TAX RECONER 

BY TACHOTAX
Complete guide on the latest
Income Tax Reforms & Income Tax
Structure
Table Of Contents
01 All About Income Tax

02 Online ITR filing Guide

03 8 Changes in income tax lawas for 2020-21

04 Union Budget Highlights

05 Income Tax slabs and changes as per union budget 2020-21

06 Frequently asked questions (FAQ's)

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 1.0 All About Income Tax         

1.0 ALL ABOUT
      INCOME TAX
1.1 What is income Tax?
Income tax is a type of tax that
governments impose on income generated
by businesses and individuals for the
purpose of financing its various
operations.
There are two types of taxes - direct tax
and the newly launched Goods and
Services Tax (GST) which subsumed all
other indirect taxes such as VAT, service
tax, excise etc.
 As per income tax Act of india, Income
from the following sources is considered
taxable:

Income tax is calculated on an annual

basis. It is levied on the income earned in
the previous year which is also known as
the Assessment Year. The Financial Year
begins on 1st April in a given year and
ends on 31st March of the following year.

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 1.0 All About Income Tax

1.2 Why do you need to file Income Tax Returns?

Filing an income tax return is compulsory when your total Indian income exceeds
Rs.2,50,000.
Even if your income is less than the threshold of Rs.2,50,000, it’s a good practice
to file or e-file your income tax return. An income tax return is an important
document that is required to be  produced at the time of availing a home loan. It
is a proof of income that shows your Credit worthiness.
 You need at least three years filed income tax returns to show as proof of income,
if you are planning to go abroad for higher studies or are about to take up a job
outside of India, It is also required in processing your visa application to evaluate
your financial health.

1.3 Tax Saving options in India.

Section 80C of the Income Tax Act is considered the most popular tax-saving
options available to individuals and HUFs in India. It includes various investments
and expenses that can be used to claim deductions. The limit is Rs.1.5 lakh in a
financial year, which means that you can use this entire amount to reduce your
taxable income.

1.4 What is Income Tax?

These deductions include health insurance premiums, tax benefits on home loans.
By creating a Hindu Undivided Family (HUF) you can split your income between two
entities–yourself as an individual taxpayer and the HUF. You can avail the same
tax-saving deductions twice this way.

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 1.0 All About Income Tax

1.5 What is Income Tax?

 Check the tax-saving expenses that you can claim which includes expenses like   
    insurance premium, children’s tuition fees, etc.
 Deduct this amount from 1.5 lakh to figure out how much to invest.
 Choose tax-saving investments like ELSS funds, PPF, NPS and fixed deposits are   
    some of the popular options.

1.6 Different Types of ITR

*ITR-7: The ITR-7 income tax form is to be filed by individuals or companies that are required to submit
their returns under the
    following sections:

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 2.0 Online ITR E ling guide              

2.0  ONLINE ITR
        E FILING GUIDE
2.1 Who Should E-file
 Assessee with a total income of Rs. 5 Lakhs and above
 Individual/HUF resident with assets located outside India
 An assessee required to furnish a report of audit specified under sections 10(23C)
(IV), 10(23C) (v), 10(23C) (VI), 10(23C) (via), 10A, 12A (1) (b), 44AB, 80IA, 80IB, 80IC,
80ID, 80JJAA, 80LA, 92E or 115JB of the Act
 Assessee who is required to give a notice under Section 11(2) (a) to the assessing
officer
 Firm (which does not come under the provisions of section 44AB), AOP, BOI,
Artificial Juridical Person, Cooperative Society and Local Authority (ITR 5)
 Assessee required to furnish returns U/S 139 (4B) (ITR 7)
 Resident who has signing authority in any account located outside India
 Person who claims relief under sections 90 or 90A or deductions under section 91
 All Companies

2.2 Types of e filing

 It is mandatory to file IT forms using Digital
Signature Certificate (DSC) by a chartered
accountant.
 ITR V form is generated if you e-file without
DSC, which should then be printed, signed and
submitted to CPC, Bangalore by ordinary post or
speed post within 120 days from the date of e-
filing.
 You can file e-file IT returns through an E-return
Intermediary (ERI) with or without DSC.

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 2.0 Online ITR E ling guide              

2.3 Steps to follow to file ITR

 First, log in to IncomeTaxIndiaeFiling.gov.in and register on the website.
 Your user ID is your Permanent Account Number (PAN).
 View your tax credit statement or Form 26AS before proceeding to file your
return.
 Choose the financial year and click on the income tax return forms.
 Download the ITR form applicable to you.
 Open excel/java utility (the downloaded return preparation software) and fill
out the form by entering all details using your Form 16.
 By clicking the ‘calculate tax’ tab you can check the tax payable amount.
 If applicable pay tax and fill in the challan details.
 By clicking the ‘validate’ tab confirm all the data provided in the worksheet.
 Generate an XML file and save it.
 On the portal’s panel, go to ‘upload return’ and upload the saved XML file.
 You can download the acknowledgment form, ITR Verification (ITR-V) generated
by you.

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 3.0 Eight changes in income tax laws for 2020-21             

3.0 EIGHT CHANGES IN
       INCOME TAX LAWS FOR 2020-21
3.1 TDS on additional payments made while     
      purchasing immovable property
While purchasing a property, you will have to include the payment made for other
services or amenities such as club membership fee, car parking fee, electricity and
water facility fee and so on while computing the amount paid for the property for
the purpose of deducting TDS.

3.2 TDS on cash

withdrawals from bank
account
As per new section 194N, TDS will be levied
at the rate of two per cent on cash
withdrawals exceeding Rs 1 crore on
aggregate basis during the year from an
account held with a bank, cooperative bank
or post office will invite levy of TDS.

3.3 TDS on payment

made by individuals &     
HUFs to contractor &
professionals.
Individuals and HUFs making a payment to
contractors and professionals exceeding Rs
50 lakh in aggregate per annum will be
required to deduct TDS at the rate of 5 per
cent.

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 3.0 Eight changes in income tax laws for 2020-21             

3.4 TDS on non-exempt portion of life               

      insurance
TDS will be deducted at the rate of five per cent on the net income portion if life
insurance maturity proceeds received by you are taxable in your hands. The net
income portion is defined as:
The total sum received
Less: Total amount of insurance premium paid
If the annual premium paid does not exceed 10 per cent (20 per cent in case of
insurance policies sold prior to April 2012) of the sum assured, the proceeds
received at the maturity of a life insurance policy are exempted from tax 

3.5 Banks and FIs can be asked to report even 

      small transactions
Banks and other financial institutions are required to report specified financial
transactions if the amount exceeded the threshold limit (Mostly Rs 50,000 or more)
through a Statement of Financial Transactions (SFT).The tax department might ask
Banks and FIs to report even small transactions.

3.6 If PAN is not linked with Aadhaar

Budget 2019 changed the rules to protect the validity of previous transactions
done using the PAN, PAN will now become inoperative but not invalid if not linked
with Aadhaar by the specified deadline.

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 3.0 Eight changes in income tax laws for 2020-21             

3.7 Inter-changeability of PAN & Aadhaar are   

      manadatory quoting in prescribed                 
    transactions

Aadhaar can be quoted in lieu of PAN only for certain prescribed transactions. 

3.8 Faceless e-assessment

Under faceless scrutiny assessment, tax returns is picked up by a central
computer for scrutiny based on risk parameters and mismatch and then returns
are allotted randomly to a team of officers. This allocation is reviewed by
officers at another randomly selected location and only if concurred, a notice is
sent by the centralised computer system. Response to such notices need to be
given electronically without the requirement of visiting a tax office or meeting
any official. 

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 4.0 Union Budget Highlights                  

4.0  UNION BUDGET
        HIGLIGHTS

4.1 Affordable housing

Additional deduction up to Rs. 1.5 lakhs for interest paid on loans borrowed up to
31st  March, 2020 for purchase of house valued up to Rs. 45 lakh.
Overall benefit of around Rs. 7 lakh over loan period of 15 years.

4.2 Boost to electric Vehicles

 Additional income tax deduction of Rs. 1.5 lakh on interest paid on electric       
        vehicle loans.
 Customs duty exempted on certain parts of electric vehicles.

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 4.0 Union Budget Highlights 

4.3 Relief for Start-ups

 Capital gains exemptions from sale of residential house for investment in start-
ups extended till FY 2021.
 ‘Angel tax’ issue resolved- start-ups and investors filing requisite declarations
and providing information in their returns not to be subjected to any kind of
scrutiny in respect of valuations of share premiums.
 Funds raised by start-ups to not require scrutiny from Income Tax Department
 Special administrative arrangements for pending assessments and grievance
redressal
 No scrutiny of valuation of shares issued to Category-II Alternative Investment
Funds.
 Relaxation of conditions for carry forward and set off of losses.

4.4 NBFCs
Interest on certain bad or doubtful debts by deposit taking as well as systemically
important non-deposit taking NBFCs to be taxed in the year in which interest is
actually received. 

4.5 International Financial Services Centre (IFSC)

 100 % pro t-linked deduction in any ten-year block within a fteen-year period.
 Exemption from dividend distribution tax from current and accumulated income
to companies and mutual funds.
 Exemptions on capital gain to Category-III Alternative Investment Funds (AIFs).
 Exemption to interest payment on loan taken from non-residents.

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 5.0 Income Tax slab and changes as per Budget          

5.0 INCOME TAX SLABS AND

       CHANGES AS PER BUDGET
5.1 INCOME TAX RATES
Option A
For Individuals, Hindu Undivided Family, Association of Persons, Body of Individuals and
Artificial juridical persons

(a) In case of a resident individual of the age of (c) Rate of surcharge

60 years or above but below 80 years, the
basic exemption limit is Rs. 300,000.      ->37% on base tax where specified income exceeds 
             Rs. 5 crore;
(b) In case of a resident individual of age of 80
years or above, the basic exemption limit is Rs.      ->25% where specified income exceeds Rs. 2 crore   
500,000.             but does not exceed Rs. 5 crore
     ->15% where total income exceeds Rs. 1 crore but   
              does not exceed Rs. 2 crore; and
     ->10% where total income exceeds Rs 50 lakhs but 
              does not exceed Rs. 1 crore.
Specified income – Total income excluding income under
the provisions of section 111A and 112A of the Act.
Marginal relief for such person is available.
(d) Health and Education cess @ 4% on aggregate
of base tax and surcharge.
(e) Individuals having total income not
exceeding Rs. 500,000 can avail rebate of lower of
actual tax liability or Rs. 12,500 .

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 5.0 Income Tax slab and changes as per Budget          

Option B
The Finance Bill, 2020 has proposed New Personal Tax Regime:

For adopting Option B, most of the deductions/exemptions such as section 80C,

80D, etc. are to be foregone. The aforesaid regime is optional. Accordingly,
Individuals and HUFs have the option to be taxed under either of the options.
Option B once exercised can be changed in subsequent years (not applicable for
business income).

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 5.0 Income Tax slab and changes as per Budget          

5.2 Personal Income Tax Scenario

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 6.0 Frequently asked questions(FAQs)
6.0 FREQUENTLY ASKED QUESTIONS 
       FAQS.
6.1. What are the benefits of
filling ITR?
Return Filing is a legal obligation
and must be fulfilled by everyone
who falls under the prescribed
category. It is also helpful in the
following situations:
 To get a home or personal
loan
 For visa and immigration
processing
 As a proof of income/ net
worth certificate
 To claiming excess tax paid via
refund
 Apply for a higher insurance
cover
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6.2. Why do I need to file tax
return if my company deducts
TDS and pays it to the
government?
Although tax is deducted at source
(TDS), and you’re not liable to any
more tax to the government, it is
compulsory to file returns if your
income exceeds the basic exemption
limit. Tax returns act as a declaration
to the government that you have
derived income only from the source
revealed by you, and no other. 
6.3. Are retirement benefits like
PF and Gratuity taxable?
Gratuity and PF receipts on
retirement are exempt from tax In
the hands of a Government
Employee. In the hands of non-
Government employee, gratuity is
exempt subject to the limits
prescribed in this regard and PF
receipts are exempt from tax, if the
same are received after rendering
continuous service of not less than 5
years from a recognized PF.
 6.0 Frequently asked questions(FAQs)
6.4. If my income is taxed in
India and in abroad, can I claim
any relief because of double
taxation?
Yes, Relief is either granted as per the
provisions of double taxation
avoidance agreement entered into
with that country (if any) by the
Government of India or by allowing
relief as per section 91 of the Act in
respect of tax paid in the foreign
country.
6.5. Am I required to pay
Income-tax on if I win a lottery
or prize money in a competition?
Yes, such winnings are liable to flat
tax rate of 30% without any basic
exemption limit. In such a case the
payer of prize money will generally
deduct tax at source (i.e., TDS) from
the winnings and will pay you only
the balance amount.
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6.6. Can a person change Tax
Regime year on year?
The persons who have Income from
sources of Salary, House Property,
Capital Gain and from other sources
are allowed to select tax regime
year on year basis. However, those
having Income from Business
Profession are allowed to select tax
regime only once in lifetime.
6.7. Under new tax regime, is
Standard Deduction of Rs. 50000
available to Individuals having
Income from Salary?
The main condition of availing an
option of paying tax at concessional
rates on Income up to Rs. 15 Lacs is
“to forego certain tax deductions and
exemptions”. Here Deductions
includes Standard deduction which is
otherwise available of Rs. 50000 to
those having Income from Salary. It
means that Standard Deduction is
not available under new tax regime.
 6.0 Frequently asked questions(FAQs)

6.8. Can a person opting New

Tax Regime avail benefit of
Rebate u/s 87A?

The new tax regime talks about

foregoing most of the exemptions
and deductions, and therefore
Rebate u/s 87A is available under
both Old as well as New Tax Regime.

6.9. If Employee does not give

Intimation of going for new tax
regime to the employer while
deciding tax liability and later on
wish to go for new regime while
filing Income Tax Return, can he
do so?

An Employee can change the tax

structure at the time of filing
income tax and that the amount
of TDS will be adjusted
accordingly.

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