Presentation on Bank dealings and

Income Tax Returns

Presented By- vandna
Roll no.- 14401
B.Com (hon’s) - 2nd year
Concept of banking
Banks are the institutions that accept various types of
deposits and use those funds for granting loans.
According to Section 5(b) of the Banking Regulation
Act, 1949, “Banking” means the accepting for the
purpose of lending or investments, of deposits of
money from the public, repayable on demand or
otherwise, and withdrawable by cheque, draft and
order or otherwise.
Bank dealings
Bank deal mainly with money and credits. They plays
significant role in the shaping and in the advancing of
modern society. The industrial development will not be
possible without the help of banks. Creation of credit
is the special function of banks. They are the
architecture of the digital economy. Every banks must
follow these basic functions:
1) Accepting deposits
2) Advancing loans
3) Others.
1) Accepting of deposits
Deposits are the most important element of the banking
sector. They collect surplus money from the public.
The depositors are benefited and their amount of
money is safe at the bank.
The banks have introduced different type of deposit
schemes. These schemes are:
1) Fixed deposit
2) Current account
3) Saving account
4) Other account
Fixed deposits
Under this scheme the banks mobilize the deposits which are
repayable after the expiry of certain period. The bank grant
a higher rate of interest on these deposits. A large number
of savers prefer this mode of investment. The amount of
fixed deposit cannot generally be withdrawn before the
expiry of the period of deposits.
The fixed deposits are also known as term deposit. The rate
of interest and other terms and conditions are regulated by
RBI. The main object of the step was to make bank
deposits more attractive as compared to other saving
instruments.
Current deposit
Current accounts are more beneficial to those who
withdraw several time from the account of deposits.
No interest is paid on this account. Cheques are
generally used for withdraw a certain amount for the
deposits. Current account is more useful for the
businessmen. They can produce the account as an
evidence of revenue of assessment of income tax. The
businessmen are not required to keep with them a large
amount of money.
Current accounts are more useful to the businessmen,
firms, companies and individuals.
Saving bank account
Saving bank account is useful to middle and low income
groups. They can save certain amount during a certain
period. It is a flexible account. In this account, the
depositor can withdraw money about thrice a week.
The account holder can deposit money at anytime. A
person wishing to open saving bank account will have
to fill a form. He has to furnish his specimen
signatures. A pass book will be issued to the account
holder.
Other account
These are so many saving accounts like recurring deposit
account, private saving account and special saving
account. Recurring saving accounts are more popular
in India. In this account a fixed amount is deposit in
installments. In this account the rate of interest is more
than the saving account and less than the fixed deposit
account. It is a greater source of stimulating short
deposits.
2) Advancing loans
Bank deals with money and other persons. Bank does not lend its
own money. It is the other’s money in which it deals. The
advances of bank may be granting in form of loans, overdraft,
cash credit, credit discounting, bills of exchange.
The main methods of granting advances in India may be classified
as follows:
1) Loans = term loans, short term loans, bridge loans,
consumption loans, composite loans etc.
2) Cash credits
3) Overdraft
4) Discounting of bills
5) Others= cheque payment, collection and payment of credit
instruments, credit card, ATM services, online banking,
mobile banking etc.
Introduction to Income Tax
A tax is a compulsory financial charge made by central
govt. from the general public.
Income tax is the Direct tax which is progressive in
nature.
Income Tax Act 1961 is the charging statute of income
tax in India provides for levy, collection and recovery
of income tax.
An Income Tax is tax which government imposed on
income generated by assessee
Meaning of Income Tax Returns
 Under Income Tax Act 1961 every assessee has to
compute his income and pay a tax on such income
 Income tax returns contains all the information
regarding the income earned by assessee and total tax.
 In other words income tax return is the form in which
assessee files information about his income and tax
there on to tax department.
Types of Income Tax Return
 Section 139(1): Mandatory and Voluntary Returns
• Who is required to file Income Tax Returns?
The following assessee has to file income tax returns.
o Every person who has a total income that exceeds the
exemption limit, is liable to furnish Income Tax Return
within the due date
o Any private, public and domestic foreign country located
and doing business in India.
o Any firm including LLP.
o Every HUF, AOP, BOI if total income exceeds the
exception limit, they are liable to file Income Tax Return.
 Section 139(3): Return of Loss
• In case of an individual tax payer, if any loss was incurred in the
previous financial year then filing the tax return is not mandatory.
• If loss arise under the head of “Profits and Gains of Business and
Profession” or under the head of “ Capital Gains”, tax return filing is
mandatory in case the firm wants to carry forward this loss and offset
with the future income.
• In case loss arise under the head of “ house or residential property” the
loss could be carry forward even though the tax return is filed after due
date.
 Section 139(4): Late Income Tax Return
The taxpayer have to furnish the tax return before the due date as
specified under section 139(1) , if they fails to do so, they may still file
belated return for any prior year any time until the expiry of one year
that started from the end of the applicable year of assessment or before
conclusion of assessment, whichever happens earlier.
 Section 139(4a): Income Tax Return of Charitable and
Religious Trusts
Filing income tax return under section 113(4a) is needed by
every individual who receive income derived from the
property held under any trust or other legal obligations,
either wholly for religious and charitable purposes or partly
for such purposes only.
 Section 139(4b): Political Parties to Furnish the Return
on Income
Section139(4b) requires political parties to file Income Tax
Return in case total income exceeds the maximum
allowable tax exempt limit. The chief executive officer or
the secretary of all political parties are required to furnish
this return as applicable.
 Section139(4c) and section139(4d): Income Tax Return of entities
claiming exemptions under section 10
These sections are intended to deal with certain institutions who are
claiming benefits according to the section 10 of Income Tax act 1961
Returns under section139(4c) includes institutions that are compulsorily
required to file tax returns if the amount accumulated by the institutions
exceeds the maximum allowable limit of exemption.
Return under section 139(4c) required to be filed by:
 Each and every association engaged in scientific research.
 News agency
 Institution mentioned under section 10(23A)
 University, institution, other educational and medical institutions,
hospitals.
 Section 139(4f):
Every investment fund referred to in section115UB, which is
not required to furnish return of income or loss under any
other provisions of the section, shall furnish the return of
income in respect of its income or loss in every previous
year.
 Section 139(5): Revised Returns
In case the Income Tax Return was filed within due date but
date was later the tax payer realises that their was some
mistake in filing of return or correct these mistakes there by
provision is revised return of income tax under section
139(5).
There is no restriction on the number of times that a tax return
could be revised within specified time frame.
 Section 139(9): Defective Return
A tax return is defective if certain documents are not attached while
filed the return. In case the return is considered defective by the
tax officer, then the tax payer will inform by him and will be
allowed to rectify the defect within 15 days starting from the
date of intimation.
The following documents are necessary to avoid your filing to be
deemed as defective:
 A duly filed tax return is recommended form
 A statement displaying the computation of payable tax
 Proof of all claims of paid taxes- like proof of tax deduction and
collection was done at source, payment of self assessment tax
and advance tax.
Types of ITR Forms
In total, there are almost 9 type of ITR forms available for the tax payer to file his
tax.
However only following are to be taken into consideration by individual who
filing returns as per The Central Board of Direct Tax in India.
• ITR-1
• ITR-2
• ITR-2A
• ITR-3
• ITR-4
• ITR-4S
The following income tax returns forms are applicable only for companies and
firms:
• ITR-5
• ITR-6
• ITR-7
 ITR 1:
Form ITR 1 also known as SAHAJ, is applicable only to individuals. This
form can be used in following cases:
• When individual earn income through salary or pension.
• When individual earn income from single house property
• When individual earn income from other sources like dividend, interest
etc.
Structure of ITR form 1
Part A: general information
Part B: gross total income
Part C: deduction and taxable total income
Part D: computation of tax payable
Part E: other information
 ITR 2:
This form can be used by individuals or HUF in following cases
 When there is income from salary/pension
 When an individual or HUF has income from house property.
 When total income of HUF/ individual include income from capital gain
 When total income of an individual/ HUF includes income from other sources
including windfall income such as from winning of lottery or house racing
• ITR 3:
 When there is an income from salary/pension
 When an individual/HUF has income from house property
 When there is an income from business and profession of partnership firm, in
which HUF/ individual is partner
 When total income of individual/ HUF exceeds rupees 50 lakh for the financial
year.
 When total income of individual/HUF includes income/loss from capital gain
• ITR 4
Form ITR4 also known as SUGAM can be filed by individual/HUF and firm a part of LLP.
With income from business and professional consultants who charge money for
professional advices.
ITR 4 is not applicable in the following cases:
1. Annual income of assessee is in excess of Rs. 5 lakh.
2. The income tax assessee is a company director.
• ITR 5
This ITR form is to be used by following entities for filing their income tax return.
a) Firms
b) Limited liability partnerships
c) Body of individuals
d) Association of persons
e) Co-operative societies
f) Artificial judicial persons
g) Local authorities.
• ITR 6
Form ITR 6 is applicable to companies. All the companies who
excepts claim under the exemption of section 11 are
required to file income tax return in form ITR 6.
Companies that claim exemptions under section 11 are those
companies that have income from property held for
charitable and religious purposes. All the companies eligible
to file ITR 6 needs to file their returns electronically and sign
through digital signature.
 ITR 7
Following categories are required to furnish their returns:
o Every person, individual or company who is receipt to
income derived from perty held under trust or legal
obligations.
o Research associations
o Institutions
o Mutual funds
o Any funds, university, education institutions or hospital
o Body of authority or board or trust or commission
o Venture capital company
 Due dates of filing Income Tax Returns
The due dates of filing income tax return can be divided
into two parts.
A. For individuals, HUF, BOI,AOP(tax payer with no
audit requirement.) the due date of filing income tax
return is 31th july of the relevant AY.
B. For Company, taxpayer who’s account needed to be
audited, working partners the due date for filing
Income Tax Return is 30th september of the relevant
AY.