Welcome to the future, as FY 2023–24 enters its fourth quarter. Digital transformation and AI-enabled data-driven cultures are about to become the new norms. It is beginning to integrate accounting and tax services into an enterprise-level ecosystem. It will create more opportunities for tax-compliant individuals or businesses in India, as well as for non-resident Indians (NRIs).
According to job market projections and reports of salary budget plans, Indian companies anticipate granting their employees a salary increase of approximately 9.8% in 2024, a figure closely in line with the 10% rise experienced in 2023. India’s new income tax regime features a major revamp with an updated threshold of Rs. 3 lakhs from the previous 2.5 lakhs, while the rebate limit is extended to Rs. 7 lakh from the previous Rs. 5 lakh. The basic tax exemption limit for super senior citizens aged 80 and above is Rs 5 lakh.
As the Indian corporate industry is all set with new tax exemptions and rebates, it has become imperative for new businesses and taxpayers to engage in smart and conscious tax planning. MPVD & Associates is a leading CA firm in Kolkata that has been helping individual taxpayers as well as businesses in India and overseas with multivariate accounting and taxation services to make the most of the opportunities related to taxes, investments, and income. This article explores some of the vital strategies.
New Tax Rules
Several significant financial changes have been brought into effect from October 2023 onwards in India, which will widely impact both businesses and individual taxpayers in their future budgeting, investment strategies, and tax planning. Below are some of the most significant new rules:
- Revised Tax Collected at Source (TCS) rates – New TCS rates will apply to expenditures exceeding the threshold limit in a fiscal year. The rate will be charged regardless of the nature of the transaction— which could be investments, foreign remittances, cryptocurrency transactions, or spending on travel, education, or healthcare.
- New Threshold Limits for Sections 44AD and 44ADA: The assessment year (AY) 2024-25, is set to introduce new threshold limits for the Presumptive Tax Scheme for Businesses and Professionals under Sections: 44AD and 44ADA, subject to certain conditions. While Section 44AD is proposed to have an increased threshold limit of up to INR 3,00,00,000, Section 44ADA will increase to INR 75,00,000.
- Restrictions on Unabsorbed Depreciation for Non-Resident Indians: New revisions to NRI tax norms state that non-residents who are subject to taxation in a fiscal year will no longer be able to deduct any unabsorbed depreciation or carry over losses to future years.
A solid tax planning strategy can significantly reduce a company’s tax liability. Tax savings could be used to make large investments and make the best use of tax credits and concessions. MPVD & Associates, a reputed NRI tax consultant in Kolkata, has introduced practical income tax return service packages to keep businesses on the bright side of the law.
Embracing Digital Transformation and Applications of Generative AI
Key trends in automating digital applications will simplify TDS return filing online. As new information and reports become more easily accessible, it will make tax-saving investments easier for investors.
There is software for everything and software that could track so many activities, from TDS return filing dates and amounts to calculating income tax TDS refunds for the year. In corporate tax departments, the game-changing impact of generative AI will pave the way for higher efficiency, time savings, improved accuracy, and data-driven insights.
These insights and simplified steps will foster more familiarity and understanding of processes on a day-to-day basis, give a business more freedom to diversify its investment portfolio and engage in more robust or disruptive financial steps while being tax compliant all the while. So looking ahead to a holistic and placid approach to the overall income tax return service and system, it is bent on imparting a cohesive system that is safe, transparent, and easily accessible.
Document And Monitor Capital Expenditures when Setting Up Business
When you first embark on your entrepreneurial adventure, there will be several setup charges. These out-of-pocket expenses are classified as “capital expenditures.” According to Section 35D of the Income Tax Act of 1961, the capital expenditure incurred for starting a new firm may be written off as a deduction in the first five years, in five instalments. The maximum deduction under Section 35D is limited to 5% of the project cost. The maximum deduction allowed to an organisation is 5% of the project’s cost, or the capital spent on the company’s operations.
Investment Planning and Strategies
Consider tax-saving options now rather than waiting till the end of the assessment year to consider investments like tax-saving FDs, PPF, ELSS, etc. Instead, space out, plan, investigate, and review your investments regularly over the relevant fiscal year. In this manner, you will qualify for a variety of tax breaks and exemptions when you complete your ITR.
Collaborate with MPVD & Associates to Tally Your Accounts To Maximize Your Eligibility for Tax Opportunities And Deductions –
Apart from claiming the deduction of the preliminary expense under Section 35D of the Income Tax Act, there are several other opportunities for tax exemptions and deductions for both your expenses and investments.
If you are a startup owner and just starting as an entrepreneur, you must implement a strong financial strategy to minutely tally your books and take advantage of all deductions possible.
Making this much easier for businesses and professionals in India, we at MPVD & Associates have significant accounting and taxation service packages that are tailored to meet their specific needs. From digital processes for iTax return filing, monitoring income tax TDS returns, and overall company law matters, we are the most trusted accounting company in Kolkata, and we can help you every step of the way with taxes, accounts, smart investing, and the plethora. Feel free to get in touch with all kinds of tax-related queries and concerns.