Income Tax






  • An income tax is a tax imposed on income , gain or profits earned by a person such as individuals and other entities. It is a direct tax that a government levies on the income of its citizens.
  • Income tax return is the form in which assesse files return about his income tax department. Filing income tax return is mandatory for those whose total income is more than Rs2,50,000.
  • Individual includes both male and female assesse. Every individual is supposed to pay tax on his or her total income at a graded scale of tax rates ruling during that assessment year.
  • An individual may have income under any / all of the following 5 heads :
    Income under head Salary,
    Income under head House property,
    Income under head Business or Profession,
    Income under head Capital Gain,
    Income under head Other sources
  • Form 16
    Salary slip
    Interest certificate from banks and post office
    Form 26 AS
    Tax saving investment proofs
    Aadhaar Card
  • FIRM (including LLP)
  • A partnership firm ( including LLP) is a separate entity in the eyes of income tax department . It is so because the definition of the term ‘Person’ given u/s 2 (31) also includes firm.
    LLP is a corporate form of partnership having separate legal entity which is distinct from its partners and carries limited liability for them. Firms and limited liability partnerships ( LLP) business tax return needs to be filed irrespective of profit and loss which are computed on presumptive basis under section 44AD , section 44ADA or section 44 AE.
  • A Company means a company incorporated under this act or under any previous company law.
    Types of Companies :-
    Indian Company
    Company in which public are substantially interested
    Domestic Company
    Foreign Company
    Investment Company
    Consultancy Service Company
    Trading Company
    Banking Company

    A Company is said to be resident in India in any previous year. A Company in which the public are substantially interested is known as widely held companies.

    Special provisions relating to tax on distributed profits of companies :-
    Tax on distributed profits of companies.
    Dividend covered
    Treatment of dividend received by a domestic company from its subsidiary company
    Treatment of dividend paid under by Indian company from foreign subsidies.
    Responsibility to deposit tax
    Final Payment
    Penalty for non-payment of dividend distribution tax

TDS Returns Fillings

TDS is a source of collecting tax by government of India at the time when transaction takes place.

  • In case of payment of salary or life insurance policy, tax is deducted at the time of payment.
    The deductor then deposits this TDS amount to the income tax (I-T) department.
    Through TDS, some portion of your tax is automatically paid to the I-T department. Thus, TDS is considered as a method of reducing tax evasion.
    Tax is deducted usually over a range of 1 % to 10%.
  • Details required to file TDS return are :
  • PAN of the deductor and the deductee
  • Amount of tax paid to the government
  • TDS challan information
  • Eligibility Criteria for TDS return
  • TDS return can be filed by employers or organization who avail a valid tax collection and deduction account number (TAN).
  • Various forms are used for filling TDS return , depending on the purpose of deduction.
    Following are the assesses liable to file quarterly TDS return electronically:
    (a)People whose accounts are audited u/s 44 AB
    (b)People holding an office under the government

    Benefits of TDS:-

  • Filing TDS return is mandatory as per I-T Act, 1961. Some of its benefits are:
  • It helps in regular collection of taxes
  • Ensures a flow of regular income to the government
  • Reduces the burden of lump-sum tax payment
  • Offers an easy mode of tax payment to the payer.

    The most important and crucial function of financial accounting is to ascertain the financial position and the profitability of the business.
    The trading and profit and loss account show the profit or loss of the business. The balance sheet depicts the financial position of the business.

  • A balance sheet is a summary of a business financial health on any given day.
  • A balance sheet shows a company assets liabilities and equity accounts.

    Advance tax is calculated by applying the slab rate applicable to a financial year on his total income.

  • Advance tax is the tax payable on total income of the year earned from different sources including salary , business , profession , etc.

  • The tax should be paid in the same year in which the income was received
  • The penalty under section 234B of the income tax act is applicable if : A taxpayer has failed to pay advance tax. The advance tax paid by the taxpayer is less than 90 % of the assessed tax.