Income tax in IndiaFrom Wikipedia, the free encyclopediaIncome Tax in IndiaCentral Revenue collections in 2007-08 (Source: Compiled from reports ofComptroller and Auditor General of Indiafor relevant years) Personal Income Tax (Direct) (17.43%) Corporate Tax (Direct) (32.76%) Other Taxes (Direct) (2.83%) Excise duty (Indirect) (20.84%) Customs duty (Indirect) (17.46%) Other Taxes (Indirect) (8.68%)The Central Government has been empowered by Entry 82 of the Union List of Schedule VII of the Constitutionof India to levy tax on all income other than agricultural income (subject to Section 10(1)). The Income TaxLaw comprises The Income Tax Act 1961, Income Tax Rules 1962, Notifications and Circulars issuedby Central Board of Direct Taxes (CBDT), Annual Finance Acts and Judicial pronouncements by SupremeCourt and High Courts.The government of India imposes an income tax on taxable income of all persons including individuals, HinduUndivided Families (HUFs), companies, firms, association of persons, body of individuals, local authority andany other artificial judicial person. Levy of tax is separate on each of the persons. The levy is governed by
the Indian Income Tax Act, 1961. The Indian Income Tax Department is governed by CBDT and is part of theDepartment of Revenue under the Ministry of Finance, Govt. of India. Income tax is a key source of funds thatthe government uses to fund its activities and serve the public.The Income Tax Department is the biggest revenue mobilizer for the Government. The total tax revenues of theCentral Government increased from Rs. 139226 crore in 1997-98 to Rs. 588909 crore in 2007-08. Contents [hide]1 History2 Residential status, Scope of taxable income & Charge o 2.1 Charge to Income-tax o 2.2 Residential Status o 2.3 Residential status of a person other than an individual o 2.4 Scope of total income3 Heads of Income o 3.1 Income from Salary o 3.2 Income from House property o 3.3 Income from Business or Profession o 3.4 Income from Capital Gains o 3.5 Income from Other Sources4 Agricultural Income o 4.1 Income partly agricultural and partly business o 4.2 Scheme of partial integration of non-agricultural income with agricultural income5 Permissible deductions from Gross Total Income o 5.1 Section 80C Deductions o 5.2 Section 80CCC o 5.3 Section 80CCD o 5.4 Section 80CCF: Investment in Infrastructure Bonds o 5.5 Section 80D: Medical Insurance Premiums o 5.6 Interest on Housing Loans Section o 5.7 Section 80DDB : Deduction in respect of Medical Treatment, etc6 Refund Status7 Due Date of submission of return
8 Advance Tax9 Tax deducted at Source (TDS)10 Corporate Income tax11 Tax Returns o 11.1 Normal Return o 11.2 Belated Return o 11.3 Revised Return o 11.4 Defective Return o 11.5 Returns In Response To Notices12 Annual Information Return and Statements o 12.1 Annual Information Return o 12.2 Statements By Producers o 12.3 Statements By Non-Resident Having A Liaison Office In India13 Tax Penalties14 See also15 References16 External linksHistoryIncome tax levels in India were very high during 1950-1980, in 1970-71 there were 11 tax slabs with highest taxrate being 93.5% including surcharges. In 1973-74 highest rate was 97.75%. But to reduce tax evasion taxrates were reduced later on, by "1992-93" maximum tax rates were reduced to 40%. Residential status, Scope of taxable income & ChargeCharge to Income-taxWhose income exceeds the maximum amount, which is not chargeable to the income tax, is an assesse, andshall be chargeable to the income tax at the rate or rates prescribed under the finance act for the relevantassessment 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 nature of income, i.e., whether it is revenue or capital. The rates of taxation ofincome are-:Income Tax Rates/Slabs Rate (%) (applicable for assessment year 2013-14)
Net income range (For Net income range Net income range Net income range (For any Income resident woman below 60 (For resident (For super senior other person excluding companies and Tax years on the last day of the senior citizen1) citizen2) co-operative societies) rates3 previous year)Up to Rs. 2,00,000 Up to Rs. 2,50,000 Up to Rs. 5,00,000 Up to Rs. 2,00,000 Nil Rs. 2,50,001-Rs. 2,00,001-5,00,000 - Rs. 2,00,001-5,00,000 10% 5,00,000 Rs. 5,00,001- Rs. 5,00,001-Rs. 5,00,001-10,00,000 Rs. 5,00,001-1,00,0000 20% 1,00,0000 10,00,000 Above Rs. Above Rs.Above Rs. 10,00,000 Above Rs. 1,00,0000 30% 1,00,0000 10,00,000^1 Senior citizen is one who is 60 years or more at any time during the previous year but not more than 80 years on the last day ofthe previous year.^2 Super senior citizen is one who is 80 years or more at any time during the previous year.^3 Surcharge isnt applicable for any person excluding companies whose taxable income exceed Rs. 1 crore. Education cess at 2%and Secondary and higher education cess at 1% of income-tax applicable for all person. These slab-rates arent applicable for theincomes which are to be taxed at special rates under section 111A, 112, 115, 161, 164 and 167. For instance, long-term capitalgains (except the one mentioned in section 10(38))for all assessees is taxable at 20%.Residential StatusThe residential status of the assessee is useful in determining the scope or chargeability of the income for theassessee, i.e., whether taxable or not. For an individual person, to be a resident, any one of the following basicconditions must be satisfied:- Presence of at least 182 days in India during the previous year. Presence of at least 60 days in India during the previous year and 365 days during 4 years immediately preceding the relevant previous year.However, in case the individual is an Indian citizen who leaves India during the previous year for the purpose of employment (or as amember of a crew of an Indian ship) or in case the individual is a person of Indian origin who comes on a visit to India during the previousyear, then only the first of the above basic condition is applicable. To determine whether the resident individual is ordinarilyresident the following both additional conditions are to be satisfied:-
Resident in India in at least 2 out of 10 years immediately preceding the relevant previous year. Presence of at least 730 days in India during 7 years immediately preceding the relevant previous year.If the individual resident satisfies only one or none of the additional conditions, then he is not ordinarily resident. (In case the person is not anindividual or an HUF, then the residential status can only be either resident or non-resident)Residential status of a person other than an individual Control & management of Control & management of Control & management of affairs of Type of person affairs of the taxpayer is affairs of the taxpayer is wholly the taxpayer is partly in India partly wholly in India outside India outside IndiaHUF1 Resident Non-resident ResidentFirm Resident Non-resident ResidentAssociation of Resident Non-resident ResidentpersonsIndian company2 Resident Resident ResidentForeign company3 Resident Non-resident Non-residentAny other person Resident Non-resident Residentexcept an individual^1 After determining whether an HUF is resident or non-resident, the additional conditions (as laid down for an individual) should bechecked for the karta to determine whether the HUF is ordinary or not-ordinary resident.^2 An Indian company is the one which satisfies the conditions as laid down under section 2(26) of the Act.^3 Foreign company is the one which satisfies the conditions as laid down under section 2(23A) of the Act.Scope of total incomeIndian income1 is always taxable in India notwithstanding residential status of the taxpayer.Foreign income1 is not taxable in the hands of a non-resident in India. For resident (in case of firm, associationof persons, company and every other person) or resident & ordinarily resident (in case of an individual or anHUF), foreign income is always taxable. For resident but not ordinarily resident foreign income is taxable only ifit is business income and business is controlled wholly or partly in India or it is a professional income andprofession is set up in India.
^1 Foreign income is the one which satisfies both the following conditions:- Income is not received (or not deemed to be received under section 7) in India, and Income doesnt accrue (or doesnt deemed to be accrued under section 9) in India.If such an income satisfies one or none the above conditions then it is an Indian income.Heads of IncomeThe total income of a person is segregated into five heads:- Income from Salary Income from house property Income from business or profession Capital Gain and Income from other sourcesIncome from SalaryAll income received as salary under Employer-Employee relationship is taxed under this head,on due or receipt basis, whichever arises earlier. Employers must withhold tax compulsorily (subject to Section192), if income exceeds minimum exemption limit, as Tax Deducted at Source (TDS), and provide theiremployees with a Form 16 which shows the tax deductions and net paid income. The Act contains exemptionsincluding (the list isnt exhaustive):- Particulars Relevant section for computing exemptionLeave travel concession 10(5)Death-cum-Retirement Gratuity 10(10)Commuted value of Pension (not taxable for specified Government employees) 10(10A)Leave encashment 10(10AA)Retrenchment Compensation 10(10B)
Particulars Relevant section for computing exemptionCompensation received at time of Voluntary Retirement 10(10C)Tax on perquisite paid by employer 10(10CC)Amount received from Superannuation Fund to legal heirs of employee 10(13)House Rent Allowance 10(13A)Some Special Allowances 10(14)The Act contains list of Perquisites which are always taxable in all cases and a list of Perquisites which areexempt in all cases (List I). All other Perquisites are to be calculated according to specified provision and rulesfor each. Only two deductions are allowed under Section 16, viz. Professional Tax and EntertainmentAllowance (the latter only available for specified government employees). [show]Computation of exemption for Gratuity [Section 10(10)] [show]Computation of exemption of House Rent Allowance(HRA) [Section 10(13A)] [show]Computation of exemption for Pension [Section 10(10A)] [show]Computation of exemption for Leave encashment [Section 10(10AA)] [show]Computation of exemption for Retrenchment compensation [Section 10(10B)] [show]Computation of exemption for Voluntary Retirement Scheme [Section 10(10C)]Income from House propertyIncome under this head is taxable if the assessee is the owner of a property consisting of building or landappurtenant thereto and is not used by him for his business or professional purpose. An individual or an HinduUndivided Family (HUF) is eligible to claim any one property as Self-occupied if it is used for own or familysresidential purpose. In that case, the Net Annual Value (as explained below) will be nil. Such a benefit can onlybe claimed for one house property. However, the individual (or HUF) will still be entitled to claim Interest onborrowed capital as deduction under section 24, subject to some conditions. In the case of a self occupiedhouse deduction on account of interest on borrowed capital 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 istaken before 1 April 1999). For let-out property, all interest is deductible, with no upper limits. The balance isadded to taxable income.The computation of income from let-out property is as under:-Gross Annual Value (GAV)1 xxxxLess:Municipal Taxes paid (xxx)Net Annual Value (NAV) xxxxLess:Deductions under section 242 (xxx)Income from House property xxxx^1 The GAV is higher of Annual Letting Value (ALV) and Actual rent received/receivable during the year. The ALV is higher of fairrent and municipal value, but restricted to standard rent fixed by Rent Control Act.^2 Only two deductions are allowed under this heaad by virtue of section 24, viz., 30% of Net annual value as Standard deduction Interest on capital borrowed for the purpose of acquisition, construction, repairs, renewals or reconstruction of property (subject to certain provisions).Income from Business or ProfessionThe 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 fewmore sections under this Chapter, viz., Sections 44 to 44DA (except sections 44AA, 44AB & 44C), whichcontain 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: - Sections 30 to 37 cover expenses which are expressly allowed as deduction while computing businessSpecific deductions income.Specific Sections 40, 40A and 43B cover inadmissible expenses.disallowanceDeemed Incomes Sections 33AB, 33ABA, 33AC, 35A, 35ABB, 41.Special provisions Sections 42, 43C, 43D, 44, 44A, 44B, 44BB, 44BBA, 44BBB, 44DA, 44DB.
Presumptive Income Sections 44AD, 44AE.The computation of income under the head "Profits and Gains of Business or Profession" depends on theparticulars and information available.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 xxxLess: Expenses deductible (net of disallowances) under this head (xx)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 xxxAdd : Inadmissible Expenses debited to Profit and Loss Account xxAdd: Deemed Incomes not credited to Profit and Loss Account xxLess: Deductible Expenses not debited to Profit and Loss Account (xx)Less: Incomes chargeable under other heads credited to Profit & Loss A/c (xx)Income from Capital GainsTransfer of capital assets results in capital gains. A Capital asset is defined under section 2(14) of the I.T. Act,1961 as property of any kind held by an assessee such as real estate, equity shares, bonds, jewellery,paintings, art etc. but does not include some items like any stock-in-trade for businesses and personal effects.Transfer has been defined under section 2(47) to include sale, exchange, relinquishment ofasset extinguishment of rights in an asset, etc. Certain transactions are not regarded as Transfer undersection 47.Computation of Capital Gains:-Full value of consideration1 xxxLess:Cost of acquisition2 (xx)Less:Cost of improvement2 (xx)Less:Expenditure pertaining to transfer incurred by the transferor (xx)^1 In case of transfer of land or building, if sale consideration is less than the stamp duty valuation, then such stamp duty value shallbe taken as full value of consideration by virtue of Section 50C. The transferor is entitled to challenge the stamp duty valuation
before the Assessing Officer.^2 Cost of acquisition & cost of improvement shall be indexed in case the capital asset is long term.For tax purposes, there are two types of capital assets: Long term and short term. Transfer of long term assetsgives rise to long term capital gains. The benefit of indexation is available only for long term capital assets. Ifthe period of holding is more than 36 months, the capital asset is long term, otherwise it is short term. However,in the below mentioned cases, the capital asset held for more than 12 months will be treated as long term:- Any share in any company Government securities Listed debentures Units of UTI or mutual fund, and Zero-coupon bondAlso, in certain cases, indexation benefit is not be available even though the capital asset is long term. Suchcases include depreciable asset (Section 50), Slump Sale (Section 50B), Bonds/debentures (other than capitalindexed bonds) and certain other express provisions in the Act. There are different scheme of taxation of longterm capital gains. These are: 1. As per Section 10(38) of Income Tax Act, 1961 long term capital gains on shares or securities or mutual funds on which Securities Transaction Tax (STT) has been deducted and paid, no tax is payable. STT has been applied on all stock market transactions since October 2004 but does not apply to off-market transactions and company buybacks; therefore, the higher capital gains taxes will apply to such transactions where STT is not paid. 2. In case of other shares and securities, person has an option to either index costs to inflation and pay 20% of indexed gains, or pay 10% of non indexed gains. The cost inflation index rates are released by the I-T department each year. 3. In case of all other long term capital gains, indexation benefit is available and tax rate is 20%.All capital gains that are not long term are short term capital gains, which are taxed as such: Under section 111A, for shares or mutual funds where STT is paid, tax rate is 10% from Assessment Year (AY) 2005-06 as per Finance Act 2004. With effect from AY 2009-10 the tax rate is 15%. In all other cases, it is part of gross total income and normal tax rate is applicable.For companies abroad, the tax liability is 20% of such gains suitably indexed (since STT is not paid).Besides exemptions under section 10(33), 10(37) & 10(38) certain specific exemptions are available undersection 54, 54B, 54D, 54EC, 54F, 54G & 54GA.
Sectio Section Section Section 54 Section 54F Section 54G Section 54GA n 54B 54D 54ECWho iseligible Individua Any perso Any persoto claim Individual/HUF Individual/HUF Any person Any person l n nexemption Land/build ing Agricultu forming ral land part of an (if used industrial by undertakin Any long term individua g which is capital asset l or his compulsor (other than house Land/building/plant/mWhich parents ily property) Land/building/plant/m achinery in order toasset is for Any long A residential acquired provided that on achinery in order to shift an industrialeligible agricultur term house property by the the date of shift an industrial undertaking fromfor al capital (long term) Governme transfer the undertaking from urban area toexempti purpose asset nt & assessee does not urban area to rural area any Special Economicon during at which is own more than Zone least 2 used one residential years during 2 house property immediat years for ely prior industrial to purposes transfer) prior to acquisition Bonds of Nationa l Highways AuthorityWhich ofasset India or Rshould Agricultu Land/build ural Land/building/plant/m Land/building/plant/mbe ral land Residential house ing for Electrificat A residential achinery in order to achinery in order toacquire in rural property industrial ion house property shift undertaking to shift undertaking tod to or urban purpose Corporatio rural area any SEZclaim area n Limited;exempti Maximumon exemption in one financial year is Rs. 50 lakhWhat is Purchase: 1 year 2 years 3 years 6 months Purchase: 1 year 1 year backward or 3 1 year backward or 3the time backward or 2 forward forward forward backward or 2 years forward years forwardlimit for years years
Sectio Section Section Section 54 Section 54F Section 54G Section 54GA n 54B 54D 54ECacquirin forward;Construc forward;Construcg the tion:3 years tion:3 yearsnew forward forwardasset Investment in the new asset or capital gain, whichever is lower (The new Investment in the asset new asset÷Net should not Investme sale Investment be nt in the consideration×Ca in the new transferred new asset pital gain; The asset or within 3 or capital assessee should capital years of its Investment in the gain, not complete gain, acquisition new asset or whicheve construction of Investment in the new Investment in the new whichever ); The new capital gain, r is lower another asset or capital gain, asset or capital gain, is lower assetHow whichever is (The new residential house whichever is lower whichever is lower (The new should notmuch is lower (The new asset property within 3 (The new asset should (The new asset should asset beexempt asset should not should years from the not be transferred not be transferred should not converted be transferred not be date of transfer of within 3 years of its within 3 years of its be into within 3 years of transferre original asset nor acquisition) acquisition) transferred money or its acquisition) d within should he within 3 any 3 years of purchase within 2 years of its loan/advan its years from the acquisition ce should acquisitio date of transfer of ) not be n) original asset taken on another house the property security of the new asset within 3 years from the date of its acquisitionIncome from Other SourcesThis is a residual head, under this head income which does not meet criteria to go to other heads is taxed.There are also some specific incomes which are to be always taxed under this head. 1. Income by way of Dividends. 2. Income from horse races/lotteries. 3. Employees contribution towards staff welfare scheme.
4. Interest on securities (debentures, Government securities and bonds). 5. Any amount received from keyman insurance policy as donation. 6. Gifts (subject to certain conditions and exemptions). 7. Interest on compensation/enhanced compensation.Agricultural IncomeAgricultural income is exempt from tax by virtue of section 10(1). Section 2(1A) defines agricultural income as :- Any rent or revenue derived from land, which is situated in India and is used for agricultural purposes. Any income derived from such land by agricultural operations including processing of agricultural produce, raised or received as rent-in-kind so as to render it fit for the market or sale of such produce. Income attributable to a farm house (subject to some conditions). Income derived from saplings or seedlings grown in a nursery.Income partly agricultural and partly businessIncome in respect of the below mentioned activities is initially computed as if it is business income and afterconsidering permissible deductions. Thereafter, 40,35 or 25 percent of the income as the case may be, istreated as business income, and the rest is treated as agricultural income. Business Agricultural Incomea income incomeGrowing & manufacturing tea in India 40% 60%Sale of latex or cenex or latex based crepes or brown crepes manufactured from field latex or 35% 65%coalgum obtained from rubber plants grown by a seller in IndiaSale of coffee grown & cured by seller in India 25% 75%Sale of coffee grown, cured, roasted & grounded by seller in India 40% 60%^a For apportionment of a composite business-cum-agricultural income, other than the above mentioned, the market value of anyagricultural produce, raised by the assessee or received by him as rent-in-kind and utilized as raw material in his business, shouldbe deducted. No further deduction is permissible in respect of any expenditure incurred by the assessee as a cultivator or receiverof rent-in-kind.Scheme of partial integration of non-agricultural income with agricultural income
If the assessee is an individual, HUF, AOP, BOI or an artificial judicial person; and the net agricultural incomeexceeds Rs. 5000 per annum; and the non-agricultural income exceeds the amount of basic exemption limit,then the tax calculation shall be:- 1. Compute tax on aggregate amount of non-agricultural and agricultural income. 2. Compute tax on aggregate amount of net agricultural income and basic exemption limit available to the assessee. 3. Calculate the difference from above mentioned two amounts and add education cess and secondary and higher secondary education cess.Permissible deductions from Gross Total Income This section requires expansion.(November 2012)Deductions allowed under Chapter VI-A i.e., sections 80C to 80U, cannot exceed gross total income of anassessee excluding short term capital gains under section 111A and any long term capital gains. Deductionsunder sections 80C to 80DDB are listed below.Section 80C DeductionsDeduction under this section is available only to an individual or an HUF.Section 80C of the Income Tax Act allows certain investments and expenditure to be deducted from totalincome up to the maximum of Rs 1,00,000. The total limit under this section is ₹120, 00 ) which can be any 0combination of the below: 1. Contribution to approved superannuation fund/public provident fund/recognized provident fund/statutory provident fund. Provident fund contribution should not exceed 1/5 th of salary & public provident fund. 2. Payment of life insurance premium. It is allowed on premium paid on self, spouse and children even if they are not dependent on father or mother (subject to a maximum of 20% of sum assured). 3. Payment in respect of non-commutable deferred annuity. 4. Unit linked Insurance policy of UTI/LIC Mutual fund Dhanraksha. 5. Subscriptions to National Savings Certificates VIII issues. 6. Deposits with National Housing Bank. 7. Principal part of loan taken for acquiring Residential House Property; provided that the house should not be transferred within 5 years. Loan for land cost for residential house is also qualified.
8. Subscriptions to schemes of PSUs providing long term finance for housing, or of housing boards constituted in India for infrastructural development of cities/towns. 9. Notified annuity plan of LIC or of any other approved insurer. 10. Units of Mutual Fund or UTI. 11. Notified pension fund by UTI or approved mutual fund. 12. Tuition fees (not including donation or development fees) towards full-time education including play- school activities, pre-nursery & nursery classes, of any 2 children of an individual, paid to University, College or School in India. 13. Investments in shares or debentures with a lock-in-period of 3 years, of approved public company exclusively engaged in infrastructure facility or power sector. 14. Subscription to the bonds issued by NABARD as specified by Central Government. 15. Any sum deposited as 5 years time deposit under Post Office Term Deposit. 16. Any sum deposited in Senior Citizen Savings Scheme. 17. Any sum deducted from salary of Government employee (subject to maximum 20% of salary) towards deferred annuity plan for benefit of self, spouse or any children. 18. Term deposit with scheduled bank for a period of not less than 5 years as per scheme notified by Central Government. 19. Investing in units of notified mutual fund investing in approved public companies engaged in infrastructure facility or power sector.Section 80CCCPayments made to LIC or to any other approved insurer under an approved pension plan is admissible fordeduction under this section. Then pension plan policy should be for individual himself out of his taxableincome. The deduction is least of the amount paid or Rs. 1,00,000.Section 80CCDContribution made by the assessee and by employer to a Notified Pension Scheme is admissible for deductionunder this section. The assesse should be an individual who is employed on or after January 1, 2004. Thededuction shall be equal to the amount contributed by the assessee and/or by the employer, not exceeding10% of his salary (basic+dearness allowance). Even a self-employed person can claim this deduction whichwill be restricted to 10% of gross total income.The total deduction available to an assessee under sections 80C, 80CCC & 80CCD is restricted to Rs.1,00,000 per annum. However, employers contribution to Notified Pension Scheme under section80CCD is not a part of the limit of Rs. 1,00,000.Section 80CCF: Investment in Infrastructure Bonds
From April, 1 2011, a maximum of ₹20,000 is deductible under section 80CCF provided that amount isinvested in infrastructure bonds.However, this deduction has not been extended to Financial year 2012-13. Omitted with effect from F. Y.2012-13.Section 80D: Medical Insurance PremiumsHealth insurance, popularly known as Mediclaim Policies, provides a deduction of up to 35,000.00 (₹15,000.00for premium payments towards policies on self, spouse and children and ₹15,000.00 for premium paymenttowards non-senior citizen dependent parents or ₹20,000.00 for premium payment towards senior citizendependent). This deduction is in addition to ₹1,00,000 savings under IT deductions clause 80C. Forconsideration under a senior citizen category, the incumbents age should be 60 years during any part of thecurrent fiscal, e.g. for the fiscal year 2010-11, the incumbent should already be 60 as on March 31, 2011), Thisdeduction is also applicable to the cheques paid by proprietor firm.Interest on Housing Loans SectionFor self occupied properties, interest paid on a housing loan up to Rs 150,000 per year is exempt from tax. Thisdeduction is in addition to the deductions under sections 80C, 80CCF and 80D. However, this is only applicablefor a residence constructed within three financial years after the loan is taken and also the loan if taken afterApril 1, 1999.If the house is not occupied due to employment, the house will be considered self occupied.For let out properties, the entire interest paid is deductible under section 24 of the Income Tax act. However,the rent is to be shown as income from such properties. 30% of rent received and municipal taxes paid areavailable for deduction of tax.The losses from all properties shall be allowed to be adjusted against salary income at the source itself.Therefore, refund claims of T.D.S. deducted in excess, on this count, will no more be necessary. Section 80DDB : Deduction in respect of Medical Treatment, etcDeduction is allowed to resident individual or HUF in respect of expenditure actually during the PY incurred forthe medical treatment of specified disease or ailment as specified in the rules 11DD for himself or a dependentrelative or a member of a HUFRefund StatusState Bank of India (SBI) is the refund banker to the Indian Income Tax Department(ITD). Your tax refunddetails are sent to SBI, by the Income tax department. Then SBI will process the refund, and send you the
refund intimation. While filing your return you can choose any one of the two Refund modes ECS orPaper(cheque). The refund status can be checked online at the NSDL site.Due Date of submission of returnThe due date of submission of return shall be ascertained according to section 139(1) of the Act as under:- -If the assessee is a company (not having any inter-nation transaction), or -If the assessee is any person other than a company whose books of accounts are required toSeptember 30 of the Assessment be audited under any law, orYear(AY) -If the assessee is a working partner in a firm whose books of accounts are required to be audited under any law. If the assessee is a company and it is required to furnish report under section 92E pertainingNovember 30 of the AY to international transactions.July 31 of the AY In any other case.Advance TaxUnder this scheme, every assessee is required to pay tax in a particular financial year, preceding theassessment year, on an estimated basis. However, if such estimated income is less than Rs. 10000, then noadvance tax is payable.The due dates of payment of advance tax are:- In case of corporate assessee OtherwiseOn or before 15 June of the previous year Up to 15% of advance tax payable -On or before 15 September of the previous year Up to 45% of advance tax payable Up to 30% of advance tax payableOn or before 15 December of the previous year Up to 75% of advance tax payable Up to 60% of advance tax payableOn or before 15 March of the previous year Up to 100% of advance tax payable Up to 100% of advance tax payableAny default in payment of advance tax attracts penalty under section 234B and any deferment of advance taxattracts penalty under section 234C.Tax deducted at Source (TDS)
The general rule is that the total income of an assessee for the previous year is taxable in the relevantassessment year. However, income-tax is recovered from the assessee in the previous year itself by way ofTDS. The relevant provisions therein are listed below. (To be used for reference only. The detailed provisionstherein are not listed below.1) Threshold limit (up to which noSection Nature of payment TDS to be deducted tax is deductible) As specified for individual in Part III192 Salary to any person Exemption limit of I Schedule Subject to detailed provisions of193 2 Interest on securities to any resident 10% given section Interest (other than interest on securities) to Rs. 10000 (for Bank/cooperative194A 2 10% any resident bank) & Rs. 5000 otherwise194B Winning from lotteries etc. to any person Rs. 10000 30%194BB Winning from horse races to any person Rs. 5000 30% Rs. 30000 (for single contract) & 2% (for companies/firms) & 1%194C 2 Payment to resident contractors Rs. 75000 (for aggregate otherwise consideration in a financial year)194D Insurance commission to resident Rs. 20000 10% Payment to non-resident sportsmen or194E Not applicable 10% sports association Payment of deposit under National Savings194EE Rs. 2500 20% Scheme to any person Commission on sale of lottery tickets to194G Rs. 1000 10% any person
194H 2 Commission/brokerage to a resident Rs. 5000 10% 2% (for plant,machinery,equipment)194-I 2 Rents paid to any resident Rs. 180000 & 10% (for land,building,furniture) Fees for professional/technical services;194J 2 Rs. 30000 10% Royalty Interest paid by Infrastructure Development194LB Fund under section 10(47) to non-resident - 5% or foreign company Interest or other sums (not being salary) As per double taxation avoidance195 paid to non-residents or foreign company - treaty except under section 115O^1 At what time tax has to be deducted at source and some other specifications are subject to the above sections.^2 In most cases, these payments shall not to deducted by an individual or an HUF if books of accounts are not required to beaudited in the immediately preceding financial year.In most cases, the tax deducted should be deposited within 7 days from the end of the month in which tax wasdeducted.Corporate Income taxIncome-wise number of corporate assessees in IndiaFor companies, income is taxed at a flat rate of 30% for Indian companies, with a 5% surcharge applied on thetax paid by companies with gross turnover over ₹1 crore (10 million). Foreign companies pay at the income taxat the rate of 40% plus 2% surcharge on the income tax payable. An education cess of 3% (on both the taxand the surcharge) are payable, yielding effective tax rates of 32.5% for domestic companies and 41.2% forforeign companies.  From 2005-06, electronic filing of company returns is mandatory.
Tax ReturnsThere are five categories of Income Tax returns. 1. Normal Return 2. Belated Return 3. Revised Return 4. Defective Return 5. Returns In Response To NoticesNormal ReturnReturns filed within the return filing due date, that is 31 July or 30 September of concerned assessment year.Belated ReturnIn case of failure to file the return on or before the due date, belated return can be filed before the expiry of oneyear from the end of the relevant assessment year.Revised ReturnIn case of any omission or any wrong statement mentioned in the normal return can be revised at any timebefore the expiry of one year from the end of the relevant assessment year.Defective ReturnAssessing Officer considers that the return is defective, he may intimate the defect. One has to rectify thedefect within a period of fifteen days from the date of such intimation. If the assessee wants more time, he canfile an application to the A O and a further 15 days can be granted at the instance of the A O.Returns In Response To NoticesAssessing officer in the process of making assessment, may serve a notice under various sections like 142(1),148(1), 153A(a) or 153C. Returns are required to be furnished within the date specified on the respectivenotices.Annual Information Return and StatementsAnnual Information ReturnThose who is responsible for registering, or, maintaining books of account or other documents containing arecord of any specified financial transaction, shall furnish an annual information return in Form No.61A.Statements By Producers
Producers of a cinematographic film during the financial year shall, prepare and deliver to the Assessing Officera statement in the Form No.52A, within 30 days from the end of such financial year or within 30 days from the date of the completion of the production of the film,whichever is earlier.Statements By Non-Resident Having A Liaison Office In IndiaWith effect from 01,June 2011, Non-Resident having a liaison office in India shall prepare and deliver astatement in Form No. 49C to the Assessing Officer within sixty days from the end of such financial year.Tax PenaltiesThe major number of penalties initiated every year as a ritual by I-T Authorities is under section271(1)(c) which is for either concealment of income or for furnishing inaccurate particulars of income."If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedingsunder this Act, is satisfied that any person-(b) has failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 orfails to comply with a direction issued under sub-section (2A) of section 142, or(c) has concealed the particulars of his income or furnished inaccurate particulars of such income,he may direct that such person shall pay by way of penalty,-(ii) in the cases referred to in clause (b), in addition to any tax payable by him, a sum of ten thousand rupeesfor each such failure;(iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be lessthan, but which shall not exceed three times, the amount of tax sought to be evaded by reason of theconcealment of particulars of his income or the furnishing of inaccurate particulars of such income.See also