How To File Income Tax in India? Basic Guide AY 2016-17

What are The Direct and Indirect Taxes?

Tax is a financial charge follow suit by the government. There is two types of tax and i.e. direct tax and indirect tax. Direct tax is directly imposed on tax payer. Indirect dies not direct impose on the payer. It is taken indirectly from product and service user. Income tax is direct tax while, excise duty, custom duty, service tax, sales tax, value added tax.

What is the Income Tax in India

 

Income tax is a direct tax. It is a tax imposing by central government. The authority & responsibility to collect tax is giving to central government. It is including in entry 20 in 7th constitution. The income tax is not counting on agricultural income. Income tax is a major source of revenue. The tax is leviable and collected under the income tax act, 1961.

What are the different kinds of taxes?

There are two type of income tax

Corporation tax

It is calculated for the artificial person as per law i.e. companies

Income tax:

 It is imposing on the individual income on different head of income.

 

Now, we go for basic concept of income tax.

 

Income tax:

Income tax is calculating on the total income of previous year of any individual/corporation.

Who is eligible to pay income tax? Person:

  1. Individual
  2. Hindu undivided family
  3. Company
  4. Firm
  5. Association of person & body of individuals (AOP & BOI)
  6. Local authority
  7. Artificial /judicial person
  8. Co-operative Society

 

  • Individual

An individual is a human being who can be female, male, minor.

  • Hindu Undivided Family

Hindu undivided family is made by forefather of any family and other family members are follow their business by many years. It including forefather, the KARTA, his wife, sun, unmarried girl.

  • Company

Company may be Indian company and foreign company. And any institute, association, body constitute under company act 1972. Under the act, Indian income tax act, 1922. Any company started on 1st April 1970, that company is included in taxable company for income tax.

  • Firm

Any partnership firm which limited by liability. And it may be registered or not registered is known as firm.

  • AOP/BOI

There is difference in AOP/BOI and it is shows that AOP is a group of individuals or artificial person. Where, BOI is only a group of individuals. It is not including artificial person.

  • A local authority

Local authority is working at local locations. It is including municipal corporations, district level bureau, port commissions and any other authority at local location.

  • Artificial / judicial person

Any person who is not including any from above six person. It is including in artificial/ judicial person. An artificial person that means a person who is not biologically exist but the formation of this person by law.

  • Co-operative Society

Co-operative society is a artificial person where people of society and establish a institute for to make weal of the society.

 

Income Heads for Income Tax Assessee/ sources list.

  1. Income from salaries
  2. Income from house property
  3. Profit and gain of businesses and profession
  4. What is capital gain
  5. Income from other sources

    Income from Salaries

As per income tax act an income is earned in relation of payer and payee. That is the person who is earning income in form of salary they need to establish relation between payer and payee. And that relation is employer and employee.

If the relation of employee and employer relation does not exist, income does not calculated in salary in income head. Salary is come only under the head of income for individual

Income from House Property

Income from house property which is rent takes on house. Under this head, the house property is using for to make income for an individual, firm.

In this head we can include the house property, commercial building, complexes, land and factory. This is used to get rent by an individual.

Profit and gain of businesses and profession

Any profit incurred to trader, manufacturer, professionals are doing profit come through their profession. Any person earns income by their business and profession.

What is capital gain

Any individual make profit from transferring of any capital asset is calculated under the head of capital gain. And it is calculated in current financial year.

There are under this head, the tax payer’s property is not connected with their business or profession. There are two type of capital under this head, short term and long term.

In short term capital asset including equity and preference share, other listed security, bonds, equity oriented funds.

Long- term capital asset is a capital which is to hold for more than 1 year.

Income from other sources list: 

Other sources of income include dividends, winner in game, reserve of PF/ESI/PPE, interest on securities, income through machinery, property.

These are including under the head of other sources of income.

Income Tax Slab for ay 2016-17/Income Tax Rates:

income tax slabs
Income tax Slabs-2016-17

(B) firm/LLP: a firm’s income taxable rate is 30%

 

(C) Companies: Domestic companies income tax rate – 30%

Foreign companies income tax rate – 40% and 50% as per income.

 

(D) Co-operative society:

Up to 10,000 – 10%

Rs. 10,000 to 20,000 -20%

Above 20,000 – 30%

 

Income Tax Deductions for ay 2016-17

 

  • According to section 80 C- individual/ HUF

According to this section, An individual and HUF eligible to deduct Rs. 1.5 lacs per year.

Investment to get deduction under section 80c listed below:

– Life insurances policies

-Provident fund

-Tuition fees paid for two children

-Expenses to construct / purchase of residential property

-Deposit in fixed for 5 years

Subsection under sec. 80 C

According to Sec. 80 CCC, the tax payer can save Rs. 1.5 lacs by making Payment in any pension fund.  This deduction is claimed by only individuals.

According to Sec. 80 CCD, the tax payer can save their 10% of salary by to make payment in pension scheme offered by central government. It is applied to only individual tax payer.

According to Sec. 80 CCG, the tax payer deducted Rs. 25,000 per year by making investment in equity saving schemes.

  • Deduction under section 80d – Individuals/ HUF

According to section 80D, the tax payer can save Rs. 15,000 for individual & Rs. 20,000 for senior citizen. Individual and HUF are eligible for this deduction.

Subsection under sec. 80 D

According to Sub-sec. 80 DD, the tax payer can save 75,000 for normal disability, and 1.5 lacs for severe disability. In this section deduction made if the tax payer’s treatment of disability and maintain insurance policy of a person.

According to Sub-sec. 80 DDB, the tax payer can deduct expenses related to treatment of senior citizens. It deduction is limited to the 40,000 and increased to the 60,000.

  • Deduction under section 80E– individuals

According to section 80E, the tax payer can less their burden by make payment in education to own self.

Subsection under sec. 80 E

According to Sub Sec.80 EE, the tax payer can save by the repay of loan amount. It is permitted to Rs. 3 lacs.

  • According to section 80G – Individuals/HUF

According to section 80G, the tax payer can save without limit.

Donation to central government funds like NDF (National Defence Fund &PMRF ( Prime-Minister Relief’s Fund) etc. It is fully deductible from the income tax.

The Donation makes to fund in Municipal Corporation, district offices, to promote family planning, in the development of sports.

The tax payer can save 50% of the investment.

The Donation makes to funds like PMs Drought Relief Fund, Rajiv Gandhi Foundation.

The Donation makes to fund religious organisation, local authority.

Subsection under sec. 80 G

According to Sub sec. 80 GG, the taxpayer is not receiving house allowances. They are eligible deduction under this section. They can deduct Rs. 2000 in a month and 25% of the total income.

According to Sub sec. 80 GGA, the taxpayer is earned income by the business. They are eligible for this deduction. The donation make to research about science, social, statistics. And the donation make to the national urban poverty fund.

According to Sub sec. 80 GGB, The taxpayer is funding to the political parties. They are benefited under this section.

According to Sub sec. 80 GGC, the taxpayer eligible for this deduction if they are fund donate in local authority and artificial person.

  • According to Section 80 IA – All assessees

According to this section the taxpayer is earning profit from industrial activities like tele-communication, industrial park, SEZ’s

Subsection under sec. 80 IA

According to Sub sec. 80 IAB, the tax payer is earned by developing SEZs area.

According to Sub sec. 80 IB, this sub section is getting relief for those taxpayer who are earning profit from restaurant, ships, theatres, cold storage logistic, housing project, research& development.

According to Sub sec. 80 IC, this section is used to get relief from income tax. The tax payer is earning from special categorised states. These states are Assam, Manipur, Himachal Pradesh, Meghalaya, Nagaland, Arunachal Pradesh, Tripura, Uttaranchal etc.

According to Sub sec. 80 ID, this section is creating for the tax payer who is earning profit from restaurant and convention centre. They can claim for this deduction by the taxpayer.

According to Sub sec. 80 IE, this section is generating for taxpayer who is earning from east-north area of the nation.

  • According to section 80J – All assesses

 

Sub section under 80 J:

According to Sub sec. 80 JJA, this section is applicable to those who are producing product by using bio wastage. They can deduct 100% of profit to pay income tax after 5 years from starting.

According to Sub sec. 80 JJAA, the taxpayer under this section is the Indian business entity. They can be claimed for the deduction in income tax about 30% of total income.

  • According to section 80 LA – Banks/international financial services 

The taxpayer is earning from businesses but, in SEZ area & outside of the country. Outside business including international financial services and banks.

  • According to section 80 P – Cooperative societies

The taxpayer can claim from rang 50,000 and 1lacs. If the tax payer earn money by this ways are given below.

  1. Income earned by renting warehousing by co-operative house.
  2. Income earned through give money as loan to another society.
  3. Income earned by interest of securities.

 

  • According to section 80 QQB – Authors – resident individuals

Authors are making claim for this deduction. Under this section only book authors are eligible to claim. The authors of journal, literature, textbooks, are not claiming for deductions.

  • According to section 80 RRB – Resident individuals

The tax payer in this section is individual who is earning royalty on their patent. And they are claiming on the income of 3 lacs.

  • According to 80 TTA – Individuals/HUF

The taxpayer is claiming in the interest of 10,000 Rs. This claim made by HUF/Individuals.

This is claiming on interest earned on bank saving.

  • According to section 80U – resident individuals

This claim is applicable to who are disable to work their daily routine. The claim is applicable. The claim can be made maximum 75,000 Rs. Per year.

Pay Income Tax Online/income tax payment online:

 

STEP: 1.

To do Online tax payment, first log on to www.tin-nsdl.com, then select service menu of this above given site, then after select the link e-payment: pay taxes online option.

STEP: 2.

Then after select the CHALLAN given below

CHALLAN NO./ITNS 281 – this CHALLAN is fill up to pay TDS from corporate/ non- corporate.

CHALLAN NO./ITNS 280 – this CHALLAN is used to pay individual income tax or corporation tax.

CHALLAN NO./ ITNS 282 – this CHALLAN is used to pay STT i.e. security transaction tax, HRT (hotel receipts tax), estate duty, wealth tax, expenditure tax, expenditure tax/ other direct tax.

CHALLAN NO./ INS 283 – this CHALLAN is used to pay Banking Cash Transaction tax, and fringe benefit tax.

You need to select form as per your requirement.

STEP: 3.

Fill up the CHALLAN which is selected by you. There is you need to fill the information related to PAN/TAN. Also fill up information related to the accounting head, address of the tax payer, name of the bank etc.

STEP: 4.

Then after when you enter the CHALLAN fill up with detail. The TAN/PAN master is showing the PAN/TAN is valid or not. Then full name of taxpayer displayed on screen.

 

STEP: 5.

After confirmation all detail fill up by you. The taxpayer directed automatically to the net banking site of particular bank.

STEP: 6.     

Now, the taxpayer needs to log in by the user by their log id and password given by bank to use net banking. Then tax payer fill information related to payment info.

STEP: 7.   

If you successfully enter all information in CHALLAN then the CHALLAN confirmed by the way to get counterfoil.

How to file Income Tax Return:

  1. First log on to https://incometaxindiaefiling.gov.in/ for file income tax return. Then, you need to Log In To E-Filling. There is PAN is your user id.
  2. Then see, your trade credit statement /form 26 AS. And it is confirm with form 16.
  3. Now you need to go to this site twice. And select ITR forms. When you select ITR forms to fill income tax this will take in you in new tab in particular window. And that you need to select assessment year.
  4. There are exist forms respectively ITR1 (SAHAJ), ITR2, ITR3, ITR4, ITR4S (SUGAM), ITR5, ITR6, ITR7.

In that,

ITR1 (SAHAJ) stands for individual earns income from salary & interest.

ITR2 stands for individual & HUF earns income from profit in business.

ITR3 stands for individual & HUF earns income from business and capital gain.

ITR4 stands for individual & HUF earns income from owned business by individual/ HUF.

ITR4S (SUGAM) stands for individual/HUF/partnership firm who is owned presumptive business.

ITR5 stands for other who is not filled up form- ITR7 i.e. may be Individual/HUF/Company/artificial person.

ITR6 stands for companies which are claiming exemption under section 11.

ITR7 stands for person including companies to claim for return under the act, 139(4A)/139(4B)/139(4C) /139(4D)/139(4e)/139(4F).  And then download form as per your requirement.

  1. After filling form from ITR 1 to ITR 7. You need to select calculate tax. If applicable you need pay tax & fill.
  2. And now you select validate to confirm data which you fill In ITR form.
  3. Now, generate an XML file and upload return on the income tax portal.
  4. Now the web site is asking for signature. If you have digital signature certificate. Click on YES, and if you have not say NO.
  5. Now generate ITR- Verification code (ITR-V).
  6. If you have not digital signature. Then print out ITR-V and sign in blue ink.
  7. Send this form via ordinary and speed post.

 

INCOME TAX REFUND:

Income tax refund is defined as the tax which is more than the actual value. A person who is paying more to the income tax department they are claiming for refund.

Procedure to check income tax refund status:

  • First, you need to log in to e-filling website https://incometaxindiaefiling.gov.in.
  • Then you select “MY ACCOUNT” and select refund status.
  • Now you fill up detail about i.e. assessment year, by through payment is made to pay income tax.
  • You can see your refund status.

 

 Income tax slabs for FY 2017-18 

income tax slabs updated on 2017-18
income tax slabs 2017-18

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