This document provides information on various aspects of income tax in India including different types of income and applicable tax rates, common deductions and exemptions available, procedures for tax filing and payment, due dates and forms for tax returns. Key points covered include income from salary and applicable tax deductions, capital gains tax rates, section 80C deductions, filing tax returns online or physically and related timelines.

2.  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.

3.  In addition, the Form 16 will contain any other deductions
provided from salary such as:
 Medical reimbursement: Up to 15,000 per year is tax free if supported by
bills.
 Transport allowance: Up to 800 per month (9,600 per year) is tax free if
provided as transport allowance. No bills are required for this amount.
 Conveyance allowance: is tax exempt.
 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.
 House rent allowance: the least of the following is available as exemption
 Actual HRA received
 50%/40%(metro/non-metro) of basic salary

4.  Income from House property is computed by
taking into account what is called Gross
Annual Value of the property.
 The annual value (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.)

5.  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)
 No other deduction available
 Interest paid or payable on a housing loan against
this house

6.  LTCG : 20%
 LTCG in case of sell of equity shares: Nil
 STCG Tax: According to slab
 STCG in case of sell of equity shares: 15%

7.  Income by way of Dividends
 Income from horse races
 Income from winning bull races
 Income from shares (dividend other than
Indian company)

8.  Section 80C Deductions
 Section 80C of the Income Tax Act [1] allows certain investments and
expenditure to be deducted from total income up to the maximum of 1 lac. The
total limit under this section is ₹ 100,000 ) which can be any combination of
the below.
 Contribution to Provident Fund or Public Provident Fund
 Payment of life insurance premium
 Investment in pension Plans
 Investment in Equity Linked Savings schemes (ELSS) of mutual funds.
 Investment in National Savings Certificates
 Tax saving Fixed Deposits provided by banks for a tenure of 5 years
 Payments towards principal repayment of housing loans. Also any
registration fee or stamp duty paid.
 Payments towards tuition fees for children to any school or college or
university or similar institution (Only for 2 children)
 Post office investments

9.  From April, 1 2011, a maximum of ₹ 20,000 is
deductible under section 80CCF provided that
amount is invested in infrastructure bonds.
This is in addition to the 100,000 deduction
allowed under Section 80C.

10.  Health insurance, popularly known as
Mediclaim Policies, provides a deduction of
up to 35,000.00 (₹ 15,000.00 for premium
payments towards policies on self, spouse and
children and ₹ 15,000.00 for premium
payment towards non-senior citizen dependent
parents or ₹ 20,000.00 for premium payment
towards senior citizen dependent).

11. Interest on Housing Loans Section
For self occupied properties, interest paid on a
housing loan up to Rs 150,000 per year is
exempt from tax. This deduction is in addition
to the deductions under sections 80C, 80CCF
and 80D. However, this is only applicable for
a residence constructed within three financial
years after the loan is taken and also the loan
if taken after April 1, 1999.

12.  Income tax calculation for the year 2012 2013 :
You entered : Income = 905730, Gender = female,
Seniority = none
Tax for amount above 500000 at rate of 20% is : 81146
Tax for amount above 200000 at rate of 10% is : 30000
Total Tax = 111146
Income tax calculation for previous year (2011 2012) :
You entered : Income = 905730, Gender = female,
Seniority = none
Tax for amount above 800000 at rate of 30% is : 31719
Tax for amount above 500000 at rate of 20% is : 60000
Tax for amount above 190000 at rate of 10% is : 31000
Total Tax = 122719

15.  Procedure for depositing tax:
A form called Challan available in the Income Tax
department, in banks and on the IT department web site
should be filled up and deposited in the bank along with the
money. Taxes can also be paid on-line.
 Advance tax :
It is paid in instalments. The amount payable is to be calculated
in the following manner.
For Non corporate:
By 15th Jun - Nil
By 15th Sep – 30%
By 15th Dec – 60%
By 15th March – 100%

16.  Return of Income:
 It is a prescribed form through which the particulars
of income earned by a person in a financial year and
taxes paid on such income is communicated to the
Income tax department after the end of the Financial
year.
 Different forms are prescribed for filing of returns for
different Status and Nature of income.
 The form can also be downloaded from the
site http://www.incometaxindia.gov.in/.

17.  ITR1
For Individuals having Income from Salary/ Pension/ family pension &
Interest
 ITR2
For Individuals and HUFs not having Income from Business or Profession
 ITR3
For Individuals/HUFs being partners in firms and not carrying out business
or profession under any proprietorship
 ITR4
For individuals & HUFs having income from a proprietary business or
profession
 ITR5
For firms, AOPs and BOIs
 ITR6
For Companies other than companies claiming exemption under section 11

18.  ITR7
For persons including companies required to furnish return under section
139(4A) or section 139(4B) or section 139(4C) or section 139(4D)
 ITR8
Return for Fringe Benefits
 ITRV
Where the data of the Return of Income/Fringe Benefits in Form ITR-1,
ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-8 transmitted electronically
without digital signature

19.  Documents to be enclosed along with the return of
income
The new return form numbering 1 to 8 is annexure
less. Hence no documents need to be attached

20.  Companies & their Directors 31st October
 Other business entities,
other than companies,
if their accounts are auditable
& their working partners 31st October
 In all other case 31st July

21.  Companies and firms are compulsorily required to
file their return electronically.
 e-filing is compulsory for the A.Y. 2012-13 onwards,
for an individual or a Hindu Undivided Family if the
total income exceeded Rs. 10 lakh.
 digital signature is not mandatory. Taxpayers, can
also transmit the data in the return electronically, and
thereafter submit verification of the return in Form
ITR-V.

22.  E-filing offers convenience of time and place to tax
payers.
 This facility is available round the clock and returns
could be filed from any place in the world.
 It also eliminates/ reduces interface between assessee
and tax officials.

23.  Visit ITD e-filing website https://incometaxindiaefiling.gov.in
 Select appropriate type of Return Form based on Sources of
Income and status of taxpayer. Download the excel based
utility from the ITD e-filing website.
 Fill your return offline in the downloaded excel sheet and
generate a XML file. Register your PAN on the ITD e-filing
website, if you are using it for the first time. User id / Login id
will be the PAN itself. After successful registration an
activation link will be sent to your registered email id. Upon
activation you can avail various facilities available on e-filing
website including submission of income tax return.

24.  After login, click on "Submit Return". Select the AY and
type of form to be uploaded.
 Browse to select XML file for uploading in the ITD e-filing
website and click on "Upload" button.
 On successful upload, acknowledgement details would be
displayed. Click on "Download" to download the
acknowledgement i.e. ITR-V Form for the taxpayers, who are
not using digital signature. This is an acknowledgement cum
verification form.

25.  The tax payer has to print and duly sign the same and
send it to "Income Tax Department – CPC, Post Bag
No - 1, Electronic City Post Office, Bengaluru -
560100, Karnataka" within 120 days of uploading the
return on the ITD e-filing website by ordinary post or
speed post only. Upon receipt of the ITR-V, the ITD will
send an e-mail acknowledging the receipt of ITR-V to the
email id entered in the return form. No Form ITR-V shall
be received in any other office of the Income-tax
Department or in any other manner. This completes the
return filing process for non-digitally signed returns.

26.  For the taxpayers using digital signature for uploading the
form, taxpayer has to register the DSC before uploading the
return. In these cases, no ITR-V will be generated. Website
will generate "Acknowledgement" instead and return will be
treated as filed. Taxpayer may take a printout of the
"Acknowledgement" for his/her record.


27.  Yes. It may be furnished at any time before the
expiry of two years from the end of the financial year
in which the income was earned.
 For example, in case of income earned during FY
2006-07, the belated return can be filed before
31st March 2009.

28.  The excess tax can be claimed as refund by
filing your income tax return. It will be
refunded by issue of cheque or by crediting to
your bank account.
 The department has been making efforts to
settle refund claims within four months from
the month of filing return.

29.  Am I required to keep a copy of the return
filed as proof and for how long?
 Yes. Since legal proceedings under the income
tax act can be initiated up to six years prior to
the current financial year, you must maintain
such documents at least for this period.

30.  Non-payment of tax attracts interests, penalty
and prosecution.
 The prosecution can lead to rigorous
imprisonment from 6 months to 7 years and
fine.

31.  Based on information available with the
department a small percentage of returns are
picked up for verification. This process is
called scrutiny.
 You will be given full opportunity to put forth
views and evidences to support your claims.

32.  What recourse is available to me if I am unhappy
with the order passed by my Assessing officer?
 The Income tax Act has provided for filing appeals in
such cases. The first appellate authority is the
Commissioner (Appeals). Subsequently the matter
can be taken to the Income Tax Appellate Tribunal,
then to the High Court and Supreme Court.

33. A salaried employee is not required to file Income Tax Return for
A.Y.2012-13 provided all the following conditions are met:-
 He has earned only Salary and Income from Saving Bank
Account and the annual interest earned from SB A/c is less than Rs.
10,000/-.
 His Total Income does not exceed Rs. 5 lacs (Total Income
means Gross Total Income less Deductions under Chapter VIA).
 He has reported his PAN and interest on Saving Bank Account to
his employer.
 He has received Form-16 from his employer and his TDS has been
deposited with Central Govt.
 He has received salary only form One Employer and has No
Refund claim
 He has not received any notice from Income Tax Department for
filing of Income Tax Returns.

34.  Practice tax avoidance.
 Legitimate methods to reduce your tax obligation to
your fair share but no more.
 Financial decisions related to purchasing, investing,
and retirement planning are the most heavily affected
by tax laws.
 Tax Evasion.
 Illegally not paying all the taxes you owe, such as not
reporting all income.

35.  Salary Restructuring
 Restructuring a few components could reduce your
tax liability.
E.g. Opt for food coupons instead of lunch allowances,
as they are exempt from tax up to Rs 60,000 p.a.
 Include medical allowance, transport allowance,
education allowance, uniform expenses (if any), and
telephone expenses as part of salary. Produce bills of
actual expenses incurred for these allowances to
reduce tax.

36.  Utilizing Section 80C
 Section 80C offers a maximum deduction of up to
Rs. 1, 00,000. Utilize this section to the fullest by investing
in any of the available investment options
 Options beyond 80C
 Section 80D – Deduction of Rs. 15,000 for medical
insurance of self, spouse and dependent children and Rs.
20,000 for medical insurance of parents above 65 years.
 Section 80CCF- Deduction of Rs 20,000, in addition to the
Rs 1 lakh under 80C, for investments in
notified infrastructure bonds.
 Section 80G- Donations to specified funds or charitable
institutions.

37.  House Rent Allowance
 Are you paying rent, yet not receiving any HRA from your
company? The least of the following could be claimed under
Section 80GG.
 25% of the total income or,
 Rs 2,000 per month or,
 Excess of rent paid over 10% of total income
 This deduction will however not be allowed, if you, your
spouse or minor child owns a residential accommodation in
the location where you reside or perform office duties.

38.  If HRA forms part of your salary, then the
minimum of the following three is available as
exemption.
 The actual HRA received from your employer
 The actual rent paid by you for the house,
minus 10% of your salary (this includes basic
+ dearness allowance, if any)
 50% of your basic salary (for a metro) or 40%
of your basic salary (for non-metro).

39.  Tax Saving from Home Loans
 Use your home loan efficiently to save more
tax. The principal component of your loan, is
included under Section 80c, offering a
deduction up to Rs. 1, 00,000.
 The interest portion offers a deduction up to
Rs. 1, 50,000 separately under Section 24.

40.  To minimize taxes owed...
 If you expect to have the same or a lower tax rate next year,
accelerate deductions into the current year.
 If you expect to have a lower or the same tax rate next year,
delay the receipt of income until next year.
 If you expect to have a higher tax rate next year, delay
deductions since they will have a greater benefit.
 If you expect to have a higher tax rate next year, accelerate
the receipt of income to have it taxed at the current lower
rate