul16
2021TDS on Winnings from Lottery or Crossword Puzzle (Section 194B)
We all are aware of many famous reality shows and game shows like ‘Kaun Banega Crorepati’, Indian Idol and Dance India Dance etc. These shows offer huge prizes in the form of cash as well as kind. Similarly, many people are fond of buying lottery tickets and some win them too. The income earned from such sources is not tax free. The price money received by a person is subject to TDS under Section 194B of the Income Tax Act, 1961.
Jul07
2021
Gratuity is a lump sum amount that employers pay their employees as a sign of gratitude for the services provided. It is paid as a reward for the employee’s long service rendered. Gratuity is generally paid at the time of retirement but one can also ask for it while moving jobs after a certain length of service (5 years).
In India, all matters related to gratuity are governed under the Payment of Gratuity Act, 1972. The act was passed by the Parliament on 21st August 1972 and came into force on 16th September the same year.
All central and state government departments, defense, and local governing bodies are covered under this act. Private organisations can come under its purview subject to fulfillment of certain conditions.
The key idea behind the introduction of this Act was to provide monetary benefit to employees who have provided an extended term of service to a single employee.
Applicability of Gratuity:
Organisations with a workforce of 10 employees on a single day in the preceding 12 months are liable to pay gratuity.
Once gratuity provisions are applicable to any organization, it shall remain applicable to it in future even if number of employees are less than 10.
Time of Payment of Gratuity:
An eligible employee will receive gratuity on following events:
Note:
Computation of Continuous Service:
The following rules apply to the calculation of continuous service under the Payment of Gratuity Act, 1972.
Notes:
Computation of Gratuity:
Computation of Gratuity when employer is covered under the Gratuity Act:
Step 1: Determine Tenure of Service of an Employee:
Step 2: Compute 15 days Wages:
Step 3: Determine Gratuity Payable:
Computation of Gratuity when employer is not covered under the Gratuity Act:
Example:
Treatment of Gratuity under Income Tax:
Lease of the following amount is exempt from tax:
Example: A private sector employee has received Rs. 10 Lakh as gratuity from his employer. The eligible gratuity amount is Rs. 4,00,000. In this case, the lowest of the three figures is Rs 4,00,000 which is exempt from tax. Employee must pay tax on the remaining amount of Rs 6,00,000 as per income tax slab.