20 Quotes which can help you become an Achiever!

1. Dream Big. Start small. Act now. 
2. Victims make excuses. Leaders deliver results.
3. Clarity breeds mastery.
4. Education is inoculation against disruption.
5. A problem is only a problem when viewed as a problem.
6. All change is hard at first, messy in the middle and gorgeous at the end.
7. If you’re not scared a lot you’re not doing very much.
8. Where victims see adversity, extreme achievers see opportunity.
9. The project you are most resisting carries your greatest growth.
10. Small daily improvements over time lead to stunning results.
11. Criticism is the price of ambition.
12. Potential unexpressed turns to pain.
13. Ordinary people love entertainment. Extraordinary people adore education.
14. Your daily behavior reveals your deepest beliefs.
15. The only failure is not trying.
16. Focus is more valuable than IQ.
17. To double your income, triple your investment in self-development.
18. Your excuses are nothing more than the lies your fears have sold you.
19. An addiction to distraction is the end of your creative production.
20. Life is short. Be of use.

Thanks to Robin Sharma!

HUF - What, Why & How?

What is HUF (Hindu Undivided Family)?

HUF is a family with husband, wife and children (and children’s spouses if any) living together. The property owned by this family will be through lineal ascendants or any ancestors. There are a set of laws that govern property ownership, marriages, taxation etc for a legally declared HUF. IT department of India has a format of taxation for a HUF; tax benefits can be availed from this format

Why HUF to Save Tax?

A very effective and legal way to save tax is to form a separate tax entity HUF i.e. Hindu Undivided Family. The creation of Hindu Undivided Family helps the tax payers to save their taxes in a legal manner. In India there are many families which are undivided and the incomes earned by such families are joint income as compared to Individual Incomes.

As these are joint incomes and not Individual Incomes, these incomes cannot be taxed in the hands of any specific individual and are therefore taxed in the hands of the whole family. As these are taxed in the hands of the family, the family has a separate PAN Card as compared to Individual members of the HUF who also have a separate PAN Card.

It is a well known fact that every individual member of the family specially the adult members of the family would enjoy a tax deduction up to Rs. 1,50,000 in under section 80C of the Income-tax Act, 1961.However, most of the prudent individuals are able to take the full advantage of the said section 80C of the Income-tax Act, 1961. 

Basically the logic behind forming an HUF to save tax is to avail the benefit of an extra PAN Card legally. As the Income of the Family is not taxed in the hands of any specific Individual, a new PAN Card is allotted to the HUF and Tax would be paid by the Family using this PAN Card.

As a new PAN Card would be allotted to the whole family, it will also enjoy the benefits of Income Tax Slab Rates i.e. Income would be Tax Free up to the specified limits and would then be taxed progressively at 10%, 20% & 30% resulting in tax saving.

How creating a Hindu Undivided Family Account would result in tax saving?

Example: 

Let’s assume there are 4 Members in a Family – Husband, Wife and 2 Children. The Income of the Husband is Rs. 30 Lakhs, Income of the Wife is Rs. 20 Lakhs. They also have a ancestral property from which they are earning rent of Rs. 8 Lakhs p.a.

The rent from such a property would either be taxed in hands of the Husband or the Wife or both.

Case 1: If taxed in the hands of the Husband, the husband who is currently in the 30% Income Tax Slab Category would be required to pay 30% of Rs. 8 Lakhs i.e. Rs. 2.4 Lakhs as Tax.

Case 2: If taxed in the hands of the Wife, the wife who is also currently in the 30% Income Tax Slab Category would be required to pay 30% of Rs. 8 Lakhs i.e. Rs. 2.4 Lakhs as Tax.

Case 3: If taxed equally in the hands of both Husband and Wife i.e. Rs. 4 Lakhs each, both the Husband and Wife would be required to pay tax @ 30% on Rs. 4 Lakh = 1.2 Lakhs each by both Husband and Wife thereby leading to a total tax outflow of Rs. 2.4 Lakhs.

However, there is a better way out by which you can plan your Income Tax. As this Income is arising from an asset which belongs to the whole family, this Income shall be taxed in the hands of the Family (provided an HUF is formed) and you would be able to enjoy the benefits of slab rates.

Case 4: If this Rental Income of Rs. 8 Lakhs is taxed in the hands of HUF, the tax payable by the HUF as computed as per the Slab Rates would be Rs. 70,000 to Rs. 80,000 (depending on the income tax deductions claimed by the HUF). Taxing this Rental Income in the hands of the HUF would lead to a Tax Saving of Rs. 1,80,000 p.a. (Rs. 2,40,000 – Rs. 60,000).

For easy understanding of the concept, we explained this article using only Rental Income, but there are many other Incomes as well which arise to the family as a whole wherein the concept of saving taxes by forming an HUF can also be applied.

Benefits and Drawbacks of forming an HUF

1. The major advantage of creating a Hindu Undivided Family Account is that the family gets an extra PAN Card and can split the family income and thereby resulting in tax saving and reducing the tax outgo. This is the major reason why CA’s advise their clients to create a HUF and save taxes of upto Rs. 1.8 Lakhs every year (as explained above). Apart from getting tax deduction up to Rs. 1,50,000 for an individual, it is possible that if an HUF is created by that individual, he will be able to claim higher tax deduction and exemptions under the Income-tax Law because the new tax entity in the form of a Hindu Undivided Family will be eligible to claim separate tax deduction under section 80C of the Income-tax Act, 1961. Likewise, the dividend income and the Long-term Capital Gains on listed securities would also be exempted for such Hindu Undivided Family. The income from Short-term Capital Gain by this Hindu Undivided Family will also be eligible to a lower tax rate of 15 per cent tax only. 
2. Various other tax benefits within the framework of the Income-tax Law are available for the Hindu Undivided Family to save tax. 

However it should be noted that there is a disadvantage as well and that is the fact that all assets of in the name of the Hindu Undivided Family are assets of the family and not of a specific individual. All members of the family have a right in the assets of the Hindu Undivided Family (including an unborn child in the womb of a mother).

Therefore proper caution should be exercised while gifting assets to the Hindu Undivided Family as the whole family would be having a share in the assets of the family as compared to the fact that if these assets were in the name of a specific individual – only that individual would have a right over that asset.

To be Continued...

Documents Required for Loans by the Banks

 Term Loan

1. Audited Financial Statement of last 3 years along with Income Tax Return Acknowledgement.
2. Provisional Balance Sheet for the current year.
3. Projection of Sales , Purchase, Stock & Raw Material Consumption for the next 5 years.
4. Quotation of Machinery to be purchased.
5. Installed Capacity, Licensed Capacity - existing & proposed, Envisaged Capacity Utilisation.
6. Details of Raw Material requirement, calculation, how desired ?Source of supply and supply position. Cost of raw material supported by current quotation.
7. Catalogue / Brochure of Machine.
8. Maintenance arrangement & costs thereof.
9. Project implement schedule.
10. Cost already incurred.
11. Sources of such expenditure.

Housing Loan

1. Financial Statement of last 3 years along with Income Tax Return Acknowledgement.
2. Provisional Balance Sheet for the Current Year.
3. Copy of Pay Slip and Form No. 16.
4. Agreement of Sale of House Property to be purchased.
5. Copy of Last Municipal Tax Paid Receipt.
6. Copy of Sanctioned Plan.
7. Receipt of Advance Money Paid to Promoter/Seller.
8. Collateral Security Offered.

Car Loan

1. Financial Statement of last 3 years along with Income Tax Return Acknowledgement.
2. Provisional Balance Sheet for the Current Year.
3. Copy of Pay Slip and Form No. 16.
4. Quotation of Car to be purchased.
5. Receipt of Advance Money Paid to Seller.
6. Statement showing repayment schedule.

Relevant sections of Income Tax Act for Non Resident Indians to set-up business in India and residents dealing with NRIs.

S. No.	Section	Particulars
1	2	Definitions
2	4	Charge of income-tax.
3	5	Scope of total income.
4	6	Residence in India.
5	7	Income deemed to be received.
6	10	Incomes not included in total income
7	40(a)(i)	Amounts not deductible.
8	40(a) (iii)	Amounts not deductible.
9	90	Agreement with foreign countries or specified territories
10	90A	Adoption by Central Government of agreement between specified associations for double taxation relief.
11	91	Countries with which no agreement exists.
12	92	Computation of income from international transaction having regard to arm's length price.
13	9	Income deemed to accrue or arise in India.
14	28	Profits and gains of business or profession
15	44B	Special provision for computing profits and gains of shipping business in the case of non-residents
16	44BB	Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils .
17	44BBA	Special provision for computing profits and gains of the business of operation of aircraft in the case of non-residents.
18	44BBB	Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects.
19	44C	Deduction of head office expenditure in the case of non-residents
20	44D	Special provisions for computing income by way of royalties, etc., in the case of foreign companies.
21	44DA	Special provision for computing income by way of royalties, etc., in case of non-residents.
22	45	Capital gains
23	47	Transactions not regarded as transfer
24	48	Mode of computation
25	49	Cost with reference to certain modes of acquisition
26	92A	Meaning of associated enterprise.
27	92B	Meaning of international transaction.
28	92BA	Meaning of specified domestic transaction.
29	92C	Computation of arm's length price
30	92CA	Reference to Transfer Pricing Officer.
31	92CB	Power of Board to make safe harbour rules.
32	92CC	Advance pricing agreement.
33	92CD	Effect to advance pricing agreement.
34	92D	Maintenance and keeping of information and document by persons entering into an international transaction [or specified domestic transaction]
35	92E	Report from an accountant to be furnished by persons entering into international transaction [or specified domestic transaction].
36	92F	Definitions of certain terms relevant to computation of arm's length price, etc.
37	93	Avoidance of income-tax by transactions resulting in transfer of income to non-residents.
38	94	Avoidance of tax by certain transactions in securities.
39	94A	Special measures in respect of transactions with persons located in notified jurisdictional area.
40	95	Applicability of General Anti-Avoidance Rule.
41	96	Impermissible avoidance arrangement.
42	97	Arrangement to lack commercial substance
43	98	Consequences of impermissible avoidance arrangement.
44	99	Treatment of connected person and accommodating party.
45	100	Application of this Chapter.
46	101	Framing of guidelines.
47	102	Definitions.
48	111A	Tax on short term capital gain in certain cases
49	112	Tax on long term capital gains
50	115A	Tax on dividends, royalty and technical service fees in the case of foreign companies.
51	115AB	Tax on income from units purchased in foreign currency or capital gains arising from their transfer
52	115AC	Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer.
53	115ACA	Tax on income from Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer
54	115AD	Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer
55	115BBD	Tax on certain dividends received from foreign companies
56	115C	Definitions.
57	115E	Tax on investment income and long-term capital gains
58	115F	Capital gains on transfer of foreign exchange assets not to be charged in certain cases.
59	115G	Return of income not to be filed in certain cases.
60	115H	Benefit under Chapter to be available in certain cases even after the assessee becomes resident.
61	115JG	Conversion of an Indian branch of foreign company into subsidiary Indian company
62	139	Return of income
63	139A	Permanent account number
64	140	Return by whom to be signed
65	140A	Self-assessment
66	160	Representative assessee
67	161	Liability of representative assessee
68	162	Right of representative assessee to recover taxes paid
69	163	Who may be regarded as agent
70	166	Direct assessment or recovery not barred
71	167	Remedies against property in cases of representative assessee
72	172	Shipping business of non-residents.
73	173	Recovery of tax in respect of non-resident from his assets
74	174	Assessment of persons leaving India.
75	195	Other sums.
76	195A	Income payable "net of tax"
77	196A	Income in respect of units of non-residents
78	196B	Income from units.
79	196C	Income from foreign currency bonds or shares of Indian company.
80	196D	Income of Foreign Institutional Investors from securities.
81	197	Certificate of deduction at lower rate
82	199	Credit for tax deducted
83	200	Duty of person deducting tax
84	201	Consequences of failure to deduct or pay
85	204	Meaning of person responsible for paying
86	205	Bar against direct demand on assessee
87	206AA	Requirement to furnish Permanent Account Number
88	207	Liability for payment of advance tax
89	208	Conditions of liability to pay advance tax
90	209	Computation of advance tax
91	210	Payment of advance tax by the assessee of his own accord or in pursuance of order of Assessing Officer
92	211	Instalment of advance tax and due taxes
93	214	Interest payable by Government
94	215	Interest payable by assessee
95	216	Interest payable by assessee in case of under-estimate, etc.
96	217	Interest payable by assessee in case of under-estimate, etc.
97	218	When assessee deemed to be in default
98	219	Credit for advance tax
99	228A	Recovery of tax in pursuance of agreements with foreign countries.
100	234A	Interest for default in furnishing return of income
101	234B	Interest for default in payment of advance tax
102	234C	Interest for deferment of advance tax
103	245N	Definitions.
104	245-O	Authority for Advance Rulings.
105	245P	Vacancies, etc., not to invalidate proceedings.
106	245Q	Application for advance ruling.
107	245R	Procedure on receipt of application.
108	245RR	Appellate authority not to proceed in certain cases.
109	245S	Applicability of advance ruling.
110	245T	Advance ruling to be void in certain circumstances
111	245U	Powers of the Authority.
112	245V	Procedure of Authority
113	271BA	Penalty for failure to furnish report under section 92E.
114	271C	Penalty for failure to deduct tax at source
115	271G	Penalty for failure to furnish information or document under section 92D
116	285	Submission of statement by a non-resident having liaison office
117	115BBA	Tax on non-resident sportsmen or sports associations.
118	115D	Special provision for computation of total income of nonresidents.
119	115I	Chapter not to apply if the assessee so chooses.
120	115J	Special provisions relating to certain companies
121	115JA	Deemed income relating to certain companies
122	115JAA	Tax credit in respect of tax paid on deemed income relating to certain companies
123	115JB	Special provisions for payment of tax by certain companies
124	194E	Payments to non-resident sportsmen or sports associations.
125	220	When tax payable and when assessee deemed in default
126	221	Penalty payable when tax in default
127	222	Certificate to tax recovery officer
128	226	Other modes of recovery
129	230	Tax clearance certificate