INCOME TAX INDIA

 

Income Tax Return is a proof that you have paid your income tax. It contains details about your annual income and the amount of tax you have paid. Every year, Indian citizens who earn taxable income have to file Income Tax Return (ITR). Filing ITR will help you in getting a refund in case you pay more tax than what you are required to pay. If you fail to file your ITR, you might have to bear penalty etc. Income tax return form ranges from ITR 1 to ITR 7 which can be choose on the basis of Nature of Income, Nature of Person.

 

Basics of Income Tax

A tax that, imposed on individuals or entities which varies with respective income or profits.

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What is Income Tax?

It is a tax imposed by the Government of India on any body who earns income in India on both earned income (wages, salaries, commission) and unearned income (dividends, interest, rents). The Ministry of Finance along with the Government of India are responsible for assessing the income tax rates in India. Provisions relating to the income tax are governed by the Income Tax Act, 1961. The Income Tax Department (also referred to as the IT Department) is responsible for monitoring the income tax collection by the government. This tax is levied on the strength of an Act called Income Tax Act which was passed by the Parliament of India.

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What is an 'Assessment Year'?

It is the twelve-month period 1st April to 31st March immediately following the previous year [the financial year in which the income was earned]. In the Assessment year a person files his return for the income earned in the previous year. For example for Financial Year 2017-18 the Assessment Year is 2018-19.

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Who is supposed to pay Income Tax?

Any Individual or group of Individuals or artificial bodies who/which have earned income during the previous years are required to pay Income tax on it. The IT Act recognizes the earners of income under seven [7] categories. Each category is called a Status. These are Individuals, Hindu Undivided Family [HUF], Association of Persons [AOP], Body of individuals [BOI], Firms, Companies, Local authority and Artificial juridical person.

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What are Perquisites in Salary Income?

Perquisites are benefits received by a person as a result of his/her official position and are over and above the salary or wages. These fringe benefits or perquisites can be taxable or non-taxable depending upon their nature.

Source of income

S. N.Head of IncomeNature of Income covered
1Income from SalaryAll the money you receive while rendering your job
as a result of an employment contract
(salary paid by your employer)
2Income from Other SourcesIncome from savings bank account interest
Income accrued from fixed deposits and
savings account come under this head.
3Income from House PropertyIncome from house property you own; property can
be self-occupied or rented out.
This is rental income house property
4Income from Capital GainsIncome earned from the sale of a capital asset
(mutual funds or house property). Lottery form KBC.
5Income from Business and ProfessionThis is when you are self-employed work as a freelancer or
contractor or you run a business.
Life insurance agents chartered accountants and lawyers who
have their own practice tuition teachers, doctors

Income Tax Slab & Rate from FY 2015-16 to FY 2019-20

Income Tax Slabs Rates for FY 2019-20 (AY 2020-21)

Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2019-20

Income Tax SlabsTax RateHealth and Education Cess
Income up to Rs 2,50,000*No tax
Income from Rs 2,50,000 – Rs 5,00,00005%4% of Income Tax
Income from Rs 5,00,000 – 10,00,00020%4% of Income Tax
Income more than Rs 10,00,00030%4% of Income Tax

Health and Education Cess 4% of Income Tax.

Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.

* For individuals (More than 60 years old and less than 80 years old ) Income tax exemption limit is Rs. 3,00,000.00  and for individuals (more than 80 years old ) Income tax exemption limit is Rs. 5,00,000.00 .

Income Tax Slabs Rates for FY 2018-19 (AY 2019-20)

Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2018-19

Income Tax SlabsTax RateHealth and Education Cess
Income up to Rs 2,50,000*No tax
Income from Rs 2,50,000 – Rs 5,00,00005%4% of Income Tax
Income from Rs 5,00,000 – 10,00,00020%4% of Income Tax
Income more than Rs 10,00,00030%4% of Income Tax

Health and Education Cess 4% of Income Tax.

Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.

* For individuals (More than 60 years old and less than 80 years old ) Income tax exemption limit is Rs. 3,00,000.00  and for individuals (more than 80 years old ) Income tax exemption limit is Rs. 5,00,000.00 .

Income Tax Slabs Rates for FY 2017-18 (AY 2018-19)

Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2017-18

Income Tax SlabsTax RateHealth and Education Cess
Income up to Rs 2,50,000*No tax
Income from Rs 2,50,000 – Rs 5,00,00005%3% of Income Tax
Income from Rs 5,00,000 – 10,00,00020%3% of Income Tax
Income more than Rs 10,00,00030%3% of Income Tax

Health and Education Cess 3% of Income Tax.

Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.

* For individuals (More than 60 years old and less than 80 years old ) Income tax exemption limit is Rs. 3,00,000.00  and for individuals (more than 80 years old ) Income tax exemption limit is Rs. 5,00,000.00 .

Income Tax Slabs Rates for FY 2016-17 (AY 2017-18)

Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2016-17

Income Tax SlabsTax RateHigher and Secondary Education Cess
Income up to Rs 2,50,000*No tax
Income from Rs 2,50,000 – Rs 5,00,00010%3% of Income Tax
Income from Rs 5,00,000 – 10,00,00020%3% of Income Tax
Income more than Rs 10,00,00030%3% of Income Tax

A resident individual is entitled for rebate u/s 87A if his/her total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or Rs. 5,000, whichever is less.

Higher and secondary education Cess 3% of Income Tax.

Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.

* For individuals (More than 60 years old and less than 80 years old ) Income tax exemption limit is Rs. 3,00,000.00  and for individuals (more than 80 years old ) Income tax exemption limit is Rs. 5,00,000.00 .

Income Tax Slabs Rates for FY 2015-16 (AY 2016-17)

Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2015-16

Income Tax SlabsTax RateHigher and Secondary Education Cess
Income up to Rs 2,50,000*No tax
Income from Rs 2,50,000 – Rs 5,00,00010%3% of Income Tax
Income from Rs 5,00,000 – 10,00,00020%3% of Income Tax.
Income more than Rs 10,00,00030%3% of Income Tax.

Higher and Secondary Education Cess 3% of Income Tax.

Surcharge: 12% of income tax, where the total income exceeds Rs.1 crore.

* For individuals (More than 60 years old and less than 80 years old ) Income tax exemption limit is Rs. 3,00,000.00  and for individuals (more than 80 years old ) Income tax exemption limit is Rs. 5,00,000.00 .

Benefits of filing ITR

Avoid IT Scrutiny:

Avoid legal repercussions If cash deposited during the demonetization period is greater than Rs 2 lakh in your bank account.

Avoid Tax Notices:

Taxpayers often get served notices from the IT department for delayed & missed return submissions.

Build Financial Documentation:

Your Tax Return documents are proof of your financial investments and will be useful when you apply for a loan or a visa.

Carry Forward your losses:

You can carry forward losses against house property and depreciation.

Tax Refund:

You can claim tax refund; earlier your file sooner you get the refund.

Quick Visa processing:

Most embassies and consulates require you to submit IT returns for the last 3 years. Immigration officers give due weight-age to your annual income.

For accidental claim:

In case of accidental death of any one member/’s during roadside accident, because during court trial insurance company need the proofs of income to arrive at the amount of accidental claim, if any return is missing, mainly last 3 years, this could lower the claim amount or even no claim because court take ITR as only evidence.

 Eligibility in all Loan cases:

In case of accidental death of any one member/’s during roadside accident, because during court trial insurance company need the proofs of income to arrive at the amount of accidental claim, if any return is missing, mainly last 3 years, this could lower the claim amount or even no claim because court take ITR as only evidence.

For obtaining Govt tenders:

The value of business profiles of various corporate agencies, contractors, professional service providers or Individuals is dependent on the yearly income tax returns.

Points at the time of filing ITR

1) Always file your returns on time and correctly: This is the basic precaution you need to take to ensure 100% compliance with the law. Make sure you file the return correctly, and all the details while filling the returns match the details already available with the IT department.

2) Submit ITR V to Centralized Processing Centre (CPC) Bangalore: Your tax return filing is only considered complete when the ITR V reaches the CPC. Just uploading returns online is not enough; make sure you get a confirmation of its receipt from the CPC. Please follow the dos and don’ts of sending the ITR-V to the CPC correctly.

3) Check your form 26AS (Tax Credit Statement): ’26AS’ gives the details of the ‘TDS’ deposited on your behalf. You should check all the TDS payments duly credited to you or get them rectified. You can view them though NSDL or on the IT department’s website, or even through your bank’s online portal.

4) Mismatch in income and expenses/investments: If your income in the year was Rs 10 lakh, and you invested Rs 25 lakh, you will need to justify the source of the used funds; the same applies to expenses also.

5) Gifts/money credited to your account: If you have funds credited to your account out of gifts or loan from relatives/ friends, you need to maintain documentary evidence for it. You may also need to report these transactions at few instances.

6) Declaring “exempt” income: Even though few incomes are exempt from taxation, you still need to declare it while filing your returns.

7) Updating PAN details: Keep updating any changes in your pan data like address/surname change after marriage, etc.

8) Pay advanced tax: If you are liable to pay advance tax, then make sure you pay it as per its schedule and deadline.

9) Form 15H or 15G: Use 15H/15G instead of claiming refund. Submit this at financial institutions like banks, to prevent them from deducting TDS on your investments with them, in case your income is below the taxable limit.

10) Avoid high value transactions: The department gets information of all your high value transactions from the concerned institution, and the chances of you coming under scrutiny increases. Avoid these transactions wherever possible and plan them carefully and legally.

What is Professional Tax?

What is Professional Tax?

Professional tax can be defined as a tax that is levied by a state government on all individuals who earn a living through any medium. This must not be confused with the definition of other professionals such as doctors or lawyers. This is a type of tax that needs to be paid by each and every individual earning income. The calculation of this tax and the amount collected differs from one state to another. However, the limit has been set to Rs. 2500 per year.

Professional Tax in Odisha:

MONTHLY SALARY (IN RS.) TAX (PER MONTH IN RS.)
Up to 5,000 Nil
5,001 to 6,000 30
6,001 to 8,000 50
8,001 to 10,000 75
10,001 to 15,000 100
15,001 to 20,000 150
More than 20,000 200

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