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Presumptive Taxation: A Simplified Approach for Small Taxpayers

 Introduction Taxation may be complicated and cumbersome for businesses and other professionals. In order to make taxation simpler, there is a system of presumptive taxation that is provided by the Income Tax Act. Presumptive taxation enables individuals to report their incomes on a set percentage rate without keeping account books. Presumptive Taxation – Meaning It is a system where the income is computed according to the turnover  or receipts at a predetermined percentage. There is no computation of the actual profits, and the taxable income is declared according to the prescribed rates. Such tax system is generally regulated by: Section 44AD (Business) Section 44ADA (Profession) Section 44AE (Transporter) Objectives of Presumptive Taxation Reduction of book-keeping burden Calculation of taxes becomes easier Ensuring small taxpayers follow taxation rules Decrease in tax evasion Presumptive Taxation - Applicability  Section 44AD (Business) For small businesses The presum...
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Role of Subsidiaries in Consolidated Financial Statements

  Introduction  In the current organizational structure of firms, organizations tend to extend their reach through acquisitions or formations of other organizations. Such organizations are termed as subsidiaries. In such circumstances, the need for consolidated financial statement arises to reflect the overall financial status of both the parent organization and its subsidiaries. As stated by IFRS 10, consolidation is necessary to ensure that a true and fair view of the group is provided. Meaning of Subsidiary A subsidiary is an enterprise controlled by another enterprise called the parent enterprise. There is control if: The parent exercises power over the investee The parent is exposed to variability of returns The parent is able to influence these returns through exercising such power. This definition of control is vital in the preparation of consolidated financial statements under IFRS 10   Meaning of Consolidated Financial Statements The consolidated financial statem...
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