Annual Information System

 

The Annual Information Statement (AIS) is a comprehensive overview of the information required by the taxpayer.

The information is displayed on the Form 26AS. Taxpayers are able to provide feedback on the information presented in the AIS. AIS displays

both the reported value and the modified value (i.e. value after considering taxpayer feedback) under each

section (i.e.TDS section, SFT, TDS details).

Objectives of Annual Information System

Make voluntary compliance easier and the return filling process simple

Make sure taxpayers have exact information, with the option to write online reviews.

Discourage non-compliance

Process to Access Annual Information System

Login to URL https://www.incometax.gov.in/

After successful login Following a successful login, choose "Annual Information Statement (AIS)" from the "Services" option on the electronic filing page.

On the homepage click the AIS tab.

For access to the Annual Information System, choose the appropriate FY, then hit the AIS tile.

Component of AIS:

Part A: General Information

Part B: Other Information

Part A- General Information

The basic details about you are listed in Part-A. It includes your personal identification number, Aadhar masked number name day of birth, date of incorporation or creation, mobile number, email address.

Part B- Other Information

TDS/TCS Info: -This page provides information about tax paid and collected from the point of collection. The table below shows the information code for TDS/TCS, information description, as well as the information value

SFT details information from reporting entities as part of the Statement of Financial Transaction (SFT) is displayed under this section. There is a way to obtain an SFT code, the description of information and the Information value.

Taxpayer The information shown pertains to tax payments under a variety of headings, such as Taxes owed in advance, Tax as well as Self-Assessment Tax.

Refund and Demand You can see the specifics of the requests that were made and the refunds that were initiated during the time of the budget year (AY and the amount).

Additional Information The data taken from GST turnover that is reported under GSTR-3B. GST purchases made under GSTR-1 by the seller is provided here.

The difference between Form 26AS and AIS

The extended version to the form 26AS can be described as AIS. Information about real estate purchases investment of high value, as well as TDS/TCS transactions completed in the course of the fiscal year are outlined within Form 26AS. Furthermore, AIS contains income from savings accounts and dividends, as well as rent paid purchase and sales of real estate and stocks international transfers and deposits that earn interest and GST turnover, among others.

The taxpayer has the opportunity to make comments on the transactions that are reported via AIS and AIS. Additionally, TIS additionally reports the total transactions at the information source level.

If the taxpayer must verify the GST amount based on information in the GSTR-3B form, only Form 26AS is required.

AIS Preparation Steps:

Step 01 - PAN Population:

It is possible that the PAN will be filled by matching Aadhar with other essential factors in the event that the information provided is not an actual PAN.

Step 02 - Information Display:

The information reported is usually displayed next to the PAN holders. The presentation logic for specific information, such as bank accounts, property, Demat account, etc. The goal is to present details to relevant PAN holders to allow for evaluation and feedback.

Step 03 - Information Deduplication:

The information that has the lower value is classified in the form of "Information is duplicate / included in other information" by automatic rules when the exact information is reported under different categories of information (for instance, the reporting of interest/dividends within SFT as well as TDS).

Step 04 - Preparation of the Taxpayer Information Summary (TIS):

The summary of information for the aggregated taxpayer an individual taxpayer is created by the information category following deduplication that is based on established rules. It provides values that have been processed (i.e. value derived after deduplication of data with pre-established processes) and the value derived under each category of information (i.e. value that is derived from the feedback of taxpayers as well as the processed value).

Processing of AIS Feedback:

The Annual Information Statement (AIS) will include a log of the assessor’s comments along with separate displays of the amount reported and for the change in value (i.e. the value following feedback).

A Taxpayer Information Summary's derivable value--the amount that was calculated after accounting for assesses input - will be adjusted using the input of the assessed (TIS)

Automatic rules will be utilized to process and display information from the AIS that is assigned to other PANs and the years of the taxpayer's own AIS.

Feedback will be analysed according to guidelines of risk management if given information is changed or derided, risky feedback being flagged for further investigation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internal Audit vs External Audit: Key Differences Explained

 As businesses expand and expand, they must ensure that the financial records of their company are accurate and that their business operations follow the legal and regulatory standards. In order to achieve this, they can perform internal audits or employ external auditors. Internal and external audits have the same purpose which is to enhance the efficiency of an organization and increase accountability. They differ however in regards to their purpose as well as their scope and methodology. This article we'll examine the distinctions between internal audits and external audits as well as their benefits.

1. Introduction Auditing is an important aspect of managing finances in every organization. It is the process of reviewing the financial records and operation to verify that they are correct as well as in line with law and regulations. There are two kinds of auditing which are: the internal audit, and an external audit. Internal audits are performed by employees of the company as opposed to an external audit which is performed by a third-party auditor. Both kinds of audits are essential to the organization's success, however they differ in their goals, scope, and methods.

1. What is an Internal Audit?
   Definition and Objectives
   Internal audits are an impartial and independent review of a company's internal controls financial reporting, internal controls, and operational procedures. The objective of internal audits is to discover risks and weaknesses in the organisation's procedures and systems and make recommendations to improve. Auditors who are internal employees work for the business and are accountable on behalf of the committee for audit or the management. Accounting outsourcing services in Delhi 
   
   Scope
   Internal audits cover an array of subjects that include financial reporting in compliance with the law and regulations as well as risk management operating efficiency. Internal auditors examine their internal control and procedures and provide recommendations to improve.
   
   Methodology
   Internal auditors utilize a systematic process to evaluate the effectiveness of an organization's procedures and controls. They might employ a mixture of interview, documents review as well as observation and tests to assess whether internal controls are effective and procedures. Internal audit reports contain recommendations for improvement. Management is accountable for the implementation of the recommendations.

1. What is an External Audit?
   Definition and Objectives
   External audits are an independent assessment of the financial statements of a company and internal controls performed by an auditor from a third party. The objective in an external audit is give an impartial assessment of the financial statements of the company and to verify the compliance of regulations and laws. External auditors are not part of the business and report to shareholders or the board of directors.
   
   Scope
   The external audit is focused upon the accounting records as well as internal controls of the business. External auditors examine the company's financial statements and assess how effective internal controls are. They also assess the compliance with applicable laws and regulations.
   
   Methodology
   External auditors utilize a systematic process to examine the organization's internal controls and financial statements. They can employ a mix of documents, tests, and interviews to determine whether internal control systems are effective and procedures. External audit reports offer an objective opinion about the financial statements of the company and provide a list of areas for incompatibility or weaknesses.

1. Differential ties between External Audit and Internal Audit
   Independence
   The primary distinction in internal and external audits is their independence. Internal auditors have the status of employees within an organization and external auditors are not part of the company. This autonomy allows external auditors to offer an impartial review of the organization's internal controls and financial statements.
   
   Reporting Line
   Internal auditors are accountable on behalf of the committee for audit or the management, whereas external auditors report to board of directors or shareholders. External auditors give an independent assessment of the financial statements of an organization and internal controls, whereas internal auditors concentrate on identifying weaknesses and risks and making recommendations for improvement.
   
   Focus
   The internal audit is focused on the internal controls within the organization including financial reporting, as well as operations processes. It examines whether internal controls and procedures and offers suggestions for improvement. The external audit is focused on the financial statements of the company and its internal procedures. The audit provides an independent view about the financial statements of the business and also identifies weak points or areas of incompatibility.
   
   Responsibility
   Internal auditors are accountable to identify weaknesses and risks and recommending improvements. Management is accountable for the implementation of these suggestions. External auditors are accountable to give an impartial review of the organization's internal control and financial statements.
   
   Standards
   The internal audit is conducted according to the standards established by the Institute of Internal Auditors (IIA). External audit is conducted in accordance with the standards that are set by the International Auditing and Assurance Standards Board (IAASB).

1. Benefits of Internal and External Audits
   Audits both internal and external provide many benefits to companies which include:
   
   Improved Controls
   Audits can help determine points where the internal security need to be improved, thus reducing the possibility of errors and fraud.
   
   Compliance
   Audits are a way to ensure compliance with law and regulations, which reduces the chance of financial and legal sanctions.
   
   Efficiency
   Audits uncover areas in which processes could be improved and streamlined to make them more efficient, thus reducing costs and increasing productivity.
   
   Trust and Credibility
   Audits offer an impartial opinion about the financial statements of an organization along with internal procedures, thereby increasing credibility and trust among stakeholders.

Conclusion
External audits and internal audits share the same objective to improve the efficiency of an organization and accountability. They differ however in regards to their purpose the scope, methodology, and objectives. Internal audits focus on identifying the weaknesses and risks and recommending improvements as opposed to the external audit, which gives an independent assessment of the financial statements of a company as well as internal control. Audits of both types bring numerous benefits, including better controls, compliance, efficacy as well as trust and credibility with other stakeholders.

 

Angel tax relief to startups

Angel Tax refers to a money pool created by high net worth individuals or companies, generally called as angel investors, for investing in business startups. Various startups founder claimed that they received notice under section 56(2) (vii) (b) of Income Tax Act (“Act”) from Income Tax Department (“Department”) to pay taxes on angel funds raised by them. Entrepreneurs have raised their concern on such tax notices. However, India is likely to soon announce the concessions to shield startups from the angel taxes. The changes will be made to the conditions specified under section 56(2) (vii) (b) of the Act to remove any ambiguity and allow exemption for past as well as proposed investments that do not exceed INR 10 crores.

Meaning of angel tax
With an intention to promote entrepreneurship in India, government has loosened the condition for startups and investors to shield them from what has been called angel tax. Angel tax is a term referred to the income tax payable on capital raised by unlisted companies via issue of shares where the share price is seen in excess of the fair market values of the share sold. The excess realization is treated as income and taxed accordingly. This tax was introduced in the year 2012 Union Budget by the finance minister Pranab Mukherjee to seize and desist money laundering practices.

Relaxation on Angel Tax
In the latest development, the government has redefined the meaning of startups. The relaxations are made per the vision to boost the startup culture in India. The new rules are expected to catalyse business enterprises by exempting angel tax on the funds that they have received from the investors.
This move has opened paths for large conglomerates and alternative investment funds to invest in startups without getting taxed on valuations. The new bill will also allow startups to avail tax-free holiday up to three years during the 10-year period and the investment limit has been raised from 10 crores to Rs 25 crores for availing tax exemption. Now, with the higher exemption limit, the majority of the angel investment would wind up qualified for exclusion from the tax.

Current scenario
CBDT will soon be set for processing requests from startups and angel investors for exemption to speed up the process. DIPP will meet stakeholders to seek feedback in the first week of February 2019 to discuss all policy and implementation issues. New framework regarding the same will be announced on 16 February. Helping hand that is CBDT will set up cell to process exemptions applications. Latest notification issued by DIPP lays down a process for startups to obtain an exemption from angel tax.

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