Category Archives: Income Tax

Every year at the end of the month of March, every company, organization, institution and the Government sector offices and even the employees working in the organizations etc. have so many questions revolving in their mind that- Do we need to Pay Tax? Are there any changes in the rates and schemes? Well, Taxes are mandatory. Every eligible citizen of India has to pay taxes.

What is Tax

Tax is a charge that is levied by the Central Government or the State Government of India. The tax charge is implemented for the betterment of the country’s economy and improving the standards and welfare of the country. The tax rules and the types of taxes are constituted by the Ministry of Finance’s Department of Revenue.

Different Types of Taxes in India

Various types of taxes in India are

• Direct Taxes
• Indirect Taxes
• Other Taxes

Direct Tax

Direct Taxes are the taxes that are directly paid or imposed on the Government of India. These taxes are controlled by the Government body, Department of Revenue named as Central Board of Direct Taxes (CBDT). The different types of direct taxes in India are

1. Income Tax– Income Tax in India is levied on anybody who earns an income in India, whether they are resident and non-resident. They are classified into some categories like- individual person, Hindu Undivided Family (HUF), Association of Person (AOP), Body of Individuals, Corporate Firms, Companies, Local Authorities and another artificial jurisdictional person who have earned an income and they are eligible to pay the income tax. The Income tax is charged on the total income of the previous year at the rates prescribed for the particular assessment year. According to the assessment year of 2017-2018, the income tax rates are categorized on the basis of the income slab.

The income tax rates are distributed in 5%, 10%, 20%, and 30% on the basis of the total income. A Surcharge of 10% of the income tax is added for the income between Rs 50 Lacs to 1 Crore. A surcharge of 15% is charged if the total income exceeds Rs 1 Crore. An Educational Cess of 3% is also charged in case of every individual.

For more details regarding the Income Tax rates for FY 17-18 please click here

2. Capital Gains Tax– It is a tax gain on capital. If you are selling a property, bond or dealing any contract and you are gaining a profit in it, then you need to pay Capital Gains Tax. This type of tax is of two types- short term and long term. The long-term Capital Gains Tax is charged if the capital assets are charged for more than 1 year in a shared case and 3 years in the case of contract whereas short-term Capital Gains Tax is charged if it is less than the certain period mentioned above for the long term.
3. Securities Transaction Tax– This type of tax is applicable, on the platform of stock exchange. If you are buying or selling equity shares, derivative instruments, equity oriented Mutual Funds, then the Security Transaction Tax is implemented.

The Current Security Transaction Tax Rates

4. Wealth Tax- This tax was imposed on one individual if their net wealth exceeds 30 lacs at the rate of 1% on the amount exceeding 30 lacs. Wealth Tax is no longer leviable from the assessment year 2016-17.
5. Corporate Tax- Corporates are the annual or the yearly taxes that are payable on the income of the corporate organization operating in India. These are broadly classified as Domestic and Foreign Companies.

Indirect Taxes

Indirect Taxes are the taxes that are not directly levied on the taxpayer or the individual but indirectly imposed on the expense incurred by the individual. Like for an example, when we buy any product, we pay GST (Previously VAT or Service Tax in case of Services). Following are the types of indirect taxes

1. Good and Services Tax (GST)– It is a type of Indirect Tax which is charged on the sale, consumption, manufacture of Goods and services at the National Level. GST was amended by the Constitution of India (122nd Amendment Bill) 2014. GST is implemented for the country’s economic growth and reduce the overall tax burden on the goods in the country. The other taxes that are included in the umbrella of GST are
   1. Value Added Tax (VAT)– The Sales Tax is complimented with Value Added Tax to make it uniform across the country. These taxes are applied when the goods are sold completely and finally to the customer. The VAT is now a part of Goods and Service Tax (GST)
   2. Excise Duty– Excise duty is the type of indirect tax that is levied by the Government on the goods and commodities that are manufactured in India. These goods are meant for domestic consumption. Ex-Salt, sugar, newspapers, Tobacco, Gasoline, Alcohol etc. Excise is also a part of GST now.
   3. Service Tax–  The Service providers are connected to the service tax. The service tax is charged on the aggregate amount that is received by the service provider. Example- leasing, The INTERNET, transportation etc. are subjected to the service tax. Service
   4. Customs Duty– These are the indirect taxes that are imposed on the goods that are imposed on the goods that are exported from India and imported to India.
   5. Sales Tax– These taxes are imposed by the Government on the sale and purchase of the goods in the Indian Market. These are charged on the movable goods. Anything you purchase in the market, you pay sales tax for it. Examples are- telephone, salon, the advertising company, health center etc. The last rate of the Sales tax is 14.5%. It is now replaced by GST as is the case with all above-stated taxes. For the restaurants serving alcohol, the tax charged will be 18%.
   6. Education, Healthcare are going to be exempted from GST.
   7. GST charges on the services on Non-AC Restaurants will be 12%.
   8. GST on Gold and Jewelry will be 3%
   9. GST on Diamond and Precious Stones will be 0.25%
   10. Petroleum Products and Liquor is not a part of the GST regime and is still under the VAT and Excise Model.

GST is divided into 3 parts

1. Central GST (Levied by Union Government of India)
2. State GST (Levied by Various State Governments)
3. Integrated GST (Levied by Union Government when there is a movement of Goods or Services across state lines.

GST Rates comprises CGST + SGST which are equal and half of the below-given rates. GST Rate Slabs are given below

The GST Rates are distributed on the basis of the product category

Other Indirect Taxes

1. Professional Tax– It is the tax that is charged on the income on the basis of the profession or employment. An individual earning an income or anyone holding a profession such as a lawyer, doctor, interior or fashion designer etc.
2. Municipal Tax– This tax is imposed by the local authority called as Municipality of the country. These are the local taxes that are paid to the Municipal Corporation if he or she owes a house property. These taxes are paid for the maintenance of sewage, road, civic services.
3. Entertainment Tax– This tax is imposed by the State Government on the financial transaction that is related to the Entertainment. These taxes are imposed on movie tickets, stage/ theater shows, broadcasting, DTH and cable services. This tax is no longer active and covered under the umbrella of GST from July 1st, 2017 Onwards.
4. Stamp Duty, Registration Fees, Transfer Tax–  When you are purchasing a property then you have to pay additional charges like the stamp duty, registration fees, transfer tax etc. This tax is levied by the Government for preparing the legal documents of the property. This is the tax is imposed over the handling of the title of the property ownership from one person to another. The amount varies from property to property.
5. Education Cess and Surcharge– The Education Cess is divided into two types – Primary Education Cess and Higher Secondary Education Cess. This tax is levied by the Government to improve the education quality in the public schools and colleges. It comprises of the 3% of the income tax. The Cess charges are also included under the GST family structure. Whereas, the surcharge is an extra charge that is clubbed to your existing tax calculation. This tax is applied on the tax amount.
6. Gift Tax– If you receive the gift from someone, it is merged with your income and you need to pay tax on it. This tax is called Gift Tax. This tax is applicable if the amount is more than Rs 50,000/- in a year.
7. Swachh Bharat Cess – This tax is recently imposed by the Government. The tax is applicable to all the taxable services from 15th November 2015. The effective rate of Swachh Bharat Cess is 0.5%. Swachh Bharat Cess is abolished after the introduction of GST.
8. Krishi Kalyan Cess– This tax is levied for the welfare of the farmers. The effective rate of the Krishi Kalyan Cess is 0.5%. This tax came into effect in the year June 1st, 2016. Krishi Kalyan Cess has been abolished after the introduction of GST
9. Entry Tax– This tax is levied or charged on the goods that are bought within the state or from outside the state. Entry Tax is separately charged by the State Government of India. This tax is also known as the Octroi Tax. Octroi is no longer levied after the introduction of GST.

Some other forms of taxes are

• Dividend tax
• Infrastructure tax
• Property tax
• Luxury tax
• Toll tax.

The above Cess mentioned like -Swachh Bharat Cess, Krishi Kalyan Cess, and the Entry Tax are no longer active now and they are clubbed with GST.

Latest Update- The latest report on tax says that after the introduction of the GST all the indirect taxes are merged under GST. So, the above taxes are removed due to the arrival of GST in the queue of Taxes. So, the taxes are reduced from number 25 to 10.

Income tax refers to a tax levied on the income or profits. Income tax levied on business is also called a corporate tax. All the major tax in India are imposed by the central government and a few small ones by local authorities like the Municipality. There are two types of taxes-direct and indirect tax. Direct tax refers to the tax directly levied on a person’s income while indirect tax can be of various forms like service tax, Value Added Tax, Restaurant bill etc.

The income tax act is under the mandate of Income Tax Act 1961. The IRS which is the acronym for Indian Revenue Service deals with the collection and administration of various taxes. The logo of the income tax department “Kush Mulo Dand” is a verse taken from Kautilya’s “Arthashashtra” which means that as citizens of India we should understand the importance of paying taxes and any person not doing so is punishable by law.

Importance of Paying Tax

Regular payment of tax fall under civic duty and not paying taxes is punishable by law and might lead to fine or imprisonment.

The importance of paying taxes are

• The taxes that we pay goes to a number of places. They are paid for the manufacturing and maintenance of roads, infrastructure, the establishment of libraries and public parks etc.
• Taxes are also a major source of revenue for various government schemes and scholarship meant for the weaker section of the society.
• Further, part of our income tax also goes to the defense sector of the country including police and firefighters.

Eligibility for Income Tax

Salaried people are required to pay a part of their income as income tax. To pay income tax a person should fill form 16. It is basically a certificate by the employer stating the deduction of TDS on the salary. The form is issued at the end of each financial year. However, not everyone is required to file for income tax. In case a person is not eligible then he or she is not required to fill form 16. In such a case, the employer does not provide this form to the employee. The eligibility for taxation for people who are less than 60 years for the financial year 2017-18 are for both men and women are

Taxation for people (both men and women) above 60 years and less than 80 years

Taxation for people above 80 years (both men and women)

Income tax for business or corporate tax criteria are

Documents Required

The list of documents required for tax deduction should be collected beforehand so as to avoid last minute haste.

The list of documents required are

1. ID Proof: PAN card, passport, Aadhaar card
2. Salary proof: Form 16 (part A and part B and 12 BA)
3. Proof of income in the form of interest
   • Bank passbook or interest certificate on saving account
   • Interest certificate for all fixed deposits
   • Income from other sources like commission, dividend etc.
4. Proof of tax saving investments like NSC, life insurance, PPF etc
5. Proof of income from property
   • Certificate of possession of the property
   • Receipts of municipal taxes
   • House loan certificates
   • Form 16A on rent
6. Proof of capital gain
   • sale of property sale deed
   • sale related expenses
   • expenses relating to purchase
   • reinvested property’s sale deed
7. Other claims from employers
   • Rent Receipt
   • Travel cost

Form 26AS: it deals with all the incomes earned during the year and the tax deducted on the spot.

Income Tax Returns

Tax returns are basically the various income and refund to be earned by a person from the Government like tax liability, details of tax paid etc. Income tax returns basically form that every salaried person is required to file every year to the Income Tax Department. If excess tax has been paid in a year then the person is liable for refund depending upon the interpretations and calculation of the income tax department. Income Tax returns require the correct form to be filled.

ITR 1: This is a very easy and simple form. Here the details regarding salary/pension or income from property and other sources must be mentioned. However, this form need not be filled by a person whose income is more than 50 Lakhs, have a taxable capital gain, foreign assets, income from business or other professions, income from more than one house property and if income from agriculture exceeds Rs 5000.

ITR 2: This form is to fill if a person gets income from salary or pension, income from capital gains, income from house properties, income from foreign assets and other sources of income and if agricultural income is more than Rs 5000. This form should not be filled if a person gets income from business or profession.

ITR 3: This form is to be filled by an individual or Hindu Undivided Family when the source of income is from a business or profession, house property, pension/salary or other sources. This form should not be filled if a person has opted for resumption taxes.

Things to be kept in mind while filing IT returns

• A person should mention in their tax returns regarding deposits which have been more than 2 lakhs after demonetization.
• The cash deposited should match with the information provided while filing an ITR. In case of a mismatch, a person can face a penalty.
• Income from interest should also be mentioned like income from interest on tax saving schemes and deposits.
• Aadhaar must not only be linked with PAN but an individual should also mention Aadhaar details while filing tax returns. Not doing so might invite prosecution or fine under section 277
• Income from the previous employer should also be mentioned
• If a person is working abroad then he or she is required to give details of the foreign bank account, date of opening, interest incurred and field number.
• The Tax department also asks for information about financial assets if the earning is more than 50 lakhs
• Lastly, a person should keep in mind the last date of filing tax returns.

Income Tax Refund

If a person pays more taxes then he or she is liable for income tax refunds based on the calculations and interpretation of the Income Tax Department. The refund can be filed both online as well as physically. Normally the refund takes place within 2 to 6 months. The status of the refund can also be checked online. It will be paid either directly to the bank account or via cheque. The following steps should be taken while filing for a refund

For the online filing, the following steps should be taken

1. Visit the official website of the Income Tax Department
2. Enter your user id and password
3. After logging in select the “my account”tab and then select “refund reissue request” option in the drop down menu
4. After this, a form will appear on the screen. The tax payer is required to fill the form and then click on”validate” for the successful submission of the claim.

The procedure of Paying Income Tax

Income Tax can be paid both offline as well online. If a person wants to pay offline these steps should be taken.

• Download the ITR-V document. To download one should visit the income tax department official website.
• After downloading the form, PAN number and date of birth must be used as a password to open the form. It must be noted that the password should be written in the appropriate box, should not have any space in between and should be written in small letters.
• The ITR-V comprises of one page and it should be signed with blue ink by the taxpayer
• The form should be sent via post to the following address:

Post Bag No 1, Electronic City Post Office,

     Bengaluru, Karnataka-560100

For online tax submission, the following steps should be taken

• Visit the official website of Income tax department for income tax e-filing
• Click on “register yourself” in the top right-hand side corner of the page
• After this, a registration form will appear, select the user type as either “individual” or “HUF” and then click on “continue”
• After selecting the user type, a basic details form will appear. It is mandatory to fill all the boxes where the asterisk is provided and then click on “continue”
• After filling in the basic details, a registration form will appear on the screen. All the asterisk marked boxes are mandatory and the user should provide the current mobile number and e-mail id.
• After filling up the registration form click on “submit”. After successful registration, a mail will be sent to the registered email id confirming the registration and an OTP will be sent to the registered mobile number.
• The mail sent by the Income Tax department will consist of an activation link.
• When the activation link is clicked it will get redirected to the activation page where the user is required to provide the OTP received in his or her registered mobile number and then hit the “submit” button
• The registration process gets completed after submitting the OTP.

Another way of online tax payment

• Visit the e-filing website of the income tax department
• Go to e-file and click on “prepare and submit ITR online”.(user can fill only ITRs1 or 4s online)
• Select the ITR form and the assessment year
• After filling the ITR form click on “submit”
• The digital signature certificate must be uploaded if applicable and then click on “submit”
• If the Digital signature certificate is not uploaded then the ITR-V link will be displayed. After clicking on the link the user is redirected to the ITR-V form. The form will be sent to his or her email id. If the digital signature certificate is uploaded then the return filing process is complete.

Tax Saving Instruments

There are a number of tax saving schemes and deposits like PPF, NPS, NSC, ELSS, Fixed deposit etc. that can be used for reducing the income tax burden. Some of the major tax saving schemes and deposits in India are:

Public Provident Fund: It is also commonly known as PPF. It is a tax saving cum pension scheme. It acquires maturity after completing 15 years. The minimum deposit per year is Rs500 and the maximum deposit is Rs 1.5 lakhs per annum.

Fixed Deposit: It does not have a fixed maturity period. The deposit can be opened after 10 years or even after 7 days. There is no upper limit on the maximum investment

Mutual fund/ELSS: The minimum maturity period of mutual funds is three years. The minimum investment is Rs 500 and there is no upper limit on the maximum investment. However, the tax is deductible only on a maximum of 1.5 lakhs per annum.

NSC: The NSC can be bought with the denomination of Rs100, Rs500, Rs1000, Rs5000 and Rs10000. There is no limit on the maximum amount of investment that a person can invest. However it the tax is deductible only till 1.5 lakh rupees per year. There are maturity period, one for 5 years and one for 10 years.

Recurring deposit: the term period varies from 1 year to 10 years. The minimum deposit should be 1000 but tax will be exempted if the interest earned is more than 10000.

Linking Pan with Aadhaar

The government of India has made it mandatory for all taxpayer to link their PAN cards with their Aadhaar cards. This step is taken to prevent fake PAN cards. Infant in a recent report it has been stated that the government has deactivated multiple PAN cards due to there multiple presences so as prevent tax circumvention. As many as 11.44 lakhs PAN cards have been deactivated. This has been done to prevent fake identities and illegal purchase of properties. The PAN and the Aadhaar can be linked with the following steps:

• Visit the official e-filing website of Income Tax department
• Click on “link Aadhaar” in the left-hand side of the page
• After this a form will appear whereby the user is required to fill in the details of his PAN number, Aadhaar number, Name as per Aadhaar, date birth. The user can verify either by entering the captcha code or request for an OTP.
• The OTP will be sent to the registered mobile number.
• After verifying, click on link Aadhaar.

The Government has decided to mandate linking Aadhaar with PAN for income tax filing and also the deadline for linkage has been extended to 31 Aug 2017.

Check out the procedure to link Aadhaar with Pan using this Link.

Income Tax Return is the income tax return which you need to file when you have income, depending on the slab range stated by the Government of India. It stores the complete data about the incomes and the investment of a person in a certain fiscal year. For filing an ITR online you need to e-file it online.

What is an e-filing?

The process of electronically filing the income tax return using the internet is known as e-filing. It is a mandatory process for all the companies and firms and individuals requiring the statutory audit and submits the income tax return for the Annual Year 2017-18. The e-filing procedure is possible with or without the digital signature.

Filing an income tax return online can help the person fill all the following relevant information online and can submit the form online itself.

This step by step guide will help you file your ITR quite easily

• Gather All the Information and Documents

Before starting filing an income tax return, make sure you keep all your documents, papers and identity card information ready. This will shorten out your time and will not keep you in a mess. The documents that you need while filing an ITR are

1. PAN Card- Permanent Accountant Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department. A typical PAN is AABPS1205E.
2. Form 16 received from your employer- Form 16 is only applicable for the service employers. If you are a salaried person and your employer has deducted TDS on your salary, then he/she will issue you a Form 16. Form 16 shows the salary earned by an employee during the year, deductions and tax deducted or TDS on your salary during the year. This is known as the TDS Certificate.
3. Form 16A received from Banks- It is the TDS Certificate showing the tax deducted at source by other deductions such as the bank’s other institutions on the interest/commission that you have earned this year.
4. Form 26AS- It is the tax deducted and deposited on your behalf by your deductors. It is provided by the Income Tax Department. It shows you the total tax paid against the PAN during a financial year. you can download this form by logging in to your Income Tax E-filing Account.
5. All Your Bank Statements
6. Property Details
7. Home Loan Certificates
8. Business/Professional Income Details
9. Self-Assessment Challan/ Advance Tax Challan
10. Investment Proofs

• Now visit the e-filing website – www.incometaxindiaefiling.gov.in
• If you are a first-time user and you are filing it for the first time then click on the “New Registration tab” and register yourself by providing the relevant information about yourself and create your personal username and password. Make sure that when you are creating your user-id you must have your e-mail id and mobile number active.
• After the registration, an active link is provided. After clicking on the activation link, you are given a one-time password (OTP), where you have provided the OTP which has been sent to your mobile number.
• Click on the registered user if you have registered yourself already on the website. If you have any issues or problem related to the registration process you can contact the customer helpline number.
• Now click on the login tab and provide the required details like- your User ID, your PAN details, date of birth, and the captcha code was given. Then click on the login button to get signed in.
• After logging in, your account dashboard appears on the screen. Click on the “e-file tab” and select “Prepare and submit ITR online” option.
• Now select the relevant form and the assessment year for which the ITR must be filed. Here the taxpayer can fill in the address from the PAN database or add a new address. Here the income tax department asks you whether you want to digitally sign your return. If you select the “Yes” option then you need to upload your digital signature which needs to be pre-registered at the income tax official website.
• Now click on the submit button, and the website will redirect you to the page for filling to the form selected by you. Before starting e-filing the ITR form, one should read the General Instructions given at the start of the form.
• After that, you will be given to fill in the required information in different tabs, like the General Information, Income Details, Tax details, taxes paid in the ITR form. Make sure the tax payable shown in the online form matches the information and calculations given by you.
• Before submitting final, you need to save the data you have provided earlier and recheck it to avoid any mistakes. Once “Preview and Submit button is chosen your form will appear on the screen allowing you a preview of your ITR form before the final submission is made.
• Once the submit button is clicked your ITR will be uploaded and you will be asked to verify your return using any of the options available.
• If you have already added your digital signature, you will be asked to upload the same signature while submitting your ITR at the final step. Once it is upload and the final submission is made then your ITR filing process is completed and no further verification is required. You don’t have to send an acknowledgment/ITR-V to the CPC Bangalore.
• If you haven’t uploaded any digital signature while filing an ITR then you can verify your return either electronically using Aadhaar OTP or by sending a signed-printout of the ITR-V sent to CPC Bangalore within 120 days from the date of e-filing.
• An acknowledgment/ITR-V is sent on your registered e-mail ID once you have successfully uploaded. This acknowledgment pops out on your account on the e-filing website from where you can download if it is required.
• Now the department will process your ITR once you verify it. After your ITR is processed you will be intimated about the email via email and SMS on your registered mobile number.

So, you can now easily file your Income Tax Return (ITR) without any complication.

provide links to previous income tax post once published.