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On the Occasion of Gudi Padwa i.e, 31-3-2014

Let’s See behind and Move Ahead in the Financial Year

Arjuna (Fictional Character): Krishna, Today is Gudi Padwa which means beginning of New Year. Further today is the last day of financial year 2013-14 and tomorrow will be the beginning of new financial year 2014-15. Krishna, what is the significance of this day?

Krishna (Fictional Character): Arjuna, today is Chaitra Shukla Pratipada. Gudi Padwa is celebrated on the first day of the Chaitra month to mark the beginning of New Year and also arrival of spring season. People welcome New Year by hoisting and worshipping Gudi. It is said that this day is one of the Muhurta from the three and half Muhurta. It is a great coincidence that the eve of Gudi Padwa is also the last day of Financial Year. It means that on this day some important financial and legal things are required to be done for 2013-14 and also taxpayers will have to plan and make necessary changes for the upcoming financial year.       

Arjuna: On this occasion of beginning of the New Year and end of the financial year, what taxpayer should do to make happy ending of the financial year?

Krishna: Yes Arjuna, on this day of Gudi Padwa there is a ritual to eat Neem leaves along with Jaggery which purifies the blood and increase immunity. Similarly taxpayers are required to do many compliances at the end of the financial year. Taxpayer feels these compliances burdensome, same as one feels the bitterness of Neem leaves. However these compliances benefit taxpayer in the long run. Some of these important compliances are as under:

1. Closing Stock: In the financial world, Profit and Loss account has great importance. Closing stock is the base of Profit and Loss account. At the end of financial year every businessman should count his stock. After counting the stock it should be reconciled with the stocks mentioned in the books of accounts. If any difference is noted it should be accounted. After stock taking by using appropriate method, valuation should be done. This stock valuation not only helps to know the profit but also helps to give statement to bankers if cash credit is taken, insurance companies and it is used in many such transactions.

2. On this occasion of Gudi Padwa as houses are cleaned. Similarly taxpayers should reconcile the accounts of debtors and creditors by obtaining ledger extract of his accounts as seen in their books and clean up their ledgers.      

3. Bank and Loan Reconciliation: Taxpayers should reconcile all the bank accounts and loan accounts.

4. 26 AS: Taxpayers should reconcile books of accounts with 26 AS (discussed in detail in last article).

5. Service Tax: 31st March is the last day for payment of service tax if not paid interest will be levied. Therefore taxpayer should pay service tax on or before 31st March.  

6. Profession Tax: If taxpayer has deducted profession tax from the employee’s salary, it should be paid on or before 31st March.

Arjuna: Krishna, this was all about financial year 2013-14 but how should a taxpayer hoist his Gudi of the new financial year 2014-15?

Krishna: Arjuna, as today all wake up early so as to absorb the energy from sun rays, on this day these rays have great importance. Similarly before starting new financial year taxpayers are required to plan some compliance so that upcoming year brings happiness.  Some of these compliances are as under: 

1. Taxpayer should get new bill books, receipts books, etc. printed and start using them from 1st April. Furthermore from 1st April businessman should start using new books of accounts.

2. Please Note that as per New Companies Act 2014, from 1st April 2014 every company has to mention its company registration number on each invoice.

3. As per Maharashtra Value Added Tax Act from April 2014 taxpayer will have to give TIN details of purchases and sales made, while filing vat returns. Therefore taxpayers should obtain and update TIN details so that it will not create problem while filing returns.

Arjuna: Krishna, How should taxpayer start New Year?  

Krishna: Arjuna, On Gudi Padwa in every house Gudi is hoisted, which is symbol of victory and joy. For keeping this happiness endless one should try not to repeat mistakes made in the past and try to rectify the mistakes made earlier. One should start New Year with great enthusiasm and zeal. Rather than brooding in recession of last year one should create and find opportunities in the upcoming year. Taxpayer should not get April fooled from any of the department of tax laws. It means taxpayer needs to be alert and follow the tax laws so that he does not get trapped. For taxpayers, Gudi is “tax laws” (stick), “honest transaction” is Cloth. Further “profit” is “inverted copper pot” and “social belief” is “Toran” of the Gudi. May this Financial Year be a prosperous and happiness giving year. 

Dear Karniti Lovers "Wish you all a happy new Financial Year".

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