Taxable Income Rahul
Taxable Income Rahul
Taxable Income Rahul
Rate
Taxable income slab (Rs.)
(%)
Up to 1,60,000
Up to 1,90,000 (for women)
NIL
Up to 2,40,000 (for resident individual of 65 years or
above)
1,60,001 – 3,00,000 10
3,00,001 – 5,00,000 20
5,00,001 upwards 30*
*A surcharge of 10 per cent of the total tax liability is applicable where the total income exceeds Rs 1,000,000.
Note : -
• Education cess is applicable @ 3 per cent on income tax, inclusive of surcharge if there is
any.
• A marginal relief may be provided to ensure that the additional IT payable, including
surcharge, on excess of income over Rs 1,000,000 is limited to an amount by which the
income is more than this mentioned amount.
• Agricultural income is exempt from income-tax.
Income tax in India
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The Indian Income Tax department is governed by the Central Board for Direct Taxes (CBDT)
and is part of the Department of Revenue managed by Indian Revenue Service (IRS), under the
Ministry of Finance, Govt. of India.
The government of India imposes an income tax on taxable income of individuals, Hindu
Undivided Families (HUFs), companies, firms, co-operative societies and trusts (Identified as
body of Individuals and Association of Persons) and any other artificial person. Levy of tax is
separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961.
Contents
[hide]
• 1 Overview
○ 1.1 Charge to Income-tax
○ 1.2 Residential Status
○ 1.3 Heads of Income
• 2 Individual Heads of Income
○ 2.1 Income from Salary
○ 2.2 Income From House property
○ 2.3 Income from Business or Profession
○ 2.4 Income from Capital Gains
○ 2.5 Income from Other Sources
• 3 Income Exempt from Tax
○ 3.1 Dividends
○ 3.2 Other Exempt Income
• 4 Deduction
○ 4.1 Section 80C Deductions
○ 4.2 Section 80D: Medical Insurance Premiums
○ 4.3 Interest on Housing Loans
• 5 Tax Rates
○ 5.1 Surcharge
○ 5.2 Education Cess
○ 5.3 Tax Rate for non-Individuals
○ 5.4 Refund Status for Salaried tax payers
• 6 Corporate Income tax
○ 6.1 Fringe Benefit Tax
○ 6.2 Tax Penalties
• 7 References
• 8 See also
• 9 External links
[edit] Overview
[edit] Charge to Income-tax
Person:
Every Person whose total income exceeds the maximum amount which is not chargeable to the
income tax is an assessee, and shall be chargeable to the income tax at the rate or rates prescribed
under the finance act for the relevant assessment year, shall be determined on basis of his
residential status.
Income tax is a tax payable, at the rate enacted by the Union Budget (Finance Act) for every
Assessment Year, on the Total Income earned in the Previous Year by every Person.
The chargeability is based on the nature of income, i.e., whether it is revenue or capital. The
principle of taxation of income is: -
1. All revenue incomes are chargeable to tax unless it is specifically exempt (declared as not
taxable).
2. All capital profits are not chargeable to tax unless specifically made chargeable.
what is an in come tax is an income about people paying
[edit] Residential Status
The inclusion of a particular income in the Total Income of a person for income-tax in India is
based on his residential status. There are three residential status, viz., (i) Resident & Ordinarily
Residents (Residents) (ii) Resident but not Ordinarily Residents and (iii) Non Residents. There
are several steps involved in determining the residential status of a person [1]
All residents are taxable for all their income, including income outside India.[2] Non residents are
taxable only for the income received in India or Income accrued in India. Not Ordinarily
residents are taxable in relation to income received in India or income accrued in India and
income from business or profession controlled from India.
[edit] Heads of Income
The total income of a person is divided into five heads, viz., taxable[3]:
1. Income from Salary
2. Income from House Property
3. Income from profits and gains of Business or Profession
4. Income from Capital gains or losses
5. Income from Other sources
[edit] Individual Heads of Income
[edit] Income from Salary
All income received as salary under Employer-Employee relationship is taxed under this head.
Employers must withhold tax compulsorily, if income exceeds minimum exemption limit, as Tax
Deducted at Source (TDS), and provide their employees with a Form 16 which shows the tax
deductions and net paid income. In addition, the Form 16 will contain any other deductions
provided from salary such as:
1. Medical reimbursement: Up to Rs. 1,00,000 per year is tax free if supported by bills.
2. Conveyance allowance: Up to Rs. 800 per month (Rs. 9,600 per year) is tax free if
provided as conveyance allowance. No bills are required for this amount.
3. Professional taxes: Most states tax employment on a per-professional basis, usually a
slabbed amount based on gross income. Such taxes paid are deductible from income tax.
4. House rent allowance: the least of the following is available as deduction
1. actual HRA received
2. 50%/40%(metro/non-metro) of 'salary'
3. rent paid minus 10% of 'salary'. Salary for this purpose is basic+DA forming
part+commission on sale on fixed rate.
Income from salary is net of all the above deductions.
[edit] Income From House property
Income from House property is computed by taking what is called Annual Value. The annual
value (in the case of a let out property) is the maximum of the following:
• HRA Rent received
• Municipal Valuation
• Fair Rent (as determined by the I-T department)
If a house is not let out and not self-occupied, annual value is assumed to have accrued to the
owner. Annual value in case of a self occupied house is to be taken as NIL. (However if there is
more than one self occupied house then the annual value of the other house/s is taxable.) From
this, deduct Municipal Tax paid and you get the Net Annual Value. From this Net Annual Value,
deduct :
• 30% of Net value as repair cost (This is a mandatory deduction)
• Interest paid or payable on a housing loan against this house
In the case of a self occupied house interest paid or payable is subject to a maximum limit of
Rs,1,50,000 (if loan is taken on or after 1 April 1999 and construction is completed within 3
years) and Rs.30,000 (if the loan is taken before 1 April 1999). For all non self-occupied homes,
all interest is deductible, with no upper limits.
The balance is added to taxable incom.
[edit] Income from Business or Profession
•
○ carry forward of losses
An example .. An architect works out of home and co-ordinates work for his clients. All the
following expenses would be deductible from his professional fees.
• he uses a computer,
• he travels to sites in his car,
• he has a peon to help him collect payments
• He has a maid who comes in daily
• part of the society maintenance bills
• entertainment expenses incurred..
• books and magazines for his professional practice.
The income referred to in section 28, i.e, the incomes chargeable as "Income from Business or
Profession" shall be computed in accordance with the provisions contained in sections 30 to 43D.
However, there are few more sections under this Chapter, viz., Sections 44 to 44DA (except
sections 44AA, 44AB & 44C), which contain the computation completely within itself. Section
44C is a disallowance provision in the case non-residents. Section 44AA deals with maintenance
of books and section 44AB deals with audit of accounts.
In summary, the sections relating to computation of business income can be grouped as under: -
1. Deductible Expenses - Sections 30 to 38 [except 37(2)].
2. Inadmissible Expenses - Sections 37(2), 40, 40A, 43B & 44-C.
3. Deemed Incomes - Sections 33AB, 33ABA, 33AC, 35A, 35ABB & 41.
4. Special Provisions - Sections 42 & 43D
5. Self-Coded Computations - Sections 44, 44A, 44AD, 44AE, 44AF, 44B, 44BB, 44BBA,
44BBB, 44-D & 44-DA.
The computation of income under the head "Profits and Gains of Business or Profession"
depends on the particulars and information available.[4]
If regular books of accounts are not maintained, then the computation would be as under: -
Income (including Deemed Incomes) chargeable as income under this head xxx Less: Expenses
deductible (net of disallowances) under this head xxx Profits and Gains of Business or Profession
xxx
However, if regular books of accounts have been maintained and Profit and Loss Account has
been prepared, then the computation would be as under: -
Net Profit as per Profit and Loss Account
xxx
Add : Inadmissible Expenses debited to Profit and Loss Account
xxx
Deemed Incomes not credited to Profit and Loss Account
xxx
xxx
Less: Deductible Expenses not debited to Profit and Loss Account xxx
Incomes chargeable under other heads credited to Profit & Loss A/c xxx
xxx
Profits and Gains of Business or Profession
xxx
Filing of Return
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As per AY 2008-09 Non-auditable accounts are furnished by those businesses, which have annual turnover
of up to Rs 40 lakh per annum and those professionals having income up to Rs 10 lakh per annum.
From July 26 onwards taxpayers including salaried class would also be allowed
for the first time to file tax returns in 1,000 designated post offices in the country.
One-by-Six Scheme was omitted according to the proposal of Finance Bill, which
said that no return shall be required to be furnished under the proviso for assessment
year 2006-07 and subsequent years. The amendment took effect from 1st June, 2006.
One-by-Six Scheme
If a person is enjoying any of the following item, he/she has to file his/her return.
• Occupation of a House
• Ownership of a motor car
• Expenditure on foreign travel
• Holder of credit card
• Electricity payments in excess of Rs 50,000/annum
• Member of a club - where the entrance fee is more than Rs 25,000/-.
The assessee is obliged to voluntarily file the return of income without waiting for the notice of
the assessing officer calling for the filing of the return. The time limit for filing of the return by
an assessee if his total income of any other person in respect of which he is assessable exceeds
the maximum amount not chargeable to tax shall be as follows:
a. Where the assessee is a company the 30th day of November of the assessment
year
b. Where the assessee is a person, other than a company :-
i. where the account of the assessee are required to be audited under the
income tax act or any other law, or in cases where the report of the
chartered Accountant is required to be furnished under sections 80HHC or
80HHD i.e.. for deduction in respect of profits retained for export business
and also in respect of earnings in convertible foreign exchange, or in case
of a cooperative society, the 31st day of October of the assessment year
ii. where the total income includes any income from the business or
profession, not being a case falling under sub clause (i), the 31st day of
August for the assessment year
iii. in any other case, 30th day of June of the assessment year
The requirements of Income-tax Act making it obligatory for the assessee to file a return of his
total income apply equally even in cases where the assessee has incurred a loss under the head
'profit and gains form business and profession' or under the head 'capital gains' or maintenance of
race horses. Unless the assessee files a return of loss in the manner and within the same time
limits as required for a return of income or by the 31st day of July of the assessment relevant to
the previous year during which the loss was sustained, the assessee would not be entitled to carry
forward the loss for being set off against income in the subsequent year.
Late Return
Any person who has not filed the return within the time allowed may be file a belated return at
any time before the expiry of one year from the end of the relevant assessment year or before the
completion of the assessment, which ever is earlier. However, in case of returns relating to
assessment year 1988-89 or any other assessment year, the period allowable is two years.
Revised Return
An assessee who is required to file a return of income is entitled to revise the return of income
originally filed by him to make such amendments, additions or changes as may be found
necessary by him. Such a revised return may be filed by the assessee at any time before the
assessment is made. There is no limit under the income tax Act in respect of the number of time
for which the return of income may be revised by the assessee. However, if a person deliberately
files a false return he will be liable to be imprisoned under section 277 and the offence will not
be condoned by filing a revised return.
Where the return relates to assessment year 1988-89 or any earlier assessment year, the period of
limitation is two years from the end of the relevant assessment year.
Defective Return
If the assessing officer considers that the return of income furnished by the assessee is defective,
he may intimate the defect to the assessee and give him an opportunity to rectify the defect
within 15 days from the date of such intimation or within such further period as may be allowed
by the assessing officer on the request of the assessee. If the assessee fails to rectify the defect
within the aforesaid period, the return shall be deemed invalid and further it shall be deemed that
the assessee had failed to furnish the return. However, where the assessee is made the assessment
officer may condone the delay and treat the return as a valid return.
Signing of Return
Under the existing law, penalty for delay in filing of return of income is calculated as a
percentage of the shortfall of tax. Where tax has already been deducted at source, or advance tax
has been duly paid, no penalty is leviable. It is proposed to amend the law to provide for the
penalty of Rs.1000 even in such cases. This provision is targeted towards the salary earners who
always had the impression that their liability was over the moment the tax was deducted by the
employer.
(1) Every person, if his total income or the total income of any other person in respect of which
he is assessable under this Act during the previous year exceeded the maximum amount which is
not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or
the income of such other person during the previous year in the prescribed form 1416 and
verified in the prescribed manner and setting forth such other particulars as may be prescribed :
Provided that a person, not furnishing return under this sub-section and residing in such area as
may be specified by the Board in this behalf by a notification in the Official Gazette, and who at
any time during the previous year fulfils any one of the following conditions, namely :-
(i) Is in occupation of an immovable property exceeding a specified floor area, whether by way
of ownership, tenancy or otherwise, as may be specified by the Board in this behalf; or
(ii) Is the owner or the lessee of motor vehicle other than a two- wheeled motor vehicle, whether
having any detachable side car having extra wheel attached to such two-wheeled motor vehicle
or not; or
(iv) Has incurred expenditure for himself or any other person on travel to any foreign country,
(v) Is the holder of the credit card, not being an "Add-on" card, issued by any bank or institution;
or
(vi) Is a member of a club where entrace fee charged is twenty-five thousand rupees or more :
shall furnish a return, of his income during the previous year, on or before the due date in the
prescribed form and verified in the prescribed manner and setting forth such other particulars as
may be prescribed. Provided further that the Central Government may, by notification in the
Official Gazette, specify class or classes of persons to whom the provisions of the first proviso
shall not apply,
(a) Where the assessee is a company, the 30th day of November of the assessment year;
(i) In a case where the accounts of the assessee are required under this Act or any other law to be
audited or where the report of an accountant is required to be furnished under section 80HHC or
section 80HHD or where the prescribed certificate is required to be furnished under section 80R
or section 80RR or sub-section (1) of section 80RRA, or in the case of a co-operative society or
in the case of a working partner of a firm whose accounts are required under this Act or any
other law to be audited, the 31st day of October of the assessment year;
(ii) In a case where the total income referred to in this sub-section includes any income from
business or profession, not being a case falling under sub-clause (i), the 31st day of August of the
assessment year;
(iii) In any other case, the 30th day of June of the assessment year.
Explanation 2 : For the purposes of sub-clause (i) of clause (b) of Explanation 1, the expression
"working partner" shall have the meaning assigned to it in Explanation 4 of clause (b) of section
40.
Explanation 3 : For the purposes of this sub-section, the expression "motor vehicle" shall have
the meaning assigned to it in clause (28) of section 2 of the Motor Vehicles Act, 1988 (59 of
1988).
Explanation 4 : For the purposes of this sub-section, the expression "travel to any foreign
country" does not include travel to the neighbouring countries or to such places of pilgrimage as
the Board may specify in this behalf by notification in the Official Gazette.
(3) If any person, who has sustained a loss in any previous year under the head "Profits and gains
of business or profession" or under the head "Capital gains" and claims that the loss or any part
thereof should be carried forward under sub-section (1) of section 72 or sub-section (2) of
section 73, or sub-section (1) or sub-section (3) of section 74 , or sub-section (3) of section 74A,
he may furnish, within the time allowed under sub-section (1), a return of loss in the prescribed
form and verified in the prescribed manner and containing such other particulars as may be
prescribed, 1429 and all the provisions of this Act shall apply as if it were a return under sub-
section (1).
(4) Any person who has not furnished a return within the time allowed to him under sub-section
(1), or within the time allowed under a notice issued under sub-section (1) of section 142, may
furnish the return for any previous year at any time before the expiry of one year from the end of
the relevant assessment year or before the completion of the assessment, whichever is earlier :
Provided that where the return relates to a previous year relevant to the assessment year
commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one
year aforesaid shall be construed as reference to two years from the end of the relevant
assessment year.
(4A) Every person in receipt of income derived from property held under trust or other legal
obligation wholly for charitable or religious purposes or in part only for such purposes, or of
income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2,
shall, if the total income in respect of which he is assessable as a representative assessee (the
total income for this purpose being computed under this Act without giving effect to the
provisions of sections 11 and 12) exceeds the maximum amount which is not chargeable to
income-tax, furnish a return of such income of the previous year in the prescribed form and
verified in the prescribed manner and setting forth such other particulars as may be prescribed
1432 and all the provisions of this Act shall, so far as may be, apply as if it were a return
required to be furnished under sub-section (1).
(4B) The chief executive officer (whether such chief executive officer is known as secretary or
by any other designation) of every political party shall, if the total income in respect of which the
political party is assessable (the total income for this purpose being computed under this Act
without giving effect to the provisions of section 13A) exceeds the maximum amount which is
not chargeable to income-tax, furnish a return of such income of the previous year in the
prescribed form and verified in the prescribed 1433a manner and setting forth such other
particulars as may be prescribed and all the provisions of this Act, shall, so far as may be, apply
as if it were a return required to be furnished under sub-section (1).
(5) If any person, having furnished a return under sub-section (1), or in pursuance of a notice
issued under sub-section (1) of section 142, discovers any omission or any wrong statement
therein, he may furnish a revised return at any time before the expiry of one year from the end of
the relevant assessment year or before the completion of the assessment, whichever is earlier :
Provided that where the return relates to the previous year relevant to the assessment year
commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one
year aforesaid shall be construed as a reference to two years from the end of the relevant
assessment year.
(6) The prescribed form of the returns referred to in sub-sections (1) and (3) of this section, and
in clause (i) of sub-section (1) of section 142 shall, in such cases as may be prescribed, require
the assessee to furnish the particulars of income exempt from tax, assets of the prescribed nature
value and belonging to him, his bank account and credit card held by him, expenditure exceeding
the prescribed limits incurred by him under prescribed heads and such other outgoings as may be
prescribed.
(6A) Without prejudice to the provisions of sub-section (6), the prescribed form of the returns
referred to in this section, and in clause (i) of sub-section (1) of section 142 shall, in the case of
an assessee engaged in any business or profession, also require him to furnish the report of any
audit referred to in section 44AB, or, where the report has been furnished prior to the furnishing
of the return, a copy of such report together with proof of furnishing the report, the particulars of
the location and style of the principal place where he carries on the business or profession and all
the branches thereof, the names and addresses of his partners, if any, in such business or
profession and, if he is a member of an association or body of individuals, the names of the other
members of the association or the body of individuals and the extent of the share of the assessee
and the shares of all such partners or the members, as the case may be, in the profits of the
business or profession and any branches thereof.
(8)(a) Where the return under sub-section (1) or sub-section (2) or sub-section (4) for an
assessment year is furnished after the specified date, or is not furnished, then [whether or not the
Assessing Officer has extended the date for furnishing the return under sub-section (1) or sub-
section (2)], the assessee shall be liable to pay simple interest at fifteen per cent per annum,
reckoned 1443 from the day immediately following the specified date to the date of the
furnishing of the return or, where no return has been furnished, the date of completion of the
assessment under section 144, on the amount of the tax payable on the total income as
determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax
deducted at source : Provided that the Assessing Officer may, in such cases and under such
circumstances as may be prescribed, 1444 reduce or waive the interest payable by any assessee
under this sub-section.
Explanation 1 : For the purposes of this sub-section, "specified date", in relation to a return for
an assessment year, means, - (a) In the case of every assessee whose total income, or the total
income of any person in respect of which he is assessable under this Act, includes any income
from business or profession, the date of the expiry of four months from the end of the previous
year or where there is more than one previous year, from the end of the previous year which
expired last before the commencement of the assessment year, or the 30th day of June of the
assessment year, whichever is later;
(b) In the case of every other assessee, the 30th day of June of the assessment year. Explanation
2 : Where, in relation to an assessment year, an assessment is made for the first time under
section 147, the assessment so made shall be regarded as a regular assessment for the purposes of
this sub-section.
(b) Where as a result of an order under section 147 or section 154 or section 155 or section 250
or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the
Settlement Commission under sub-section (4) of section 245D, the amount of tax on which
interest was payable under this sub-section has been increased or reduced, as the case may be,
the interest shall be increased or reduced accordingly, and -
(i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee, a
notice of demand in the prescribed form specifying the sum payable, and such notice of demand
shall be deemed to be a notice under section 156 and the provisions of this Act shall apply
accordingly;
(ii) In a case where the interest is reduced, the excess interest paid, if any, shall be refunded.
(c) The provisions of this sub-section shall apply in respect of the assessment for the assessment
year commencing on the 1st day of April, 1988, or any earlier assessment year, and references
therein to the other provisions of this Act shall be construed as references to the said provisions
as they were applicable to the relevant assessment year.
(9) Where the Assessing Officer considers that the return of income furnished by the assessee is
defective, he may intimate the defect to the assessee and give him an opportunity to rectify the
defect within a period of fifteen days from the date of such intimation or within such further
period which, on an application made in this behalf, the Assessing Officer may, in his discretion,
allow; and if the defect is not rectified within the said period of fifteen days or, as the case may
be, the further period so allowed, then, notwithstanding anything contained in any other
provision of this Act, the return shall be treated as an invalid return and the provisions of this Act
shall apply as if the assessee had failed to furnish the return :
Provided that where the assessee rectifies the defect after the expiry of the said period of fifteen
days or the further period allowed, but before the assessment is made, the Assessing Officer may
condone the delay and treat the return as a valid return.
Explanation : For the purposes of this sub-section, a return of income shall be regarded as
defective unless all the following conditions are fulfilled, namely :- (a) the annexures, statements
and columns in the return of income relating to computation of income chargeable under each
head of income, computation of gross total income and total income have been duly filled in;
(b) The return is accompanied by a statement showing the computation of the tax payable on the
basis of the return;
(bb) The return is accompanied by the report of the audit referred to in section 44AB, or, where
the report has been furnished prior to the furnishing of the return, by a copy of such report
together with proof of furnishing the report;
(c) The return is accompanied by proof of - (i) the tax, if any, claimed to have been deducted at
source and the advance tax and tax on self-assessment, if any, claimed to have been paid;
(ii) The amount of compulsory deposit, if any, claimed to have been made under the Compulsory
Deposit Scheme (Income-tax Payers) Act, 1974 (38 of 1974);
(d) Where regular books of account are maintained by the assessee the return is accompanied by
copies of - (i) manufacturing account, trading account, profit and loss account or, as the case may
be, income and expenditure account or any other similar account and balance sheet;
(ii) In the case of a proprietary business or profession, the personal account of the proprietor; in
the case of a firm, association of persons or body of individuals, personal accounts of the
partners or members; and in the case of a partner or member of a firm, association of persons or
body of individuals, also his personal account in the firm, association of persons or body of
individuals;
(e) Where the accounts of the assessee have been audited, the return is accompanied by copies of
the audited profit and loss account and balance sheet and the auditor's report and, where an audit
of cost accounts of the assessee has been conducted, under section 233B of the Companies Act,
1956 (1 of 1956), also the report under that section;
(f) Where regular books of account are not maintained by the assessee the return is accompanied
by a statement indicating the amounts of turnover or, as the case may be, gross receipts, gross
profit, expenses and net profit of the business or profession and the basis on which such amounts
have been computed, and also disclosing the amounts of total sundry debtors, sundry creditors,
stock-in-trade and cash balance as at the end of the previous year.