IMPORTANT DEFINITIONS

 In order to understand the provisions of the Act

easily, we need to have a thorough knowledge of
certain key terms like ASSESSEE, ASSESSMENT,
PERSON, INCOME, ASSESSMENT YEAR,
PREVIOUS YEAR etc.
Some terms are defined in the Act and we have to
follow that definition.
If the definition is not given in the Act for a term,
reference can be made to the General Clauses Act or
other Dictionaries.
 ASSESSEE
According to Income Tax Act 1961 sec.2 (7) assessee means
(a) a person liable to pay any tax or any other sum of money
payable under this act and includes:
 every person in respect of whom any proceedings under this act
has been taken for the assessment of :
• his income or
• the income any other person in respect of which he is assessable or
• loss sustained by him or by such other person
• or of the amount of refund due to him;
(b) every person who is deemed to be an assessee under any
provisions of this act;
(c) every person who is deemed to be an assessee-in-default under
any provision of this act
 TYPES OF ASSESSEES
(a) Ordinary Assessee: This includes
(i) any person against whom some proceedings under
this Act are going on. It is immaterial whether any
tax or other amount is payable by him or not;
(ii) any person who has sustained loss and has filed
return of loss u/s 139(3);
(iii) any person by whom some amount of interest, tax
or penalty is payable under this Act; or
(iv) any person who is entitled to refund of tax under
this Act
 TYPES OF ASSESSEES

(b) Representative or Deemed Assessee:

A person may not be liable only for his own

income or loss but also on the income or loss
of other persons e.g. guardian of minor or
lunatic, agent of a non-resident etc.

In such case the persons responsible for the

assessment of income of such persons are
called representative assessee or deemed to be
an assessee.
 TYPES OF ASSESSEES
Examples of Representative or Deemed Assessees

1. In case of a deceased person who dies after writing his will

the executors of the property of deceased are deemed
assessees.

2. In case of a person dies intestate (without writing his will)

his eldest son or other legal heirs are deemed as assessee.

3. In case of a minor, lunatic or idiot having income taxable

under Income Tax Act, their guardian is deemed as assessee

4. In case of a non-resident having income in India, any person

acting on his behalf is deemed as assessee.
 TYPES OF ASSESSEES
(c) Assessee-in-default:
A person is deemed to be assessee-in-default if he
fails to fulfill his statutory obligations.
In case of an employer paying salary or a person
who is paying interest, it is their duty to deduct
tax at source and deposit the amount of tax so
collected in Government treasury.
If he fails to deduct tax at source or deducts tax but
does not deposit it in the treasury, he is known
as assessee in default.
 ASSESSMENT

It is the process of determining the correctness of

income of an assessee and of assessing the amount
of tax payable by him and procedure for imposing
tax liability.

The current assessment year is 2021-2022 (1 st

April, 2021 to 31st March 2022)

The previous year is 2020-2021

(1st April 2020 to 31st March 2021)
 ASSESSMENT YEAR

 An assessment year is a period of 12 months

commencing on 1st April and ending 31st
March every year. It is also known as financial
year.
 Assessment year is the financial year of the
Government of India during which income of
a person relating to the relevant previous year
is assessed to tax. The current assessment year
is 2021-2022.
 PREVIOUS YEAR
 Previous Year means the financial year
immediately preceding the assessment year.
Previous year is also known as the
accounting year or income year.
 The current assessment year is 2021-2022
which commenced on 1-4-2021 and will end
on 31-3-2022
 The previous year for this assessment year
would be 2020-2021 which commenced on
1-4-2020 and ended on 31-03-2021
 PREVIOUS YEAR FOR UNDISCLOSED
SOURCES OF INCOME
 Usually, income earned in a previous year
gets taxed in its assessment year.
 However, in some cases, if the income is not
disclosed by the tax payer but is detected by
the Income Tax department and the source for
which is not satisfactorily explained by the
assessee to the Assessing Officer, it is deemed
to be the income of the year in which it is so
detected.
PREVIOUS YEAR FOR UNDISCLOSED SOURCES OF INCOME

Amount
borrowed or
repaid on
hundi
(Sec.69D)
Unexplained
Cash Credits
Expenditure
(Sec.68)
(Sec.69C)

UNDISCLOSED
SOURCES OF
INCOME

Investments
Unexplained
not fully
Investments
disclosed
(Sec.69)
(Sec.69B)

Unexplained
money
(Sec.69A)
 PREVIOUS YEAR FOR UNDISCLOSED
SOURCES OF INCOME

i. Cash credits (Sec.68): Any sum found credited in

the books of the assessee and the assessee offers
no explanation about the nature and source or the
explanation offered is not satisfactory in the
opinion of the assessing officer.
The sum so credited may be charged as income of
the assessee of that previous year.
 PREVIOUS YEAR FOR UNDISCLOSED
SOURCES OF INCOME

ii. Unexplained investments (Sec.69):

Any investments made in the previous year which
are not recorded in the books of account and the
assessee offers no explanation about the nature
and source of investments or the explanation
offered is not satisfactory in the opinion of the
assessing officer, the value of
Investments are taxed as deemed income of the
assessee of such financial year.
 PREVIOUS YEAR FOR UNDISCLOSED
SOURCES OF INCOME

iii. Unexplained money (Sec.69A):

If the assessee is found to be the owner of any money,

bullion, jewellery or other valuable article in a
financial year and the same are not recorded in the
books of account and the assessee offers no
explanation about the nature and source of acquisition
of such things or the explanation offered is not
satisfactory in the opinion of the assessing officer, the
money and the value of bullion etc. may be deemed to
be the income of the assessee for such financial year.
 PREVIOUS YEAR FOR UNDISCLOSED
SOURCES OF INCOME
iv. Unexplained investments etc., not fully disclosed in the books
of account (Sec.69B): If the assessee is found to be the owner
of any money, bullion, jewellery or other valuable article in a
financial year and the Assessing officer finds that the amount
spend on making such investments or in acquiring such articles
exceeds the amount recorded in the books of account and the
assessee offers no explanation for the difference, such excess
may be deemed to be the income of the assessee of such
financial year.
Example: If the assessee is found to the owner of 40 grams of gold
(market value Rs.1,50,000) during the financial year ending
31.03.2020. but he has recorded that he has spent Rs.1,00,000
for acquiring it, the assessing officer can add Rs.50,000 as the
income of the assessee, if he does not offer satisfactory
explanation.
 PREVIOUS YEAR FOR UNDISCLOSED
SOURCES OF INCOME

v. Unexplained expenditure (Sec.69C):

If the assessee has incurred any expenditure in a
financial and the assessee offers no explanation
about the nature and source of such expenditure
or the explanation offered is not satisfactory in
the opinion of the assessing officer, he can treat
such unexplained expenditure which is deemed to
be the income of the assessee and shall not be
allowed as deduction under any head of income.
 PREVIOUS YEAR FOR UNDISCLOSED
SOURCES OF INCOME

v. Amount borrowed or repaid on hundi (Sec.69D):

Where any amount is borrowed on a hundi or any
amount due thereon is repaid other than through
an account-payee cheque drawn on a bank, the
amount so borrowed or repaid shall be deemed to
be the income of the person borrowing or
repaying for the previous year in which the
amount was borrowed or repaid, as the case may
be
Certain cases when income of a previous year
will be assessed in the previous year itself

1. Shipping business of non-resident (sec.172)

2. Persons leaving India (sec.174)
3. AOP/BOI/Artificial Juridical Person formed for a
particular event or purpose (sec.174A)
4. Persons likely to transfer property to avoid tax
(sec.175)
5. Discontinued business (sec.176)
 Maximum Marginal Rate and
Average Rate of Income Tax

As per section 2(10), ‘Average Rate of Income

Tax’ means the rate arrived at by dividing the
amount of income tax calculated on the total
income, by such total income

Amount of Tax
Average Rate of Income tax = --------------------
Total Income
 Maximum Marginal Rate and
Average Rate of Income Tax

As per section 2(29C), ‘Maximum Marginal Tax’

means the rate of income tax (including surcharge
on the income-tax if any) applicable in relation to
the highest slab of income in the case of an
individual, AOP or BOI, as the case may be, as
specified in Finance Act of the relevant year.
 PERSON [Section 2(31)]
Person includes:
(i) an individual;
(ii) a Hindu Undivided Family (HUF);
(iii) a Company;
(iv) a Firm;
(v) an Association of Persons (AOP) or
Body of Individuals (BOI), whether
incorporated or not
(vi) a Local Authority; and
(vii) every artificial judicial person not falling within any
of the preceding sub-clauses.
 TYPE OF PERSONS

INDIVIDUAL

ARTIFICIAL
JURIDICAL HUF
PERSON

PERSON
LOCAL COMPANY
AUTHORITY

AOP/BOI FIRM
 AN INDIVIDUAL

(i) an individual means a natural or living

human being.
It refers to a natural human being whether
male or female, minor or lunatic or any
other legal representative like guardian
or manager who is entitled to receive
his/her income.
In case of deceased person, the assessment
would be made on the legal heir.
 HINDU UNDIVIDED FAMILY

HUF is not defined under Income Tax Act 1961. It is

a relationship created due to operation of Hindu
Law. The manager of HUF is called ‘Karta’ and
the members are called ‘Coparceners’.
Earlier only descendants were considered as
coparceners. With effect from 6th September 2005,
daughters have also accorded coparcenary status.
However other female members like wife, daughter-
in-law are not eligible for coparcenary interest.
Under Income Tax Act 1961 JUF (Jain) and SUF
(Sikh) are also treated as HUF.
 PERSON [Section 2(31)]

Schools of
Hindu Law

Mitakshara School
Dayabaga school
(Rest of India except
(WB & Assam)
WB & Assam)
 PERSON [Section 2(31)]

 In Dayabaga School, the children do not acquire

any right of share in the family property, as long as
his father is alive.
 Only on the death the father (Karta), the children
will acquire the right or share in the property.

 In Mitakshara school, the children the right to the

family property by his birth and not by succession.
 Every child born in the family acquires a right of
share in the family property.
 COMPANY (Section 2(17)

Company means:
1. Any Indian Company as defined in section 2(26); or
2. Any foreign company; or
3. Any institution, association or body which is
assessable or was assessed as a company for any
assessment year under the Indian Income Tax Act;
or
4. Any institution, association or body, whether
incorporated or not and whether Indian or non-
Indian, which is declared by a general or special
order of the CBDT.
 FIRM (Sec. 2(23)
(iv) a Firm : This is an entity which comes into existence as a
result of partnership agreement. Usually Partnership firm
does not have a legal entity, yet it has been regarded as a
separate entity under Income Tax Act, 1961.
 a partnership firm may be:
(i) as defined under the Indian Partnership Act 1932 or
(ii) as defined under the Limited Liability Partnership Act
2008
For the income tax purposes, a minor admitted to the benefit of
the firm is treated as a partner.
Individually : Partners; Relationship : Partnership;
Collectively : Firm
 (V) Association of Persons (AOP) or
Body of Individuals (BOI)
 When persons combine together to carry on a joint enterprise and they
do not constitute partnership under the ambit of law, they are
assessable as an association of persons.
 Receiving income jointly, common action to achieve common purpose
are the features of Association of Persons.

 Cooperative societies, MARKFED (A largest Marketing Cooperative

Federation – in Punjab), NAFED (Navy Federal Credit Union) etc.,
are the examples of such persons.

 The main difference between the two is that , in the case of association
of persons even body corporates & firms can be members where as in
BOI only individuals can be members.
 It may noted that the provisions relating to AOP & BOI are one & the
same as regards computation & taxability of income
 PERSON [Section 2(31)]

(vi) a Local Authority : Corporation Municipality,

Panchayat, District Board, Port Trust are the
examples of Local Authorities.

(vii) Artificial juridical person : A public

corporation established under special Act of
legislature and a body having juristic personality
of its own are known as Artificial Juridical Person.
Example : University of Madras, Bharathiar
University etc.
 INCOME [Section 2(24)]

1. The definition of income as per the Income-tax Act,

1961 begin with the words “Income includes” . So,
the definition is in inclusive and not exhaustive one. It
only provides some inclusions within the ambit of the
term ‘income’.

(i) Profits and gains;

(ii) Dividend;
(iii) Voluntary contributions received by a Trust for charitable
or religious purposes
(iv) The value of any perquisite (extra free benefit) or profit
in lieu of salary U/s 17
(v) Any special allowance or benefit other than perquisite
included above to meet the expenses of the duties of an
office or employment of profit
 INCOME [Section 2(24)]

(vi) Any allowance granted to the assessee to meet his

personal expenses for the duties of his office or
employment
(vii) Value of any benefit or amenity, whether convertible
into money or not obtained from a company by a director
or a person
(viii) Value of any benefit or perquisite, whether convertible
into money or not obtained by any representative assessee.
(ix) Deemed profits chargeable to tax U/s 41 or 49
(x) Profits and gains of business or profession chargeable to
tax under section 28
(xi) Any Capital gains chargeable under section 45
 INCOME [Section 2(24)]

(xii) The profits and gains of any insurance business carried on

by Mutual Insurance company
(xiii) The profits and gains of any business of banking
carried on by a co-operative society with its members
(xiv) Any winnings from lotteries, crossword puzzles, races
including horse races, card games and other games of any
sort or from gambling or betting of any form or nature
whatsoever;
(xv) Any sum received by the assessee as his employers’
contribution to any provident fund or superannuation fund
or any fund set up under the provisions of the Employee’s
State Insurance Act, 1948 or any other fund for the welfare
of the such employees;
 INCOME [Section 2(24)]

xvi) Any sum received under a key man insurance policy

including the sum allocated by way of bonus on such
policy;
(xvii) Any sum whether received or receivable in cash or
kind under an agreement for – not carrying out any
activity in relation to any business; or not sharing any
know-how, patent, copyright, trade-mark, license,
franchise or any other business or commercial right of
similar nature or information or technique likely to
assist in the manufacture or processing of goods or
provision of services;
(xviii) Fair market value of inventory which is converted
into, or treated as a capital asset
 INCOME [Section 2(24)]

(xix) Any consideration received for issue of shares as exceeds

the fair market value of shares [Section 56(2) (viib)]
(xx) Any sum of money received as advance, if sum is forfeited
consequent failure of negotiation for transfer of capital asset
(xxi) Any sum of money or value of property received without
consideration or for inadequate consideration by any person
(xxii) Any compensation or other payment, due to or received by
any person, in connection with termination of his employment
(xxiii) Assistance in the form of a subsidy or grant or cash
incentive or duty drawback or waiver or concession or
reimbursement, by whatever name called by the CG or SG in
cash or kind.
2. Concept of Income under the Income-tax Act, 1961

Regular receipt vis-à-vis Casual receipt

Generally income refers to periodic monetary return
which accrues or is expected to accrue regularly
from definite sources.
e.g. Salary, interest etc.
Similarly, even certain capital receipts which do not
arise regularly are treated as income for tax
purposes under Income tax Act 1961. e.g.
Winnings from lotteries, crossword puzzles etc.
2. Concept of Income under the Income-tax Act, 1961

Revenue receipt vis-à-vis Capital receipt

Capital receipts are non-recurring in nature which
are received by sale of capital assets. Capital
receipts are not generally included within the
scope of income.
Revenue receipts are income normally received in
the ordinary course regularly and it is taxable.
However, under Income tax Act 1961, certain
capital receipts like Capital gains, profit on sale
of capital assets are come under the definition of
income and which are taxable
2.Concept of Income under the Income-tax Act, 1961

Net receipt vis-à-vis Gross receipt

Only net receipts are treated as income and taxable
and gross receipts are not taxable.

Net receipts are arrived at after deducting the

expenditure incurred in connection with earning
such receipts. The expenditure which can be
deducted while computing income under each
head is prescribed under Income Tax Act 1961
2.Concept of Income under the Income-tax Act, 1961

Due basis vis-à-vis Receipt basis

Both the income received and income due are
taxable.
For computing income under the heads, “Profits and
gains of business or profession” and “Income
from other sources” the assessee can follow either
cash system or mercantile system.
Some receipts are taxable only on receipt basis, e.g.
income by way of interest received on
compensation or enhanced compensation.
2.Concept of Income under the Income-tax Act, 1961

Due basis vis-à-vis Receipt basis

Both the income received and income due are
taxable.
For computing income under the heads, “Profits and
gains of business or profession” and “Income
from other sources” the assessee can follow either
cash system or mercantile system.
Some receipts are taxable only on receipt basis, e.g.
income by way of interest received on
compensation or enhanced compensation.
 INCOME [Section 2(24)]
The definition of income given in sec. 2(24) is inclusive and not
exhaustive. It says that certain items are included in the term ‘income’
summary of important rule which give the meaning of income is as
below.

• An illegal income is taxable as legal income.

• Income received at irregular intervals is taxable.
• Taxable income should have been received from an outside source
• Any benefit convertible into money is also considered as income.
• Mere relief or reimbursement of expenses is not treated as income.
• Gift (i.e. any sum of money) exceeding Rs.50,000 received without
consideration by an individual or H.U.F from any person (other than a
‘relative’) on or after 1-9-04 is considered as income.
• Any prize which is unexpected is not treated as income.
• Income arising from wasting assets by way of royalty is treated as
income.
• Casual incomes are taxable.
 HEADS OF INCOME

According to section 14 of Income-tax Act 1961,

the computation of total income of an assessee
can be divided into five heads as follows:
i. Income from ‘Salaries’
ii. Income from ‘House Property’;
iii. Income from ‘Profits and Gains of
Business or Profession’;
iv. Income from ‘Capital Gains’; and
v. Income from ‘Other Sources’
 GROSS TOTAL INCOME

The aggregate income under the 5 heads of

income (viz. Salary, House Property, Business
or Profession, Capital Gains & Other Sources),
(Duly applying and clubbing provisions), losses
are adjusted and the resultant figure is called
Gross Total Income (GTI)

GTI = Salary income + House property income

+ Business or Profession income + Capital
gains + Other sources income + Clubbing of
income – Set off of losses.
 TOTAL INCOME

‘Total Income’ means the total amount of

income remaining after allowing deductions
under Chapter VI A (u/s 80c to 80u) from
Gross Total Income.

It is noted that Income tax is charged on total

taxable income at prescribed rates.
 TOTAL INCOME
‘Total Income’ has to be computed as per the provisions of
Income Tax Act 1961.
STEPS FOR COMPUTING TOTAL INCOME OF AN ASSESSEE

Step – I Determination of Residential Status

The Residential status of a person has to be determined as per the
Income-tax Act. It can be classified as i) Resident and Ordinarily
Resident ii) Resident but Not Ordinarily Resident and iii) Non
Resident.
A new concept of Deemed Resident is introduced by the Finance Act
2020. A Deemed Resident is always a resident but not ordinarily
resident in India.
The Residential status of a person helps to find out whether an
income is taxable or not. For example, income earned and
received outside India is not taxable in the hands of a non-resident,
but taxable in the hands of a resident and ordinarily resident
 TOTAL INCOME
Step – II Classification of Income under
different heads
According to section 14 of Income-tax Act 1961,
the computation of total income of an assessee
can be divided into five heads as follows:
i. Income from ‘Salaries’
ii. Income from ‘House Property’;
iii. Income from ‘Profits and Gains of
Business or Profession’;
iv. Income from ‘Capital Gains’; and
v. Income from ‘Other Sources’
 TOTAL INCOME
Step – III Computation of income under each head after
providing for permissible deductions / exemptions
 Income is to be computed in accordance with the
provisions governing a particular head of income.
 Exemptions: certain incomes are wholly exempted and
partly exempted from income-tax. Agricultural income is
fully exempted.
 HRA, Education Allowance are partly exempted- up to
some extent.
 Deductions: Deductions and Allowances are prescribed
under each head of income. For example, Municipal taxes
and interest on housing loan are allowed as deductions.
 Before arriving taxable income these exemptions and
deductions should be considered.
 TOTAL INCOME
Step – IV Clubbing of income of spouse, minor
child etc.
Usually income tax is levied on a slab system on the
total income of individuals. When there is an
increase in income, the rate of tax also increase.
In order to avoid the higher tax rate, some tax
payers divert some portion of their income to
their spouse, minor child etc. to minimize their
tax burden.
To prevent such tax avoidance, clubbing of income
of spouse, minor child in the income of the
person who has diverted his income for the
 TOTAL INCOME
Step – V Set-off and carry forward of losses
An assessee may have different sources of income under
different heads. For example, a person may have profit from
textile business and loss in grocery business. The loss on
grocery business can be set-off against the profit of textile
business to arrive at the net income chargeable under the head,
‘ income from profits and gains of business or profession.
An assessee may have loss in one head of income, and this may
be adjusted with another head of income subject to some
conditions. (not with salary income)
Further, lossess which cannot be set-off in the current year due
to inadequacy of eligible profit can be carried forward for set-
off in the subsequent years. In this regard, the brought forward
losses under one head cannot be set-off against the income of
another head.
 TOTAL INCOME
Step – VI Computation of Gross Total Income

The final figure of income or loss under each head

of income, after allowing the deductions,
allowances and other adjustments, are then
aggregated, after giving effect to the provisions
for clubbing of income and set-off and carry
forward of losses, to arrive at the Gross Total
Income.
 TOTAL INCOME
Step – VII Deductions from Gross Total Income

The Income Tax Act permits some deductions from

the Gross Total Income as under.
a) Deductions in respect of certain payments:
LIC premium paid, Contribution to PF, Pension fund,
Medical Insurance premium paid, Payment of
interest on loan taken for higher education,
Payment of interest of housing loan, payment of
interest on purchase of electric vehicle, Rent paid,
Donations to certain charitable trusts, Contribution
to political parities, National Defence Fund etc.
 TOTAL INCOME
Step – VII Deductions from Gross Total Income
b) Deductions in respect of certain incomes:
Employment of new employees, Royalty income of
authors of certain books other than text books,
Royalty on patents.
c) Deductions in respect of other incomes :
Interest on deposits in SB A/c. Interest on deposits
in case of Senior Citizens.
d) Other Deductions:
Deductions in case of a person with disability.
 TOTAL INCOME
Step – VIII Computation of Total Taxable
Income
We can arrive the Total Taxable income after
deducting the above deductions from the Gross
Total Income. It should be rounded of to the
nearest multiple of Rs.10
 TOTAL INCOME
Step – IX Computation of Tax according to the prevailing slab
rate of tax on the basis of person on Total Taxable Income.

The current slab rate for the AY 21-22 in case of Individuals and HUF.
Up to Rs. 2,50,000 - Nil
> Rs.2,50,000 up to Rs.5,00,000 - 5%
(Resident individuals in this slab enjoy full rebate of tax under section
87 A up to Rs.12,500)
From Rs,5,00,000 up to Rs.10,00,000 - 20%
Over and above Rs.10,00,000 - 30%

Note: For certain special Income like Long Term Capital Gains,
Lottery Income, Specified short term capital gain etc., special rates
of taxes are applicable.
Slab rates are given in Annual finance Act, Special rates contained in
the Income Tax Act itself.
 TOTAL INCOME
Step – X Surcharge / Rebate U/s 87A
Surcharge is an additional tax payable over and above the income-
tax. It is levied as a percentage on income tax.
Total income of individuals /
HUF / AOP / BOI / Artificial Surcharge Rebate
Juridical Person U/s 87A
Income tax on Total
≤ Rs.5,00,000 Not applicable Income or Rs.12,500
whichever is less
> Rs. 5 lakhs ≤ Rs. 50 lakhs Not applicable Not applicable
> Rs. 50 lakhs ≤ Rs. 1 crore 10% of Income Tax Not applicable
> Rs. 1 crore ≤ Rs. 2 crore 15% of Income Tax Not applicable
> Rs. 2 crore ≤ Rs. 5 crore 25% of Income Tax Not applicable
> Rs. 5 crore 37% of Income Tax Not applicable

Rebate U/s 87A – In order to provide tax relief to the individual tax payers whose
total income does not exceed Rs.5,00,000, section 87A provides rebate up to
the extent of Rs.12,500.
 TOTAL INCOME
Step – XI Health and Education Cess on Income
Tax

The income-tax, as increased by the surcharge or as

reduced by the rebate under section 87A, if
applicable, is to be further increased by an
additional surcharge called health and
education cess on income-tax @4% of income-
tax plus surcharge, if applicable
 TOTAL INCOME
Step – XII Advance Tax / Tax deducted at Source
The tax liability of the assessee is determined only at the end
of the year. Even though, tax is required to be paid in
advance in four installments on the basis of estimated
income i.e., on or before 15th June, 15th September, 15th
December and 15th March.
In case of Salary income, the employer will deduct tax at
sources at the time payment of salary to the employees.
For other payments like, fees for professional services, fees for
technical services, interest payable to residents, the person
responsible for paying is liable to deduct tax at source at the
time of crediting the income to the accounts of the payee or
at the time of payment whichever is earlier. Such deducted
source has to be remitted to the Central Government through
any branch of RBI or SBI or any authorised bank.
 TOTAL INCOME
Step – XIII Tax payable / Tax Refundable

After adjusting the advance tax and tax deducted at

source, the assessee would arrive at the amount
of net tax payable or refundable. Such amount
should be rounded off to the nearest multiple of
Rs.10 as per section 288B.
The assessee has to pay the amount of tax payable
on or before the due date of filing of the return.
Similarly, if any refund is due, assessee will get
the same after filing the return of income.
 TOTAL INCOME
Step – XIII Tax payable / Tax Refundable

Return of Income:
Return of income is the declaration of income by
the assessee in the prescribed format under
Income tax Act 1961 within the due date.
The particulars of income earned under different
heads, gross total income, deductions from gross
total income, total income and tax payable by the
assessee are required to be furnished while
furnishing the return of income.
 TOTAL INCOME
‘Total Income’ has to be computed as per the provisions of Income Tax Act
1961.

STEPS FOR COMPUTING TOTAL INCOME OF AN ASSESSEE

Step – I Determination of Residential Status

Step – II Classification of Income under different heads
Step – III Computation of income under each head after providing for
permissible deductions / exemptions
Step – IV Clubbing of income of spouse, minor child etc.
Step – V Set-off and carry forward of losses
Step – VI Computation of Gross Total Income
Step – VII Deductions from Gross Total Income
Step – VIII Computation of Total Taxable Income
Step – IX Computation of Tax according to the prevailing slab rate of tax on
the basis of person on Total Taxable Income
Step – X Surcharge / Rebate U/s 87A
Step – XI Health and Education Cess on Income Tax
Step – XII Advance Tax / Tax deducted at Source
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