Chit Fund Tax Benefits
The purpose of any investment must be repeated. However, without proper housing, without taxation, optimal returns are not possible.
2 different types of people are involved – you, subscriber and foreman. Both have different income sources.
Tax on the dividend received by the subscribers
Do not spend TDS in the dividend you earn during your tenure. The dividend you receive each month is not interesting, so Section 194A does not apply to this. These dividends will contribute to income/loss.
Taxation on the commission earned by the Foreman
The lead actor acts on behalf of chit Finance Company. He combines subscribers together and performs torture. He is responsible for collecting money, leading auctions, and subscriber records. A certain amount (usually 5%) person gets his / her compensation for his efforts to administer the chit.
So 25 subscribers are Rs. 25,000 per month The foreman will be 1,00,000 cd, 5% of the Sid value (Rs.5,000 per month).
According to the instruction provided by the CBDT, the commission obtained by the supervisor receives income from the business. The loss of any particular cause is loss of business. If he does not accept the responsibility of some of the members, the organizer will not normally lose. If the money can not be recovered, the group should consider a bad credit.
Indirect Taxes – GST and Chit Funds :
The commission paid to the Commission will pay compensation to the service provided and the service tax will be charged under “Banking and other financial services“.
Service tax is only 70% of the commission value. The Finance Ministry has allowed a 30% reduction in this regard. Rs. 100, then service tax of Rs. 70.
Because the service tax is being transferred to the GST, this informal industry is currently looking forward to an upcoming GST threat.
Other financial services such as credit providers, leasing, purchase finance and mutual benefit companies have been exempt from NBFC, but Sid finances have not received these exemptions.
Section 269 ST
The Union Budget is Rs. 2 lakh limit in cash transactions, effective April 1, 2017 This is one of the government’s actions to improve the cash flow economy.
This transaction is a cash transaction of Rs. 2 lakh per day per person. If this amount is higher, the greater the amount of penalty will be charged if there are no good and sufficient reasons.
Participants of the Sid Fund Transaction should be careful with these Terms. Sid Financial Institutions confirm that only the following methods are used –
Account ghost check
Draft Account Wage
Using an electronic banking system with a bank account
These new rules have a huge impact on the parties involved, often paying cash for their monthly installments, and pay the bank accounts first, if they pay the check.
The chit Fund industry represents the Government of India in this matter.
By ensuring that all transactions are carried out through legal channels, the government has repeatedly withdrawn several strokes and includes all the money. It will show good returns for a long time. All cash transactions are registered and enforced by legal channels, ending the financial transaction. This will give a big boost to the SID financial sector.
This method can be considered as golden times for monetary funds, to monitor all city transactions and by every bit of crossing a legal channel. The beliefs in the profession will soon be restructured, and the Sid Funds will not retreat if the government has paid for the exemption of claims!