Even though these businesses are not generating enough turnover to get covered under GST or handling GST exempt goods, maintenance of business records are necessary. 

Business records

Business records include the sales and service invoices issued to customers, purchase invoices and delivery notes received from suppliers, bills and receipts that were received for various business-related transactions that are recorded in the books of accounts.  

Necessity of record maintenance

Even though record maintenance seems to be a non-essential issue from an income tax perspective as it has some alternative methods of calculating business profits for this segment of tax payers, these books of records are important for applying loans, answering any tax related queries, business expansions, business forecasting, etc. Many small businesses are failing because of weak or lack of business accounting records. 

With the imposition of stringent rules set by GST, supply of products or services by non-registered companies to GST registered companies has become increasingly difficult. Hence many small businesses are losing opportunities.

Accurate books of accounts help these businesses to forecast financial requirements in both short term and long term. 

Reasons for non-maintenance

One of the main reasons for not maintaining books of accounts are the costs associated with it. There may be cases where there are very few transactions of higher value, or there may be cases where many transactions of lesser value. But they are not able to spend thousands of rupees on Accountants or not able to buy and maintain Accounting software or Invoice software applications that takes longer time to learn and maintain records by themselves. 

There are many businesses which are going ahead in employing accountants in house or outsource it to some freelance professionals, but they are still not able to get the desired results either because of lack of required knowledge or because of lack of focus and attention. This is also because many qualified professionals are focussing more on GST registered companies, as its payout is more lucrative.

How to resolve the issue?

Many small businesses use either issue hand written invoices or use generic tools like Microsoft Excel or google sheets, to create day to day transactions like invoices and vouchers. There is a higher risk of loosing these documents.

An efficient, easy to work, secured Accounting software application, that can do everything for their business or profession is required for small business segment.

CEAAR is providing a solution to all these problems and more. CEAAR is an Invoicing and Accounting software application. It lets businesses record their own transactions accurately and timely. It helps small businesses, professionals and freelancers to set up and generate an invoice faster than an Excel invoice and it keeps all your documents digitally safe and secure. Accounting is made easy here. Auditors can also have access to this Accounting software. We will be shortly launching the application. Please visit www.ceaar.com to know more.

Rama Krishna Akkaraju (CEO)

Email: mailto:rk@ceaar.com

Now, let's talk about period of holding of shares required to call it long term capital gain (LTCG):

Securities listed in a Recognised stock exchange in India - held for more than 1 year.

Shares other than above(in India or abroad) - held for more than 2years.

Now, taxation of LTCG on shares Tax on LTCG on equity shares (either listed or not), where STT paid on acquisition (except acquired before 01/10/2004 or where STT not chargeable) & STT paid on transfer -

Finance Act 2018 has added section 112A which provides a concessional tax rate of 10% on LTCG in excess of Rs. 100000.

For e.g. if LTCG is of Rs. 220000, tax will be Rs. 12000 [10% of (220000–100000)]. But no benefit of Indexation will be available, generally in computing LTCGs, cost is indexed.

For e.g. if Cost is Rs. 100000 in F.Y. 01–02, indexed cost will be Rs. 280000 in F.Y. 18–19 as per Cost inflation index(CII).

But not allowed in case of LTCG u/s 112A.

Suppose, Sale consideration= Rs. 400000 in above example. LTCG (with indexation) = Rs. 120000 (400000–280000) and

LTCG u/s 112A (without indexation) = Rs. 300000 (400000–100000).

Tax u/s 112A = Rs. 20000 [10% of (300000–100000)]

Though benefit of grandfathering is given with the amendment in section 55 i.e. for units acquired before 01/02/2018 and will be taxable u/s 112A,

cost of acquisition (COA) shall be -

Higher of: Actual cost of acquisition Lower of : FMV as on 31/01/2018 or

Actual sale value

For e.g. if actual COA = Rs. 400;

FMV as on 31/01/2018 = Rs. 740;

Sale value = Rs. 750 then deemed COA will be Rs. 740 and

LTCG will be Rs. 10 (750–740) not Rs. 350 (750–400).

2. Tax on LTCG on securities listed in recognised stock exchange in India (other than equity shares u/s 112A)

- Whatever is lower of: Tax @ 10% (without benefit of indexation)

Tax @ 20% (with benefit of indexation)

3. Tax on shares (other than 1 & 2) i.e. securities other than equity shares not listed in recognised stock exchange in India - Tax @ 20%.

#Benefit of basic exemption limit is available (if balance income is less than basic exemption.

#Any long term capital loss arising from above can be set off from any LTCG and carry forward for 8 years.

#Deductions under Chapter VI - A (section 80C to 80U) not allowed against this LTCG.

(This is not only for salary arrears but also other eligible arrears as mentioned in section 89 )Most important is to therefore remember that assessee after claiming tax relief benefit under section 89 for arrears must not forget to upload form 10 E online in the income tax website else his request for relief under section 89 is not allowed during intimation assessment