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3. Who administers the Income-Tax Act?
7.
Is Income tax Act
applicable only to residents?
9. How can I know
whether a company is resident or non-resident?
10. How is resident/
non-resident status relevant for levy of income tax?
16. I own shares of
various Indian companies and receive dividends. Is it
taxable?
17. I am a religious
preacher and earn money from preaching. Do I have to pay tax and file
return?
24. What is agriculture
income?
44. What is a return of income?
45. From where can I get a return form?
46. How can I know which form is applicable for my income?
55. If I fail to furnish my return within the due date of filing, will I be fined or penalized?
70. Is it mandatory to file return of income after getting PAN?
71. What is considered as Salary income?
72. What is meant by an employer-employee relationship?
73. What are allowances? Are all allowances taxable?
78. Is pension income considered as salary?
79. Is Family pension considered as salary?
81. Are retirement benefits such as PF and Gratuity taxable?
82. Are arrears of salary taxable?
83. Can my employer consider relief u/s 89(1) for the purposes of calculating my tax liability?
85. Is leave encashment taxable as salary?
86. Life insurance amount received on maturity along with bonus - is it taxable?
87. What do you mean by Income from House Property?
89. What are the conditions for taxing income from a property under this head?
92. I own two houses both of which are occupied by my family and me. Is there any tax implication?
100. I am a small time trader. Do I need to maintain any account?
101. Where should the books of account of my business be kept and for how long?
102. Do I have to keep an accountant to maintain my accounts?
103. What is meant by audit of the books of account?
105. I am a medical practitioner. Do I need to maintain any accounts?
106. Can an electric contractor also avail the benefit of deemed income provision?
109. What do you mean by revenue expenditure?
110. In what form can I claim deductions for capital expenses incurred in my business?
114. Sale of what kind of assets attracts capital gains?
116. Does the capital gain tax differ according to my period of holding an asset?
119. If I sell my land will I be taxed?
120. What is TDS?
121. Is TDS relevant for me as a businessman?
125. What can I do if I
am unable to get the TDS certificate [form-16 or 16A]?
126. I have not
received TDS certificate from my employer. Can I claim TDS deducted from my
salary?
128. I am buying a
property from a person residing in USA. Should I deduct tax while making
payment?
129. Can I use PAN to
pay the TDS deducted into government account?
132. What recourse is
available to me if I am unhappy with the order passed by my Assessing
officer?
It is a tax imposed by the Government of India on any body who earns income in India. This tax is levied on the strength of an Act called Income tax Act which was passed by the Parliament of India.
Income earned in India is not limited to income earned within the geographical limits or boundaries of the country. Certain incomes are also deemed to have been earned in India although they may have been earned outside the country.
The job of monitoring the Income-tax collection by the government is entrusted to a Department called Income-Tax. This department functions under the Department of Revenue, Ministry of Finance, Government of India.
Income earned in the twelve months contained in the period from 1st April to 31st March (commonly called Financial Year [FY]) is taken into account for purposes of calculating Income Tax. Under the income tax Act this period is called a Previous year.
It is the twelve-month period 1st April to 31st March immediately following the previous year [refer answer-4]. In the Assessment year a person files his return for the income earned in the previous year. For example for FY:2006-07 the AY is 2007-08.
Any Individual or group of Individual or artificial bodies who/which have earned income during the previous years are required to pay Income tax on it. The IT Act recognizes the earners of income under seven [7] categories. Each category is called a Status. These are Individuals, Hindu Undivided Family [HUF], Association of Persons [AOP], Body of individuals [BOI], Firms, Companies, Local authority, Artificial juridical person.
When Companies pay taxes under the Income tax Act it is called Corporate tax.
7.
Is Income tax
Act applicable only to residents?
No, The
Income tax Act applies to all persons who earn income in India. Whether they are
resident or non-resident.
If an
individual stays in India for 182 days or more in a year, he is treated as
resident in that year regardless of his citizenship. If the stay is less than
182 days he is a non-resident.
9.
How can I know
whether a company is resident or non-resident?
A company is
considered as resident if it is incorporated under the Indian Companies Act. A
foreign company can also become a resident if the control and management of
its affairs is done entirely in India during the previous
year.
10. How is resident/ non-resident status relevant
for levy of income tax?
In case of
resident individuals and companies, their global income is taxable in India.
However non-residents have to pay tax only on the income earned in India or from
a source/activity in India.
It depends on your residential status. If you
are a resident all incomes earned globally are taxable. Therefore the same needs
to be included in the return. However if any tax is paid on that income in the
foreign country, you will get credit for the same.
B. Taxable Income
The word Income has a very broad and inclusive meaning. In case of a salaried person, all that is received from an employer in cash, kind or as a facility is considered as income. For a businessman, his net profits will constitute income. Income may also flow from investments in the form of Interest, Dividend, and Commission etc. Infect the Income Tax Act does not differentiate between legal and illegal income for purpose of taxation. Under the Act, all incomes earned by persons are classified into 5 different heads, such as:
No.
Receipts can be classified into two kinds. A) Revenue receipt B) Capital receipt.
The general rule under the Income tax Act is that, all revenue receipt are taxable unless a receipt is specifically exempted and all capital receipts are exempt from taxation unless there is a provision to tax it. Gifts and loans etc are in the nature of capital receipts not attracting tax.
In a simple language, all that one derives from a source is called revenue receipt. For ex. Salary from employment, Rent from property, Interest or Divided from Investments, Profits from business. When an income is earned on account of transacting the source itself, it is called Capital receipt. For ex. Sale of land and building, business, investment etc.
Gift exceeding Rs 25,000 is taxable unless it
is received from
7
any person who
is a relative or
7
on occasion of
marriage or
7
under will or
by inheritance or
in contemplation of death of the payer
16. I own shares of various Indian companies and
receive dividends. Is it taxable?
No. The
dividend declared by Indian companies is not taxable in the hands of the share
holders because tax on distributed profits have already been borne by the
company.
17. I am a religious preacher and earn money from
preaching. Do I have to pay tax and file return?
Yes.
No.
What is done after the income is earned does not determine its taxation. However charitable contribution to approved institutions will give you the benefit of certain deductions from taxable income.
Your
daughter is the owner of the house and therefore she is liable to pay tax even
though you receive the rent. If the house is transferred, then you would become
the owner and you will have to pay tax on the rental income.
No.
At the moment individual, HUF, AOP, and BOI having income below rupees one lakh need not pay any income tax. For other categories [persons] such as co-operatives societies, firms, companies and local authorities no such exempted limits exists, so they have to pay taxes on their entire income. In cases of senior citizens aged above 65 years and women the exempted limit for the financial year 2007-08 are rupees one lakh ninety thousand and one lakh forty thousand respectively.
Your agricultural income is not taxable per se.
However, if you have any other source of income like income from investments,
property etc, while calculating tax on
them, your agricultural income will be taken into account, so that you pay tax
at a higher rate on that other income.
24. What is agricultural
income?
To consider
an activity as agriculture the basic operation such as tilling, sowing,
irrigating & harvesting should have been carried out. Thereafter what is
sold in the market should be the primary product harvested. Receipt from such
sale is considered as agricultural receipt. If however some further processing
or modification were done to the harvested product to enhance its marketable
value then such enhanced value would be considered as business
income.
No.
For every source of income you have to maintain proof of earning and the records specified under the IT Act. In case, no such records have been laid down, you should maintain reasonable level of records with which you can support the claim of income.
Even if you have only agricultural income you are advised to maintain some proof of your agricultural earnings.
Yes.
Taxes are collected by three means: a) voluntary payment by persons into various designated Banks. For example Advance Tax and Self Assessment Tax b) Taxes deducted at source [TDS] on your behalf from the payments receivable by you. c) Taxes collected at source [TCS] on your behalf at the time of spending. It is the constitutional obligation of every person earning income to compute his income and pay taxes correctly.
The rates of income tax and corporate taxes are available in the Finance bill [commonly called budget] passed by Parliament every year.
You need not do so. You can take professional help or the help of Public Relation Officer [PRO] in the local Income Tax Department office. You may also take assistance from Tax Return Preparers [TRP]
Generally the tax on income crystallizes only on completion of the previous year. However for ease of collection and regularity of flow of funds to the Government for its various activities, the Income tax Act has laid down payment of taxes in advance during the year of earning itself. Taxes may also be collected on your behalf during the previous year itself through TDS and TCS. If at the time of filing of return you find that you have some balance tax to be paid after taking into account your advance tax, TDS & TCS, the short fall is to be deposited as Self Assessment Tax.
A form called Challen available in the Income Tax department, in banks and on the IT department web site should be filled up and deposited in the bank along with the money. Taxes can also be paid on-line.
The tax to be paid by the companies on their income is called corporate tax and in the challan it is mentioned as Income tax on Companies. Tax paid by non-corporates is called Income tax and in the challan it is identified as Income tax other than Companies.
It is paid in installments. The amount payable is to be calculated in the following manner:
|
Status |
By 15th June |
By 15th Sept |
15th Dec |
15th March |
|
Corporate |
15% |
45% |
75% |
100% |
|
Non-Corporate |
nil |
30% |
60% |
100% |
The deposit of advance tax is made through challan by ticking the relevant column.
Under the Income tax Act every person has the responsibility to correctly compute and pay his due taxes. Where the Department finds that there has been understatement of income and tax due, it takes measures to compute the actual tax amount that ought to have been paid. This demand raised on the person is called Regular Tax. The regular tax has to be paid within 30 days of receipt of the notice of demand.
Clearly mention:
i. Head of payment eg. Corporation Tax/Income Tax
ii. Amount and mode of payment of tax
iii. Type of payment [Advance tax/Self assessment/Regular/Tax on Dividend]
iv. Assessment year
v. The unique identification number called PAN [Permanent Account Number] allotted by the IT Department. (Since PAN related services have been outsourced, for further details on PAN please see the departmental website http://www.incometaxindia.gov.in/ or www.nsdl_tin.com)
The filled up taxpayers counter foil will be stamped and returned to you by the bank. Please ensure that the bank stamp contains BSR[Bankers Serial number code], Challan Identification Number [CIN], and the date of payment.
The NSDL website [http://www.tin-nsdl.com] provides online services called Challan Status Enquiry. You can also see your tax pass book, an online tax credit viewing facility in the same website.
You must first register your PAN by logging into the online service called view tax credit in the NSDL website [http://www.tin-nsdl.com]. Thereafter your PAN registration must be authorized by visiting the nearest TIN [Tax Information Network] facilitation center of NSDL or getting their representative to call upon you. These are paid services.
For payments deposited by you into the bank you will have to contact your bankers if the credit has not been given even after three days. In case of TDS or TCS you will have to contact the concerned deductor /collector after the due date for filing the quarterly TDS/TCS return by them is over.
No. You are thereafter responsible for ensuring that the tax credits are available in your tax passbook, TDS/TCS certificates are received by you and that full particulars of income and tax payment along with necessary proof is submitted to the income tax department in the form of Return before the due date.
43. What can I do to reduce my
tax?
The tax can be reduced by making investment
in approved schemes and also by making donations to approved charitable
institutions.
D. Return of
income
44. What is a return of income?
It is a prescribed form through which the particulars of income earned by a person in a financial year and taxes paid on such income is communicated to the Income tax department after the end of the Financial year. Different forms are prescribed for filing of returns for different Status and Nature of income.
45. From where can I get a return form?
The Public Relation Officer [PRO] can be contacted for this purpose. The form can also be downloaded from the site http://www.incometaxindia.gov.in/.
46. How can I know which form is applicable for my income?
You should choose a return form according to your status and nature of income from the following:
|
ITR1 |
For Individuals having
Income from Salary/ Pension/ family pension & Interest |
|
ITR2 |
For Individuals and
HUFs not having Income from Business or Profession |
|
ITR3 |
For Individuals/HUFs
being partners in firms and not carrying out business or profession under
any proprietorship |