it's very useful fr those students who desire to know about income tax.................

1. INCOME TAX

2. An income tax is a government tax imposed
on individuals or entities (taxpayers) that
varies with the income or profits (taxable
income) of the taxpayer.
What is income tax

3. Income tax is a direct tax
It is levied & collected by
Central Government
In case of direct tax , burden and incidence are on same person who
pays the tax, but in case of indirect tax, the burden is on one and
incidence is on another.

4. Tax on “Income”
 Income tax is imposed on taxable income of
all persons including individuals, Hindu Undivided
Families (HUFs), companies, firms, local authority
and any other artificial judicial person.
 Levy of tax is separate on each of the persons and is
governed by the Indian Income Tax Act, 1961.
 Income tax is a key source of funds that the
government uses to fund its activities and serve the
public.

5. Scope of taxable income & Charge
Net income
range (Individual
resident (Age
below 60 Yrs.) or
any NRI / HUF /
AOP / BOI / AJP)
Net income
range (For
resident senior
citizen1)
Net income
range (For super
senior citizen2)
Net income
range (For any
other person
excluding
companies and
co-operative
societies)
Income Tax
rates3
Up to 200,000 Up to 250,000 Up to 500,000 Up to 200,000 NIL
200,001–500,000
250,001–
500,000
-
200,001–
500,000
10%
500,001–
1,000,000
500,001–
1,000,000
500,001–
1,000,000
500,001–
1,000,000
20%
Above 1,000,000
Above
1,000,000
Above
1,000,000
Above
1,000,000
30%
A surcharge of 10% on income tax payable is applicable for every non-corporate
assessee, whose total income exceeds 10 million

6. What comes under Income
Income broadly includes :
 Profits & gains from business and profession
 Salary income
 Winnings from lotteries, crossword puzzles, races,
games, gambling or betting
 Allowances given to assessee by his employee
 Capital gains,

7. Previous Yr. & Assessment Yr.
The year in which income is earned is known as
previous year (P.Y.) and it is taxed in the next year
called Assessment year(A.Y.)

8. Heads of Income
Income from Salary
Income from House Property
Income from Business or Profession
Income from Capital Gains
Income from Other Sources
1.
2.
3.
4.
5.

9. Components of salary
 Basic salary,
 Dearness Allowance(DA),
 House Rent Allowance(HRA),
 Conveyance allowance,
 Children education allowance,
 Children Hostel expenditure allowance,
 Travel concession

10. Income from Salary
 Income can be charged under this head only if
there is an employer employee relationship between
the payer and payee.
 Salary includes basic salary or wages, pension,
gratuity, commission, retirement benefits. The
aggregate of the above incomes, after exemptions
available, is known as Gross Salary
 Basic salary along with commissions and bonuses is
fully taxable.

11. Income from House Property
 Rental incomes arising from residential or
commercial property are taxable under the IT act.
Rental agreement would form the basis to determine
income under this head

12. Income from Business or profession
 Income earned through your profession or business
is charged under the head “profits and gains of
business or profession”.
 The income chargeable to tax is the difference
between the credits received on running the
business and expenses incurred.
 The deductions allowed are depreciation of assets
used for business; rent for premises; insurance and
repairs for machinery and furniture;
advertisements; traveling and many more.

13. Income from Capital Gains
 Any profit or gain arising from transfer of capital
asset held as investments are chargeable to tax
under the head “capital gains”.

14. Income from Other sources
 This head comprises miscellaneous incomes, such
as interest from bank deposits, winnings from
game shows and lotteries.