Category: Tax

  • Quote Your PAN and Save Excessive Taxes on Fixed Deposit

    Quote Your PAN and Save Excessive Taxes on Fixed Deposit

    For any financial transactions above Rs. 50,000 PAN (Permanent Account Number) is mandatory to quote. Fixed deposit is not an exception in this rule. Many investors hesitate to give their PAN, fearing theft of identity or excessive taxation. However, it is the myth. In reality, quoting PAN makes you a compliant citizen and secures your investment. You can always save tax if the income is within your taxable limits. Read on below paragraphs to know the importance of PAN card when you open FD with any bank or financial institute.

    Security of Investment

    Every citizen of India has a unique PAN card. It is quite possible to have a common name and surname of the individuals. However, they cannot have the same PAN card. Hence, in case your FD is misplaced by you, you can safely and rightfully claim your money by presenting your PAN card if you have quoted it while opening the FD. On the other hand, chances of fraud and miss-representation increases when no PAN is attached with your fixed deposit.

    The rate of TDS (Tax Deduction at Source)

    Every financial institution is mandated to deduct the income tax at source for interest income, popularly known as TDS. If your FD has PAN information, mandated TDS rate is 10% of interest income. In the absence of PAN, TDS shall be deducted at 20% rate. Hence, you are liable to pay double income tax when you do not quote the PAN.

    Tax Credit

    TDS cannot be claimed back while you file your income tax return. On the other hand, FD with PAN is eligible for tax credit. You can also claim the refund of the tax deducted if your gross income is within the taxable limit.

    TDS Certificate

    If no PAN is quoted, no TDS certificate is issued. Hence, even if your tax is deducted, you cannot claim a tax deduction in any of your income tax return. It is similar to the situation when you have made payment,but you cannot avail the receipt of the same. Consider applying PAN if you do not have the same.

    Tax Exemption

    If your gross income is below taxable limit, you can claim exemption from TDS. However, such exemption is not valid if your deposit does not bear PAN. This rule is also applicable for Form 15 G or 15 H that are widely used to prevent TDS from the fixed deposit. Hence, even if you are not liable to pay income tax because of your lower income, you have to pay heavy tax at the rate of 20%, only because of the absence of PAN.

    Limit on FD Amount

    Without PAN, you can open a fixed deposit from Bajaj Finance with a very limited amount of Rs. 50000 or less. No financial institution is allowed to open FD beyond this limit without furnishing PAN from the depositor.

    Benefits of Furnishing PAN in your Fixed Deposit

    There are dead-ended implications of not furnishing PAN in your fixed deposit. On the other hand, furnishing PAN card gives you several benefits. First and foremost, there is no limit on the investment amount. You can invest the amount of your choice without any limitation, to make your fixed deposit. If your gross income is below taxable limit, you can submit form 15 G or 15 H to prevent TDS from your interest income. In the case of taxable income, TDS will be deducted at the rate of 10% only. You shall be issued TDS certificate,and the tax credit will also be reflected in your form 26AS.

    Moreover, by any chance, if you miss your fixed deposit receipt, you can request for duplicate receipt from the bank or NBFC by presenting your original PAN card. The bank will retrieve the details from the system based on your PAN card and issue duplicate receipt. Hence, your money is safe when you use your PAN card while making a fixed deposit.

    Applying PAN is Easy

    Nowadays applying PAN is easy and online. You have to furnish basic details about your identity, residential address,and date of birth. Consider applying for the same if you do not have it, and enjoy legitimate tax saving on your hard earned money.

  • Forex Beginner’s Guide Learn how to trade currencies online

    Forex Beginner’s Guide Learn how to trade currencies online

    The Forex is short for Foreign Exchange, the English name for the currency. Currency is the market where one country’s currency is exchanged for the currency of another country. One may need forex when doing international business for example, or personally, when traveling.

    The currency market is a volatile market where sometimes you can make very large gains. Such large gains come with a potential for substantial loss.

    Hedging and Currency Trading

    The foreign exchange market has its usefulness. It allows companies that trade internationally to limit their risks by hedging their foreign exchange risk. It is known as hedging. To hedge currency risks, companies will eventually buy currency pairs. The forex market is the largest market in the world today, because to companies looking to hedge is added a mass of currency speculators: major banks, hedge funds, investment funds, hedge funds, brokers and individuals who joined this market not so long ago.

    This market is very successful because it is a liquid market. In the beginning, forex beginners may find this a bit complicated, but in the end it’s a market like any other: supply meets demand and there are sellers and buyers. Currency prices vary widely and there are several factors that can affect the value of a currency: interest rates, trading flows, tourism, growth of various countries, geopolitical events and more again. In the currency market, as in any other market, when you buy a currency pair, in front you have a seller who sells the same pair of currencies.

    The Complete Guide to Forex

    The forex market is a decentralized market with no clearing house. This is an OTC (Over the Counter) market. The interbank market is made up of many banks that trade currencies against each other around the world. The risk in the currency market is counterparty risk, as there is no clearing house. Each bank displays its purchase price and its selling price and the formation of the price is given by the market. Negotiated volumes are very important and there is hardly anyone who can influence currency rates significantly. The daily volumes are from 2000 – 3000 billion dollars. Only central banks can influence prices by their interest rate decisions.

    Attempts are being made to create ECN (Electronic Communication Network) networks to bring buyers and sellers into a centralized exchange so that traders can see the order book and the depth of the market. This is a positive move for the individual traders who will gain an advantage by seeing the volumes.

    The risks on the forex are similar to those of the other stock markets. an investor may lose his capital if he makes a bad trading decision.

    Advantages of Forex Trading

    The currency market is the largest in terms of traded volume in the world and offer deep liquidity. It is thus easy to go in and out of position quickly without worrying if we will find a counterpart.

    Significant leverage is available in this market. Forex brokers offer different leverage that can range from 10 to 1000. It is very important that the leverage is mastered by the trader because it amplifies the gains, but also the risks.

    Another advantage of the currency markets is the fact that you can trade 24 hours a day, trading starts in Australia and other major places follow: Sydney, Hong Kong, Singapore, Tokyo, Frankfurt, Paris, London and New York.

    Currency trading is a “macro-economic” trading. Negotiating currency pairs is like comparing the two economies. Some traders find it easier to interpret currency pair movements than movements in technical markets, such as the options market or the futures market.

    How to Trade Forex

    There are several ways to trade Forex:

    • Scalping / arbitrage with a large capital
    • leveraged trading
    • hedging
    • long-term currency trading

    Forex scalping with large capital is possible for banks and other financial institutions. Professional traders develop arbitrage strategies and run them on very large sums of money. It is true those in the currency market changes in quotations are weak and that large volumes of orders are needed in order to generate some profitability.

    Traders who use leverage are traders who cannot afford large banks but want to exploit the volatility of currencies as well. The risk of this kind of trading is that leverage can increase losses and gains.

    Hedging is a protection trading against a risk. An exporting company that will receive 1 million dollars in 6 months needs to protect itself against the volatility of the euro today, in order to cover its costs. In the same way, a US investor who buys European stocks and wants to sell them in 1 year must protect himself from the volatility of the Eurodollar, because this investor will have to have dollars at the end of the period and his shares are in dollars. Hedging is a zero sum game, but it allows you to close the gain / loss at the rate desired by the investor. Always remember that forex is a very volatile market. Trading strategies based on volatility can be considered in this market.

    Conclusion: Forex is a risky market that offers earnings opportunities too. It cannot be stressed enough that trading the forex with leverage is a risky thing and that it does not suit any type of investor.

  • Tax Software vs. Accountant: Which One is Better for You?

    Tax Software vs. Accountant: Which One is Better for You?

    Tax can be a complicated endeavor for anyone who doesn’t understand the accounting or what it entails. It is also not something you can delay or get out from and that means you need to do your taxes regularly in order to avoid penalties. This is why people use outside help and rely on expertise from the individuals or companies to file their taxes.

    However, technological advancement brought another solution for this issue. Today, instead of hiring a certified accountant, you can use tax-preparation software to get it all done. But both options have their advantages, so here is the comparison to answer which one is better.

    Pros of tax software

    Speed

    Without a doubt, it will take you less time to calculate and complete your taxes than by hiring an accountant. This is because all it takes is to collect the documents and start preparing your taxes by entering data into the software. On the other hand, the accountant will take more time since you may not be their only client, but also they will need time to file your forms.

    Price

    Price is something that is undoubtedly going to affect your decision on which type of tax preparation to choose. The cost of software can on average amount to $50 which can be on the annual level, or for good with a small additional and optional fee for support. However, there are many free options out there which are sufficient enough for individuals and small businesses.

    On the other hand, the accountant will cost you more and you will have to pay them by tax filings. This means that whenever you have to prepare and file your taxes you will have to hire them all over again. So, the notion you can save money on tax preparation is the most attractive benefit of using software to do it.

    Simplicity

    First of all, you need to research the tax preparation software to see if you agree with its methods. Some programs can be confusing especially for people who don’t have experience in filing taxes. Look for the user-friendly interface and options that will explain each step.

    If you have only a few things to prepare, then the software will be perfect and the best solution for you. A good program will walk you through the process of making it all easy and less burdening. Some developers even offer free training for their customers as part of the price, so that is also something to consider.

    Pros of hiring an accountant

    Human touch

    Nothing beats human touch, no matter how simpler it may seem. Your accountant will know your financial situation and work in your best interest to overcome any problems and reach future goals. Suggestions and recommendations don’t come from software and sometimes that is exactly what you need to resolve certain issues.

    Around the clock service

    Not only will your accountant answer all your questions, but they will be available to give advice or take care of problems around the clock. This is especially important if you branched out your business to other countries and need to respect different regulations you barely know anything about.

    For example, on Australian market consulting the best accountants in Sydney will help you when opening a branch office in other parts of the world. Your accountant will know which papers to prepare for the tax filing in other countries, as well as what to do at the headquarters.

    Handling of complicated cases

    Software can’t help with complicated cases since you will need immediate reaction and advice on what to do. That is where an accountant will save the day since some matters can be really sensitive and need expert handling. Take into consideration that a professional tax preparer knows the system and can quickly react to any problem which may arise.

    The software is impersonal and hardly can predict any unexpected situations which can only cause more trouble especially if you are not familiar with the tax regulations yourself.

    Relieves the workload

    Tax preparation is a serious obligation you need to handle in time. This is especially hard if you are busy and have other tasks on your agenda. Using even the best software there is will require time and collection of all the necessary data for the submission of forms.

    Hiring an accountant will take that workload of your schedule so that you can focus on more important things like running a company.

    In the end

    Choose between tax software and an accountant in the rational and realistic way. Take into consideration what you need to include in your taxes and whether you will need around the clock support. If you are an individual, then the software may be a perfect solution for you and the most cost-effective one.

    However, as a business entity, consider hiring a professional who will not only prepare your taxes but also give you valuable advice and recommendations. After all, sometimes you will need to know more about certain matters and software can’t educate or instruct you on the right approach.

  • The A to Z of paying your taxes – An integral part of your personal finance management

    The A to Z of paying your taxes – An integral part of your personal finance management

    When thinking about your personal finances, paying your taxes is an obligation that everyone must ensure. Needless to say this is a part which is always neglected and which can result in serious crimes.

    From funding the development of public roads to building public infrastructures, and being used for the country’s defense, tax money does many things. This is why the authority is incredibly strict once it involves watching people’s tax reports.

    Once you are defendant of evading your tax obligations, the authority will scrutinize the minutest details of your personal life, or worse, take all your money from your checking account as the payment for your tax dues. This is the reason why focusing on your timely tax filing and payment is an integral part of your personal finance management.

    Evading tax is a crime

    The authority is very harsh in its judgments owing to the belief that every single person who misses a tax payment is purposefully avoiding their obligations. What your attorney has to do now could be to prove that you just did not mean to evade the taxes knowingly. You were just unable to satisfy your tax obligations because of money instability or bankruptcy, emotional instability or being unaware of the law, if the law was freshly amended.

    Of course, the authority will gather all the information about you to disprove your claims; however it is also your lawyer’s duty to ensure that no matter what is brought in court, it works in your favor rather than the opposite party’s.

    Why you should hire a professional?

    If your issues with taxes are already this serious, you need to undoubtedly search around for a decent professional who will defend your case. Most attorneys cannot get their client’s totally free of their penalties; they can only try for the penalties to be decreased. Hiring a professional to handle the proceedings of the audit will defend you from showing emotion in tight situations under pressure.

    With a professional taking care of everything for you, everything is settled accurately and rationally. The attorney will believe that you are less guilty of tax evasion than what the authority report says. Apart from that to pay taxes on time, you also need a professional to keep track and file your forms on time to avoid penalties.

    Prevention is better than cure

    You have to look for the assistance of a tax professional or a comptroller when you feel the situation is getting out of hand. You have to undoubtedly have a professional at your side to assist you with taxes if you own a business, as business tax is totally different from personal taxes. Albeit you may think that you apprehended everything there’s to understand regarding personal taxation, the nuances of business taxes would possibly rattle you.

    Also, tax policies carry on dynamically. It’s extremely troublesome for the normal individual to maintain track of those changes. If you hire a tax professional, you can still keep track of all the required updates needed.

    Choosing the appropriate professional

    Make sure you scour the Internet or the classifieds ads in the newspaper to hire the best. Referrals from friends or colleagues can give you information about the lawyer’s work ethics, their temperament, their rates and therefore the real deal behind his specialties. You can also refer to the testimonials from the lawyer’s websites to get an idea and make sure you are hiring the absolute best.

    You may have come across many ads and commercials for tax relief firms. Many tax relief firms boast of their services and make big promises but in reality they are nothing but frauds waiting to pay on desperate and innocent customers. They justify and proclaim themselves to be the best in business but it is on you to identify the right firm that will benefit you. There are many listed popular companies but are not trustworthy. But people generally realize this when they are duped out of their money.

    Unfortunately, this business has attracted many frauds that just wait to kill those that are weakened by the threat of tax penalties and problems. Even if you can’t stop these unscrupulous firms from succumbing to their greed, you can arm yourself with the tools necessary to defend against their cheating. It is crucial that you understand the different types of frauds that are trademarks of a fake.

    Avoid non-refundable direct payments

    The most common fraud that is seen among these firms is to charge direct payments that have absolutely no guarantees and are non-refundable in nature.  While they promise to yield result, they are very unpredictable and very difficult to achieve. That means there is high chance of loss of money and your personal finance management can take a hit. Committing a huge amount without any research and guarantees can be risky. These frauds are not concerned about your money or about your tax problems; they are just bent on making money by preying on you.

    Never judge the potential outcomes

    There are some aggressive companies that reel in the customers on their tax troubles and take advantage of their compromise settlements. The truth is that only a few taxpayers qualify for a compromise. Most of us don’t know this so the frauds just string us along and make us assume that our problem is being taken care of, when in reality, we didn’t even qualify for the compromise.

    There are many factors that are considered by IRS in compromise application like the taxpayer’s ability to pay, income, expenses and plus equity. Choose a relief firm that answers your queries and tells you from the start that a compromise is very difficult to obtain. The company should have your best interests in mind.

    Identify the real service providers

    There are some fraud companies that boast of their tax relief services, but are nothing but fakes. Such companies just make bi promises and then turn to other companies that provide the actual service. It is very important to stay away from such outright frauds. Often we are led to believe that the company we have hired is doing the entire job but the truth is they have hired other service providers for the job or outsourced freelance contractors.

    Conclusion

    Some unscrupulous firms register many customers into their program and collect their money without providing adequate services. When there are several complaints or upset customers, they just merely change their name and begin preying on customers in a different place. So, beware, choose the best company and file your taxes on time.

     

  • How to Find a Right Tax Professional

    How to Find a Right Tax Professional

    Are you tired of a preparatory session of different type of tax projects?

    So, why not you search a right tax professional for your entire requirements of payroll, income tax, personal tax, and others.

    For instance – I see specialized professionals of taxation including small business tax accountants in Calgary, Income tax preparation in Calgary, a Personal tax accountant in Calgary and others are the first choice for entrepreneurs to get their work done. With the assistance of Calgary small business accountants and Calgary corporate tax accountants, they receive high-class payroll services in Calgary that make them stay calm and relaxed.

    So, every one is now well acquainted with the complication of tax preparation. Even a minute error may charge you a heavy penalty. Thus, it brings a hard to manage because tax preparation by self is also full of challenges and requires specialized skills and knowledge.

    Now, without ado let’s have a look at some tips to find a right tax pro and how you should coordinate to make the things smooth and flawless.
    Different Kinds of Tax Professionals

    Though anyone can claim himself as the best tax professional and prepare a tax return for you. Basically, there are two types of a tax professional; first being certified public accountants and another one are enrolled, agents.

    Certified public accountants or CPAs: These accountants passed qualifying state exams and hold the specialized education and required experience. The benefit of going with CPAs you should know is that you can be assisted with other financial matter addition to tax services.

    Enrolled agent or EA: They are specialized tax professional who is licensed by IRS through an exam or on-hand experience of a specific number of years. The benefit of employing EA is that they are required to undergo educational courses in taxes regularly after fixed years. Comparatively, they charge less than CPAs.
    What to Ask Before You Hire a Tax Professional

    Once you find the tax professional either CPAs or EA, make sure they will work flawlessly for you. Below are the steps on account of which you can select the right tax professional for your necessities.

    Perform a background check:To stay protected from illegal taxation practice or crime, you should check an agency’s background through your state boards of accountancy for issues of CPAs license. Also, you can check enrollment of enrolled agents with IRS office.

    Verify qualifications and credentials:Regardless of tax professional you employed;ask for Preparer Tax Identification Number (PTIN). This is a number issued by IRS that a preparer must have. Also, you should ask them for education and experience in tax return and services. Also, ask for recommendation sources for the tax preparer to verify their professionalism and reliability.

    • Moreover, you can include some below listed additional questions:
    • How and when they will be reachable?
    • The additional service they can provide.
    • The fee and method of calculation (by hour, project, etc.)
    • Types of receipts and documents they will require. Etc.

    Thus, these are some tips that will definitely help you to get rid of hassles of tax return filing and etc. At last, be cautious not to submit a blank tax return. Before submission, you must review all the forms and ask the preparer if any doubt appears. I see the people employed preparer for tax services in Calgary or payroll services in Calgary follow these strong steps and regard with the best tax accountant in Calgary.

    Me (Amit Sharma) is an all-time professional Writer and very honest sincere and up-front blogger. In general, I try to blog up-front and honest, without being argumentative or confrontive. I take care not to offend, but sometimes, I just want to bash intelligence into some brains.

  • Tax Accountants – What They Do And How To Get The Best

    Tax Accountants – What They Do And How To Get The Best

    Tax accountants are responsible for collecting tax-related information, taxation reporting to authorities and tax management. A tax accountant can save you from legal trouble with the relevant tax regulatory body in your state or locality. This means they need to know everything about tax laws and regulations and also remain up to date if at all they are to offer you proper guidance on all tax related issues.

    Failure to comply with the set laws and regulations can land you in trouble usually in hefty fines, but action also taken against your business or businesses. It is important to get a tax accountant to guide you through the complicated tax laws and requirements. A tax accountant has several tasks to play, including the following.

    • Creating tax data collecting systems

    • Devising proper tax strategies to reduce or eliminate tax payments

    • Updating company sales tax database with any changes to tax rates

    • Preparing and updating tax provision schedules

    • Negotiating with the tax authorities over any tax payment issues

    • Advising on the impact of any new laws on the tax liabilities and impact on corporate strategies

    • Identifying tax savings and coordinating any tax preparation work that is outsourced

    • Coordinating audits and completing tax reporting on time

    When you have a reliable tax accountant to work with, you will have little to worry about around taxes and remaining compliant. But you also need to ensure that you choose the best one to handle your personal or business finances to enjoy a pleasant experience all through. Here are a few questions you should ask the tax accountant you are about to hire to gauge competence and suitability for the slot in your affairs.

    What is your clientele? It is important that you get a tax accountant who is familiar with your line of business. Every industry has certain tax rules that need to be followed and how income is reported. Your tax expert should know the ins and out of the industry you are in.

    What tax program are you familiar with? Even though this should not really be the basis for making your selection, it is good to find out what program they are going to use. QuickBooks is the most common, especially for small businesses, but there are different tax software options that can be used. Ensure the program will not in any way interfere with your need to switch to another accountant in the need ever arises.

    What is your experience? Apart from understanding your line of business, a tax accountant who is familiar with the relevant tax agents and how they work is best placed to offer you the kind of services you may need. Certification could mean that they have some experience handling audits and have knowledge on how the tax system works, hence financial planning will not be too much of a challenge for them.

    How available are you? The truth is that most accounting firms work during tax seasons only. If you are a small business, you may require assistance all year long, hence the importance of getting a tax accountant you can rely on whenever an issue arises and needs immediate addressing.

    Who handles the work? It is not uncommon for accountants to outsource work to third parties. It is always best that you know exactly who will be handling the work so you put in measures that will give you an easy time speaking directly to them in case that becomes necessary.

    How do you bill your services? Some may offer flat rates for all services, whereas others may charge on an hourly basis. Ensure whichever plan you settle for is reasonable and worth the services you will be getting.

    Byline: Stephen has worked as an expert tax accountants Sydney in a number of small to large accounting firms in Brisbane. In 2008 he founded Blake & Co Accountants and in 2009 he founded BrisTax. Professionally, he specialises in income tax. He has for many years had a keen interest in both business and technology.