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Employers in India issue Form 16 to employees in India which indicates the salary earned, taxes deducted, and other details. As a salaried employee, it is essential to know the  

Form 16 is an important document issued by employers to salaried employees in India, indicating the salary earned, taxes deducted, and other details.  

As a salaried employee, it is essential to understand the significance of Form 16 and how to fill it out online. Filling out Form 16 online can save a considerable amount of time and effort, and it also ensures accuracy in the information provided. In this blog post, we will guide you through the process of filling out Form 16 online and provide useful tips to ensure that you get it right. So, if you are a salaried employee and must fill out Form 16, keep reading to learn more.

What Is Form 16?  

Form 16 is a certificate governed by Section 203 of the Income Tax Act, 1961, that provides information on the Tax Deducted at Source (TDS) from your annual income. It is an income certificate issued by your employer, containing details of the tax deducted and paid in advance. This certificate includes all the necessary information for taxpayers to file their income tax returns (ITR) with the Income Tax Department. Employers are required to provide Form 16 to their employees at the end of each budget year, and it serves as vital proof of tax paid. It is important to note that Form 16 is not issued to employees who fall below the tax bracket, as they are not required to pay taxes or file ITR  

Components of Form 16  

It is important to note that Form 16 has two parts – Part A and Part B. Part A includes the above-mentioned components, while Part B contains a detailed breakup of salary, exempt allowances, and deductions under Chapter VI-A of the Income Tax Act.  

Part A  

If an employee changes their job in a year, each employer will issue a separate Part A of Form 16 for the period of employment.  

Employers can generate and download Part A of Form 16:

https://www.tdscpc.gov.in/app/login.xhtml    

Employers should check the credibility of the contents filled in the above form before issuing certificates to the Employees.  

Part B  

Part B of Form 16 is an addendum to Part A, which contains crucial details such as the breakup of your salary, tax deductions allowed under Chapter VI-A, tax paid, tax dues, and other income (if applicable). This section is to be prepared by the employer for its employees.  

If an employee changes jobs during a fiscal year, they should obtain Part B from both employers. Like Part A, this section serves as an essential document for employees to prepare their income tax returns and claim any tax refunds that may be available.

When to file?  

Form 16 or 16A is a document that serves as proof of tax deduction at source made by an employer on behalf of their employees. This form is issued annually for the previous fiscal year, typically before the end of May, covering the period from April 1st to March 31st. It is a crucial document for salaried employees as it helps them prepare their income tax returns and claim any eligible tax refunds.  

Eligibility  

To comply with the IT Act, of 1961, individuals whose income falls under the taxable bracket of over Rs. 2,50,000 are eligible for Form 16. However, those whose annual income for the assessment year is within Rs. 2,50,000 are exempt from filing this form. In such cases, the company is not obliged to provide Form 16 to the employee.  

How to download Form 16?  

You can download Form 16 from the official website of the Income Tax Department at https://www.incometaxindia.gov.in/Pages/default.aspx, under the Income Tax Forms section.  

How to file your income tax return using Form 16?  

Begin by gathering all the necessary documents and information, including Form 16, a copy of your PAN and Aadhaar card, bank statements, and any other relevant documents. Identify all the deductions you qualify for while filing your taxes, such as any deductions under 80C, 80D, etc.  

Register on the Income Tax e-filing portal and create an account. If you already have an account, log in.  

Once logged in, go to the e-File section, and click on “Income Tax Return” to begin the process.  

Choose the appropriate Income Tax Return (ITR) form based on your income and other factors. If you have Form 16, you can use either ITR-1 or ITR-2.  

Fill in all the required details, including personal information, income details, deductions, and tax payments. From Form 16, you can locate certain information needed to file your income tax return, such as allowances exempt under Section 10, break up of deductions under Section 16, taxable salary, income (or admissible loss) from house property reported by an employee and offered for TDS, income under the head ‘Other Sources’ offered for TDS, break up of Section 80C deductions, the aggregate of Section 80C deductions (gross and deductible amount), and tax payable or refund due.  

Validate all the data entered in the form and submit it.  

After submitting your return, E-Verify it using any of the available options, such as Aadhaar OTP, etc.  

The entire process is smooth and can be completed online in just a few minutes.

Difference between Form 16, Form 16 A, and Form 16 B  

Uses:    

Form 16 can be used for verification purposes to compare the TDS (Tax Deducted at Source) deducted by the employer to the actual income tax received by the government. This certificate can be cross-checked and validated using the actuals in Form 26AS, which contains all the information about the entire amount of income tax collected and deposited with the government.  

When a person applies for a credit card, financial organizations may utilize Form 16 as proof of income to evaluate their financial situation. The credit limit on the credit card might also be determined using this certificate.  

Since Form 16 provides a thorough breakdown of the salary and tax liability, it can be used to evaluate loan applications. It aids the lender in understanding the borrower’s financial stability and ability to repay the loan.  

When processing a visa application, foreign embassies and consulates occasionally require Form 16. With the use of this certificate, they can assess your financial standing and decide if they can handle their finances while traveling overseas.  

Filing income tax returns using Form 16 is a crucial process that every taxpayer should be aware of. With the help of this form, individuals can ensure that they are accurately reporting their income and claiming all the deductions they are eligible for. At the same time, it can also be a complex and time-consuming process.  

If you find it difficult to file your income tax returns using Form 16 on your own, you can seek the assistance of professional tax filing services. Our services can help you gather all the necessary documents, prepare your tax return accurately, and file it on time. So, do not hesitate to contact us if you need assistance.  

Reference:  

https://groww.in/p/tax/difference-between-form-16-and-form-16a  

https://www.livemint.com/  

https://taxguru.in/income-tax/form-16-generator-auto-tax-calculator-salary-statement.html  

https://incometaxindia.gov.in/forms/income-tax%20rules/103120000000007292.pdf  

The concept of One personal company is introduced in the year 2013 under the Companies Act, 2013. This has brought so many changes and provided many opportunities for all budding entrepreneurs to start their single-person economic enterprise. It is a refinement of a Sole proprietorship.  

An OPC is managed and controlled by a single individual, minimizing his or her accountability for contributions to the enterprise. A director nominee, on the other hand, is present but has no authority until the actual director is unable to continue. A company can be founded with only one director and one member, according to Section 2 (62) of the Company’s Act 2013. A Person Company Registration in India is a type of entity with the fewest compliance requirements of any company type. Because it is administered by a single person, an OPC is simple to manage. If you are an entrepreneur seeking unique success, you can register as an OPC in India.

Why Choose One-Person Company Registration?

One-Person Company Registration offers numerous advantages over a sole proprietorship. Having a registered company under MCA increases the legitimacy of your business. It benefits your company in the following ways:  

1. A single proprietor can form a corporation.  

2. Unlike a sole proprietorship, your business name is protected and cannot be replicated by others.  

3. A decrease in compliance  

4. Its director’s liability is limited.  

5. Suitable for bank loans and credit  

6. Lower income tax rate when compared to a sole proprietorship  

7. No involvement from a third party is permitted.  

8. Ownership is easily transferrable to a nominee in the event of the owner’s death.  

Eligibility for One-Person Company Registration

The company’s Director / Shareholder must be an Indian citizen and a resident of India. NRIs and foreign nationals are not permitted to register for OPCs in India.  

Before registering a one-Person Company, the proprietor must be 21 years old. Minor is unable to function as a member.  

The promoter must select and furnish KYC information for a nominee during the OPC Incorporation.  

There is no minimum capital requirement for a one-person firm. An OPC can be formed with a paid-up capital of Rs.1/-. An OPC, on the other hand, must be registered with a minimum authorized capital of Rs. 1 Lakh.  

Your company’s name must be distinct and unique. The suggested company name should not be similar to any existing registered Indian companies or trademarks

Documents Needed for OPC Company Registration

A scanned copy of a recent bank statement  

Bank statements can be accessed via Internet banking or by visiting a bank branch. Account statements and transaction summary statements are two additional standard titles for them.  

A bill for power or gas, a phone bill, and a mobile bill  

Utilities often include power, gas, water/sewage, and garbage disposal. Other services, such as internet, cable TV, and phone service, are occasionally viewed as extra utilities because they are now considered standard in most Indian households. The cost of utilities might vary greatly based on your location, the temperature where you reside, and your usage habits. As a result, these are also presented as critical documents for OPC registration.

Rental agreement in English, digitally transcribed  

Tenants are frequently given hard copies of rental agreements. This must be scanned and submitted to the appropriate authority for documentation.  

Digital transcription of a landowner’s no-objection certificate  

This document comes from the specific landowner. Section 12 of The Companies Act, 2013 requires that every corporation maintain a registered address. When a company is incorporated in India, the registered address is attached to the Spice+ form. If the business’s address changes after formation, a Form INC-22 notification of the company’s new registration address must be sent to the ROC.

An English-language scanned copy of the property deeds or sale deeds if the property is owned.  

A sale deed is a legal document used in real estate transactions to confirm the purchase of property and the transfer of ownership from the seller to the buyer. This is the primary ownership transfer documentation. A sale deed is also known as a conveyance deed or a final deed.

Registering One Person Company is quick, simple, and can be done online with a few easy steps:

Obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN): These are mandatory requirements for registering any company in India. You can obtain these online by visiting the website of the Ministry of Corporate Affairs (MCA) or through a government-approved agency.

Choose a unique name for your OPC: You need to choose a unique name for your company that does not conflict with any existing trademarks or company names. You can check the availability of your chosen name on the MCA website.

File incorporation documents: You need to prepare and file various documents for incorporation, including the Memorandum of Association (MOA) and Articles of Association (AOA) of the company, as well as a declaration from the sole member of the company. You can prepare and file these documents online through the MCA website.

Pay the registration fee: Once your documents are verified, you will need to pay the registration fee online. The fee depends on the authorized share capital of the company.

Obtain Certificate of Incorporation: After successful registration, you will receive a Certificate of Incorporation from the Registrar of Companies. This certificate is proof that your OPC is now a legal entity in India.

Apply for PAN and TAN: Finally, you need to apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for your OPC. You can apply for these through the NSDL website.

Finding difficulty in registering OPC? Utilize our effective services for Person Companies (OPC) registration. Assuring that all legal criteria are met, our knowledgeable team will walk you through the whole registration process. You can concentrate on expanding your business while we take care of the paperwork. Use our easy registration services to begin your OPC journey right away.

Reference:

https://cleartax.in/s/one-person-company-registration-procedure-india

https://www.geeksforgeeks.org/one-person-company-meaning-and-characteristics/

https://vakilsearch.com/one-person-company-opc-i

TDS stands for Tax deducted at the source which means an authorized deduct or deducts tax while making certain payments, e.g.: Rent, Commission, Salary, Interest, etc. In this blog, we will explain the details of 27 sections under TDS with different provisions of deduction and a threshold limit of exemption.  

What is TDS in income?  

TDS or Tax deduction forms an integral portion of the direct taxation mechanism applicable to heads of Income to deduct taxes for certain payments.  

TDA at its source reduces the burden of taxpayers from paying off lump sums of taxes at the end of every budget year. In this way, the TDS process enables a balanced outflow of revenue between the government and taxpayers. For Instance: If ABC group company pays an amount of Rs.30,000/- as a salary to Y, the ABC groups shall deduct a tax of Rs.2,000/ and make a net payment of Rs.28,000/- to Y. Then, the tax deducted by ABC Groups Ltd will be directly credited to the government.  

According to the Income Tax Act, of 1961, policies and regulations related to tax deducted at source (TDS) are managed by CBDT (Central Board of Direct Taxes), the person who is liable to pay tax is known as Deducted, and the person who deducts the tax is known as Deduct or.  

The deducted amount in the TDS Mechanism shall be sent to the Central Government. The deducted can check the deducted TDS amount in Form 26 As or the TDS certificate issued by the deducted or.  

Types of TDS  

Even when you are making payments as an individual taxpayer, you need to deduct TDS on certain payments. The following type of payments attracts TDS:  

a) Salary Transfer  

b) Professional Fee  

c) Consultation Fee  

d) Rent Payments  

e) Commission  

f) Interest on Securities & Deposits  

g) Dividend on company shares and mutual funds  

h) Lottery and similar winnings  

I) Payment of Royalty  

j) Salary Transfer  

k) Professional Fee  

l) Consultation Fee  

m) Rent Payments  

n) Commission & brokerage payments  

o) Interest on Securities & Deposits  

p) Dividend on company shares and mutual funds  

q) Lottery, lucky draw, and similar winnings  

r) Payment of Royalty  

s) Director’s Remuneration  

t) Transfer of Property  

u) other interest payments  

When and who is liable to deduct TDS?  

If you receive payment specified under the Income Tax Act, TDS will be deducted. If you are an individual or a Hindu Undivided Family and your books do not require an audit, then no TDS will be deducted. However, if you pay rent and the amount exceeds Rs. 50,000, a TDS at 5% will be deducted, even if your books do not require an audit. Your employer will deduct TDS from your salary as per the applicable income tax slab rates. The bank with whom you hold an account will deduct TDS at 10%. If you submit your investment proof to your employer and your total taxable income is below the taxable threshold, then you will not need to pay any tax, and no TDS will be deducted. If your total taxable income is below the taxable limit, you can submit Form 15G and Form 15H to the bank, and they will not deduct TDS on your interest income. If the bank has deducted TDS, and you are eligible to claim a refund, you can file a return and claim it.  

How to pay TDS?  

To ensure compliance with the concept of TDS, the deducting organization or individual is responsible for remitting the deducted income to the government. Here is a step-by-step guide on how to deposit TDS:  

Log in to NSDL’s website for e-payment.  

Select Challan No ITNS 281 under the section TCS/TDS and enter the required details such as TAN, assessment year, PIN code, and mode of payment.  

Choose between TDS on regular assessment and TDS deducted or payable and click on “Submit”.  

After confirming the TAN and taxpayer’s name, you will be redirected to the payment page. Make your payment here.  

Upon successful payment, you will receive a counterfoil with CIN, payment confirmation, and bank details as proof of payment. You must file a TDS return after this.  

What are TDS Returns?  

TDS return is the process of returning the excess amount deducted as TDS to the taxpayer. While TDS is a form of income tax, individuals may still have an income tax liability at the end of each year, even after paying TDS. This is because TDS is deducted from the source of income to avoid payment delays. If the total TDS paid in a year exceeds the individual’s tax liability, the excess amount will be returned by the government. To receive this return, the taxpayer must obtain a TDS certificate from their deduct, which is necessary while filing a TDS return.  

TDS RATE CHART FOR FY 2023-24

TDS/TCS returns for the assessment year 2023-24.  

If you need to file your TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) returns for the budget year 2022-23, here are the deadlines you need to remember. These are the dates by which you must file your TDS/TCS returns for the assessment year 2023-24.

How to upload TDS Statement?  

To upload your TDS (Tax Deducted at Source) statements on the official website of the Income Tax Department, follow these simple steps:  

Visit https://www.incometaxindiaefiling.gov.in/home and click on the ‘Registered User?’ option on the right side of the page.  

Fill in your login details and click on ‘Login’. Your user ID will be your TAN (Tax Deduction and Collection Account Number).  

Locate the ‘TDS’ drop-down menu after logging in and select ‘Upload TDS’.  

Fill in the required details on the form that appears and click on ‘Validate’.  

Finally, validate your returns using either a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC)  

What is TDS Certificate?  

A TDS certificate is a document that serves as proof of tax deducted at source from a person’s income by an entity. This certificate is issued by the entity that has made the TDS deduction, to the person from whose income the TDS is deducted, also known as the assesses. The certificate indicates that the TDS amount has been deposited in the Government’s account. Knowing about TDS certificates and their types can help in resolving any issues related to TDS deductions from various sources of income. It is important to understand the several types of TDS certificates and which ones you should request.

and which ones you should request.

What is the penalty for filing to Pay TDS?  

If you fail to submit or submit late TDS returns/statements, you will be subjected to various penalties by the Income Tax Department, as outlined below:  

Failure to submit returns: Section 272A (2) of the Income Tax Act imposes a penalty of Rs. 100 per day for each day that returns remain unsubmitted, with a maximum penalty equal to the TDS amount.  

Failure to file returns on time: Section 234E of the Income Tax Act imposes a penalty of Rs. 200 per day for each day that returns remain unfiled, with a maximum penalty equal to the TDS amount.  

Defaults in TDS statement filing: Section 271H of the Income Tax Act imposes a penalty ranging from Rs. 10,000 to Rs. 1 lakh if the deduct or defaults in filing a TDS return within the due date.  

Incorrect details: Under Section 271H of the Income Tax Act, a penalty ranging from Rs. 10,000 to Rs. 1 lakh will be charged if the deduct or submits incorrect information, such as PAN (Permanent Account Number), challan particulars, TDS amount, etc.  

Non-payment of TDS: Section 201A of the Income Tax Act imposes interest along with the penalty if TDS is not paid within the due date. In case a part or the whole of the tax amount is not deducted at the source, interest will be charged at 1.5% per month from the date on which the tax was deductible to the date on which it is deducted.  

When can Taxpayers claim a refund?  

Taxpayers can claim a refund or reduction of applicable TDS under certain circumstances.  

If the total income is not within the income tax payable slab, a refund or reduction can be claimed.  

If the TDS paid is more than the tax payable liability, a refund can be claimed.  

If the taxpayer has a loss of income in the current month or a previous year’s loss carried forward in the present year, a reduction can be claimed.  

If the taxpayer is eligible for tax exemption, a refund or reduction can be claimed.  

Form 15G/15H can be submitted to avoid TDS deduction.  

Form 13 can be submitted to claim a refund or non-reduction of TDS.  

It is important for taxpayers to understand what TDS is and why it is deducted to file their returns and maximize their benefits.  

TDS or Tax Deducted at Source is a crucial aspect of the Indian taxation system. It ensures a smooth collection of taxes and reduces the burden of tax collection for the government. TDS also helps to track financial transactions, minimizes tax evasion, and ensures tax compliance. As a taxpayer, it is important to be aware of the rules and regulations related to TDS and ensure timely compliance to avoid any penalties or legal implications. Overall, TDS plays a significant role in the Indian tax regime and contributes to the growth and development of the nation’s economy.  

Reference  

https://incometaxindia.gov.in/Pages/Deposit_TDS_TCS.aspx

https://www.caclubindia.com/articles/tds-rate-chart-for-the-fy-2023-24-ay-2024-25-49539.asp

https://taxguru.in/income-tax/tds-rate-chart-fy-2023-2024-ay-2024-2025.html

https://groww.in/p/tax/tds

Are you someone who has moved to Hyderabad recently to find a job or to do a job? Are you someone, In case if you are  residing and doing a job in Hyderabad then you must know that all earning individuals in Telangana must  file pay professional income tax returns (ITR) as per their Income, as per Indian Govt rules  

According to the 2023 Oxford Economics report, Telangana’s capital city is expected to beat economic growth among many global cities in the Asia Pacific region. ( Add citation link as a superscript )  

The city has surpassed Bengaluru in the new office space addition in the first half of the financial year 2022-23. The city is on its way to becoming a larger economy with different types of businesses. ( Add Graph screenshots )  

The need for income tax filing also increases as there is exponential growth in the economy and the number of people filing.

Most people refrain from doing it because of the hectic procedures, but do you know that it is mandatory and also your right as it is the confirmation of your income?  

If not, then you must read more about Income Tax filing and its benefits.

What is Income Tax Return Filing?  

According to the Income Tax Act, Filing IT to the government of India is mandatory for all Indian Citizens to file Income tax returns. All individuals, an association or a firm, LLP, a local authority, or a Hindu undivided family are required to pay the income tax for each financial year under Income Tax laws.  

 Income Tax Return is often termed as ITR or IT returns. Through this ITR filing a taxpayer must record his total income earned during the fiscal year. Individuals can file their taxes Online or Offline at their convenience. It is filed in seven different forms: ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6, and ITR 7  

Documents required for Filing ITR  

To file income tax returns online, certain documents are necessary. These include,  

Pan card

Form 26AS

Form 16A, 16B, 16C

Salary Pay slips

Bank statements

Interest certificates

TDS certificate

Proof of tax-saving investments

Process of Filing Income Tax Returns  

Step 1 – Evaluate your income tax liability using the procedures outlined in the Income Tax Rules.  

Step 2 – Check Form 26AS for a summary of your TDS payment for each quarter of the assessment year.  

Step 3 – Check which group you fall into based on the eligibility requirements provided by the Income Tax Department (ITD).  

Step 4 – Go to the Income Tax Department’s official e-filing portal at https://eportal.incometax.gov.in/iec/foservices/#/login.  

Step 5- If you are a first-time user, click the ‘Register’ button to create an account. If you have registered before, click the ‘Login’ option.  

Step 6 – Under the ‘e-file’ menu, select the ‘File Income Tax Return’ option.  

Step 7- From the website’s list, select the category that applies to you – individual, Hindu Undivided Family (HUF), and so on.  

Step 8 – Select the appropriate ITR Form for your situation.  

Step 9- Enter your bank account information. If you have previously submitted the same information, you will be requested to pre-validate the information.  

Step 10 – Review the pre-filled details of your ITR on a new online page. Check the details and make any necessary adjustments. Once you are certain that all of the relevant data in the form is correct, confirm and validate it.  

Step 11 – When the process is finished, verify the returns and mail a hard copy to the Income Tax Department.

Due Date for filing ITR 2023-2024  

According to the Income Tax Act, penalties may arise if the income tax is not paid within the specified period. Income tax return filing should be completed within the assessment year following the financial year. The government may extend the due dates, and there are penalty provisions under Sections 234 A and 234 F of the Income Tax Act.  

Category of Taxpayer  

Penalties for Late Filing ITR  

Huge penalties are imposed on the taxpayer if the returns are not filed by the deadline. If the returns are not filed, the person may experience extra hassles and repercussions in addition to penalties. Individuals may be subject to fines ranging from Rs. 1,000 to Rs. 10,000 depending on when their returns are filed beyond the deadline.

Importance of Filing ITR  

Failing to file an income tax return can result in fines and legal repercussions. Income tax reports are required to be filed by everyone with a particular level of income.  

Submitting an ITR is evidence of income and is frequently needed when requesting loans, visas, or other official documents.  

Filing an ITR enables people to claim tax credits and benefits, lowering their tax obligations and raising their take-home pay.  

It indicates financial responsibility and dependability to lenders and financial institutions, completing ITR on a regular basis can help improve a credit score.  

Last but not least, submitting an ITR also aids in the development of the country because taxes collected by the government are used for the development of infrastructure, social welfare programs, and other public services.  

For taxpayers in India, Filing Income Tax Returns (ITR) is a requirement that must be fulfilled in order to reap several benefits. ITRs are also used as proof of income for self-employed people, and they can speed up the loan and visa application process.  

The Income Tax Department’s streamlined e-filing approach makes it simple for people to file their ITRs from the comfort of their homes. To avoid any inconvenience and enjoy the benefits that come with it, it is therefore advised that all taxpayers file their ITRs on time.  

If you still need help regarding filing your income tax, Contact our Tax filing experts at 24efiling by clicking here

Reference:  

https://www.bankbazaar.com/tax/income-tax-return.html

https://groww.in/p/tax/income-tax-return

https://www.financialexpress.com/money/income-tax/itr-e-filing-start-date-2023-on-incometaxgovin-when-will-income-tax-return-filing-begin-this-year/3051603/

Authorized capital plays a crucial role in the growth and expansion of a business. This article dives deep into the concept of authorized capital, its significance, its components, and how it affects a company’s ability to raise funds and protect the interests of its shareholders. Understanding the importance of authorized capital is essential for entrepreneurs, investors, and anyone involved in the corporate world.

What is Authorized Capital?

Authorized capital, also known as authorized share capital, authorized stock, or registered capital, refers to the maximum amount of capital a company is allowed to issue in the form of shares according to its Articles of Association. It sets a limit on the number of shares a company can issue, which can be increased or decreased through a special resolution passed by the company’s shareholders.

Significance of Authorized Capital

Protection of Shareholders’ Interests

By limiting the number of shares that can be issued, authorized capital ensures that existing shareholders are not diluted by the issuance of new shares. It helps maintain a stable ownership structure and prevents hostile takeovers or other unwanted changes in the company’s ownership.

Flexibility in Raising Capital

Authorized capital provides flexibility for companies in raising capital. By allowing companies to issue more shares if needed, they can raise capital without having to go through the process of amending their Articles of Association to increase their authorized capital.

Attracting Investors

Companies with a high authorized capital are often perceived as more stable and trustworthy by investors. A high authorized capital indicates that the company has the potential to grow and expand in the future, making it an attractive investment opportunity.

Mergers and Acquisitions

A high authorized capital also makes companies more attractive for mergers and acquisitions, offering more opportunities for growth and expansion. This can be beneficial for all parties involved in the transaction.

Protection Against Hostile Takeovers

High authorized capital can protect a company from hostile takeovers. It makes it harder for a hostile acquirer to acquire a controlling stake in the company, as they would need to purchase a significant number of shares, which would require a large amount of capital.  

Components of Authorized Share Capital

Authorized share capital is divided into three main components:

Subscribed Capital: The portion of authorized capital that potential shareholders have agreed to purchase from the company, often as part of an Initial Public Offering (IPO).

Paid-up Capital: The amount of subscribed capital that investors have paid in full to the company.

Issued Capital: The total value of shares that the company has issued to its shareholders, including public investors, institutional investors, and company insiders.  

Increasing Authorized Share Capital

A company may need to increase its authorized share capital to raise additional funds for expansion or other business ventures. To do so, the company must follow a series of steps as outlined in its Articles of Association. These steps may include:

Reviewing the Articles of Association to ensure provisions allow for an increase in authorized capital.

Holding a board of directors meeting to discuss and approve the increase in authorized capital.

Convening an Extraordinary General Meeting (EGM) of shareholders to vote on the proposed increase in authorized capital.

Filing the necessary forms and documentation with the Registrar of Companies (ROC) to reflect the changes in authorized capital.

Authorized Capital and Shareholder Rights

Shareholders play a vital role in the decision-making process of increasing a company’s authorized capital. They have the right to vote on the proposed increase, and their approval is necessary for the change to take effect. This ensures that the interests of existing shareholders are protected and prevents unnecessary dilution of their ownership in the company.

Authorized capital is an essential aspect of a company’s corporate governance structure. It determines the maximum number of shares a company can issue, which can significantly impact its ability to raise capital, grow, and expand. By setting an appropriate authorized share capital limit, companies can protect the interests of their shareholders, maintain a stable ownership structure, and position themselves for long-term success. Understanding the importance of authorized capital is crucial for entrepreneurs, investors, and anyone involved in the corporate world.

Reference  

https://www.indmoney.com/articles/stocks/what-is-authorised-share-capital

https://margcompusoft.com/m/authorized-capital/

https://marketbusinessnews.com/financial-glossary/authorized-capital/

https://business.paytm.com/blog/decoding-the-difference-between-paid-up-and-authorised-capital/

The Indian income tax system has seen a significant shift with the introduction of a new tax regime in the financial year 2020-21. The government aimed to simplify the tax structure and attract taxpayers towards the new system by offering lower tax rates and fewer exemptions. However, this has led to confusion among taxpayers regarding the choice between the old and new tax regimes. To help you make an informed decision, this article comprehensively compares the old and new tax regimes in India, considering the changes introduced in the Union Budget 2023.

Old Tax Regime

The old tax regime is the tax system that existed before the introduction of the new regime. Under this regime, taxpayers could avail of numerous exemptions and deductions, including House Rent Allowance (HRA), Leave Travel Allowance (LTA), deductions under Sections 80C, 80D, and more. These deductions helped in reducing the taxable income and minimizing the overall tax liability.

New Tax Regime  

The new tax regime was introduced in the financial year 2020-21, with the aim of simplifying the tax structure and offering lower tax rates to taxpayers. However, to avail themselves of the concessional tax rates in the new regime, taxpayers had to forgo several exemptions and deductions that were available under the old rule. This led to a dilemma among taxpayers regarding the choice between the two tax regimes.

In the Union Budget 2023, the government made several changes to the new tax regime to make it more attractive to taxpayers.  

The Key Changes in the New Tax Regime are  

The government introduced various incentives in the Budget 2023 to encourage taxpayers to adopt the new tax regime. Some of the key changes are as follows:

The tax rebate limit under Section 87A has been increased to INR 7 lakh from the earlier INR 5 lakh. This means that individuals earning up to INR 7 lakh annually will not have to pay any tax under the new regime.

The tax exemption limit has been raised to INR 3 lakh, and the new tax slabs have been revised. The new tax slabs range from 0% to 30%, with the lowest slab starting at INR 3 lakh and the highest tax rate applicable on income above INR 15 lakh.

The standard deduction of INR 50,000, previously available only under the old regime, has been extended to the new tax regime as well. Additionally, those receiving a family pension can claim a deduction of INR 15,000 or 1/3rd of the pension, whichever is lower.

The surcharge rate on income over INR 5 crore has been reduced from 37% to 25%. This change reduces the effective tax rate for such individuals from 42.74% to 39%.

The exemption limit for non-government employees has been increased from INR 3 lakh to INR 25 lakh.

Tax Rates: Old vs New  

The tax rates under both the old and new tax regimes are different. The old tax regime had four tax slabs, ranging from 5% to 30%, while the new tax regime has five tax slabs, ranging from 0% to 30%. Here’s a comparison of the tax rates under both regimes for the financial year 2023-24:

Exemptions and Deductions: Old vs New  

The availability of exemptions and deductions is a crucial factor in deciding between the old and new tax regimes. Here’s a comparison of some popular exemptions and deductions under both regimes:

Which Tax Regime is Better?  

The choice between the old and new tax regimes depends on an individual’s income level, deductions, and exemptions. It’s essential to evaluate and compare the tax liability under both regimes before making a decision.

If a taxpayer has investments in tax-saving instruments, pays premiums on life or medical insurance policies, has children’s school fees, home loan principal repayment, etc., and avails the benefit of deductions for HRA, LTA, etc., it may be more beneficial to opt for the old tax regime since the benefits of deductions and exemptions can be availed.

On the other hand, if a taxpayer does not have significant tax-saving investments or deductions, the new tax regime with its lower tax rates and simpler structure might be more beneficial.

Break-even Threshold for Deciding Between Old and New Tax Regimes  

The break-even threshold is the point where the tax liability under both the old and new tax regimes is the same. If your total eligible deductions and exemptions under the old tax regime are higher than the break-even threshold for your income level, it is advisable to stay in the old regime. On the other hand, if the break-even threshold is higher, then moving to the new tax regime is more beneficial.

Here’s a table to help you understand the break-even threshold for different income levels:

Switching Between the Tax Regimes  

Taxpayers have the option to switch between the old and new tax regimes. However, the frequency of switching depends on the source of income during the year.

Where income includes business or professional income: If an individual or HUF has income from a business or profession, once they opt for the new tax rates for a financial year, the new rates shall apply for subsequent years. However, they have a single option to switch back to the old tax regime if their circumstances change. This switch-back option is available only once in a lifetime unless the taxpayer ceases to have any income from a business or profession.

Where income does not include business or professional income: If an individual or HUF does not possess income from a business or profession, the selection can be made on a year-on-year basis. For individuals with salaried income, the employer is required to withhold tax before the payment of the salaries. The employee is, however, required to inform the employer regarding their preferred tax rates.

An employee may choose between the old and new tax regimes at the beginning of the year and intimate the employer, or at the time of joining new employment during the year. However, at the time of filing the personal tax return, the employee can change the tax regime.

Reference :  

https://scripbox.com/tax/old-vs-new-tax-regime/

https://groww.in/blog/old-vs-new-tax-regime-which-is-better

https://www.forbes.com/advisor/in/tax/old-vs-new-tax-regime/