Gross Total Income: Section 14-

Income of a person is computed under the following five heads and aggregate of income of such five heads is GTI: -

1. Salaries (Section 15-17);
2. Income from House Property (Section 22-27);
3. Profit and Gains of Business/Profession (Section 28-44);
4. Capital Gains (Section 45-55); and
5. Income from Other Sources (Section 56-59).

Total/Taxable Income:{Section 2(45)}-

It is Gross Total Income as reduced by the amount permissible as Deduction under Section 80 (Chapter VI-A) of the Act.

Computation of Total Income:              

Salary Income

(after Deductions under Section 16(ii),16(iii)

House Property Income

(after Deductions under Section 24)                                                                

Profit & Gains from Business/Profession                                       

Capital Gain : ( after Exemptions u/s 54 )

1. STCG                                                                                                
2. STCG(STT)                                                                                       

             c. LTCG                                                                                             

     5. Income from Other Sources                                                               

                   GROSS TOTAL INCOME (GTI)                                                  

   Less:  Deductions u/s 80(ChapterVI-A)                                               

            TOTAL/TAXABLE INCOME                                                          

Tax -Section 2(43):

‘Tax’ means income tax chargeable under the provisions of this Act.

Rounding Off Income u/s 288A and Income Tax etc. u/s 288B:

Total Income, Tax, TDS, Advance Tax, Interest, Penalty, Fine or other sum payable under the Act, the amount of any refund etc. will rounded off to the nearest multiple of 10 rupee i.e.  if the last figure of rupee five or more shall be raised to rupee ten whereas if the last figure is less than five, it shall be reduced to lower amount which should be multiple of ten.

Permanent Account Number (PAN)

PAN under the new series means a number which will have 10 alphanumeric characters to be issued on a laminated card by Income Tax Department.

Every person, who has not been allotted any PAN, is under the obligation to obtain PAN, if his total income for previous year exceeds the maximum amount which is not chargeable to tax or any person carrying on business or profession having/expected to have total turnover/gross receipts exceeding Rs. 5, 00,000 in any previous year or who is required to furnish a return of income under Section 139(4A).

Transactions on which quoting of PAN are required:

1. Sale or Purchase of any immovable property valued at Rs. 5,00,000/- or more.
2. Sale or Purchase of any motor vehicle which requires registration by the authority but does not include two wheelers.
3. A time deposit exceeding Rs. 50,000/- with a Banking company to which the Banking Regulation Act, 1949 applies. In case of minor, the PAN number of his parents/ guardian shall be quoted.
4. A contract of value exceeding 1,00,000/- for sale or purchase of securities,
5. Opening an account with Banking Company. In case of minor, the PAN number of his parents/guardian shall be quoted.
6. Making an application for installation of telephone including a cellular telephone.
7. Payment to Hotel and Restaurants against their bills for an amount exceeding 25,000/- at any one time,
8. Payment in cash for purchase of Bank Draft or Pay Order or Banker’s Cheque from a Banking Company for an amount aggregating Rs. 50,000/- or more during any one day.
9. Deposit in cash aggregating Rs. 50,000/- or more with a Banking Company during any one day,
10. Payment in cash in connection with travel to any foreign country of an amount exceeding Rs. 25,000/- at any point of time.
11. Making an application to any Banking Company or Banking Institution or to any other Company or Institution for the issue of credit cards,
12. Payment of an amount exceeding Rs. 50,000/- to a Mutual Fund for purchase of its units or to a Company for purchase of its shares or to a Company /Institution for purchase of its Debentures or Bonds or to RBI for acquiring bonds issued by RBI.

It is the duty of every person who has been allotted PAN to quote such number in all his returns or correspondences with income tax authorities and to quote such number in all challans for the payment of any sum under this Act.

MODES OF PAYMENT OF TAX

1. Deduction of Tax at source(TDS), at the time of payment to assessee,
2. Advance tax to be paid before the assessment by assessee himself at quarterly intervals on his estimated income,
3. Self assessed tax, to be paid voluntarily by the assessee at the time of filing his return of income. Where any tax (after adjustment of the tax already paid as advance tax or TDS) is found payable on the basis of self computation of income by the assessee himself, the assessee is required to pay such tax along with interest payable under the Act before furnishing the return.
4. Tax payable on demand i.e. when the demand for balance tax is received from the assessing officer after completion of assessment.

Tax Deducted at Source (Section 192 to 196D)

TDS is one of the mode of collecting Income tax from the assesses in India by which a certain percentage of amount are deducted by a person  at the time of making/crediting certain specific nature of payments to other persons and deducted amount is remitted to Government account. Under the process, deductor is a person or company who is liable to deduct the tax at source from the payment being made to the payee/deductee. So, the person making certain payments like salary to employees, interest on securities, etc shall be responsible for deducting and depositing the TDS.

Following are the main provisions of TDS:

­TAN Number:

The Deductor/payer is required to obtain a unique identification number called TAN (Tax Deduction and Collection Account Number) which is a ten digit alpha numeric number in Form 49B. This number has to be quoted by the deductor in every correspondence related to Income tax matters concerning TDS.

The deductor should obtain PAN of the Deductee. He has to deduct the tax of the payee at correct rates and deposit tax deducted under the provisions of section 192 to 196 D in designated banks within prescribed time with the Central Government.

When to Deduct TDS:

At the time of credit to the payee’s account or on accrual of the payment at the end of the accounting year or at the time of payment in cash or by cheque or draft or any other mode whichever is earlier.

When to Deposit TDS with the Govt.:

TDS should be deposited in the designated banks within the specified time. The Government deductors shall transfer the tax deducted through book entry in Government account on the same day. This is detailed below:

1. By or on behalf of Government: on the same day,
2. By or on behalf of any other person: before the 7^th of the following month.

How to Deposit the TDS amount with the designated bank:

Use Challan No. 281 for depositing TDS amount with the Government.

TDS Return:

The payer should file a return as prescribed for having deducted and paid the tax. The payer should file quarterly statement for the period ending 30^th June, 30^th September, 31^st December and 31^st March of the financial year.

Issue of TDS certificate:

Person deducting TDS is required to issue a certificate of TDS to the payee, payee’s PAN no. should also be quoted in certificate. TDS certificate has to be issued within prescribed time in prescribed form as under:

1. Form16: In case of salaries, the certificate should be issued in Form 16 by 31^st May of the financial year immediately following the financial year in which the income was paid and tax deducted, containing the tax computation details and tax deducted and paid details. 
2. Form16A: In case of non-salaries, the certificate should be issued quarterly within 15 days from the due date for furnishing the statement of TDS containing the tax deducted and paid details. So, the certificate should be issued on or before July 30^th of the financial year (for 1^st quarter)/Oct.30^th of the financial year (for 2^nd quarter)/Jan. 30^th of the financial year (for 3^rd quarter)/May 30^th after the end of financial year in which tax is deducted (for 4^th quarter).   

Consequences on failure to deduct or pay TDS:

1. Failure to deduct the whole or any part of the tax at source- penalty for a sum equal to the amount of tax which he failed to deduct.

2. Failure to pay/deposit tax deducted at source- punishable with imprisonment for a term which shall not be less than 3 months but which may be extended to 7 years .

3. Failure to file the return of TDS  or failure to issue TDS certificate- fine of Rs. 100 for every day of default but cannot exceed the amount of tax deductible.

4. Failure to apply for TAN or quote it on relevant documents- Rs. 10,000/-

Besides, the defaulter shall also be liable to pay simple interest @1% p.m. or part of month on the amount of such tax from the date on which the tax was deductible to the date when the tax is actually paid.

ADVANCE TAX/ ‘Pay As You Earn’: Section 210

Advance Tax means Income Tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. These payments have to be made in installments as per due dates provided by the income tax department.

Advance tax is paid under two situations:

1. Payment of advance tax by the assessee on his own accord;
2. Payment of advance tax in pursuance of an order of Assessing Officer.

Payment of Advance Tax by the assessee on his own accord:

It is a legal obligation to pay advance tax on  current income on or before each of due dates as prescribed, in the financial year by assessee himself before it is assessed, at the rates specified for the financial year, if such tax is Rs. 10,000/- or more during that year. If the amount of advance tax is less than Rs. 10,000/-, then no requirement to pay the advance tax.Such an assessee may be Individual, HUF, Firm, AOP/BOI or Company etc. Every income including capital gains, casual incomes etc is liable for payment of advance tax under the Act. Advance tax is paid using Tax Payment Challan (Challan No. 280) and can be deposited at banks empanelled with the Income Tax Department at their designated branches like designated branches of ICICI, HDFC, SBI etc.

 The assessee who pays advance tax in installments, may increase or reduce the amount of advance tax payments as per his expectations of increase or decrease in the current income.

In case of Senior Citizen:

A senior citizen i.e. a resident individual who is 60 years or more of age at any time during the financial year not having any income chargeable under the head ‘Profit and Gains of  Business/Profession’, is not liable to pay advance tax.

Calculation of Advance Tax:

Such advance tax is calculated by—First estimating the residential status of assessee, then  estimating the income of assessee under five heads, then apply the provisions of clubbing of income, then set off past losses, then sum up to calculate GTI, then deduct  the Deductions available under chapter VI-A (Section 80C  to 80 U), then sum up to calculate Total Income, then estimate tax on Total Income including surcharge(if applicable) and education cess, then deduct TDS(if any) and estimate  the Net Tax  . If such net tax is 10,000/- or more, the assessee is liable to pay such advance tax as per dates specified in the Act.

Payment of advance tax in pursuance of an order of Assessing Officer:

If a person, who is liable to pay advance tax, does not make any payment of advance tax, then, the assessing officer shall direct him in writing to make such payment. A.O. may issue to such person a notice of demand specifying therein the installment(s) in which such tax is to be paid.

Advance tax has to bepaid by assessee during the relevant previous year according to following dates:

Due Dates for Payments: Section 211

For Non Corporate Assesses as well as corporate assessees:

Due Dates(of a Financial year)	Amount To Be Paid
On or before 15TH June	Not less than 15% of advance tax liability
On or before 15TH September	Not less than 45% of advance tax,less amount already paid
On or before 15TH December	Not less than 75% of advance tax,less amount already paid.
On or before 15TH March	100% of advance tax, less amount already paid

 

Note:

Any payment of advance tax payable before 31^st march of the previous year will also be treated as advance tax paid during the year; however, the assessee shall be liable to pay interest on delayed payments.

If the assessee has not paid advance tax as per provisions of Section 211, then he shall be liable to pay interest under Section 234B and Section 234C.

Self-Assessment Tax

Individuals are expected to compute the final liability of income tax after deducting the TDS amount from the source of income as well as the advance tax payable for the financial year. When the year is almost over, if there is any tax pending before filing an individual’s income tax return, a final amount that the individual is liable for, is calculated is known as the self-assessment tax. This is the final calculation before filing the tax return. This is also known as SAT.

Here are the following steps to pay the self-assessment tax online. However, note that the online platform for payment only supports Net Banking:

1. An individual can log on to the income tax website, www.incometaxindia.gov.in.
2. Once he or she has signed in, an option “e-Pay taxes” will be visible.
3. The person on clicking on this link will be redirected to the National Securities Depository Ltd, website.
4. The individual can then select “challan no. 280”
5. The person then needs to fill in the details such as PAN card details, name, contact details such as address, residential and official contact numbers and mobile numbers.
6. The individual needs to then choose the appropriate year for assessment that he or she will be making the payment for.
7. The person then needs to select the “type of payment”, which in this case will be “Self Assessment Tax”.
8. The individual can then choose the bank of their choice from the dropdown menu to make the payment.
9. He or she needs to then enter the “tax payable amount”.
10. The individual will be then directed to their bank’s own Net banking page to make the payment.
11. Once the payment is made successfully a challan will be displayed. This will include CIN, all the payment details along with the bank’s name with which the payment has been made.
12. It is advisable to keep a scan or hard copy of the same.

Tax Payable on Demand:

Under Section 143(1), an intimation letter, which specify whether assessee has paid the correct amount of tax, more than the required tax, or less than the due sum. The Assessing officer matches the return filed by assessee with his Computation under section 143 (1). A refund notice can be issued, where Income tax paid is extra. Demand Notice can be issued where the Officer’s computation shows shortfall in assessee’s tax payment. The Jurisdictional Income Tax Officer (ITO) will upload the demand notice online.Assessee can access the content of this notice by logging into his/her e-filing account on the website (WWW.incometaxindiaefiling.gov.in) under ‘Respond to Outstanding Tax Demand’, where assessee can record his/her responses. The notice will ask assessee to pay up the tax due within 30 days. The notice shall be served before the expiry of one year from the end of the assessment year in which the income was assessable or in other words before the end of financial year in which the return was filed. This intimation is sent through e-mail to the e-mail address provided in filing income tax returns online.

e-Payment of Income Tax

All Direct Taxes e.g. Income Tax, Corporate Tax etc. (TDS, Advance tax, Self assessed tax) paid on- line using net banking facility is known as e-payment. To avail this facility, the tax payer is required to have a net-banking account with any of the Authorized Banks.

It is mandatory for all Companies and all other bodies to which Section 44AB applies (Tax Audit) from 1/4/2008 to pay taxes through e-payment facility using net banking account.

Following are the steps for e-payment:

1. Under this system the amount of tax is debited to his bank account electronically and credited to Government of India.

2. Log in to web site of Income Tax Department 

3. Choose the button ‘Pay Taxes on Line’

4. Tax payer is taken to Tax Information Website where all Banks offering e-payment facility are listed.

5. Then choose the Challan for which the tax assessee wishes to pay i.e. 281 for TDS, 280 for Advance tax etc.

6. After filling the Challan, the tax payer chooses his Bank.

7. At Bank’s website, he enters his user id, Password etc. and completes the transaction.

8. Tax payer receives immediate, confirmed receipt/counterfoil of Challan having Challan Identification Number (CIN)

9. CIN can be printed or saved.

10. Tax payer should quote his CIN in his income tax return.

Income Tax Returns:

When should Income Tax Return be filed?/Voluntary Filing of Return

‘Return; means an official report. Under Income Tax Act, Return means reporting the details of income in prescribed form, signed and verified in prescribed manner, to the tax authorities by assessee himself.

As per Section 139(1), every Person;

1. Being a Company or a Firm, having income or loss ,or
2. Being a Person, other than a company or a firm , if his total income (without claiming deduction under Section 10A, 10B, 10BA, 80C to 80U) exceeds the maximum amount not chargeable to tax(basic exemption slab),Shall on or before the due date, furnish a return of its/ his income in the prescribed form.

       However, for reducing the compliance burden of small taxpayers, the Central Government has been empowered to notify the class or classes of persons who will be exempted from the requirement of filing of return of income but subject to the certain conditions.

Compulsory filing of Income tax return in relation to assets located outside India:

It is mandatory to furnish return of income by any person (may be individual or other than individual) if the following two conditions are satisfied, irrespective of the fact whether the person has taxable income or not:

1. The person is resident in India (but other than not ordinarily resident) i. e.  the provisions are not applicable if the person is Non Resident  or Not Ordinarily Resident,  and
2. He or it has any Asset located outside India

Exemption to File Income Tax Return:

Govt. has provided the exemption from filing of income tax return (to submit or not to submit), if the following conditions are satisfied:

1. The tax payer is an individual, may be resident or non-resident,
2. His taxable income does not exceed Rs. 5,00,000/-
3. Taxable income should consist of salary income and / or savingbankinterest, but interest should not be more than Rs. 10,000/-,
4. The individual has reported to his employer his PAN,
5. The individual has reported to his employer his saving bank interest for the purpose of calculating tax deductible under Section 192,
6. The individual has received a certificate of tax deduction in Form 16 from his employer which mention PAN, details of income, tax deducted at source by the employer and deposited to the credit of Central Govt.,
7. The individual has no claim of refund of taxes due to him for the income of assessment year,
8. The individual has received salary from only one employer for the assessment year.

e-filing of Return

Filing of income tax return is a legal obligation of every person whose total income for the previous year exceeds the exemption limit under the Income Tax Act, 1961. The income tax department has introduced on-line facility in addition to conventional method to file return of income.

The process of electronically filing of income tax return through the mode of internet access is called e-filing of return which is very convenient to the assessee but assessee must have a PAN number to avail this facility. It is mandatory for all Companies and Firms requiring TaxAudit u/s 44AB to submit the income tax returns electronically for AY 2007-08 onwards.

e-filing is possible with or without Digital Signature. There are three ways to file return electronically:

Option 1: Using digital signature, in which case no further action is required.

Option 2: File without digital signature, in which case the duly signed ITR-V be submitted to CPC Bengaluru using ordinary post or speed post within 120 days from the date of transmitting the data electronically.

Option 3: File through an e-return intermediary who would do e-filing and the assessee also file ITR-V form.

‘ITR-V’ stands for ‘Income Tax Return-Verification’ form. The Income Tax Department needs to verify the authenticity of income tax return when filed online without using digital signatures.

Attachments to the Returns

The returns are not to be accompanied with any other document, audit report etc. The report of audit u/s 44AB is also not required to be attached with ITR. It should not to be furnished separately also before or after the due date. Assessee should get the report of audit from auditor u/s 44AB before due date of furnishing the return and should fill out the relevant columns of ITR on the basis of such report. The assessee should retain the report with himself and may be furnished in original, if required, only at the time of assessment proceedings.

Signing of Income Tax Return

1. In case of individual: By individual himself or his authorized representative holding valid power of attorney in case he is absent from India or in case it is not possible for individual to sign the return for any reason or by his guardian in case individual is mentally incapacitate to sign.
2. In case of H.U.F.: By Karta and where the Karta is absent from India or mentally incapacitate from attending to his affair then it can be signed by any adult member of such family.
3. In case of local authority: The Principal Officer thereof,
4. In case of Firm: By Managing Partner of firm or where for any unavoidable reason such managing partner is not able to sign the return or where there is no managing partner, by any Partner of firm, not being minor,
5. In case of LLP: By Designated Partner or where for any unavoidable reason such designated partner is not able to sign the return or where there is no such designated partner, by any Partner of LLP.
6. In case of any other association: By Principal Officer or any member of Association.
7. In case of Company: By Managing Director of the Company or where for any unavoidable reason such managing director is not able to sign the return or where there is no managing director, by any director of company.
8. In case of Political Party: By Chief Executive Officer of such party.
9. In case of other persons: By that person or by some person competent to act on his behalf.

   Form of Return

   Assessee	Form
   For Individuals having income from Salary or pension/one house property income/income from other sources (not being winning from lottery and income from horse races).	Form ITR-1 (SAHAJ)
   For Individuals and HinduUndividedfamilies (not having any income under the head ‘Profit and Gains of Business or Profession’) i.e. salary /pension, one or more house property, capital gain, other sources including casual income.	Form   ITR-2
   For Individuals and HinduUndivided Families being partners in firms and not carrying out business or profession under any proprietorship.	Form ITR-3
   FOR Individual and HUF having proprietary business or profession.	Form    ITR-4
   For Firms, AOP and BOI	Form  ITR-5
   For Companies other than Companies claiming exemption u/s 11	Form  ITR-6
   For persons including Companies required to furnish return U/S139(4A) or Section139(4B) or 139(4C) or 139(4D)	Form ITR-7
   Return of income in Form ITR-1,ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 etc. transmitted electronically without digital signature	Form ITR-V

   Due Dates for filing of Income Tax Return:

   Type of Assessee	Date of Return
   For Companies	30th September of Assessment Year.
   Persons, other than companies whose accounts are required to be audited under section 44AB of the Act or under any other law for the time being in force.	30th September of Assessment Year.
   Assessed being Working partners of a firm, where the accounts of the firm are required to be audited under section 44AB of the Act or under any other law for the time being in force.	30th September of Assessment Year.
   Persons not covered under above points	31stJuly of Assessment Year.

   Note: In case last date of filing return is holiday, next working day shall be date of filing return.

   Penalty for non filing of return:

   In case a person fails to submit his return u/s 139(1) on or before due date, a penalty of 5000/- shall be imposed on such person in case returns are filed after the due date but before December 31 of the relevant assessment year , orRs. 10,000/- , in case it is filed after December 31 of the relevant assessment year.

   Return of Loss: Section 139(3)-

   If any person who has suffers a loss in any previous year under the head ‘Profits and Gains of Business or Profession’ or under the head ‘Capital Gains” and such person intends to carry forward such loss u/s 72(1)[ business loss] or u/s 73(2) [speculation loss] or u/s 74(3)[loss under the head capital gains] or u/s 74A[ loss from activity of owning and maintaining race horses], he can carry forward such loss only if such person files a voluntary return of his loss in prescribed form and verified in prescribed manner within the time allowed u/s 139(1). Without filing the return of loss, assessee cannot take the advantage of carry forward and sett off the loss under these heads.

   Penalty for non filing of return:In case a person fails to submit his return u/s 139(1) on or before due date, a penalty of 5000/- shall be imposed on such person.

   Belated Return:

   As per section 139(4), a person, who has not furnished a return within the time allowed under section 139(1) or within the time allowed under a notice issued under section 142(1), may furnish a return for any previous year at any time before the end of relevant assessment year or before the completion of assessment, whichever is earlier, along with penal interest under section 234A. But the provision has been amended by Finance Act, 2016 according to which any person who has not furnished a return within the tome allowed , may furnish the return for any previous year at any time before the end of relevant assessment year or before the completion of assessment, whichever is earlier. 

   Revised Return:

   If any person having furnished a return discovers any omission or wrong statements/mistake therein, he may furnish a revised return under section 139(5), at any time before the expiry of one year from the end of relevant assessment year or before the completion of assessmentwhichever is earlier.

   Defective Return:

   A return is termed defective if it has not been filed with all the necessary information or documents as required under the law.

   If the assessing officer thinks that the return of income furnished by the assessee is defective, he may intimate the defects to the assessee under section 139(9) and give him an opportunity to rectify the defect within 15 days from the date of such intimation or within such extended time as may be allowed by assessing officer on application made by the assessee for such extension. If assessee fails to rectify the defects within time allowed, the return shall be treated as an invalid return and it shall be presumed that the assessee has failed to furnish return.