What is Income as per Income Tax Act?

The word Income has a very broad and inclusive meaning which is defined under section 2(24) of income tax act, without
getting too in depth we will understand it broadly.

 In case of a salaried person, whatever amount received from an employer, either in cash or
kind or as a facility is considered as income.
 For a businessman, his profits and gains will constitute income
 For professionals, freelancers etc. there earnings from various sources like professional
fees, other incomes etc. are considered as Income.
 You might receive Rental income from house owned.
 Or capital gains from sale of shares, buying or selling of property etc.
 Income may also flow from investments in the form of Interest, Dividend, and Commission
etc.
 Income Tax Department has classified income in 5 broad categories. Those are:
1. Income from Salary : The amount received by you from your employer every
month comes under the head income from salary. As per law, employer-employee
relationship is must to consider the amount as income from salary else it will be
considered under other head and therefore exemptions, allowances available to a
salaried individuals will not be available.
The amount of your Salary includes basic pay, dearness allowance, medical,
transport, annuity, gratuity, advance of salary, allowances, commission, perquisites
in lieu of salary and retirement benefits etc.; The aggregate of the above incomes,
after the exemptions but before the deductions, is known as Gross Salary and this is
charged under the head income from salary. (you can refer to column no. 6 of
your Form- 16 to know your taxable salary amount)
2. Income from House property : Any Rental Income from residential or commercial
property that you own will be taxed. If you have home loan then interest part of it
would also be considered as negative income from House property.
3. Income from Business or Profession : Income earned through business or
profession is taxable under the head ‘profits and gains of business or profession.
The income on which tax is levied shall be net of expenses.
4. The income on which tax is levied shall be net of expenses.
5. Income from capital gains : Any profit or gain arising from transfer of capital asset
held as investments (such as house, Jewellery are chargeable to tax under the head
capital gains. The gain can be on account of short-term and long-term gains. Our
article Basics of Capital Gain talks about it in detail.
6. Income from other sources : Any income that does not come under the above four
heads of income is taxed under the head income from other sources. For eg.
savings bank interest,lottery you win (probably never :P) or Reality shows like “Kaun
Banega crorepati” etc. all these Incomes are taxable that means the person winning
 1 Crore in the show will have to pay 30% of tax. so he actually never became
crorepati ;)

What are Exempt Incomes/Tax Free Income and Taxable

Incomes?
Exempt Incomes are not chargeable to tax as per Income Tax law i.e. they are not included in the total income for the
purpose of tax calculation. Eg Interest earned from PPF etc. While, taxable Incomes are chargeable to tax eg. Salary, House
Property, Capital Gains Income Etc.

What is PAN?
PAN stands for Permanent Account Number, it’s a ten-digit unique alphanumeric number issued by the Income Tax
Department that acts as an identification for us. Whether we are Individual, HUF, Company, Firm, or any other assessee,
the same can be known through our PAN . PAN is a prerequisite for filing ITR, also the tax department can trace all our
communications, returns, refunds, and other activities relating to Income Tax through our PAN. It looks like as shown in
image.

Where,
First Five digits will always be Alphabetic, Next four digits - Numeric and the Last digit - Alphabetic But, the 4th letter is
important as it denotes type of assessee (Individual ,Company, Firm Etc.)
Given below is an illustrative PAN: AAAAA1234A

Every person having a PAN needs to file ITR?

No, only those having taxable income or otherwise come under the ambit of mandatory filing of Income Tax return as per
Income Tax Act are required to file ITR.

What is TAN?
TAN refers to Tax Deduction Number which is a 10 digit alphanumeric number allotted to those who are liable to deduct
TDS by the Income Tax Department.
TAN Format- JPRD00214F
First Four digit Alphabetic, than after Five digit Numeric and last digit is Alphabetic.

Who is an assessee?
As per Income Tax Act, an assessee means “a person by whom any tax or any other sum of money is payable under this
Act”.
In layman’s term if you are liable to pay taxes, have any taxable income, or otherwise required to file ITR, you are an
assessee. The Income Tax Act, 1961 has classified Assessee in different categories, such as

Individual Piyush
Aakash

Partnership Firm M/s ABC and Company

M/s ABC and associates

A Hindu Undivided Family Mr. A (HUF) or

Mr. B (HUF)
 Company Winiin Taxscope Private Ltd.
Winiin Taxscope Ltd.

An AOP (Association Of Persons) or BOI (Body Of Individuals) ABC Sangh

XYZ Dal

A Local Authority Pune Municipal Corporation

PCMC Municipal Corporation

Artificial Juridical Persons Everyone not falling within any of the a

What is the difference between Financial Year and Assessment

Year?
Financial Year is the year in which you have earned income On the other hand, Assessment Year is always the succeeding
year in which you file your Previous Year Income Tax Return, and offer the particulars of your income earned during the
Previous Year to be assessed by the Income Tax Department.

What is Income Tax?

An income tax is a tax imposed by government on income earned by you. Income tax is a key source of funds that the
government uses to fund its activities and serve the public.

What is Corporate Tax?

When Companies pay taxes under the Income Tax Act it is normally called Corporate tax.

Which body governs filing of taxes in India?

The Central Board of Direct Taxes (CBDT) provides essential inputs for policy and planning of direct taxes in India and is
also responsible for administration of the direct tax laws through Income Tax Department.
CPC Bengaluru or Income Tax Centralized Processing Centre undertakes the work of receiving and processing all income
tax returns filed in India.

Do I have to file my Income Tax Return?

Whether you are required to file your income tax return or not depends upon a number of conditions. One such basic
condition being, if your income exceeds Rs. 2,50,000 in a Financial Year you are required to file ITR. For more details read
our blog https://blog.tax2win.in/is-it-mandatory-to-file-income-tax-return/
What documents are required to be gathered to e-file your
income tax returns in India?
Go through this list to see the documents you’ll need to do your taxes. You won’t need all the documents listed here as they
vary on a case-to-case basis :-

SOURCES OF INCOME REQUIREMENTS

**Mandatory PAN Card

Bank Account Details

Form 16, 16A, 26AS

Salary
Pay slips

Rent receipt for HRA

Investment under section 80C, 80D, 80E, 80G

Address of property
House Property

Home loan interest certificate

Co-owner’s details including their PAN card details & share in capital

ELSS, SIPs, debt funds, mutual fund statement, purchase and sale of

Capital Gains equity funds.

If there is capital gains through selling shares then stock trading statement

is needed

purchase price, selling price, capital gain details and details of registration, in case
 case a house property is sold

Income received from post office account

Other Sources

Bank details required if Interest is received from savings account

Reporting of interest received from corporate bonds and tax saving bonds

What is Form-16?
Form 16 is issued to salaried individuals, by their employers.This form prescribes details regarding

 TDS deducted and

 The Salary and Amount Received
 Allowances (like amount paid for HRA, medical reimbursements etc)
 Other Income if detail provided to the Employer.
 Deductions etc

Form is given at the end of year and helps you file your income tax return as a breeze .
It is to be noted that deduction of TDS does not free you from the mandate of Filing of Income tax return.
Form 16 might differ in formats depending upon employer to employer but a standard form 16 looks like this :-

Form 16 might differ in formats depending upon employer to employer but a standard form 16 looks like this :-

 Part A of FORM 16 contains details of tax which has already been paid by you or deducted
from your income
 Part B gives the detailed breakup / composition of your income

 Part B gives the detailed breakup / composition of your income

What is TDS?
As per Income Tax Act, there are certain payments including salary, interest etc. in which the one who makes such payment
is liable to deduct tax known as Tax Deducted at Source. At the end TDS is adjusted with taxes payable at the time of
making final computation of income.
What is Form 26AS?
Form 26AS is a statement maintained and generated by the Income Tax Department for each individual assessee (person).
Form 26AS is also known as annual statement which contains all tax related information of a taxpayer. The details give a
clearer picture of the tax commitments of a taxpayer. It is associated with PAN. Form 26AS contains:

 Details of tax deducted on your income by deductors

 Details of tax collected by collectors
 Advance tax paid by the taxpayer
 Self-assessment tax payments
 Regular assessment tax deposited by the taxpayers (PAN holders)
 Refund received during the financial year
 High value Transactions in respect of shares, mutual fund etc. performed during the year

Link: https://incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html?nextPage=taxCred

Specimen of form 26 AS:

What is the User ID to login on Income Tax India efiling
website?
The user ID is your PAN number.

What are Income Tax Forms?

These are prescribed forms through which a person can furnish the details of his /her income earned and taxes paid for the
relevant financial year to the Income Tax Department. The ITR forms on successful submission to the tax department
becomes Income Tax Return.

Can I file my return even if I don’t have my Form-16?

Yes, you can file your return without Form-16. You’ll just have to enter your total salary received / taxable salary and TDS
deducted on it with the help of your payslips and you’re good to go.

Can Paper Return be Filed?

Yes, as per new ITR Forms and instructions issued by CBDT for Financial Year 2017-18 return in paper form can be
submitted if,

 Your total income does not exceed Rs 5 lakhs But, no claim for refund could be admitted
through paper filed ITRs or
 You are aged 80 years and above

Are there any benefits of filing ITR online?

In comparison to offline filing, filing your income tax return online is much faster, secure and simpler. Moreover, it is now
mandatory to file your income tax return online if your income exceeds Rs. 5,00,000 in a financial year or if you want to
claim the refund. You can easily e file your ITR by just uploading Form 16 at Tax2win!!

What is ITR Form ? How ITR submitted to Department?

ITR forms as already discussed are the prescribed forms in which information is needed to be furnished to the income tax
department. There are different ITR forms for different categories of assessee and the same have been explained below :-

Form and their Description

ITR- 1(SAHAJ) Resident Individuals having income from

 Salary or pension
  Own one house property whether self occupied or let out
 Income from other sources except Race horses and lottery etc
 Having total income upto Rs 50 lakhs

ITR-2 Individuals and HUFs not having income from Profits and Gains of Business or Profession

ITR- 3 Individuals and HUFs earning income from Business or Profession, including partnership firm

ITR-4 Anyone offering income for presumptive taxation

(SUGAM)

ITR-5 Every person other than

 Individuals
 HUFs
 Company
 Those filing ITR 7

ITR-6 For companies other than companies claiming exemption u/s 11

ITR-7 For persons including companies required to furnish return u/s 139(4A) or 139(4B) or 139(4C
139(4E) or 139(4F).

On which date ITR needs to be filed?

In simple words and for practical purpose these two due dates are relevant

 For individual - 31st July every assessment year [Non Audit Case]
 For Others - 30th September every assessment year [Audit Case]

But here you can take a glimpse of all other important dates as well:-
How can ITR be filed?
What is the process of e-filing ?
Income Tax Slab Rates for FY 2020-21 (AY
2021-22) , FY 2021-22 (AY 2022-23) & FY
2022-23 (AY 2023-24)
 If Person is Resident Individual or HUF: -

Rate of Tax under Existing Regime for FY 22-23, 21- New Regime Slab Rates for FY 22-23, 21-22 and 20-21 (i.e, A
22 and 20-21 (i.e, AY 23-24, 22-23 & 21-22) 23 & 21-22)

Individuals
Individuals with age Individuals with age with age
less than 60 years 60years or more but less 80 years
Income of the assessee or HUF than 80 years or more Applicable for All Individuals or HUF

Rs 0.0 to Rs 2.5 Lakhs NIL NIL NIL NIL

Rs 2,50,001 to Rs 3.00 5% (tax rebate u/s NIL NIL 5% (tax rebate u/s 87a is available)
Lakhs 87a is available)

Rs. 3,00,001 to Rs 5.00 5% (tax rebate u/s 87a is NIL

Lakhs available)

Rs. 5,00,001 to Rs 7.5 20% 20% 20% 10%

Lakhs

Rs 7,50,001 to Rs 20% 20% 20% 15%

10.00 Lakhs

Rs 10,00,001 to Rs. 30% 30% 30% 20%

12.50 Lakhs

Rs. 12,50,001 to Rs. 30% 30% 30% 25%

15.00 Lakhs

Exceeding Rs. 15 Lakhs 30% 30% 30% 30%

Note:
1. In Addition to basic Income Tax as discussed above , Followings are also to be taken care of:-
- Surcharge: Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:-

Rs. 50 Lakhs to Rs. 1 Crore Rs. 1 Crore to Rs. 2 Crores Rs. 2 Crores to Rs. 5 Crores More Than 5 Crores
 Rate of Tax under Existing Regime for FY 22-23, 21- New Regime Slab Rates for FY 22-23, 21-22 and 20-21 (i.e, A
22 and 20-21 (i.e, AY 23-24, 22-23 & 21-22) 23 & 21-22)

Individuals
Individuals with age Individuals with age with age
less than 60 years 60years or more but less 80 years
Income of the assessee or HUF than 80 years or more Applicable for All Individuals or HUF

10% 15% 25% 37%

- Health & Education Cess @4%

 

- Rebate u/s 87A (no tax will be payable on total income upto Rs.5 lakh in both regimes)
2. Certain income tax exemptions and deductions like section 80C, 80D,80TTB, HRA etc are available in the OLD tax regime but will not be ava
under the new tax regime.

If Person is Non-Resident Individual: -

Rate of Tax under Existing Regime for FY 22-23, 21-22 and 20- New Regime Slab Rates for FY 22-23, 21-22 a
Income of the assessee 21 (i.e, AY 23-24, 22-23 & 21-22) (i.e, AY 23-24, 22-23 & 21-22)

Rs 0.0 to Rs 2.5 Lakhs NIL NIL

Rs 2,50,001 to Rs 5.00 5%  5% 

Lakhs

Rs. 5,00,001 to Rs 7.5 20% 10%

Lakhs

Rs 7,50,001 to Rs 10.00 20% 15%

Lakhs

Rs 10,00,001 to Rs. 30% 20%

12.50 Lakhs

Rs. 12,50,001 to Rs. 30% 25%

 Rate of Tax under Existing Regime for FY 22-23, 21- New Regime Slab Rates for FY 22-23, 21-22 and 20-21 (i.e, A
22 and 20-21 (i.e, AY 23-24, 22-23 & 21-22) 23 & 21-22)

Individuals
Individuals with age Individuals with age with age
less than 60 years 60years or more but less 80 years
Income of the assessee or HUF than 80 years or more Applicable for All Individuals or HUF

Rate of Tax under Existing Regime for FY 22-23, 21-22 and 20- New Regime Slab Rates for FY 22-23, 21-22 a
Income of the assessee 21 (i.e, AY 23-24, 22-23 & 21-22) (i.e, AY 23-24, 22-23 & 21-22)

15.00 Lakhs

Exceeding Rs. 15 Lakhs 30% 30%

Note:
Surcharge & cess also applicable here as in case of resident.

If Person is AOP/BOI/Artificial Judicial Person: -

Income of the assessee Rate of Tax under Existing Regime for FY 22-23, 21-22 and 20-21 (i.e, AY 23-24, 22-23 & 21-22)

Rs 0.0 to Rs 2.5 Lakhs NIL

Rs 2,50,001 to Rs 5.00 Lakhs 5% 

Rs. 5,00,001 to Rs 10.00 Lakhs 20%

Above 10.00 Lakhs 30%

In case of a Domestic Company: -

Domestic Company NORMAL TAX RATE 

Assessment Year 2021- Assessment Y

22 23
 Rate of Tax under Existing Regime for FY 22-23, 21- New Regime Slab Rates for FY 22-23, 21-22 and 20-21 (i.e, A
22 and 20-21 (i.e, AY 23-24, 22-23 & 21-22) 23 & 21-22)

Individuals
Individuals with age Individuals with age with age
less than 60 years 60years or more but less 80 years
Income of the assessee or HUF than 80 years or more Applicable for All Individuals or HUF

Where its total turnover or gross receipt during the previous year 2018-19 does not exceed 25% NA
Rs. 400 crore

Where its total turnover or gross receipt during the previous year 2019-20 does not exceed NA 25%
Rs. 400 crore

Any other domestic company 30% 30%

Also, the Government introduced special tax rates for domestic companies under various sections, these can be summarized as:-

Domestic Company SPECIAL TAX RATES 

Assessment Year 2021-22 Assessment Year 2022-23

Where it opted for section 115BA 25% 25%

Where it opted for Section 115BAA 22% 22%

Where it opted for Section 115BAB 15% 15%

Note:
1. In Addition to basic Income Tax as discussed above, Followings are also to be taken care of:-
- Surcharge: Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specifie

Rs. 1 Crore to 10 Crores Above Rs. 10 Crore

7% 12%

- Health & Education Cess @4%

 Rate of Tax under Existing Regime for FY 22-23, 21- New Regime Slab Rates for FY 22-23, 21-22 and 20-21 (i.e, A
22 and 20-21 (i.e, AY 23-24, 22-23 & 21-22) 23 & 21-22)

Individuals
Individuals with age Individuals with age with age
less than 60 years 60years or more but less 80 years
Income of the assessee or HUF than 80 years or more Applicable for All Individuals or HUF

2. MAT Provisions as per section 115JB would also be applicable while calculating tax payable.

If Person is Foreign Company: -

Nature of Income

Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31,
1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29 1964, but
before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government

Any other income

Note:
1. In Addition to basic Income Tax as discussed above, Followings are also to be taken care of:-
- Surcharge: Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:-

Rs. 1 Crore to 10 Crores Above Rs. 10 Crore

2% 5%

- Health & Education Cess @4%

2. MAT Provisions as per section 115JB would also be applicable while calculating tax payable.

What is Deduction under section 80C?

In simple terms, you can reduce up to Rs 1,50,000 from your total taxable income through section 80C, by making
investment in prescribed routes like PPF, LIC etc. This deduction is allowed to an Individual or a HUF.

Example

Income 500000
 less- Deduction u/s 80C 150000

Taxable income 350000

After providing deduction u/s 80C Taxable income will only be Rs 3.5 lakhs and not 5 lakhs.