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Name: Faiz Memon Subj: Tax Management Activity: 3 Submitted to: Bela Ma’am Sem: V Navrachana University
or (c) Income from Capital Gains. this Return Form can be used where such income falls in any of the above categories.Introduction The process of electronically filing Income tax returns through the internet is known as e-Filing. in a case where the income of another person like spouse. or (d) Income from Other Sources (including Winning from Lottery and Income from Race Horses). etc. minor child.This report will show us the rules and instructions on filing ITR-2. Further. Forms from ITR1 to ITR 8 were introduced to file income tax return. ITR-2 Form is to be used by an individual or a Hindu Undivided Family whose total income for the assessment year 2012-13 includes:(a) Income from Salary / Pension. or (b) Income from House Property.Digital signature in e-filing has become mandatory for Companies from AY2010-11 onwards. . It is mandatory for Companies and Firms requiring statutory audit u/s 44AB to submit the Income tax returns electronically from AY 2007-08 onwards. is to be clubbed with the income of the assessee.
Other than these. Instructions for ITR-2 This Form can be submitted to the Income Tax Department in any of the following manners:(i) By furnishing the return in a paper form. Part-A is spread over half of the first page of the return. or if you own a house. It mainly seeks general information requiring identificatory and other data. . This Return Form should not be used by an individual whose total income for the assessment year 2012-13 includes Income from Business or Profession. i.e. there are four pages occupied by 15 schedules. The main portion of ITR-2 has two pages. The parts and the schedules are described below:(i) The first part. Some of the details in this form have to be filled out on the basis of the relevant codes. If you are a salaried individual and have made some money selling shares. (ii) By furnishing the return electronically under digital signature. The user has to first fill up the schedules and then get around to filling up the two main pages.. then ITR-2 is the form to be filled up. (iii) By transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITRV. (iv) By furnishing a bar-coded paper return.
there is a space for furnishing details of the transmission of the data of the form if the form has been furnished in the manner mentioned above in the form submission types point no(iii). (h) Schedule-VIA: Statement of deductions (from total income) under Chapter VIA. (d) Schedule-OS: Computation of income under the head Income from other sources. (vi) On pages 3 to 6. i.(ii) The second part. there are details to be filled if the return has been prepared by a Tax Return Preparer. there are 15 Schedules details of which are as under(a) Schedule-S: Computation of income under the head Salaries. (iv) After Part-B. (g) Schedule. (v) On top of page 3.CFL: Statement of losses to be carried forward to future years.e. there is a space for a statutory verification. (b) Schedule-HP: Computation of income under the head Income from House Property (c) Schedule-CG: Computation of income under the head Capital gains. . Part-B on page 1 and page 2 is regarding an outline of the total income and tax computation in respect of income chargeable to tax. on page 2. (e) Schedule-CYLA: Statement of income after set off of current year’s losses (f) Schedule-BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years. (iii) On page 2.
. (n) Schedule-TDS1: Statement of tax deducted at source on salary. (ii) Schedules (iii) Part B-TI and Part B-TTI (iv) Verification (v) Details relating to TRP and counter signature of TRP if return is prepared by him. (o) Schedule-TDS2: Statement of tax deducted at source on income other than salary.General on page 1. (m) Schedule-IT: Statement of payment of advance-tax and tax on self-assessment.(i) Schedule SPI: Statement of income arising to spouse/ minor child/ son’s wife or any other person or association of persons to be included in the income of assessee in Schedules-HP. Sequence for filling out parts and schedules: You are advised to follow the following sequence while filling out the form. CG and OS. (i) Part A. (j) Schedule-SI: Statement of income which is chargeable to tax at special rates (k) Schedule-EI: Statement of Income not included in total income (exempt incomes) (l) Schedule-AIR: Information regarding transactions which are reported through Annual Information Return under section 285BA.
as per procedures prescribed by the law loss(es) and/or allowance(s) of earlier assessment year(s) brought forward. this will give you “gross total income”. and also what you cannot claim as an expenditure/allowance. and (D) “Income from other sources”. A separate Schedule is provided for such set-off. subtract. “deductions” mentioned in Chapter VIA of . Also. Separate Schedules are provided for this. “Assessment Year” is the financial year immediately following the previous year. (b) Total income is to be computed as follows. (iv) Set off. (iii) Set off current year’s headwise loss(es) against current year’s headwise income(s) as per procedures prescribed by the law. in the following order: (i) Classify all items of income under the following heads of income(A) Salaries. (ii) Compute taxable income of the current year (i. (vi) From gross total income. These statutory provisions decide what is to be included in your income. compute loss(es) and/or allowance(s) that could be set off in future and is (are) to be carried forward as per procedures prescribed by the law. (B) “Income from house property”. what you can claim as an expenditure or allowance and how much. (v) Aggregate the headwise end-results as available after(iv) above. as per procedures prescribed by the law.e. the previous year) under each head of income separately in the Schedules which have been structured so as to help you in making these computations as per provisions of the Income-tax Act. Computation of total income: (a) “Previous year” is the financial year (1st April to the following 31st March) during which the income in question has been earned. (C) “Capital gains”..
(d) Claim relief(s) as prescribed by the law. Besides. . Computation of income-tax.. as prescribed. on account of arrears or advances of salary received during the year or of double taxation and calculate balance tax and surcharge payable. (f) Deduct the amount of prepaid taxes. Special rates of tax are applicable to some specified items. surcharge. (c) Add Education Cess as prescribed on the tax payable plus surcharge.the Income-tax Act. in the tax computation procedure. (b) Add surcharge as prescribed by the law on the above tax payable. like “tax deducted at source”. for rate purposes. (e) Add interest payable as prescribed by the law to reach total tax. surcharge and interest payable. “advance-tax” and “self-assessment tax”. if any. calculate agricultural income for rate purposes. The result will be the total income. Include agricultural income. education cess and interest in respect of income chargeable to tax: (a) Compute income-tax payable on the total income. The result will be the tax payable (or refundable).
medical reimbursement.000. Sharma. these need to be mentioned in the form.96. In the case of Mr.400 House rent allowance. You don’t need to calculate this entry separately — your form 16 will have the numbers.1.600 Medical Reimbursement.72.15.000 Salary income: The information to fill up this schedule comes largely from Form 16 and your salary structure. Sharadh Unnithan: Mr.1. Allowances not exempt include allowances like special allowance. house rent allowance (if an individual lives in a rented accommodation) and transportation allowance.24.9. Salary includes your basic salary and the bonus earned during the course of the year.44.80.000 Special allowance. etc are exempt from taxes.How to file ITR Let us take an example of some Mr. the basic and bonus amount to Rs 3. Sharadh Unnithan’s salary structureBasic. It also includes the house rent allowance (HRA) if the individual owns a house and lives in it. Allowances like leave travel allowance.15. Sharadh Unnithan has .000 Bonus .720 Transport Allowance.000 Leave travel allowance . Nevertheless. Mr.
Sharadh Unnithan has paid an interest of Rs 2. and he pays an interest on the home loan he has taken.92. the entire interest part of the EMI can be set off against the rent earned during the course of the year. In case of a self-occupied house. interest of up to Rs 1.98.000) works out to Rs 1. His equated monthly instalment (EMI) for this works out to Rs 27. The income chargeable to tax under this head works out to Rs 4.50. For those who rent out their house. Since he lives in the house. his HRA is taxable.bought a house for Rs 30 lakh this year and lives in it.68. If you have a house and you live in it.720) and HRA (Rs 72.275 during the year. The interest component for the year works out to Rs 2.50. To make this entry. take a look at the certificate issued by the bank. Given that Mr. Sharadh Unnithan lives in the house he bought. The total of his special allowance (Rs 96. . this section is not for you. even though Mr. That entry has been made in the table below. Sharadh Unnithan has a 20-year housing loan of Rs 25 lakh at a fixed interest rate of 12%.000. Income from house: If you don’t own a house. the entry that matters to you is the interest paid on borrowed capital. He has taken a loan of Rs 25 lakh and paid the remaining amount from his own savings. whose housing loan you have.720. So.275. his income from house property is negative.000 can be shown in a given year.720. he can show an interest of only Rs 1. Mr.527.98.
Long-term capital gains made through stocks sold through a stock exchange. index numbers are available in the instructions that come with ITR-2. For this. Nevertheless. Hence the need for a separate entry. because longterm capital gain made on selling shares is not taxable. . Put simply. are not to be mentioned in this section. What about long-term capital loss on selling shares? Long-term capital gain on selling shares or units of equity mutual funds is tax-free. Indexation is essentially a process that takes inflation into account while deciding the cost of acquisition of a particular asset. even taxable long-term capital gain made on selling units of debt mutual funds or for that matter property. Other short-term capital gains are lumped with income and taxed according to the tax bracket you fall in. There is a separate schedule EI (exempt income.Income from capital gains: All capital gains are not taxed at normal tax rates. which is not shown here) for that. which are not taxed. But this loss cannot be set off against long-term capital gain on selling shares. Other long-term capital gains are taxed at the rate of 10% without indexation and 20% with indexation. Short-term capital gains from equity are taxed at the rate of 15% for the financial year 2008-09. A short-term capital loss can be set off against any short-term capital gain you have made on selling shares or any other taxable short-term capital gain. any long-term capital loss incurred on selling shares or units of equity mutual funds cannot be set off against any long-term capital gain. As a result. you can set off the short-term capital loss against any other taxable long-term capital gain like sale of gold or property or debt mutual funds. long-term capital loss on selling shares is also tax-free.
00) and cost of acquisition (Rs 1. this remains blank. Sharadh Unnithan’s case.000. Cost of acquisition is the price at which the assets are bought. this is Rs 2.00) is the short-term capital gain or loss. So. Sharadh Unnithan sold shares for Rs 64. This. works out to a loss of Rs 18. dividend entry should include only dividend from foreign stocks.000 — Rs 48.000. Interest income includes interest received on fixed deposits (FDs) and money in the savings accounts.14. Mr.Income from short-term capital gains: Full value of consideration indicates the total value of sale of the assets.000 and liquid fund units for Rs 48.32.000). In his case.000 and liquid funds for Rs 50. Mr. Sharadh Unnithan’s case. the total value comes to Rs 1. Sharadh Unnithan’s case.000 (Rs 64. Sharadh Unnithan bought the shares for Rs 84. Sharadh Unnithan receives an interest of Rs 4. in Mr. In Mr.000 ( Rs 50. there is a loss of Rs 20. Sharadh Unnithan’s case.000 on FDs. The difference between sale value (Rs 1. In Mr. is the remaining capital gain.000. putting the total cost of acquisition at Rs 1. Hence. Other income: Dividend income from stocks and mutual funds is tax-free.14.000.32. which is the entry to be made here.000 — Rs 84. .000.000). Short-term capital gain other than section 111 A . Mr. Short-term capital gain under section 111 A is the capital gain made by selling shares. In Mr.
Public Provident Fund. The maximum limit is Rs 15.000 on selling shares. Section 80 C allows a maximum of Rs 1 lakh for investments into life insurance. For Mr. he can adjust these losses against other sources of income to reduce his tax liability.519. Tax deductions: There are 13 sections (only 3 are shown below) under the schedule VIA of the Income Tax Act. Employees Provident Fund. Section 80 D allows a deduction for payment of health insurance premium. tax saving mutual funds.Losses of current year: If an individual has made a loss under any of the sources of income.50. Mr.000 or Rs 20. Sharadh Unnithan has utilised this limit. He has been able to adjust Rs 2.481 against longterm capital gain. repayment of home loan principal etc.000. the loss from house property is Rs 1.000 against short-term capital gain and Rs 3. This remaining loss cannot be set off this year as there are not enough capital gains available to do so. Capital losses can be adjusted only against capital gains and not against any other source of income. Mr. This still leaves Rs 14. It will therefore have to be carried forward and entered in schedule CFL (carried forward loss) and also as entry 14 in computation of total income.000 for . Losses can be carried forward for a maximum of 8 years. Sharadh Unnithan. Sharadh Unnithan has also suffered a short-term capital loss of Rs 20. The schedule CFL is not shown here. which allow you to get tax deductions.
On his part.200.000 and his tax liability on Rs. This is primarily because Mr. The entire amount will be taxed at normal taxes rates. he has suffered from capital loss.842. it is mandatory to quote the MICR code.158.senior citizens. In case of Mr. As we have seen. 2. no special rates come into play. Mr.500. Sharadh Unnithan.29. Since he has faced a loss. Sharadh Unnithan has no capital gain. The deduction is allowed only for the interest portion of the EMI up to a maximum of Rs 40.200 work out to Rs. So . Sharadh Unnithan pays a premium of Rs 7.000. Total tax to be paid: As can be seen in entry 13 in computation of total income. 8. .29. the total taxable income is Rs 2. the total interest on the education loan works out to Rs 10. Sharadh Unnithan will get a refund of Rs 1.000. Section 80 E allows a deduction for repayment of education loan. In case of refunds. The company has already deducted a tax of Rs 10.