basic knowledge of income tax

UNIVERSAL COLLEGE

DEPARTMENT OF COMMERCE

BASIC KNOWLEDGE OF INCOME TAX

ASSISTANT PROFESSORDALIP KUMAR

Meaning of Income Tax

A tax may be defined as a compulsory extraction made by General Government from the general public. It is a financial charge imposed on individual or legal entities by the Government in pursuant to its legislative authority.

IMPORTANT DEFINITIONS• Assessee :- Assessee means a persons by whom any

tax or any other sum of money is payable under this Act.

• Assessment Year :- Assessment year means the period of 12 months commencing on the 1st day of April every year. Its also know as financial year.

• Previous Year :- The term previous year is very important because it is the income earned during previous year which is to be assessed in the assessment year.

Types of Income Tax Important Taxes in India

Income Tax Central Excise Duty Wealth Tax Customs Duty Service Tax Central Sales Tax State Level VAT State Excise Duty Securities Transaction

Tax

Direct Taxes Indirect Taxes

RATES OF TAX:For any other resident Individual (Male or Female),HUF,AOP,BOI

If total income is up to Rs 2,50,000 NilIf total income exceeds Rs 2,50,001 to 5,00,000 10% If total income exceeds Rs 5,00,001 to 10,00,000 20% + 25,000If total income exceeds Rs 10,00,001 30% + 1,25,000

For Resident Senior Citizen (Age 60 years more at any time during P.Y. but less than 80 year on the last day of P.Y)

If total income is up to Rs 3,00,000 NilIf total income exceeds Rs 3,00,001 to 5,00,000 10% If total income exceeds Rs 5,00,001 to 10,00,000 20% + 25,000If total income exceeds Rs 10,00,001 30% + 1,25,000

RATES OF TAX:For Resident Super Senior Citizen (Age 80 years or more at any time during P.Y.)

If total income is up to Rs 5,00,000 NilIf total income exceeds Rs 5,00,001 to 10,00,000 20%If total income exceeds Rs 10,00,001 30% + 1,25,000

(B) On Special Incomes

1. For short term capital gain on share which are subject to Security Transaction tax 15%.

2. For long term capital gains 20%.3. For casual incomes(Lotteries, races, puzzles etc.) 30%.

Surcharge:- Surcharge @10 % of tax shall be added in those cases where total income of assesses exceeds Rs 1 crore.

Education cess:- It is to be levied @2 % of tax plus Secondary and higher education cess @ 1% of tax for all persons irrespective of income.

DEDUCTIONS:Deposits made in Provident Funds Payment of life Insurance PremiumAmount invested in National Saving schemeAmount invested in notified Pension Fund set

up Mutual Funds or UTI.Amount deposited with National Housing

BankPayment of Tuition fees of two children.

DEDUCTIONS

Repayment of housing loan for purchase /construction.

Amount invested in equity shares or debentures in an eligible issue.

Medical Insurance Policy's 15000(incase of senior citizen Rs 20,000.

DEDUCTION IN RESPECT OF DONATIONS

The National Defense Fund set up by the Central Government.

The Jawaharlal Nehru memorial fund.The Prime Minister’s National Relief Fund.The Prime Minister’s Armenia Earthquake

Relief Fund.The National Children Fund.The National Illness Assistant Fund.

REBATE U/S 87AWith effect from assessment year 2014-15,a new

rebate u/s 87A has been provided to such individuals who are not earning annual income exceeding Rs.5,00,000.This rebate is allowed if following two conditions are fulfilled.

1. Assessee is an individual who may be a resident of India during P.Y.

2. His total income during the previous year does not exceed Rs.5,00,000.

REBATE U/S 87A

Amount of rebate shall be allowed as under1.Rs.2,000.2.Tax calculated on the total income as per rates

applicable to an individual w.e. is less

DUE DATES OF FILLING OF RETURN

• For company assesses :- By 30th day of September of the assessment year.

• For all other persons :- By 31st day of July of the assessment year.

• For a company as well as non corporate persons who are required to furnish a report u/s 92E:- By 30th day of November of assessment year.

FILING OF RETURNS

FORMS OF RETURNS OF INCOME

THERE ARE SEVEN TYPE OF INCOME TAX RETURN FORMS.

Form No.ITR-1(Sahaj):-For individual having Income from Salary/Pension/One house property(except brought forward loss from previous year)/Other sources(expect winning from lottery and race horses.

Form No.ITR-4(Sugam):-For Individual /HUF having business income computed in accordance with the provision of section 44AD and 44AE.

THANKyou.