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This material covers the chapters such as Introduction, Income from Salary, Income from House Property, Income from PGBP, and more.
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Meaning of Income and tax – Features of Income Tax – Types – Important definitions under the Income Tax Act – Assessee – Types – Rates of Tax – Residential Status – Scope of Total Income – Incomes Exempt from tax. UNIT – II: INCOME FROM SALARIES Definition of salaries – Allowances – Valuation of perquisites – Deductions from Salary – Gratuity – Pension – Commutation of Pension – Leave Salary – Profits in lieu of Salary - Provident Funds – Deductions under Sec. 80s relating to salaries– Computation of income from salaries. UNIT – III: INCOME FROM HOUSE PROPERTY Meaning of Annual Value – Let out Property, Self-Occupied – Deductions from annual value
Income tax is a direct tax that a government levies on the income of its citizens. The Income Tax Act, 1961, mandates that the central government collect this tax. WHAT IS INCOME? Under Section 2(24), Income includes
The main characteristic features of a tax are as follows: (1) A tax is a compulsory payment to be paid by the citizens who are liable to pay it. Hence, refusal to pay a tax is a punishable offence. (2) There is no direct quid-pro-quo between the tax payers and the public authority. (3) A tax is levied to meet public expenditure incurred by the government in the general interest of the nation. (4) A tax is payable regularly and periodically as determined by the taxing authority. (5) A tax is a legal correction. SCOPE, OBJECTIVES AND SIGNIFICANCE OF TAXATION
individual acquires or earns during the course of a financial year that is deemed to be non- taxable is referred to as 'Exempt Income'.
The term 'salary' has been defined under section 17(1) of the Income Tax Act to include salary, perquisites and profits in lieu of salary. Hence, to calculate the income under the head salaries, the total amount of salary, perquisites and profits in lieu of salary received in a year must be calculated. ALLOWANCES An allowance is a financial benefit given to the employee by the employer over and above the regular salary. These benefits are provided to cover expenses that may be incurred to facilitate the discharge of service for example Conveyance Allowance is paid to foot expenses incurred for commuting to the workplace. Taxable Allowances Partially-Taxable Allowances Non-Taxable Allowances
If the commissioner of income tax does not approve the provident fund program established by the employer and employee (as described in Recognized Provident Fund), the scheme is considered unrecognized. TAXABILITY OF PROVIDENT FUND
Rental income from a property being building or land appurtenant thereto of which the taxpayer is owner is charged to tax under the head “Income from house property”. SELF-OCCUPIED HOUSE PROPERTY A self-occupied house property is used for one’s own residential purposes. This may be occupied by the taxpayer’s family – parents and/or spouse and children. A vacant house property is considered as self-occupied for the purpose of Income Tax. LET OUT HOUSE PROPERTY A house property which is rented for the whole or a part of the year is considered a let out house property for income tax purposes DEEMED TO BE LET OUT PROPERTY According to the Income tax rules of India, when a person has more than one residential property in his name, he is considered to be living in only one property and the rest of his residential properties are deemed to be let out property.
If the property or any part of property is let out and was vacant during the whole or part of the year and due to such vacancy, the actual rent is less than the expected rent, then the actual rent will be considered as Gross Annual Value of the property. UNREALISED RENT According to section 22 of the Income-tax Act, when a tenant doesn't pay the rent i.e. defaults on the rental payment , it is known as unrealised rent in income tax. This amount cannot be realised by the owner. PRE-CONSTRUCTION INTEREST Pre-construction interest is the interest that an assessee pays while the residential house is under construction. This pre-construction interest can be claimed only after the construction is finished. The deduction for this interest is allowed in 5 equal instalments starting from the year in which the house is purchased or the construction is completed.
Business means the purchase and sale or manufacture of a commodity with a view to make profit. It includes any trade, commerce or manufacture or any adventure (Doing activity for the first time without knowing the outcome) or concern in the nature of trade, commerce and manufacture. SEC. 2(36) PROFESSION: Profession means the activities for earning livelihood which require intellectual skill or manual skill , e.g. the work of a lawyer, doctor, auditor, engineer and so on are in the nature of profession. SEC. 43(5) SPECULATIVE TRANSACTION : Speculative transaction means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrip.
4.Acknowledgement and verification After uploading return on site you'll receive an acknowledgement in the form of ITR-V .In case Aadhar details are not updated on Income Tax site you will have to submit a physical signed copy of ITR-V to the Income Tax Department on the address mentioned on ITR-V to complete the e-filing process within next 120 days via ordinary post or speed post.
5. Tax refund A tax refund is a refund on taxes when the tax liability is less than the taxes paid. Taxpayers can often get a tax refund on their income tax if the tax they owe is less than the sum of the total amount of the withholding taxes and estimated taxes that they paid. UNDER SECTION 26AS A Form 26AS contains all tax-related information of a taxpayer such as tax deducted at source (TDS), tax collected at source (TCS), advance tax paid by the assessee, self-assessment tax payments, details about income tax refunds, and the details of tax deducted on the sale of immovable property, among other details. PERMANENT ACCOUNT NUMBER PAN is a ten-digit unique alphanumeric number issued by the Income Tax Department. PAN is. issued in the form of a laminated plastic card as given below (commonly known as PAN card): Permanent Account Number (PAN) Various aspects of PAN to be covered. USAGE OF PAN HELPS TO START A BUSINESS There are several PAN card uses when it comes to starting a business. As per norms laid down by the Government of India, the PAN is mandatory for every business in the country. DEDUCTION IN TAXATION One of the primary reasons to have a PAN card is for the purpose of taxation. If an individual with annual interest earnings exceeding ₹10,000 on savings deposits has not linked his or her PAN with the bank account, the concerned bank will deduct TDS at a rate of 30% instead of 10%. OPENING A DEMAT ACCOUNT OR BANK ACCOUNT According to the current norms, an individual will not be able to open a bank account if he/she does not possess a PAN card. INCOME TAX RETURNS FILING As you may know, every individual eligible for income tax must file their income tax returns. And for doing so, a PAN card is necessary. BUYING FOREIGN CURRENCY As per the Foreign Exchange Management Act, a PAN card is necessary for purchasing foreign currency amounting to ₹50,000 or higher. PURCHASING OR SELLING IMMOVABLE PROPERTY An individual needs to provide PAN details while selling or purchasing immovable property, such as a house, the worth of which is higher than ₹10 lakhs. PURCHASING OR SELLING A FOUR-WHEELER VEHICLE A PAN card is also mandatory if an individual sells or purchases a four-wheeler vehicle. Even in cases where an individual wants to acquire a loan for buying a car, having a PAN card is a must. CASH DEPOSITS, PAY ORDERS, BANKER’S CHEQUE, BANK DRAFTS The PAN card needs to be shown if one intends to opt for pay orders, banker’s cheque, bank drafts, and cash deposits of more than a limit of ₹50,000.