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 Abstract

 Need for Study

 Objectives

 Scope & Limitations



Income Tax Act, 1961 governs the taxation of incomes generated within India and of

incomes generated by Indians overseas. This study aims at presenting a lucid yet simple

understanding of taxation structure of an individual’s income in India for the assessment year


Income Tax Act, 1961 is the guiding baseline for all the content in this report and the tax

saving tips provided herein are a result of analysis of options available in current market.

Every individual should know that tax planning in order to avail all the incentives provided

by the Government of India under different statures is legal.

This project covers the basics of the Income Tax Act, 1961 as amended by the Finance Act,

2007 and broadly presents the nuances of prudent tax planning and tax saving options

provided under these laws. Any other hideous means to avoid or evade tax is a cognizable

offence under the Indian constitution and all the citizens should refrain from such acts.



Need for Study

In last some years of my career and education, I have seen my colleagues and faculties

grappling with the taxation issue and complaining against the tax deducted by their

employers from monthly remuneration. Not equipped with proper knowledge of taxation and

tax saving avenues available to them, they were at mercy of the HR/Admin departments

which never bothered to do even as little as take advise from some good tax consultant.

This prodded me to study this aspect leading to this project during my MBA course with the

university, hoping this concise yet comprehensive write up will help this salaried individual

assesse class to save whatever extra rupee they can from their hard-earned monies.




 To study taxation provisions of The Income Tax Act, 1961 as amended by Finance Act,


 To explore and simplify the tax planning procedure from a layman’s perspective.

 To present the tax saving avenues under prevailing statures.



Scope & Limitations

 This project studies the tax planning for individuals assessed to Income Tax.

 The study relates to non-specific and generalized tax planning, eliminating the need of

sample/population analysis.

 Basic methodology implemented in this study is subjected to various pros & cons, and

diverse insurance plans at different income levels of individual assesses.

 This study may include comparative and analytical study of more than one tax saving

plans and instruments.

 This study covers individual income tax assesses only and does not hold good for

corporate taxpayers.

 The tax rates, insurance plans, and premium are all subject to AY 2013-14 only.


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Rental income. [7] .  Rectification. Private Limited & Limited Companies (including MNC’s). Architects.  Tax planning. HUF.  Payments on which income tax deduction at source required.  Annual return for TDS in electronic form ( eTDS ). Trust. Revision or Appeal of Income tax orders.  Income tax returns for Landlords.  Other Compliances as per Income Tax Act. Co-Op. Specific advice on taxation & Consultancy in TDS matters. Contractors.Doctors.  Obtaining advance Ruling.  To follow up for income tax refunds.  Electrical & Engg.  Advance tax computation. Professionals . Firms.  Registration of trust for charitable purposes.  To get the clearance certificate for going abroad. Soc. INCOME TAX RETURN We provide following income tax services for Resident Indians:  Filling of Income return for Individuals..

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 EDS India Pvt Ltd.  Tata Consultancy services (TCS) ltd.  IBM India Pvt ltd.  Avaya India Pvt Ltd  Amdocs development Centre India Pvt. Ltd.  Persistent Systems India Ltd.  Oracle Financial Solutions India Ltd.  Pimpari Chinchwad Municipal Corporation  GKN Sinter Metals Ltd. Ltd. Ltd.]  SunGard India Pvt Ltd. Ltd  Websym technologies Pvt. INCOME TAX RETURN  Tech Mahindra Ltd  Infosys Technologies Ltd.  V-Life Sciences India Pvt Ltd. Ltd  Foseco India Pvt.  Benninger India Pvt.  BMC Software Ltd.  John Deere India  Cap Gemini  Mahindra Satyam [9] . Ltd  Symantec India Pvt.  System Plus India Pvt. Ltd  Cognizant Technology Solutions India Ltd  Wipro Technologies  Accenture India Pvt.

companies. firms. 1961. co-operative societies. INCOME TAX RETURN INTRODUCTION OF INCOME TAX Income tax in India is levied by the Government of India on taxable income of individuals. at the rate enacted by the Union Budget (Finance Act) for every Assessment Year. and trusts (recognized as association of persons and body of individuals) and any other artificial person. Income tax is a tax payable. Hindu Undivided Families (HUFs). Income tax imposition is regulated by the Indian Income Tax Act. on the Total Income earned in the Previous Year by every Person. [10] . Government of India. The Central Board of Direct Taxes (CBDT) has the overall responsibility of regulating the Income Tax Department in India. Imposition of tax is different for every individual. It is a division of the Department of Revenue under the Ministry of Finance.

INCOME TAX RETURN MEANING AND DEFINITION In Income Tax in India are divided in to two types they are: 1. whereas like Service Tax. VAT. Direct Taxes 2... As per Income Tax Act of 1961. such type of income tax has to be paid on the total income in the previous year to be paid in relevant assessment year. Income Tax. Indirect Taxes. where the entire burden falls in the taxpayer directly is called as Direct Taxes. all persons who are considered as an assessee determined on the basis of the person’s residential status in India and their when their income exceeds the maximum exemption in the prescribed limit and the income tax will be levied at the prescribed rates according to finance act. Wealth Tax. etc. Income tax can be defined as all sources of income other than agricultural income which Central Government collects levies on that and shares the same with the states. are called as indirect taxes as these will be passed on through a third party. [11] . etc.

With the advent of the moguls in India the [12] . these taxes were collected to meet their military and civil expenditure and also to meet the common needs of the subjects like maintenance of roads. Further. INCOME TAX RETURN HISTORY The history of taxation system shows that taxes were levied on either on the sale and purchase of merchandise or livestock. Taxes were levied on all classes of citizens. There was a perfect admixture of direct taxes with indirect taxes and they were varied in nature. The history of taxation suggests these were done to store government buffer stocks to meet emergencies. These taxes were collected in cash or in kind and it entirely depended on the type of commodity or service on which it was levied upon. Taxes were paid in the form of gold-coins. cattle. In other words taxes on income. India's history of taxation suggests existence of a large and composite taxable population. sale. In India. drainage system. Although. government buildings. But it suggests that all historical leaders and head countrymen collected taxes to run its authority. Further it suggests that the process of levying and the manner of tax collection were unorganized. there were no homogeneous tax rate structures but it depended on the production capacity and commodity of that particular country and/or region. purchase and properties were collected to run the ruling Government machineries. grains. raw-materials and even by rendering personal service. administration of justice and other functions of the region. the tradition of taxation has been in force from ancient times.

Although. In 1922. the country witnessed a paradigm shift in the overall Indian taxation system. [13] . The period thereafter witnessed rapid growth and modernization of the Indian taxation system and the present. they also practiced the same norm of taxation but it was more homogeneous in structure and collection. Setting up of administrative system and taxation system was first done in the history of taxation system in India. INCOME TAX RETURN country witnessed a sea of change in the taxation system of India. Although. The period of British rule in India witnessed some remarkable change in the whole taxation system of India. it was highly in favor of the British government and its exchequer but it incorporated modern and scientific method of taxation tools and systems.

The performance of these functions involves substantial amount of public expenditure. This also results in the diversion of production form luxury goods to necessities. AC etc switch over the demand for the foreign brands.  Encouraging domestic industries: Taxes in the form of custom duties are used to reduce the import of certain goods that are domestically available and thereby the domestic industries for the production of these goods. The revenue collected by the [14] . The taxes collected from the rich can further be utilized for providing social services which benefit the low income groups. Inequality of income can be reduced by the system of progressive taxation under which the rich people are required to pay much more taxes than poor. The modern government has to perform several functions for the welfare of the public. tobacco etc. investment allowance and lower profits.  Reducing income inequalities: Taxation policy of the government is often used in reducing the income inequalities of incomes and assets.  Promoting economic growth: Taxation policy can also be used for promoting economic development of the country. This can be done by providing various tax-incentives in the form of tax-holidays. high customs duties on goods like TV. INCOME TAX RETURN OBJECTIVES OF TAXES  Raising revenue: The primary purpose of taxes is to raise the revenue for the government.  Stimulating investments: The instrument of taxation can also be used in the stimulating investment of the private sector.  Regulation of consumption and production: Taxes are sometimes used to discourage the consumption and production of unnecessary or harmful goods like liquor. For example.

These taxes reduce the disposable income of individuals and thereby reduce their purchasing power.  Development of backward regions: Tax system can be used in ensuring the development of backward regions.  Ensuring price stability: Direct taxes like income tax can be used to ensure price stability. Entrepreneurs can be motivated to set up their industries in the backward regions by providing tax concessions to them. [15] . The government can also use these funds in building a better infrastructure like transport and communication. This results in the fall in aggregate demand in the economy and thereby reducing demand-pull inflation. INCOME TAX RETURN government can be used in promoting development of industries and agriculture. power etc.

Secondly. taxes should be imposed in such a way as not to obstruct and discourage production. The canon of productivity implies two things.  Canon of elasticity: The canon of elasticity implies that the taxes should be levied that the yields of the taxes can be easily increased or decreased as per the need of the government. the tax system should be able to generate enough revenue to meet the required expenditure. INCOME TAX RETURN CHARACTERISTICS OF GOOD TAX SYSTEM A good tax system should adhere to certain principle that becomes the characteristics of good tax system. [16] . It will be useless to impose a tax that involves huge expenditure in its collection. The burden of tax should be fair and just.  Canons of equality: Canon of equality states that persons should be allowed to pay their taxes as per their ability to pay.  Canon of certainty: The canon of certainty implies that the tax-payer should be informed about every detail relating to the payment of each and every kind of taxes. This canon tries to achieve the objectives of economic justice. These principles are called canons of taxation. The canon of economy should be such that the cost of collection should be minimum . Equality of tax burden can be achieved if the rich people are taxed more than the poor people not only in terms of tax but also in the terms of tax rate.  Canon of economy: Every tax has a system of cost of collection which is the administrative cost of collection. In the first place.  Canon of productivity: All taxes should be productive.

 Canon of simplicity: The tax system should be easy and simple so that the tax payer can easily understand its implication. the basis and the method of calculation etc. The person by whom income tax or other sum of money is payable under the Act is the ASSESSEE [17] .whether incorporated or not f) a local authority g) every artificial juridical person not falling within any of the preceding categories. a) an individual b) a Hindu undivided family c) a company d) a firm e) an association of person or body of individuals . without the costly help of the expert WHO IS LIABLE TO PAY INCOME TAX? There are seven categories of persons chargeable to tax under the Act. INCOME TAX RETURN  Canon of diversity: The canon of diversity requires that the tax system should be such that the government depends on the number of the taxes so that every class of citizen may be called upon to contribute something towards the state revenue. Therefore any person not falling in the above mentioned categories. may still fall in the four corners of the term “person” and accordingly may be liable to tax under section 4.

.  Non Residents  Non Residents are exempt [18] . INCOME TAX RETURN RESIDENTIAL STATUS Residential Status Resident but not Ordinarily Resident Ordinarily Residents Non Residents Residents The three residential status. Residents person must be living in India at least 182 days during previous year Or must have been in India 365 days during 4 years preceding previous year and 60 days in previous year.  Resident but not  Must have been a non- Ordinarily Residents resident in India 9 out of 10 years preceding previous year or have been in India in total 729 or less days out of last 7 years preceding the previous year. viz. Ordinary residents are always taxable on their income earned both in India and Abroad. Not residents are taxable in relation to income received in India or income accrued or deemed to be accrue or arise in India and income from business or profession controlled from India.  Resident Ordinarily  Under this category.

INCOME TAX RETURN from tax if accrue or arise or deemed to be accrue or arise outside India. Taxable if income is earned from business or profession setting in India or having their head office in India. [19] .

[20] . the Form 16 will contain any other deductions provided from salary such as: 1.000 per year is tax free if supported by bills. and provide their employees with a Form 16 which shows the tax deductions and net paid income. 3. In addition. as Tax Deducted at Source (TDS). Transport allowance: Up to 800 per month (9. INCOME TAX RETURN INDIVIDUAL HEADS OF INCOME Income from Salary Income from Income from Other House Sources Heads property of income Income from Income from Business or Capital Gains Profession  Income from Salary All income received as salary under Employer-Employee relationship is taxed under this head. Employers must withhold tax compulsorily. Conveyance allowance: is tax exempt. if income exceeds minimum exemption limit.600 per year) is tax free if provided as transport allowance. Medical reimbursement: Up to 15. 2. No bills are required for this amount.

Any sum received under Life Insurance Company  Income from House property Income from House property is computed by taking into account what is called Gross Annual Value of the property. Such taxes paid are deductible from income tax. basic Salary for this purpose is basic+DA forming part + commission on sale on fixed rate. From this Net Annual Value. The exemption for HRA u/s 10(13A) is the least of all the above three factors. deduct Municipal Tax paid and you get the Net Annual Value. Perquisite Valuation does not include certain medical benefits. The annual value in case of a self occupied house is to be taken as NIL. Leave Travel Concession u/s 10(5) 2. House rent allowance: the least of the following is available as exemption Actual HRA received  50%/40%(metro/non-metro) of basic salary  Rent paid minus 10% of 'salary'. Professional taxes: Most states tax employment on a per-professional basis. (However if there is more than one self occupied house then the annual value of the other house/s is taxable. usually a slabbed amount based on gross income. deduct: [21] . Perquisites and Exemptions u/s 10 The term "Perquisite" includes value of any benefit or amenity/value of any concession provided by the employer to the employees. Perquisites paid to Indian Citizens Employed Abroad 10(7) no 3. Tax Paid on Behalf of Any Employee by the Employer 10(10CC) 4. Section 10 exemptions are available for the following perquisites: 1. 5.) From this. INCOME TAX RETURN 4.

Long term assets are those assets which are held by a person for three years except in case of shares or mutual funds which becomes long term just after one year of [22] . is taxable. with no upper limits. bonus. art etc. The balance is added to taxable income. income from managing agency and speculative transactions. all interest is deductible. any amount received under a Key man Insurance Policy which also covers Bonus. jewellery. incentives for exporters. any salary.  Income from Business or Profession Income arising from profits and gains of any Business or Profession. paintings.000 (if the loan is taken before 1 April 1999). 1961. bonds. Long term and short term capital assets are considered for tax purposes. equity shares.  Income from Capital Gains Under section 2(14) of the I.50. any benefit from business whether convertible into money or not. commission or remuneration received by Partner of a firm. income derived by a Trade/ Professional/ similar Association by performing specific services for its members. interest.30.1. Act. INCOME TAX RETURN  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 In the case of a self occupied house interest paid or payable is subject to a maximum limit of Rs.T.000 (if loan is taken on or after 1 April 1999 and construction is completed within 3 years) and Rs. Capital gains arise by transfer of such capital assets. For l non self-occupied homes. Capital asset is defined as property of any kind held by an assesse such as real estate. but does not consist of items like stock-in-trade for businesses or for personal effects.

5.  For all other long term capital gains. There are also some specific incomes which are to be taxed under this head. or pay 10% of non indexed gains. under this head income which does not meet criteria to go to other heads is taxed. no tax is payable. Income from horse races 3. 1. Income from winning bull races 4. Sale of long term assets give rise to long term capital gains which are taxable as below:  As per Section 10(38) of Income Tax Act. 1961 long term capital gains on shares/securities/ mutual funds on which Securities Transaction Tax (STT) has been deducted and paid.  For other shares & securities. Income by way of Dividends 2. Any amount received from key man insurance policy as donation. INCOME TAX RETURN holding. indexation benefit is available and tax rate is 20%  Income from Other Sources This is a residual head . Income from shares (dividend other than Indian company) [23] . person has an option to either index costs to inflation and pay 20% of indexed gains. Higher capital gains taxes will apply only on those transactions where STT is not paid.

00.001 – 5.00. i.Y.000 (for very senior citizen of 80 years or above)= 0.HUF.2013-2014) → Up to 2.00.00.e.00. surcharge = NA [24] . The rates of taxation of income are-: Income Tax Rates/Slabs Rate (%) (as per A. → 2.001 upwards = 30%.50. Up to 2. Education cess is applicable @ 3 per cent on income tax. → 5. whether it is revenue or capital. → 10.001 – 10.000 (for resident individual of 60 years or above)= 0.000 = 20%.00. Up to 5.. Associations Of Persons(AOP) and Body Of Individuals (BOI) The chargeability is based on nature of income.00.000(for men & women) = 0%.000 = 10%. INCOME TAX RETURN Personal Tax Rates: For Individuals.

Some of the income tax deductions and tax exemption limits for the financial year 2012-2013 are given below – Income Tax deductions – Section 80c of Section 80C is one of the most common income tax the Indian deductions. Each year. The department is also part of the Department of Revenue which is managed under the Indian Revenue Service (IRS) under the Ministry of finance govt. firms. There are separate levy of taxes on each persons which are governed by the Indian income tax act 1961. This is quite popular as it encourages [25] . co-operative societies and trusts (which are identified as a body of Individuals and Association of Persons) and any other artificial person. The Central Board for Direct Taxes (CBDT) governs the Indian Income Tax department. companies. individuals. INCOME TAX RETURN TAX DEDUCTION There are various India Tax Deductions or tax exemptions provided by the Indian Income Tax Act. The tax deductions help to deduct an amount from the taxable income and help to save tax. Income taxes are imposed by the government of India on taxable income of Hindu Undivided Families (HUFs). Of india. one can save thousands of rupees in income tax through income tax exemptions.

dependent parents and dependent children. Income tax deduction for 50% of the [26] . INCOME TAX RETURN Income Tax monthly savings from income. If someone has a Act taxable income in the highest tax bracket. National Saving Certificate (NSC). Income Tax Act It is better if one gets health and medical insurance for oneself.per annum for the insurance premium. bank deposits (more than 5 years). Section 80D of This section of India Tax Deduction is helpful if the Indian there is no coverage of health and medical expenses. This deduction can be availed if one has invested money in Life Insurance premium. tuition fees. Through this one can claim deduction till `15000/. mutual fund investments in ELSS (Equity Linked Savings scheme). The limit for senior citizens is Rs20. spouse. principal part of EMI on housing loan. the deductions under this section can help one reduce the taxable income by 1 lakh rupees. Prime Minister's Relief Fund. charitable institutions etc are deductible from the taxable income. Provident Funds. Income Tax Act University or educational institution of national importance. ULIPS (Unit Linked Insurance Plans). donations to National Children Foundation. Section 80G of According to Section 80G in the India tax deduction the Indian rules.000. The maximum tax deduction or tax exemption Limit is ‘100000.

INCOME TAX RETURN donated amount is eligible for other donations.000 if Pay lower if the patient is a senior citizen. However. there is no deduction. the Income Act: tax Act allows you to claim an annual deduction of Rs 40.000. Amount contributed to a recognized corporates) of political party can be claimed as a deduction without Income Tax any ceiling under Section 80GGC (80GGB for Act:Political corporate). malignant cancers. parents and siblings. someone is ill Conditions: The IT Act has defined certain diseases to claim this deduction. which include neurological diseases. Section 80DDB If you have a dependent who suffers from any of the of Income Tax ailments specified under Section 80DDB. If the amount spent is reimbursed by the employer or an insurance company. The deduction is higher at Rs 60. The donation can also be made to the affiliations can electoral trust which works for the purpose of [27] . For various funds and 50% for other donations. Dependents can include spouse. chronic kidney failure and haematological disorders. Section 80GGC You can you lower your tax if you have political (80GGB for affiliations. children. The patient should be wholly or mainly dependent on the taxpayer and should not have separately claimed deduction for the disability. The maximum tax deduction or tax exemption limit is 100%. full-blown AIDS. there are a few conditions.

The quantum of deduction is limited to 10% of the gross total income of the donor. you can set them off against short-term capital losses capital losses made on stocks and bring down your tax liability. Section 80E of The interest paid on an education loan is fully Income Tax deductible from taxable income under Section 80E. gold or short term debt funds. donations to charitable organizations get deduction ranging from 50% to 100%. Act: This deduction now includes loans taken for vocational courses. It is good to know how much deduction you can claim before you sign a cheque. liabilities Condition: Loans taken for siblings and other relatives and from employers or individuals are nt [28] . clothes and medicines do not qualify. if a parent or legal guardian Use education takes the loan. Under Section 80G. he can claim deduction for the interest loan to lower paid for upto8 successive years. INCOME TAX RETURN be some times conducting elections. starting with the year your tax in which interest is first paid. This can be especially useful for someone who has booked profits on gold ETFs and physical Gold for the year. Condition: Only cash donations are taken into account. There is a ceiling to the beneficial deduction a taxpayer can claim in a year. Say. Set off Long According to Income Tax Act if you have made any term gains by long-term capital gains from sale of property. Food.

the deduction is offered as a lump sum and does not depend on the actual amount that the taxpayer may spend on himself or on the disabled dependent. low vision. leprosy. mental retardation and mental illness and deduction is available only if the impairment is at least 40%. If the disability is severe (80% or above). The dependent could include the taxpayer's spouse. loco-motor disability. he can claim the deduction under Sec 80DD. the deduction is Rs 1 lakh a year. If he has a bracket disabled dependent. hearing impairment. Disability includes blindness. and should not have claimed deduction for the disability under Section 80U separately. the disabled person should be wholly or mainly dependent on the taxpayer for maintenance. However. he can claim lower your tax deduction of Rs 75.000 under Sec 80U. Disabilities can If a taxpayer suffers from a disability. children. [29] . INCOME TAX RETURN qualifying for deduction. parents and even siblings. Condition: Incidentally.

any one is deemed to be rented out. the taxman deduction for can be very encouraging. So the interest income on the home loan for that house can be claimed entirely for deduction. But if the taxpayer buys a second house through another home loan and gives it on rent. one can your second claim deduction of up to Rs 1. [30] . Under Section 24b.5 lakh for interest paid home loan on a home loan. Also if you have more than one house. provided the rental income or a deemed income is charged to tax. the entire interest paid on the home loan during a given year can be claimed as a deduction. INCOME TAX RETURN Take unlimited When it comes to buying a second house.

However. INCOME TAX RETURN TAX EXEMPTIONS According to Income Tax Act. It means that at the time of calculating annual income.  Share of partner in total income of a firm which is assessed separately. this type of income will not come under the purview of tax. 1961 there is a provision of exemptions in income tax. To encourage some economic activities through the process of reduction of the tax burden on some organizations or individuals involved in that activity is also another cause for Tax Exemptions. [31] . Some of them are like -  The age of the individual taxpayer  The public services performed by the individual taxpayers  The type of property owned by the individual  The geographic location of property  The net income of the individual paying the tax  The value of the taxable property India tax exemptions are specified incomes on which a person can get exemptions. for such exemptions on tax some conditions are mandatory to follow. Tax Exemption induces reduction of the tax burden on a specific section of the society to achieve some level of equilibrium among all. Some of these exempted incomes are as follows:  Agriculture Income. Tax Exemptions have the authority to bring about social and economic changes within the society followed by unprecedented consequences.

 Interest on specified central Government's savings certificates which were subscribed to in convertible foreign exchange remitted from a country outside India as per FERA by an individual citizen.  Scholarships granted to meet the cost of education  Receipt of any amount in connection with an award instituted by Government etc.  Leave encashment not exceeding 8 months salary and subject to specified conditions.  Income of a university or other educational institution.  Payment on a Life insurance policy.  Gratuity not exceeding Rs.  Interests on amounts in Non-resident (External) account in any bank in India being maintained as per FERA. house rent allowance.  Interest payable to any bank incorporated outside India and approved by RBI.00.  Receipt in respect of commutation of pension as per specified limits. 1973.  Income of individuals engaged in research work in India under duly approved research schemes and remuneration received from foreign government for training in a government office or undertaking as employee.5 lakh.000.. [32] .  Receipt of amount on voluntary retirement up to ` 5.  Receipt of Payment from superannuation fund.  Special benefits and allowance to employee viz.3.  Receipt of Payment from Public provident fund or Statutory Provident Fund. including bonus thereon but excluding therefrom amounts received u/s 80DDA(3). INCOME TAX RETURN  Interest on securities and bonds including premium on redemption of bonds by Non Residents.

[33] .  Income of news agency having been set up in India for the sole purpose of collection & distribution of news. inheritances. There are a number of protected classes like widows. war-retired persons.  Some other categories includes combat-pay to military officers. payments for personal injuries. INCOME TAX RETURN  Income of a hospital or other such institution working exclusively for philanthropic purposes. and income from local bonds. 1992. as when an expense received by a taxpayer is deduced from the gross income it results in the lowering of the net taxable income it is tax deduction and not Tax Exemption. There are many types of income and benefits being exempted from income taxes to a limited extent. people above 65. one should not get confused with the concepts of Tax Deduction and Tax Exemption.  Income of Exchange risk administration fund having been set up by public financial institutions either jointly or separately as per specified conditions. employee discounts.  Income of specified mutual funds registered and/or set up under /by SEBI Act. and disabled persons However.

or (b) Income from One House Property (excluding cases where loss is brought forward from previous years). in a case where the income of another person like spouse. INCOME TAX RETURN FORMS OF INCOME TAX ITR-1 SAHAJ This Return Form is to be used by an individual whose Indian Individual total income for the assessment year 2013-14 includes:- Income tax Return (a) Income from Salary/ Pension. Further. or (c) Income from Capital Gains. etc. is to be clubbed with the assessee this return form can be used only if the income being clubbed falls in to above income categories Note:- Those who have total income below 5 lakh rupees & those people who have exemption under sec. or (c) Income from Other Sources (excluding Winning from Lottery and Income from Race Horses) This Return Form cannot be used by any resident having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India. etc. This Return Form should not be used by an individual whose total income for the assessment year 2013-14 includes Income from Business or Profession. minor child. or (c) Income from Other Sources (including Winning from Lottery and Income from Race Horses). [34] . 10/c is less than 5. is to be clubbed with the income of the assessee. minor child. Note: Further in a case where income of another person like spouse. this Return Form can be used where such income falls in any of the above categories.000 Rupees they require to fill the ITR -I form ITR-2 For This Return Form is to be used by an individual or a Individuals and Hindu Undivided Family whose total income for the HUFs not having assessment year 2013-14 includes:- Income from Business or (a) Income from Salary / Pension. or Profession (b) Income from House Property.

000 Rupees they require to fill the ITR -II form & it is mandatory to do E filling. INCOME TAX RETURN Note:- Those who have total income above 5 lakh rupees & those people who have exemption under sec. ITR-3 For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship ITR-4 SUGAM (ITR-4S) Sugam . 10/c is above than 5. AOPs and BOIs ITR-6 For Companies other than companies claiming exemption under section 11 ITR-7 person including a company whether or not registered under section 25 of the Companies Act. 1956 required to file a return under sub-section (4A) or sub- section (4B) or sub-section (4C) or sub-section (4D) of section 139 [35] .Presumptive Business Income tax Return ITR-4 For individuals and HUFs having income from a proprietory business or profession ITR-5 For firms.

Belated Return In case of failure to file the return on or before the due date. 1. One has to rectify the defect within a period of fifteen days from the date of such intimation. 4. INCOME TAX RETURN TAX RETURNS There are five categories of Income Tax returns. Defective Return Assessing Officer considers that the return is defective. Normal Return Returns filed within the return filing due date. he can [36] . Defective Return 5. If the assessee wants more time. he may intimate the defect. that is 31 July of concerned previous year. Normal Return 2. Returns In Response To Notices 1. 2. belated return can be filed before the expiry of one year from the end of the relevant assessment year. Revised Return In case of any omission or any wrong statement mentioned in the normal return can be revised at any time before the expiry of one year from the end of the relevant assessment year. Revised Return 4. Belated Return 3. 3.

may serve a notice under various sections like 142(1). Returns are required to be furnished within the date specified on the respective notices. [37] . INCOME TAX RETURN file an application to the A O and a further 15 days can be granted at the instance of the A O. 5. 148(1). Returns In Response To Notices Assessing officer in the process of making assessment. 153A(a) or 153C.

the clients need to give the payment on the basis of the filing plan chosen by them. many people now prefer to fill the tax according to their convenience and avoid the cues. the user needs to authorize the service provider to file the tax returns on their behalf. INCOME TAX RETURN ONLINE TAX IN INDIA In India. HOW TO FILE ONLINE TAX IN INDIA The basic steps for filing tax returns online in India can be mentioned as below:  Customers need to sign up with the service provider to be able to avail their services  After signing up.  Once the data is entered the software reviews it.  Next. online tax filing has become an integral part of the process of registering tax returns. The customer receives an ITR-V if the document is not signed digitally.  After the computation is done. The returns will be generated on the basis of the entries. Following are the major benefits for tax payers who use the tax filing portals:  These companies provide the users in depth knowledge of tax laws [38] . With the increasing penetration of internet and rising levels of web awareness and work pressure among tax payers. customers need to enter their financial details.  The acknowledgment will be provided via e-mail once the process is completed and the document is signed digitally.

Tax payers only need to pay when they are filing the tax returns  They do not put the users off with unnecessary pop-ups or advertisements  Majority of these sites are backed by the Income Tax Department. This means that these companies are authorized to file tax returns with the IT department on behalf of their customers  Tax returns can be prepared and filed by customers from any income class. [39] . INCOME TAX RETURN  The technology used by these companies is comparable to the best banks across the world  Tax computation services are provided free of cost.

H. Fill your return offline and generate a XML file. On successful upload acknowledgement details would be displayed. Electronic City Post Office. ITR-V sent by Registered Post or Courier will not be accepted. Post Bag No . is furnished after the [40] . INCOME TAX RETURN E-FILLING A. This is an acknowledgement cum verification form. ” BY ORDINARY POST OR SPEED POST ONLY within 120 days of transmitting the data electronically. the ITR-V Form would be generated which needs to be printed by the tax payers.1. on successful uploading of e- Return. Register and create a user id/password AT Incomtaxindiaefiling. In case. Login and select relevant Assessment year on left panel under "Submit Return" E. In case the return is not digitally signed. Select appropriate type of Return. B. In Next screen . In case the return is digitally signed. Click on "Print" to generate printout of acknowledgement/ITR-V Form. Download Return Preparation Software for selected Return Form. I. No Form ITR-V shall be received in any other office of the Income-tax Department or in any other manner. on generation of "Acknowledgement" the Return Filing process gets completed.560100. D. Bengaluru . Karnataka. A duly signed ITR-V form should be mailed to “Income Tax Department – CPC. Form the form Name (whichever is applicable in your case) (i) Select digital signature NO (ii) In next screen Browse and select XML file prepared by you and click on "Upload" button G.

INCOME TAX RETURN above mentioned period. [41] . This completes the Return filing process for non-digitally signed Returns. it will be deemed that the return in respect of which the Form ITR-V has been filed was never furnished and it shall be incumbent on the assessee to electronically re-transmit the data and follow it up by submitting the new Form ITR-V within 120 days.


Their income from any other source is also liable for tax. Many salaried people think that the tax is deducted at source (called TDS). Well. The corpus [43] . INCOME TAX RETURN THE PROCESS OF TAX FILLING IN INDIA Many people are. Government of India. etc. The process of tax filing involves submission of tax along with necessary documents declaring yearly income of the individual or company. So you must file your income tax returns before the end of the financial year. They are a bit happy too. The most important department that is associated with the process of tax filing in India is the Department of Income Tax. that you don’t need to file the tax returns. Every single person who pays tax in India has to file his/her income tax. Do not assume that just because you do not have your own business and are getting a salary working for somebody. Yes. even a salaried individual in India has to file income tax returns. in a way. naturally. but are unaware that it is not only their income from a job that is taxed. In India the process of tax filing is governed by the Ministry of Finance. are having fixed deposits in a Bank. they are so wrong! Anybody who pays tax has to also file income tax returns. The Ministry of Finance of Government of India has different departments that are involved with the process of tax collection. unhappy to see the tax deducted at source (TDS) eroding their salaried income. such as if they are earning a part-time income from an online job. as they feel the major task of paying tax is finished with & they need not worry about anything.

Gone are the days when one had to wait for endless hours to see his yearly tax declaration being verified and accepted. INCOME TAX RETURN accumulated from individuals and companies as income tax are forwarded to the Ministry of Finance. Now an individual or company can file his tax according to his convenience by simply quoting the unique PAN. The revenue so collected is used to run the Government of India machineries. The whole process of tax filing in India is done in accordance with the Income tax acts and rules as promulgated by the Department of Income Tax. The tax of an individual or a company is submitted against an account number which is an unique combination of alpha-numeric character called Permanent Account Number (PAN). This is a fool proof process and there is no place for discrepancies. This PAN enables the taxing authority to record each and every relevant details pertaining to tax declaration of a particular person or company in India. This has in fact simplified the arduous mechanical tax declaration process in India. Today. [44] . The concerned individual or company should fill-up the relevant electronic form according to the instructions given therein. Government of India. The procedure involves filing of income tax returns over Internet. the department of Income Tax under the government of India has facilitated its citizens with e-fling process. The main purpose of filing tax returns in India is to have records of structured information. All the required information regarding filing process and necessary documents are mentioned therein. Over the years the process of tax filing in India has made tremendous progress. Government of India.

INCOME TAX RETURN The important declarations that are to be made while undertaking the process of e-filing tax are as follows - Information required for individual tax payer -  A copy of last year's tax return  Bank Statement  TDS certificates  Savings certificates / Deductions  Interest statement showing interest paid to the individual throughout the year Information required for corporate tax payer -  A copy of last year's tax return  Bank Statement  TDS certificates  Savings certificates/Deductions  Interest statement showing interest paid to the corporate throughout the year  Profit and Loss Account  Balance Sheet [45] .

the last date for filing income tax returns in India is September 31st. there definitely is a fine for not filing income tax returns in India. For every month delayed. [46] . For those with income above INR 40lakhs. For both the above groups of tax payers.5000/-. 3. INCOME TAX RETURN Is there a fine for not filing income tax returns in India? Yes. 2. you will have to pay a fine of Rs. you are paying 1. but then each month delayed means more interest to be paid on the delayed tax.5% per month. the last date for filing income tax returns in India is July 31st. For those whose income is below INR 40lakhs. they can still file their income tax returns before March 31st. What is the last date of filing income tax returns in India? 1. If you do not file your income tax returns before the last date of the assessment year (March 31st).

INCOME TAX RETURN TAX PENALTIES The major number of penalties initiated every year as a ritual by Income Tax Authorities is under section 271(1)(c)which is for either concealment of income or for furnishing inaccurate particulars of income. a sum which shall not be less than. but which shall not exceed three times. the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income [47] . or (b) has concealed the particulars of his income or furnished inaccurate particulars of such income. "If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act. a sum of ten thousand rupees for each such failure. he may direct that such person shall pay by way of penalty. in addition to any tax payable by him.- (ii) in the cases referred to in clause (a). in addition to any tax payable by him. is satisfied that any person- (a) has failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142. (iii) in the cases referred to in clause (b).

 Reducing inequalities: Direct taxes are progressive in nature. [48] . the in direct taxes go in the hands of the traders and the citizens do not have any account whatsoever in the utilization of these taxes. Hence.  Equity: Direct taxes can be made to conform to the principle of ability to pay by choosing the most appropriate rate schedules. it acts an disincentive for them. Rich people are subjected to higher taxes on the basis of their higher income and hence reduces the inequalities of income and wealth.  Certainty: Direct taxes satisfy the canon of certainty. By making the rate structure possible and progressive their burden can be put more on rich than poor. The tax payers know that how much they have to pay and on what basis they have to pay. maternity homes etc. On the other hand.  Civic consciousness: When one knows that his taxes shall be well utilized for the benefit of the public such as the developmental and defense projects .. infrastructural development. hospitals. INCOME TAX RETURN MERITS OF DIRECT TAX  Economical: Direct taxes are very economical in the sense that the cost of collecting these taxes are relatively less as they are usually collected at the source and they are paid to the government directly. establishment of government schools. They pay their dues on time and pay it will honesty. The government also knows fairly the amount of tax it is going to collect. they take active part in the process of payment of taxes.

Higher rates of income tax may discourage people to work hard or work overtime. there is a large scale tax evasion on the part of the businessman.  Inconvenience: The main drawback of the direct taxes is that they cause a lot of inconvenience to the tax payers. the tax payers are required to pay the entire tax in one instalment.  Adverse effects on the will to work and save: Direct taxes may have an adverse impact on the will to work and save. Sometimes. the tax payers have to give and elaborate documents on their income and expenditure. Tax payers feel their pinch directly. People conceal their income from the tax official so as to evade taxes. In (India. [49] .  Possibility of tax evasion: Direct taxes encourage tax evasion. Besides. the direct taxes may reduce their willingness to save. INCOME TAX RETURN DEMERITS OF DIRECT TAX  Unpopular: Direct taxes are directly imposed on the person. They cannot be shifted. Similarly.

prudent tax planning before-hand is must for all the citizens to make the most of their incomes. we can say that given the rising standards of Indian individuals and upward economy of the country. INCOME TAX RETURN CONCLUSION At the end of this study. However. planning horizon would depend on an individual’s total taxable income and age in the particular financial year. [50] . the mix of tax saving instruments.

bajajcapital. New Delhi  Income Tax Ready Reckoner – A. Snowwhite Publications P. TaxMann Vinod K. Students Guide to Income Manoharan (2007).gov. Singhania (2007).com/taxcentre/  http://www. 2007-08.incometaxindia.Y.html  www. N. Taxman Publications. INCOME TAX RETURN BIBLIOGRAPHY Books:   [51] . Direct Tax Laws (7th edition).taxes.  Dr. New Delhi. New Delhi Websites:    emudra  http://in.incometaxofinfia.Ltd.