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  • Income Tax for FY 2018-19 - Check Tax Slab Rates, Calculation & News

    Overview:

    Income tax is that percentage of your income that you pay to the government to fund infrastructural development, pay the salaries of those employed by the state or central governments, etc. All taxes are levied based on the passing of a law, and the law that governs the provisions for our income tax is the Income Tax Act, 1961.

    Income tax is only of the direct means of taxation like capital gains tax, securities transaction tax, etc., and there are many other indirect taxes that we pay like sales tax, VAT, Octroi, service tax, etc.

    The income tax you pay every month or upon every contractual earning is what forms a large part of the revenue for the Government of India. These revenue functions are managed by the Ministry of Finance, which has delegated the responsibility to managing direct taxes (like income tax, wealth tax, etc.) to the Central Board of Direct Taxes (CBDT).

    Income Tax

    Income tax is applicable for individuals, businesses, corporate, and all other establishments that generate income. The Income Tax Act, 1961 regulates the collection, recovery, and administration of income tax in India. The government requires the tax amount for various purposes ranging from building the infrastructure to paying the state and central government's employees. It helps the government in generating a steady source of income that is used for the development of the nation.

    The income tax is paid every month from the monthly earnings, however, it is calculated on an annual basis. The amount of income tax an individual has to pay depends on many factors.

    Calculate Your Taxes Online

    Income Tax Department

    Under the Department of Revenue of the Ministry of Finance, the Income Tax Department (IT Department) is responsible for monitoring the collection of Income Tax, Expenditure Tax, and various other Financial Acts that are passed every year in the Union Budget. The Central Board of Direct Taxes (CBDT) regulates the policy and planning of taxes. CBDT is also responsible for administering the direct tax laws through the IT Department. In addition to the collection of taxes, the IT department is also involved in prevention and detection of tax avoidance.

    Changes Brought About in Income Tax in the Union Budget of 2018

    Finance Minister, Arun Jaitley, in the Union Budget 2018 session yesterday (1 February) proposed five new changes to be incorporated to the existing standards of the Income Tax Department:

    • A 1% increase in the cess of corporation and personal income tax was proposed by the Finance Minister in the session yesterday. From an earlier 3%, the cess has now been increased to 4%. This, in turn, will spiral the total income tax paid by a taxpayer, every year.
    • Salaried individuals, henceforth, will get a Rs.40,000 deduction on their incomes, thereby replacing the existing exemption permitted on reimbursement of medical costs and transportation allowances. Around 2.5 crore salaried individuals are believed to benefit from this move and the total cost incurred by the Government would amount to Rs.8,000 crore. In the year 2006-07, standard deductions on incomes were abolished, although soon after the concept was brought back into action. Standard deduction, essentially comprises of deduction of a certain amount of money from the salaried individual’s income to cope with expenses that the person would incur during his employment in the organisation.
    • The Union Budget 2018 introduced a new 10% tax charged on investments of long-term capital gains in stocks, and equity mutual funds. Contradicting hugely from its existing standard of tax exemption, the new tax law states that all profits exceeding the amount of Rs.1 lakh (from mutual funds and stock markets) will henceforth be taxed a 10% rate. However, long-term capital gains that have been invested in stocks and mutual funds up until January 31, 2018 will be exempted from any tax deduction.
    • The Finance Minister in the session of Union Budget 2018 held yesterday also introduced a 10% tax rate on distributed income earned from equity-based mutual funds.
    • Concerning the senior citizens of the country, the Indian government has established a lot of changes that will help minimise their financial burden:
      • The exemption of interest income on prepayments made in banks and post offices has been increased to Rs.50,000 from an earlier Rs.10,000.
      • Under Section 80D, the deduction limit for premiums paid on health insurances or other medical expenditures has been increased to Rs.50,000 from an existing amount of Rs.30,000.
      • No deduction of TDS under Section 194A. Availability of benefits for interest received from recurring and fixed deposit schemes.

    New Income Tax Changes from April 1 by Income Tax Department

    In the Budget of 2017, several changes related to income tax were announced. These changes will come into effect from April 1, 2017. Some of the important changes are as follows:

    • The income tax rate for people earning Rs.2,50,000 to Rs.5 lakh per year has come down to 5%, but people earning over Rs.50 lakhs p.a. will have to pay an additional surcharge along with the applicable tax rate. The surcharge is 10% for people earning an income of Rs.50 lakhs to Rs.1 crore and the surcharge is 15% for people earning an income of over Rs.1 crore.
    • Filing of ITR will become easy for people earning up to Rs.5 lakhs as the government will introduce a simplified 1 page form for them. People who file their ITR using this form for the first time will not be scrutinized by the Income Tax Department.
    • No deductions can be claimed for investments made under the Rajiv Gandhi Equity Saving Scheme from AY (Assessment Year) 2018-2019.
    • People will have to pay a penalty of Rs.5,000, if they do not file ITR for the present FY (Financial Year) on time (latest by December 31). If they file after December 31, the fine amount will increase. The fine is capped at Rs.1,000 for people who earn up to Rs.5 lakhs annually.
    • According to a report by Economic Times, the holding period for long term immovable property has been reduced to 2 years. It was 3 years before. Also, if such property is held beyond 2 years, it will be taxed at 20% and will be eligible for reinvestment and exemptions.
    • In case of long term capital gains tax, the base year for cost indexation has been changed from April 1, 1981 to April 1, 2001. Tax exemption will be available, if people re-invest in some selected redeemable bonds. The exemption will also be available for investments in REC and NHAI bonds.
    • From June 1, 2017, people whose rental payments are more than Rs.50,000 per month have to subtract 5% TDS.
    • From July 1, 2017, people will not be able to file their ITR without Aadhaar.
    • People who make partial withdrawals from NPS (National Pension System) do not have to pay tax on the same. They can withdraw 25% of their own contribution before retiring in case of emergencies.
    • Health, Two-wheeler and Car insurance premiums may increase from April 1, 2017.
    • People who do not keep a minimum of Rs.5,000 per month in their SBI accounts will have to pay penalty from April 1, 2017.

    Apart from these, there are other changes that will be introduced. People are advised to keep themselves updated about these changes as they may have a direct impact on their income tax.

    Income Tax - In Detail:

    Income tax has to be paid by every individual person, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), corporate firms, companies, local authorities and all other artificial juridical persons that generate income.

    Taxes are calculated on the annual income of a person, and an annual cycle (year) in the eyes of the Income Tax law starts on the 1st of April and ends on the 31st of March of the next calendar year. The law recognizes and classifies the year as “Previous Year” and “Assessment Year”.

    The year in which income is earned is called the previous year and the year in which it is charged to tax is called the assessment year.

    For example: Income earned between April 1st 2014 and March 31st 2015 is called the income of the previous year and will be charged to tax in the next year, or the assessment year that starts on April 1st 2015.

    Taxes are collected by the government in three primary ways:

    1. Voluntary payment by taxpayers into designated banks, like advance tax and self-assessment tax.
    2. Taxes Deducted at Source (TDS) which is deducted from your monthly salary, before you receive it.
    3. Taxes Collected (TCS).
    Income Tax
    Income Tax

    Income Tax Slab Rate:

    Income tax slab rates are for different categories of taxpayers, who are taxed progressively higher based on their earning. The income tax slab rates can be broadly classified into the following categories:

    New Income Tax Slab Rates for FY 2018-19 (AY 2019-20)

    Income tax slab for individual tax payers & HUF (less than 60 years old) (both men & women)

    Income Slab Tax Rate
    Income up to Rs. 2,50,000* No Tax
    Income from Rs. 2,50,000 – Rs. 5,00,000 5%
    Income from Rs. 5,00,000 – 10,00,000 20%
    Income more than Rs. 10,00,000 30%
    Surcharge: 10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore. 15% of income tax, where total income exceeds Rs. 1 crore.
    Cess: 3% on total of income tax + surcharge.
    * Income upto Rs. 2,50,000 is exempt from tax if you are less than 60 years old.

    Income tax slab for individual tax payers & HUF (60 years old or more but less than 80 years old) (both men & women)

    Income Slab Tax Rate
    Income up to Rs. 3,00,000* No Tax
    Income from Rs. 3,00,000 – Rs. 5,00,000 5%
    Income from Rs. 5,00,000 – 10,00,000 20%
    Income more than Rs. 10,00,000 30%
    Surcharge: 10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore. 15% of income tax, where total income exceeds Rs.1 crore.
    Cess: 3% on total of income tax + surcharge.
    * Income up to Rs. 3,00,000 is exempt from tax if you are more than 60 years but less than 80 years of age.

    Income tax slab for super senior citizens (80 years old or more) (both men & women)

    Income Slab Tax Rate
    Income up to Rs. 2,50,000* No Tax
    Income up to Rs. 5,00,000* No Tax
    Income from Rs. 5,00,000 – 10,00,000 20%
    Income more than Rs. 10,00,000 30%
    Surcharge: 10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore. 15% of income tax, where total income exceeds Rs.1 crore.
    Cess: 3% on total of income tax + surcharge.
    *Income up to Rs. 5,00,000 is exempt from tax if you are more than 80 years old.
    1. Income Tax Slab for Individuals and Hindu Undivided Families:

    These are the slab rates for FY 2016-17 (AY 2017-18) These income tax slab rates are also applicable for : FY 2015-16 (AY 2016-17) FY 2014-15 (AY 2015-16)

    On all the tables listed below, Education Cess of 2% and SHEC of 1% will be levied on the tax computed using the rates given below.

    Under Section 87(A), an Income Tax Rebate of Rs.2,000 is provided for all individuals earning an income that’s less than Rs.5,00,000 per annum.

    • Tax applicable for individuals below 60 years
    Annual Income Tax Rates Education Cess Secondary and Higher Education Cess
    Up to Rs.2,50,000 Nil Nil Nil
    Rs.2,50,001-Rs.5,00,000 5% 2% of income tax 1% of income tax
    Rs.5,00,001-Rs.10,00,000 Rs.12,500 + 20% 2% of income tax 1% of income tax
    Above Rs.10,00,000 Rs.1,12,500 + 30% 2% of income tax 1% of income tax
    • Tax applicable for individuals over 60 years and under 80 years
    Annual Income Tax Rates Education Cess Secondary and Higher Education Cess
    Up to Rs.3,00,000 Nil Nil Nil
    Rs.3,00,001-Rs.5,00,000 5% 2% of income tax 1% of income tax
    Rs.5,00,001-Rs.10,00,000 Rs.10,00 + 20% 2% of income tax 1% of income tax
    Above Rs.10,00,000 Rs.1,10,000 + 30% 2% of income tax 1% of income tax
    • Tax applicable for individuals over 80 years and above
    Annual Income Tax Rates Education Cess Secondary and Higher Education Cess
    Up to Rs.5,00,000 Nil Nil Nil
    Rs.5,00,001-Rs.10,00,000 20% 2% of income tax 1% of income tax
    Above Rs.10,00,000 Rs.1,12,500 Rs.1,00,000 + 30% 2% of income tax 1% of income tax

    Income Tax should be deducted at applicable rates as above along with surcharge and Education Cess. The individuals who are earning over Rs.50 lakh and under Rs.1 crore will be required to pay a surcharge of 10% tax on the total income and the individuals who are earning over Rs.1 crore, a surcharge of 15% will be applicable as the income tax.

    1. Businesses:

    The following tables indicate the tax slabs for businesses.

    • Income Tax Slab for Co-operative societies :
    Income Tax Slab Tax Rates
    Total income less than Rs.10,000. 10% of the income.
    Total income greater than Rs.10,000 but less than Rs.20,000. 20% of the amount by which it exceeds Rs.10,000.
    Total income greater than Rs.20,000. 30% of the amount by which it exceeds Rs.20,000.
    Income Tax
    • Firms, Local Authorities, Corporates and Domestic Companies:
    • Income tax slab rates do not apply for these, as they are taxed at a flat rate of 30% on the total income declared.
    • A surcharge of 5% is levied on the total income tax of domestic companies if their income exceeds Rs.1 crore. This surcharge does not apply to firms and local authorities.

    Income Tax Refund

    The government provides an option to save on tax amount by making certain kind of investments. These kinds of investments can be declared for tax exemption under Section 80C and 80D. The Section 80C allows an individual to reduce up to Rs.1,50,000 as investment amount that can be claimed from the annual income. The Section 80D deals with the tax deduction on medical insurance for up to Rs.25,000 for a financial year.

    There are many instances when an individual declares more tax amount at the beginning of a financial year than the actual chargeable tax amount. This could be due to investment decision made at a later or mid-year stage or due to investments which provide tax exemption that you have not declared.

    An individual can claim for the tax refund by filing the Form 16. Components such as HRA (House Rent Allowance), life insurance premium amount, investments in mutual funds, equity, fixed deposit, tuition fee etc, are included in Form 16 to be declared as investments.

    Online Income Tax Refund Status

    An individual can visit the website - https://incometaxindiaefiling.gov.in/ to check the status of income tax refund for a particular financial year. Alternately, an email is sent by the IT department with the details of the refund as well. The individual can also call the CPC Bangalore on 1800-4250-0025 (toll-free) number to check for the status of the income tax refund.

    Tax Due Dates for the Month of May

    May

    7th May, 2017 -

    The due date for deposit of Tax collected/deducted for the month of April, 2017. All sum collected/deducted by an office of the government shall be paid to the Central Government on the same day of transaction where tax is paid without producing an Income-tax Challan.

    15th May, 2017 –

    • The due date for issue of the TDS Certificate for tax deducted under section 194-IA for the month of March, 2017.
    • The due date for complete the Form 24G by an office from the Government where TDS for the month of January, 2017 has been paid without the furnishing of a challan.
    • The quarterly statement of TCS deposited for the quarter ending March 31, 2017.

    30th May, 2017

    • The quarterly TCS certificates with regard to tax collected during the quarter ending March 31, 2017.
    • The submission of a statement (in Form No. 49C) by non-resident having a liaison office in India for the financial year 2016-17.
    • The due date for producing the challan/statement with regard to tax deducted in the month of April, 2017 - under Section 194-IA..

    31st May, 2017 - The quarterly statement of TDS deposited for the quarter ending March 31, 2017.

    • The certificate of TDS to employees with regard to the salary paid and tax deducted during 2016-17.
    • The return of tax deduction from contributions paid by the trustees of an approved superannuation fund.
    • The due date for completing the statement of financial transaction (in Form No. 61A) as required to be furnished under sub-section (1) of section 285BA of the Act respect of a financial year 2016-17.
    • The due date for e-filing of annual statement of accounts as required to be reported under section 285BA(1)(k) (in Form No. 61B) for calendar year 2016 by reporting financial institutions.

    Income Tax Return (ITR):

    If an individual need to claim for income tax refund, he/she will need to fill up the required Income Tax Return (ITR) form. Depending on the income assessment group, the individual will need to submit one of the ITR forms listed below:

    ITR Form Name Description
    ITR-1 For Individuals having Income from Salaries, One house property, Other sources (Interest etc.)
    ITR-2 For Individuals and HUFs not having Income from Business or Profession
    ITR-2A For Individuals and HUFs not having Income from Business or Profession and Capital Gains and who do not hold foreign assets
    ITR-3 For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship
    ITR-4 For individuals and HUFs having income from a proprietary business or profession
    ITR-4S Presumptive business income tax return
    ITR-5 For persons other than,- (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7
    ITR-6 For Companies other than companies claiming exemption under section 11
    ITR-7 For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)
    ITR-V The acknowledgment form of filing a return of income

    In order to file the ITR, an individual will require producing the bank statement, Form 16, and a copy of previous years' return. The individual will need to visit the Income Tax Department's website - https://incometaxindiaefiling.gov.in/ to register and file the returns.

    Save Income Tax

    Declaring investments - From HRA, Life Insurance Premiums, National Savings Certificate, Leave Travel Allowance to Fixed Deposit (minimum of 5 years), ELSS Tax Saving Mutual Funds, and more, by ensuring that you have declared all your investments, you can achieve more deductions on tax. The following options can be considering for saving on income tax:

    • Investment options

      • Mutual funds such as Equity Linked Savings Schemes (ELSS) can be claimed for tax deduction under Section 80C. Compare to fixed deposits and PPF’s, the ELSS offers shorter lock-in period and more benefits when it comes to making money.
      • Unit Linked Insurance Plans (ULIP) are insurance schemes that are linked to the market. The investment made under ULIP qualifies for tax deductions.
    • Insurance

      • Life insurance and health insurance - The money paid towards life insurance and health insurance policies are considering for tax deductions under Section 80C
    • Loans

      • When we take a loan for buying a house or for renovation purpose, we are eligible for tax deductions up to Rs.1,50,000 for a financial year.

    You can also consider the following options for reducing tax amount on your income:

    • Fixed Deposits (FD) - An FD with a lock-in period of five years can help you save on tax while earning the interest on the deposited amount.
    • National Saving Certificate (NSC) - The NSC offers a safe and reliable method of investing money. You can deposit as low as Rs.100 for a 5-10 year lock-in period. The investments made under NSC are eligible for tax deductions.
    • Provident Fund (PF) - You can also choose to invest more amount towards your PF account that will help you reduce your taxable amount.

    Calculate Income Tax

    The income tax can be calculated by adding total income from salary, property, capital gains, and income from all other sources, and then, by reducing the deductions that can be declared as investments. Once you have taken out the deductions as your investments, you can clearly see the amount of tax you are liable to pay.

    Income Tax Forms

    The most frequently used Income Tax Forms are:

    Form Description
    Form No.: 3CA In case the professional accounts or the accounts related to the business of a person are audited under some other law, this form is used to generate the audit report under Section 44AB of the Income Tax Act, 1961.
    Form No.: 3CB This form is used to generate the audit report under Section 44AB of the Income Tax Act, 1961, for a person falling under clause (b) of sub-rule (1) of rule 6G.
    Form No.: 3CD This form is required to furnish the statement of particulars as per section 44AB of the Income-tax Act, 1961
    Form No.: 3CEB In case of international transactions, this form is used to furnish the report from an accountant under Section 92E.
    Form No.: 10A In case a charitable trust/institution or a religious trust/institution has to be registered under Section 12A(1)(aa) of the Income Tax Act, 1961, the application for that has to be made through Form No.: 10A.
    Form No.: 10B This form is used to generate the audit report of a charitable trust/institution or a religious trust/institution under Section 12A(b) of the Income Tax Act, 1961.
    Form No.: 15CA Form No.: 15CA is used to furnish the information pertaining to payments made to a foreign company or a non-resident (provided the non-resident is not a company). Tax should be chargeable on these payments in order to furnish the details on this form.
    Form No.: 15CB This form is used to furnish the certificate issued by an accountant.
    Form No.: 15G An individual or a person (who is not a firm or a company) can file claims of particular receipts without tax deductions through Form No.: 15G. Such declarations are to made under sub-sections (1) and (1A) of Section 197A of the Income Tax Act, 1961.
    Form No.: 15H In case a person, who is 60 years old or more, has to file claims for a few receipts without tax deductions, the declaration under sub-section (1C) of Section 197A of the Income Tax Act, 1961, has to be made through Form No.: 15H.
    Form No.: 16 Form No. 16 is used to certify the TDS (tax deducted at source) which is deducted from income that appears under the ‘Salaries’ head.
    Form No.: 16A The tax deducted at source (TDS) under Section 203 of the Income Tax Act, 1961 is certified through this form.
    Form No.: 26AS The Annual Tax Statement (ATS) under section 203AA is furnished in Form No.: 26AS.
    Form No.: 35 Notification to the Commissioner of Income Tax (Appeals) is made through Form No.: 35.
    Form No.: 36 Form No.: 36 is used to notify the Appellate Tribunal.
    Form No.: 49A Form No.: 49A is used to apply for the allotment of a Permanent Account Number (PAN). However, the filing of this form is applicable only for Citizens of India, Entities which have been incorporated in India, Indian Companies, and Unincorporated entities that have been formed in India.
    Form No.: 49AA Form No.: 49AA is used to apply for the allotment of a Permanent Account Number (PAN). However, this filing of this form is applicable only for the individuals who are not citizens of India, Entities which have been incorporated outside India, and Unincorporated entities that have been formed outside India.
    Form No.: 49B Form No.: 49B is used to apply for allotting the Tax Deduction and Collection Account Number (TAN) under Section 203A of the Income Tax Act, 1961.
    Form No.: 60 If a person enters into a transaction which is specified under Rule 114B and does not have a Permanent Account Number (PAN), Form No: 60 has to be filed by the person.

    Income Types or Taxable Heads of Income:

    Income from different sources is taxed differently. These sources are called heads of income and are as follows:

    1. Income From Salaries:
    2. All income received from an employer by an employee is taxed under this heading. Employers are bound to withhold tax compulsorily under Section 192 if the income of their employees falls under a taxable bracket. Employers must also provide a Form 16, which contains details of tax deductions and net paid income.
    3. Income from House Property:
    4. Income here is taxable if the assesse is the owner of a property that’s been given out on rent. The property should not be used for business or professional purposes. Individuals and HUFs can claim one property as “self-occupied”, which means you and your family live there, and do not have to pay taxes on this. (Learn more about calculating income from house property)Income from house property is calculated as under:
    5. Gross Annual Value (GAV) = x
    6. Less: Municipal Taxes Paid = (y)
    7. Net Annual Value = x-y
    8. Less: Deductions under Section 24 = z
    9. Income from House Property = (x-y) – z
    10. Profits and Gains Of Business or Profession:
    11. These are the taxes that will be applicable for income from business or professional services rendered. The provisions for computing the tax on this type of income is in accordance with Sections 30 to 43D.
    12. Income from Capital Gains:
    13. This is for the taxes applicable on income that arises when capital assets are transferred. Capital assets are property of any value that’s held by the assesse like land, buildings, equity shares, bonds, debentures, jewellery, art, assets, etc. (Learn more about calculating capital gains)
    14. Income from Other Sources:
    15. Basically, any source of income that cannot be classified under the above heads of income falls under this heading. There are also some specific and pre-determined incomes which fall under this heading, like:
      • Income by way of dividends.
      • Winnings from horse races / lotteries.
      • Employee’s contribution towards staff welfare schemes, any fund set up under the ESIC Act that’s received by the employer from the employees.
      • Interest on securities like debentures, government securities and bonds.
      • Gifts.
      • Interest on compensation.
      • Rental income other than house property.
      • Family pension received after the death of the pensioner.
      • Interest income that is earned other than by way of securities.

    (Learn more about calculating income tax on income from other sources)

    Income Tax E-Filing:

    You can e-file your Income Tax Return, TDS return, AIR return and Wealth Tax Return online through this link https://incometaxindiaefiling.gov.in/. E-filing your return has obvious advantages like the fact that you won’t have to deal with the hassle of paperwork and waste time sorting through it all. You can simply log on to the secure website and e-file your return. (Learn more about e-file your IT returns in Online)

    This government website also has provisions for you to submit returns, view forms 26AS, outstanding tax demand, CPC refund status, rectification status, ITR – V receipt status, online application tools for PAN and TAN, e-pay your tax and even has a tax calculator.

    Deductions:

    Deductions for your taxable amount are available under various sections of the Income Tax Act , 1961

    Section 80C:

    Deductions under this section are only available to individuals and HUF. This section allows for certain investments like NSC, etc. and expenditures to be exempt from taxation up to the amount of Rs. 1,50,000.

    Section 80CCC:

    Deductions under this section are on payments made to LIC or any other approved insurance company under an approved pension plan. The pension policy must be up to Rs.1,50,000 and be taken for the individual himself out of the taxable income.

    Section 80CCD:

    Deductions under this section are for contributions to the New Pension Scheme by the assesse and the employer. The deduction is equal to the contribution, not exceeding 10% of his salary.

    The total deduction available under Section 80C , 80CCC and 80CCD is Rs.1,50,000. However, contributions to the Notified Pension Scheme under Section 80CCD are not considered in the Rs.1,50,000 limit.

    Section 80D:

    This is the section that deals with income tax deductions on health insurance premiums paid. In the case of individuals, the insurance policy can be taken to cover himself, spouse, dependent children – for up to Rs.15,000 and parents (whether dependent or not) – for up to Rs.15,000. An additional deduction of Rs.5,000 is applicable if the insured is a senior citizen. In the case of HUF, any member can be insured and the general deduction will be for up to Rs.15,000 and an additional deduction of Rs.5,000.

    A total of Rs.2,00,000 can be claimed as deductions whether the assesse is an individual or a HUF.

    Section 80DDB:

    This section is for deductions on medical expenses that arise for treatment of a disease or ailment as specified in the rules (11DD) for the assesse, a family member or any member of a HUF.

    Section 80E:

    This section deals with the deductions that are applicable on the interest paid on education loans for an education in India.

    Section 80EE:

    This section deals with tax savings applicable to first time home-owners. Applies for individuals whose first home purchased has a value less than Rs.40 lakh and the loan taken for which is Rs.25 lakh or less.

    Section 80RRB:

    Deductions with respect to income by way of royalties or patents can be claimed under this section. Income tax can be saved on an amount up to Rs.3,00,000 for patents registered under the Patents Act, 1970.

    Section 80TTA:

    This section deals with the tax savings that are applicable on interest earned in savings bank accounts, post office or co-operative societies. Individuals and HUFs can claim a deduction on an interest income of up to Rs.10,000.

    Section 80U:

    This section deals with the flat deduction on income tax that applies to disabled people, when they produce their disability certificate. Up to Rs.1,00,000 can be non-taxed, depending on the severity of the disability.

    Section 24:

    This section deals with the interest paid on housing loans that is exempt from taxation. An amount of up to Rs.2,00,000 can be claimed as deductions per year, and is in addition to the deductions under Sections 80C, 80CCF and 80D. This is only for self occupied properties. Properties that have been rented out, 30% of rent received and municipal taxes paid are eligible for tax exemption.

    Learn more about Income Tax deductions from under Section 80C to 80U.

    TDS:

    TDS or Taxes Deducted at Source - is a system incorporated by the Income Tax Law to deduct taxes before the income has been disbursed to the person earning it. It is charged depending on your income tax slab, at its point of origin. You do not get a full amount from which to deduct an income tax amount and pay it back, but get charged even before you’ve earned your income.

    The income tax here is deducted by the payer and remitted to the government on your behalf.

    TDS on income will not apply if your net taxable income is below Rs.2,50,000 for individuals, Rs.3,00,000 for senior citizens and Rs.5,00,000 for super senior citizens.

    It’s important to know which tax bracket one falls under and the investments that can be made to exempt a portion of the income from taxation. A lot of money can be saved through investments, and this helps the flow of funds through investible channels in the economy, thus helping the country develop. Health insurance policies, investments and other deductions can be used to your benefit, if you balance them out well.

    Making relevant investments can help save a lot on tax, and earn a lot in eventual interest income. Most tax-saving investments have lock-in periods where the funds cannot be accessed, and in this time compound interest at a rate higher than most savings bank accounts.

    Articles to Help You File Income Tax

    Income tax can seem like a tedious job for most people, and it has everything to do with the fact that there are a lot of details and nitty-gritties involved in calculating and paying income tax. But, if you want to get a clear picture that is simplistic and easily comprehensible about filing taxes and on the related subjects, read the pages given below.

    How to Pay Income Tax Which is Due?

    There is a lot to know about income tax payment that are already due when you already have an overwhelming notification to deal with when it comes to unpaid income tax returns. It is essential to know the details of advance or self-assessment tax as well as things you should have to consider, when paying your due taxes.

    How to e-file Income Tax Return?

    You need to know all the details involved in filing taxes to be able to file your income tax returns, online. This includes the reasons to file your incomes tax returns as well as the types of ITR filing as there are several types and ways to do it online. A step by step and detailed approach of how to file income tax returns will help you also to avoid errors, since it has to accurate at the first go.

    Income Tax Slab and rates for FY 2018-19 and AY 2019-20

    In the current running financial year, when filing your tax returns, one needs to be aware of all the details in the tax slabs. It will help to calculate the tax that you owe but you also need to know your particular category of income tax slab which may vary based on groups and demographics. Hence the latest income tax slab is essential even when it comes to clearing due taxes for 2016-17, in the future.

    Form 16

    This piece of document declares all your income tax, by your employer and is of utmost importance. It has several components that one needs to be aware of. One important thing about this form are the divisions of the documents that have to be filled in carefully. The requirement of Form 16 is also essential to understand as an employee.

    Income Tax Refund

    This is another important aspect of filing taxes. You would always want to save on your hard-earned money and this page helps you to understand the ways that you can get refunds. In other words, like Uber and PayTM, Indian income tax allows you to get some money back. But for that you have to make some savings investments wisely.

    How to Claim TDS Refund?

    You need to know how to claim TDS refund as it may seem tedious in the beginning but knowledge would help. You may also find it easier to claim TDS refund that actual tax filing since it is an online process.

    Existing Income Tax Norms and Standards Likely to Change from April 2018

    The Union Budget 2018 brought in a wave of new opportunities for a lot of underprivileged sectors of the country, including senior citizens. Where Arun Jaitley proposed multiple new additions to the sectors of healthcare, agriculture and railways, he also maintained the existing income slab rates.

    Therefore, to grasp a better understanding of what the new rules will look like, let’s read through the below given statements:

    1. A standard deduction of Rs.40,000 has been established, pertaining to salaried employees: Believed to benefit more than 2.5 crore salaried individuals in the country, this standard deduction came across in the place of the earlier deductions of Rs.19,200 (allowance for transport) and Rs.15,000 (medical reimbursements). The salaried category of people will henceforth be subjected to a flat deduction of Rs.40,000 from their taxable incomes. The amount of benefits that an individual can enjoy is wholly dependent on the tax bracket that he/she falls under.
    2. Cess rates have been increased: There has also been an increase in the cess rate levied on income tax in the Union Budget. From an earlier 3%, the cess rate has been raised to 4% for taxpayers on the total payable income tax amount.
    3. A new tax on long-term capital gains have been introduced: Finance Minister, Arun Jaitley, in the Union Budget 2018 session announced that a 10% tax rate will be levied on all capital profits surpassing the amount of Rs.1,00,000. This amount will be levied on equity sale or parts of equity funds. Additionally, to even the process the profits earned till 31 January 2018 are being effectively grandfathered, which means profits earned after this date will subjected to tax.
    4. A 10% tax will be levied on dividend incomes: Pertaining to equity-oriented mutual funds, a 10% tax rate has been announced by the Finance Minister in the Union Budget 2018 session.
    5. Premium health insurance policies will henceforth be subjected to higher benefits: In the health insurance industry, typically if you pay premiums for a few extra years, you are eligible to some discount offered by the insurer. However, earlier, a deduction limit of Rs.25,000 was allowed by each individual claiming the same. According to the new Budget announced by Finance Minister, Arun Jaitley, if you have a premium health insurance policy that has the validity of a year (or more), the deduction made will be directly proportional to the total number of years for which the cover has been provided. For example, if your insurer provides you a 10% rebate on premiums (pertaining to health insurance), you will have to pay Rs.40,000 for the period of two years. According to the new alterations made in the budget, you will now be allowed to claim Rs.20,000 in both the years.
    6. NPS schemes will attract tax benefits: Currently, non-employee subscribers of the National Pension Scheme are allowed withdrawals that are tax-free, and the period has been extended further. However, an employee’s contribution to the NPS is currently taxed, coupled with an exemption of 40% in case the account is closed or the individual chooses to opt out. For non-employees, this exemption has still not been put into practice. It is believed to commence from financial year 2018-19.
    7. Senior citizens will enjoy higher deduction with regard to their interest income: Senior citizens are believed to be able to enjoy a higher basic exemption limit with regard to deposits made in banks and post offices. This includes recurring deposits as well. Currently, under Section 80TTA of the Income Tax Act, 1961, an exemption upto Rs.10,000 is allowed for senior citizens. According to the proposed Section 80TTB, a new exemption of Rs.50,000 has been introduced on savings and deposits made by senior citizens.
    8. An increment in the investment limit of the Pradhan Mantri Vaya Vandana Yojana was also announced by the Financial Minister in the Budget. From an earlier Rs.7.5 lakh, the amount was raised to Rs.15 lakh. The scheme is also said to be extended to March 2020. Currently, the scheme offers an 8% interest rate to senior citizens.
    9. Senior citizens will be subject to a higher tax deducted at source (TDS): From an earlier amount of Rs.10,000, the threshold for deduction of TDS (concerning senior citizens) has been raised to Rs.50,000.
    10. Deduction limit increment under Section 80D of the Income Tax Act: The Union Budget 2018 announced an effective immediately increment in the deduction limit on premium payments of health insurances. From Rs.30,000, the deduction limit is said to go up to Rs.50,000. However, for citizens who are below the age of 60 years, the original deduction amount of Rs.25,000 is said to remain the same.
    11. An increased tax deduction for treatment of specific illnesses, concerning senior citizens: The increased amount of deduction is said to be Rs.1 lakh for senior citizens, as proposed Financial Minister, Arun Jaitley in the Union Budget session of 2018.

    These new advancements in the world of taxes are expected to lessen the financial burden off the underprivileged sector and the senior citizens of the country.

    Income Tax Notices: A Guide to Their Meaning and Coping Mechanisms

    While ignoring phony texts and messages from unreliable sources can be considered a legitimate act to protect one’s privacy, doing the same with regard to notices issued by the Income Tax Department can prove to be equally damaging. In order to not find yourself in a tight spot with respect to paying taxes, you must be swift and quick in your follow-up to the notice issued by the IT department.

    Notices and warnings from the IT department are sent across mainly to tax defaulters or people who have provided misinformation about their incomes with the intention to evade tax. To help you understand the gravity of such situations, a list of notices that are most likely to surface have been given below. Also, it is important to bear in mind here that these notices will only be issued to you once you have filed that year’s income tax return.

    1. Notice Issued Under Section 139(9): In case you are provided with a notice under Section 139(9), it will automatically be implied that there is a discrepancy in the filing of your income tax return. You might have made a mistake in some form while filing. You might have made use of a form that is inappropriate in your case, or you might not have paid your total due, or there might be an error in your PAN details, or you might have made a deduction claim without stating the source. In such cases, all you have to do is log in to https://incometaxindiaefiling. gov.in/e-Filing/ and choose the option ‘’In response to notice u/s 139(9)’’. Thereafter, all you have to do is make the changes stated in the notice and upload the accurate information accordingly.
    2. Notice Issued Under Section 148: In case you have missed out on specifying a certain source of income or have indeed miscalculated your total taxes due, you will receive a notice under Section 148. In case the amount mentioned in the notice exceeds Rs.1 lakh, then you can expect the notice anytime during the following six months. Otherwise, you can expect the same during the course of the next four years from when the relevant assessment year ended. The total time frame is usually mentioned in the notice by the concerned Assessing Officer or AO. Staying in tandem with that, you will be required to make the suggested changes.
    3. Notice Issued Under Section 143(1): This notice is usually issued as a response to the income tax return filed by you for that financial year. However, it solves a few purposes such as confirming that the tax return filed by you is in line with the AO’s assessment and any action on this return is inessential. You will also receive this notice if you have ended up paying more taxes than you owe. In this regard, you will be eligible to a tax refund which will materialise depending on whether or not you have provided your bank account details.
    4. Notice Issued Under Section 143(1A): This a notice that has a unique feature. Apart from the fact that it is essentially a computer-generated notice, it also provides a 30-day time frame to correct the mistake made by the concerned individual. Any misinformation or mismatch is detected automatically by the computer while referring to information provided in Form 26AS. Obligatory clarification is then demanded from the taxpayer involved. You essentially have the next 30 days to understand and solve the problem on the income tax department’s portal.

    Apart from the above mentioned notices, salaried individuals can also receive penalties if they have delayed filing their income tax returns. A total fine of Rs.5,000 will be levied if you have not filed your tax returns by 31 July. In case you are doing so by 31 December, you will have to incur a penalty of Rs.10,000.

    Frequently Asked Questions

    1. What is Income Tax Return?
    2. Income tax returns are basically the documents that taxpayers file with the Income Tax Department. An ITR contains details regarding an individual’s income and the tax payable on the same.

    3. Who should file income tax returns?
    4. All individuals whose gross total income is more than Rs.2.5 lakh will have to file their income tax returns.

    5. How many ITR forms are there and what is each one used for?
    6. Here are the ITR forms used in India:

      • ITR-1: It must be used by all individuals who earn a salary or get income through pension or income from a single house property or income from other sources apart from race horses and lottery winnings.
      • ITR-2: All individuals or HUFs who cannot file ITR-1 will have to use ITR-2. Even those who earn income that is subject to tax under “Profits or gains from profession or business” through interest, bonus, remuneration, salary or commission from partnership firms will have to use ITR-2.
      • ITR-3: All individuals or HUFs who have their own profession or proprietary business will have to file ITR-3.
      • ITR-4: All individuals and HUFs and partnership firms apart from limited liability firms who have chosen the presumptive taxation scheme under Section 44AD / Section 44ADA / Section 44AE of the Income Tax Act will have to fill in ITR-4.
      • ITR-5: Any firm, BOI, AOP, LLP, local authority, co-operative society, and artificial judicial person mentioned in Section 2(31)(vii) of the Income Tax Act will have to filed ITR-5.
      • ITR-6: All companies, apart from those that claim exemption under Section 11, will have to use this form.
      • ITR-7: All persons, inclusive of companies, that are mandated to submit returns under Section 139(4A) or Section 139(4B) or Section 139(4C) or Section 139(4D) or Section 139(4E) or Section 139(4F), such as investment funds, political parties, colleges, trusts, institutions, etc. will have to use this form.
      • ITR-V: This is an acknowledgment of filing your income tax returns.
    7. How do I file my income tax returns?
    8. Income tax returns can be filed by one of the following ways:

      • By submitting it manually in paper form
      • By submitting it electronically through the use of a digital signature
      • By transmitting the information electronically and then furnishing the verification in Form ITR-V
      • By transmitting the information electronically under EVC (electronic verification code)
    9. What are the income tax slabs for individuals under 60 years of age?
    10. Here’s the slab rates for income-earning individuals in India:

      Income Tax Rate
      Up to Rs.2.5 lakh Nil
      Rs.2.5 lakh to Rs.5 lakh 5%
      Rs.5 lakh to Rs.10 lakh 20%
      Over Rs.10 lakh 30%

      A surcharge of 10% will be applicable in case an individual’s income is between Rs.50 lakh and Rs.1 crore, and 15% in case the income is more than Rs.1 crore. A cess of 3% is applicable as well on the tax plus surcharge.

    11. What is Cost to Company or CTC?
    12. The total amount spent by an employer to hire the services of an employee is called the Cost to Company or CTC. The CTC is inclusive of all the components present in a salary structure such as Basic Salary, Dearness Allowance (DA), House Rent Allowance (HRA), Travelling Allowances, Provident Fund contribution, Pension Fund contribution, Medical Allowances, etc.

    13. What is Basic Salary?
    14. The basic salary of an employee is one of the major components of his/her salary structure. This is the part of the salary which is entirely included in the Take Home Salary of the employee.

    15. What is Gross Salary?
    16. The Gross Salary of an employee is calculated after deducting the gratuity and the Employees’ Provident Fund (EPF) contribution from the Cost To Company (CTC) of the employee. The Gross Salary is calculated before the deduction of income tax and other deductions like overtime pay, bonus, holiday pay, etc.

    17. What is Take Home Salary or Net Salary?
    18. Net Salary is also known as the Take Home Salary and it is referred to the salary that is taken home by the employee, i.e. the salary that is credited to the employee’s account. The Net Salary is calculated after deducting the income tax and all other relevant deductions such as professional tax and provident fund contribution.

    19. What is taxable income and what is exempt income?
    20. The income on which income tax is levied is called taxable income. On the other hand, exempt incomes are the incomes which are prescribed in the Income Tax law to be exempted from tax.

    News About Income Tax

    • GST: Centre defers reverse charge mechanism till September 30

      The reverse charge mechanism under the Goods and Services Tax (GST) regime, has been postponed to 30 September 2018. Under the reverse charge mechanism, GST is levied on the goods and/or services which are procured from unregistered dealers by the buyer and deposited with the government.

      The reverse charge mechanism is an anti-tax evasion measure which is implemented to ensure that the transactions which are made by unregistered people do not evade tax. In normal transactions, the supplier of the goods and/or services charges the tax and pays it to the government, but in this case, the responsibility of paying the tax reverses and lies on the buyer. After being deferred earlier, the mechanism was supposed to be put into effect on 1 July 2018. The industry had voiced their concern that the implementation of the mechanism would increase their compliance burden. Thus, the Central Board of Indirect Taxes and Customs (CBIC) issued a notice recently, notifying the delay of implementation of the mechanism by another 3 months. The tax partner at EY India, Abhishek Jain said, “This extension was much sought for as industry genuinely wanted some time before adhering to additional compliances envisaged for such procurements.”

      6 July 2018

    • India finally brings clarity on income tax computation for foreign firms

      The rules for computation of income tax for foreign companies have been notified by the government recently. If a foreign company has a place of effective management in the country, the rules will be applicable for it. Some tax experts opined that the notification of the rules for computation of income tax for these companies has brought clarity on various aspects of the new place of effective management (POEM) regime.

      A mechanism for calculation of written down value (WDV), and computation of brought forward loss and unabsorbed depreciation has been notified by the Central Board of Direct Taxes (CBDT). The notification mentions that a foreign company will be treated as a foreign company even after it becomes a resident in India. The managing partner at the tax consultancy Nangia Advisors LLP, Rakesh Nangia said, "The notification has provided clarity to the foreign companies which shall be considered as a resident in India owing to its POEM being in India.” Nangia added that the new notification will provide guidance in case of conflicts which rises in regards to the application of provisions of the Act to such foreign companies which qualify as a resident company.

      4 July 2018

    • No pure GST on petrol, diesel; 28% tax plus VAT on anvil under GST

      A top government official recently said that even if the prices of petrol and diesel are brought under the GST regime, the prices will not be calculated the way it is expected to be. According to him, even if the fuels are brought under the highest slab of 28% GST, the tax structure will be calculated after levying some amount of local sales tax or Value Added Tax (VAT) prescribed by the states.

      The present tax incidence consists of excise duty which is levied by the central government along with the VAT charged by the states. According to the official, the peak GST rate along with VAT will be equal to the present tax incidence. However, even before petrol and diesel are brought under the GST regime, the Central Government has to decide if it is willing to give up an approximate input tax credit of Rs.20,000 crore which is earned by keeping petrol, diesel, crude oil, jet fuel, natural gas, and crude oil out of the GST ambit.

      23 June 2018

    • GST formalising economy, widening tax base: Finance Ministry

      As Goods and Services Tax (GST) is leading to the formalisation of the economy, it will eventually become difficult for businesses to remain outside the tax net. The Finance Ministry recently made this statement. The ministry opined that the implementation of GST has led to the formalisation of the economy. This would also lead to consequent information flow which would not only augment the indirect taxes but also direct tax collections.

      As the excise was imposed only at the manufacturing stage, the Centre had very little data in relation to the small manufacturers and their consumption. The states, on the other hand, had very little data on the activities of the local firms outside their borders. Under the GST regime, both the Centre and the states will have access to a common set of data. This will make the collection process of direct and indirect taxes more effective.

      22 June 2018

    • NITI Aayog meeting: Tamil Nadu urges Centre to allow state governments to collect income tax

      The Chief Minister Edappadi K Palaniswami recently urged the Centre to allow the state governments to collect income tax. This suggestion was made at the latest NITI Aayog governing council meeting. The chief minister is of the opinion that his suggestion will help other states implement development programmes more effectively and efficiently.

      In addition to this, Palaniswami also said that his proposal will help simplify the complication in relation to the devolution of resources. He placed a demand for the Cauvery Water Management Authority and the Cauvery Water Regulation Committee to be made operational immediately to adhere to the Cauvery Water Disputes Tribunal’s order. He also said that Tamil Nadu had suffered an annual resource loss of Rs.6,000 crore following the 14th Finance Commission and the same might be repeated if the Terms of Reference are not rectified in the 15th Finance Commission.

      20 June 2018

    • Shell firms: I-T department to file pleas in NCLT to extract tax due

      The Income Tax Department will petition the National Company Law Tribunal (NCLT) for recovering tax dues worth crores of rupees from many deregistered shell companies. The Central Board of Direct Taxes (CBDT) has written to the Ministry of Corporate Affairs asking for help and has instructed the Income Tax Department to assign

      a special team of officers. These officers will be entrusted with the job of filing of these petitions in various branches of NCLT across the country by the end of this month.

      28 May 2018

    • New GST Returns Form Could Soon Be Introduced

      When the GST Council meets next, it is expected to look into simplifying the returns form. The Deputy Chief Minister of Bihar, Sushil Modi, has said that two models are currently being reviewed and discussed, adding that a new form that takes into account the best features of a ‘fusion’ of both these models will soon be prepared. He also said that the problems with the current form are being talked over by industry stakeholders, adding that a draft is expected to be prepared and presented to the Council in its next meeting.

      18 April 2018

    • An Urge for a 12% GST by Life Insurers

      On the grounds of cost of premiums hike, certain life insurance companies and firms have requested a 12% GST to be levied henceforth.

      On the current life insurance policies, a GST rate of 18% is levied which is 3% higher than the service tax that was levied in the earlier days. Since the premiums for life insurance covers are low already, such a high GST rate automatically creates an immense financial burden. Since the GST council has considered reducing GST rates for multiple areas, the insurance sector is also hoping for the same!

      17 April 2018

    • Gold Purchases Marred By Prices and GST For Akshaya Tritiya

      The purchase of gold for the upcoming Akshaya Tritiya on the 21st of April is expected to be marred by prices and the Goods and Services Tax. The occasion is considered auspicious, especially for purchasing gold. The fact that the festival also falls during the wedding season is not helping its cause as the price of gold is considerably high this year in comparison with the previous year. Moreover, the Goods and Services Tax is expected to be an extra burden for consumers. Akshaya Tritiya fell on the 28th of April last year, and the price of gold (standard) was Rs.2,876.5 per gram at the time. The price of gold currently, however, is 6.7% higher at Rs.3,069 per gram. No GST was charged on gold purchases last year either, but this year gold purchases are subject to GST at 3%. Weak demand for rural areas is also expected to affect gold purchases during Akshaya Tritiya this year.

      11 April 2018

    • Rs.72,509 Mopped Up In Revenue by CGST Mumbai Zone

      The CGST (Central Goods and Services Tax) Commissionerate’s Mumbai zone has collected revenue to the tune of Rs.72,509 crore until February 201, according to tax officials. The implementation of the Goods and Services Tax, which effectively combines all state and central levies, took place on the 1st of July, 2017. There are 11 taxpayers commissionerates in the Mumbai zone, including Thane, Bhiwandi, Mumbai, Navi Mumbai, Belapur, Raigarh and Palghar among others. There are four zones in Mumbai city – East, West, South and Central. The overall amount of revenue collected from the Mumbai zone between July 2017 and February 2018 was recorded at Rs.72,509 crore. Mumbai East recorded the highest collection in the 11 commissionerates between July last year and February this year at Rs.19,405 crore, according to Vijay Risi, the GST Commissioner for Mumbai East.

      9 April 2018

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