Team AckoJul 22, 2021
The concept of taxation can be traced back to ancient India. Notable texts like the Arthashastra talk about the concept of taxation. This is one of the ways how kings and monarchs used to administer their provinces during their reign.
Today, India is a democracy. It is not ruled by a King but administered by an elected government. Citizens of India pay tax to the government, which is utilised by the authorities to perform various tasks. It is the duty of every law-abiding citizen to pay income tax and contribute towards the country’s betterment. Read ahead to know more about the Indian taxation system, income tax deductions, slabs, IT returns, e-filing, etc.
If you are living in a country, it is natural that you will work there to earn a living. This means you will earn an income. Out of that income, you are required to pay a certain portion to the government of the country as income tax. An Indian citizen must pay tax directly to the Government of India.
Primarily, income tax can be of two types – direct and indirect. As the name suggests, direct tax is paid directly to the government by you on your income or profit. Tax deducted directly through your salary is an example of direct tax.
Indirect tax is a tax which is given to the government indirectly by you. This means indirect tax is collected by a third party on your behalf and then given to the government. Example of an indirect tax is Goods and Services Tax which is applicable on movie tickets, restaurants, etc.
Government collects income tax as per the provisions of the Income Tax Act, 1961. Over the years, the act has been amended to meet the requirements. The Income Tax Act was the first for independent India. Previously, the people had faced taxation by the British rulers. Taxation was, and will be one of the important means for the government to ensure the machinery is well-oiled and functional. For example, tax collected by the people is used for infrastructure, development, and defence endeavours.
As per the Income Tax Act, there are some deductions that can help you to save tax. You can invest money as per these deductions and achieve the dual objective of making investments as well as save tax. Here’s a list of some of the different deductions.
Section 80C – You have the option of investing Rs. 1.5 lakhs under the options mentioned in this section. Some of the popular options that people opt for in this section are Unit Linked Insurance Plan (ULIP), Tax-saving Fixed Deposits, and Public Provident Fund.
Section 80D – This section is all about encouraging people to purchase health insurance policies. You can benefit from this section by paying health insurance premium for you, your spouse, and your parents as well. Not just health plans, money spent for preventive health check-ups can also be eligible for tax deductions.
Section 80DD – If a person’s family member is diagnosed with a disability (note that the disability should be more than 40%) then the person can be eligible for deduction.
Section 80DDB – Deductions are on the basis of expenses made for treating specified diseases faced by the dependent.
Section 80E – Deduction on the basis of repayment of education loan.
Section 80EE – Maximum deductions of Rs. 50000 related to interest on loan payable for buying residential house property.
Section 80G – This section is dedicated towards money spent on making donations to registered organizations.
Section 80CCD(1B) – This type of investment is for pension fund. It has a maximum limit of Rs. 50000 for investing money in the National Pension Scheme.
Section 80CCD(2) – Contribution towards National Pension Scheme by employer. The investment limit for this is 10% of basic salary and dearness allowance.
Section 80GG – Rent paid in case of HRA not received.
Section 80TTA – Interest generated on money in savings accounts in banks and post offices.
Section 80TTB – Interest generated on different kinds of deposits in banks and post offices.
It would be unfair to tax a low-earning person the same way a high-earning person is taxed. This is where income tax slabs come in the picture. These are tables stated by the authorities which help people to understand how much tax they are liable to pay as per their age and income. Have a look at the following income tax slabs for FY 2019-20.
Income Tax Slab Rates for people less than 60 Years (FY 2019-20):
|Income Tax Slabs||Income Tax Rates|
|Up to Rs. 2.5 lakh||Nil|
|Rs. 2.5 lakh to Rs.5 lakh||5% on income more than Rs. 2.5 lakh + 4% cess|
|Rs. 5 lakh to Rs.10 lakh||Rs. 12,500 + 30% on income more than Rs. 5 lakh + 4% cess|
|Rs. 10 lakh and above||Rs. 1,12,500 + 30% on income more than Rs. 5 lakh + 4% cess|
Income Tax Slab Rates for people in the age group of 60 and 80 (FY 2019-20):
|Income Tax Slabs||Income Tax Rates|
|Up to Rs. 3 lakh||No Income Tax|
|Rs. 3 lakh to Rs. 5 lakh||5% on income more than Rs. 3 lakh + 4% cess|
|Rs. 5 lakh to Rs. 10 lakh||Rs. 10,000 + 20% on income more than Rs. 5 lakh) + 4% cess|
|Rs. 10 lakh and above||Rs. 1,10,000 + 30% on income more than Rs. 10 lakh + 4% cess|
Income Tax Slab Rates for people above 80 Years of Age (FY 2019-20):
|Income Tax Slabs||Income Tax Rates|
|Up to Rs. 5 lakh||No Income Tax|
|Rs. 5 lakh to Rs. 10 lakh||20% on income more than Rs. 5 lakh + 4% cess|
|Rs. 10 lakh and above||Rs. 1,00,000 + 30% on income more than Rs. 10 lakh 4% cess.|
On the surface, income tax rules and income tax act might come across as replaceable terms. But they are not. They are different terms and have different implications. Income Tax Rules, 1962 came into existence to apply the law stated in The Income Tax Act, 1961. Income Tax Rules exist within The Income Tax Act’s framework and meant to be read in conjunction.
Income Tax Returns or IT return as it is popularly known is a form which is used to convey to the authorities the tax you have paid. Even if you fall under a category where you do not have to pay tax, you still must file ITR just to show that you are not eligible. If your income is more than the tax limit, it is mandatory to file ITR. Failing to do so can lead to fines.
In case you are wondering which form you should pick to pay ITR, here’s a handy list.
ITR 1 – For those who have salaried income, income generated from property or other sources such as interest on money deposited.
ITR 2 – For a person and Hindu Undivided Family who do not have income generated from a business or a profession.
ITR 2A – For a person and Hindu Undivided Family who do not have income generated from a business, profession and Capital Gains. And they do not have any international assets.
ITR 3 – For a person and Hindu Undivided Family who are a partner in a firm and do not carry out business or involved in a profession as per any proprietorship.
ITR 4 – For a person and Hindu Undivided Family who have income generated from a proprietary business or profession.
ITR 4S – Business income tax return (presumptive).
ITR 5 – This is for people except an individual, Hindu Undivided Family, company, and the person who has filled Form ITR 7.
ITR 6 – Companies which have not claimed exemption under section 11.
ITR 7 – For those who have to furnish returns under the sections mentioned here: 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)
ITR V – This is an acknowledgement form for filing income tax return.
Filing income tax returns is an annual affair. you will need Form 16 and documents that can act as proof that you have made investments in the assessment year. You can file income tax returns yourself or take the help of professionals such as Chartered Accountants or Financial Advisors.
You have to visit the Income Tax official website https://incometaxindiaefiling.gov.in and follow the steps given to compute the returns. It is suggested to keep all the documents handy and then begin the filing process for smooth execution.
Here are some prominent benefits of filing income tax returns in a timely manner.
Swift processing of loans:
Loan processing is based on the applicant’s credibility. Filing income tax returns makes it easy for financial institutions to find out about a person’s credibility.
Certain foreign countries have made it a part of their VISA-giving process to check the applicant’s income tax returns. Without filing, you might not be allowed to travel to that country.
Businesses are all about profits and losses. When you face a business loss, you need to carry forward the losses in the accounts. This can be done only when income tax returns are filed.
Refund of Tax:
You can avail tax refund only after filing income tax returns.
Applying for Passport:
The process of passport application becomes easier when you have filed income tax returns.
Accidental Death Insurance:
Income tax return documents is a crucial document that the court considers valid while settling accidental death insurance cases.
If you are an entity and want to apply for a government tender, your past income tax returns need to be submitted for the process.
If you are someone who wants to purchase a high-risk insurance cover amounting to Rs. 1 crore, you will have to submit your income tax returns document to the insurance company for assessment.
If applicable, you can get income tax refund after filing income tax returns. It is a way of telling the authorities that you had made certain investments which saved you tax. Since the organization where you are working has already deducted tax, you will get the appropriate amount refunded based on the nature of your investments for the assessment year after scrutinizing your income tax returns document.
Income from various sources for which you are charged a tax are termed as taxable income. The Income tax Act defines several heads for such taxable income. Here’s a list for better understanding.
Income from Salary:
You must pay tax on the income earned from your salary if you fall in the tax-paying bracket.
Income from Capital Gains:
You must pay tax when you earn money via Capital Gains. For example, you have to pay tax on the income earned after selling a property previously earned by you.
Income from House Property:
You must pay tax on the income earned from renting out your property.
Income from Business:
You must pay tax on the income you have earned as profit from your business.
Income from other Sources:
Apart from the points mentioned above, you have to pay tax on income earned from other sources as well. Here’s a list that highlights taxable income from other sources.
Income from winning lotteries or events such as horse-racings. Note that such events need to be legal.
Income earned from the dividends.
Amount received as pension after the death of the pensioner.
Income from rent apart from the one generated from rent on house property.
Interest received on government securities, bonds, and debentures.
Tax payers are here divided by age, here’s the list.
People below the age of 60 years
People above the age of 60 but below 80. They are termed as senior citizens.
People above the age of 80. They are termed as super senior citizens.
Calculation and payment of tax before-hand is termed as Advance Tax. Here are some deadlines for the payment of Advance Tax.
|Date||Percentage of Advance Tax|
Here are some important dates to remember for paying tax.
|Before 31st January||You must submit the documents that act as proof of investment.|
|Before 31st March||This is the deadline before which you must make investments related to Section 80C.|
|Before 31st July||You need to file income tax return before this date.|
|Between October and November||Tax return verification|
The Income Tax Act deals with income tax provisions and deductions along with other tax-related concerns. Over the years, the act has been modified based on the requirements of the economy. Here’s an overview of the different chapters in the act and the points that they deal with:
Chapter 1 – This chapter gives an overview of the Act. It is like an introduction.
Chapter 2 – This section is related to the commencement and the scope of The Income Tax Act.
Chapter 3 – The third chapter deals with charges related to income tax, income related to dividend, total income and its scope, income generated due to working in a foreign country, etc.
Chapter 4 – The fourth chapter is about other incomes which are not a part of the total income.
Chapter 5 – This is a dedicated section for income from capital gains.
Chapter 6 – Deals with revocable transfer and transfer of income in cases where there is no transfer of assets.
Chapter 7 – Chapter seven is about deductions.
Chapter 8 – This chapter deals with rebates.
Chapter 9 – The ninth chapter of The Income Tax Act is about double taxation relief.
Chapter 10 – This section deals with scenarios where payment of income tax is avoided. For example, agreement with international countries permit avoidance of tax. Chapter 10 is about those countries that allow such provisions.
Chapter 10A – Just as Chapter 10, this section also talks about avoidance. 10A is about general rules related to avoiding tax.
Chapter 12 – Calculation of tax as per special cases.
Chapter 12A – This is about Non-resident Indians and special provisions granted to them pertaining to short-term gains, etc.
Chapter 12B – Talks about special tax provisions for specific companies.
Chapter 12BB – If a foreign organization wants to convert itself into an Indian organization, this is the section it needs to look at from a tax perspective.
Chapter 12D – This deals with Indian companies, profits earned by them, and the taxation process.
Chapter 12DA – Rules related to the distributed income of the company are mentioned here.
Chapter 12E – Rules related to distributed income of unit holders are mentioned in this chapter.
Chapter 12F – This section talks about income tax charged on the income received from funds given by venture capitalists.
Chapter 12G – Provisions related to the shipping companies are mentioned in this chapter.
Chapter 13 – Information about various tax authorities can be found in chapter 13.
Chapter 14 – This section is about income tax returns.
Chapter 14A – This section is about provisions that deal with repeated appeals.
Chapter 15 – Provisions related to liabilities for different cases are seen here.
Chapter 16 – Firms and their taxation and assessment processes are mentioned in chapter 16 of The Income Tax Act.
Chapter 17 – Points related to tax collection and recovery are mentioned in this section.
Chapter 18 – This section of The Income Tax Act talks about tax relief received by companies in case of dividends paid to shareholders.
Chapter 19 – This section deals with tax refunds if any.
Chapter 19A – Here, information about settlement of cases is mentioned in detail.
Chapter 19B – Points related to advance rulings such as power of authority are covered under chapter 19B.
Chapter 20 – Appeals forwarded to commissioner, deputy commissioner, high court, and supreme court are mentioned in this chapter.
Chapter 20A – Acquisitions of immovable property and other acquisitions from jurisdiction are a part of this chapter.
Chapter 20B – This section is all about different payment modes.
Chapter 20C – This chapter talks about provisions related to immovable property.
Chapter 21 – This chapter is about penalties.
Chapter 22 – Information about prosecution and offences are mentioned here.
Chapter 23 – This section is about miscellaneous topics.
There are two important concepts you need to understand when it comes to income tax calculation in India, they are:
Previous Year – The period when the person has to pay tax.
Assessment Year – The period following the previous year.
Both these periods are calculated from April 1 to March 31. If you are currently working in the year 2020, 2019-20 is your previous year and 2020-21 is your assessment year.
What is a digital signature?
Just as you are required to sign a document physically, you are required to sign an electronic document electronically. This electronic signature is termed as a digital signature. It is used for authentication purposes.
What is a digital signature certificate?
A digital signature certificate is an electronic version of a physical certificate such as a driving license. It can be used for identification.
What is the point of distinction between a digital signature and a digital signature certificate?
A digital signature is just an electronic version of the signature. Whereas the digital signature certificate is a computer based record which can be used to identify certifying authority, and has other details.
What is the purpose of a digital signature certificate?
The need of a digital signature certificate is as follows:
From where can a digital signature certificate be purchased?
A digital signature certificate can be purchased from official certifying authorities such as eMudhra.
Where can digital signature certificates be used?
A digital signature certificate can be used in the following cases:
For conveying messages through emails in an encrypted way.
For secure transactions on the internet
For e-Tendering, e-Procurement, etc.
For securing documents such as Microsoft Word, PDFs, etc.
Is it legal to use a digital signature certificate in India?
Yes, it is legal to use a digital signature certificate in India as per the Information Technology Act, 2000.
Listed below are the contact details of the income tax department in India.
Official website of the income tax authority in India – https://www.incometaxindia.gov.in/Pages/Tax-helpline.aspx
Aaykar sampark kendra – for general queries call on 18001801961 / 1961
PAN/TAN – for information about updating PAN/TAN. Website – www.tin-nsdl.com, Call on +91-2027218080
e-Filing of Income Tax Return – call on 1800 103 0025
Refund/Refund re-issue/Rectification – call on 1800 103 4455
TDS Centralised Processing Centre (TRACES) – for Form 26AS and Form 16 call on 1800 103 0344
Tax Return Preparer Scheme (TRP Scheme) – call on 1800 102 3738
What is the meaning of income tax?
In simple words, income tax is a tax you pay on the income earned by you in a financial year. It is a percentage of your income based on the income tax slabs stated by The Income Tax Act
How is the administrative framework of the income tax structured in India?
India’s revenue functions are a part of the Ministry of Finance. Under that, there’s the Central Board of Direct Taxes (CBDT), which deals with direct tax; income tax is one of it. The CBDT plays a key role in framing policies and planning. This department also looks after the direct tax laws. The income tax department works under the Central Board of Direct Taxes.
Which is the period for which income tax is calculated?
Income tax is calculated for a year. This year is the financial year, which means the duration is from April 1st to 31st March.
What is the difference between previous year and assessment year?
In income tax parlance, the duration for which income is earned is termed as previous year and the duration in which tax is charged is termed as the assessment year. For example, if the current period is January 2020, then the previous year is 2019-20 while the assessment year is 2020-21.
Who all have to pay income tax?
Income tax is to be paid by individuals, companies, as well as any other judicial persons. The exact category of entities that fall under the definition of ‘person’ is mentioned in The Income Tax Act.
What is the process through which the government collects income tax?
The government collects income tax through advance tax, tax deducted at source, tax collected at source, and self-assessment tax. It is a constitutional obligation on every individual’s part to calculate the income and pay the corresponding tax.
How can one check the rates on which tax is calculated?
The tax rates are mentioned in the annual budget declared by the Ministry of Finance. They can be the same or vary every year. The tax rates for the assessment year 2020-21 can be found here. The link has information about tax rates pertaining to individual, Hindu Undivided Family, Senior Citizen, Super Senior Citizen, Partnership Firm, Local Authority, Domestic Company, Foreign Company, and Co-operative Society.
Who can assist me with understanding and filing tax?
You can seek help from tax professionals to understand and file tax. Chartered accountants and financial advisors can help you out in tax planning.
Is the tax payer’s liability over when tax is paid?
One also has to file income tax returns before the due date and not just relax after paying the tax.
What is the meaning of an Assessing Officer?
An Assessing Officer belongs to the income tax department and has jurisdiction over a designated area.
What is considered as income for the computation of income tax?
The word income can have diverse meanings. For an employee, the salary received is the income. If the salary is received in kind then that is also income. For a business owner, the net profit is the income. You also earn income from interest received on your investments. Money received from sale of property is also income. The exact definition of income is described in The Income Tax Act.
What constitutes exempted income and taxable income?
There are different types of incomes one can earn. However, there are certain incomes that are termed as exempted. Tax is not charged for exempted income. The amount for which tax is charged is termed as taxable income.
What is the difference between revenue receipt and capital receipt?
Revenue receipts are those receipts that occur on a frequent basis. For example, salary is a monthly phenomenon so it is a revenue receipt. Receipt generated due to sale of property is a capital receipt, such transactions do not take place as often as those for which revenue receipts are generated.
Is agricultural income taxable?
No, agricultural income is not taxable. However, it is imperative to get a full understanding of the terms agricultural income, it is mentioned in section 2(IA) of the income tax act.
Does income from animal husbandry fall under agricultural income?
No, income from animal husbandry does not fall under agricultural income.
Is there a necessity to maintain proof of earnings?
It is important to keep a record of proof of earning for tax purposes. For example, maintaining a record of salary slips.
Are agriculturalists also required to keep proof of earnings?
It is a good habit to keep a record of proof of earning if you are an agriculturalist or belong to any other profession.
Is income tax computed on earning from lottery or winning a prize in a competition?
Yes, income tax is calculated on earning from lottery or winning a prize in a competition. The rate is 30%. Usually, this amount is deducted at source and the balance is paid to the winner.
Is there scope for relief in case of double taxation in domestic and international countries?
Yes, section 91 of the Income Tax Act has provisions related to double taxation.
Which are the sections under which you can make income tax deductions?
Here are the sections as per which you can make income tax deductions – 80C, 80CCD(1B), 80CCD(2), 80D, 80DD, 80DDB, 80E, 80EE, 80G, 80GG, 80TTA, and 80TTB.
How is profession to be understood as per The Income tax Act?
Profession includes any vocation you pursue. For example, architecture, writing, etc.
Where can I access the contact details of the income tax Ombudsman?
Contact details of the income tax ombudsman can be found here. The link contains details pertaining to each Indian state. In most cases, the details contact, name, address, phone number and email id.
At what time do I have to initiate income tax payment?
You can pay tax before the completion of the previous year. It can also be done before the period via advance tax. Primarily, there are four means through which tax is collected, self-assessment, advance tax, tax deducted at source, and tax collected at source.
What are the five heads of income as mentioned in The Income Tax Act?
The five heads of income as mentioned in The Income Tax Act are Salary, Income generated from house property, capital gains, profit from business, and income from other sources.
What is the meaning of gross total income with respect to computation of income tax?
There are five heads of income under which income is classified for computing income tax. The total of all five heads of income constitutes gross total income.
What is the meaning of total income with respect to computation of income tax?
There are certain deductions that can bring down your payable tax. Total income is arrived at when these deductions are subtracted from the gross income. For example, if your gross income is 10 lakhs, and your deductions come to 2 lakhs, then your total income comes to 8 lakhs.
What is the meaning of self-assessment tax?
Self-assessment tax is the tax paid after 31st March but before filing returns.
is there any time of the day during which the taxes have to be paid?
No, there is no specific time. Taxes can be deposited 24×7 due to net banking.
What is the meaning of ITR?
ITR stands for income tax returns. This is a form that needs to be filled and submitted after paying tax. Income tax returns need to be filled before the deadline, which is usually around the end of July. This form can get you a refund on income tax in case excess tax has been computed with regards to your income and deductions.
What are the different income tax return forms?
There are different income tax return forms as per the category of taxpayers. These forms are ITR1, ITR2, ITR3, ITR4, ITR5, ITR6, ITR7 and ITR – V.
What are the different ways in which one can file income tax return?
You can file income tax return via following modes; paper format, digital signature, electronic verification code, and by Form ITR – V (electronic).
Is it required to submit supporting documents while filing income tax returns?
There is no need to submit supporting documents while filing income tax returns. However, it is suggested to keep all proof of investment handy in case there are any inquiries or audit.
Is there a link through which I can perform ITR filing online?
Yes, there is a portal through which you can file income tax returns electronically. The income tax department has created a different portal for filing tax returns electronically, here’s the link.
What is the process for filing income tax returns electronically?
The stepwise process to file income tax online electronically is mentioned here.
Is there a number on which I can call in case I find it difficult to file my income tax returns?
In case you have difficulty in e-filing of returns, you can contact 1800 180 1961.
Are there any negative effects of filing income tax returns?
There are no negative effects of filing income tax returns. However, you can be penalized if you do not do so.
What are the positive effects of income tax filing?
It is your duty as an Indian citizen to file income tax returns. Not doing so can get you penalized. It can help you to improve your creditworthiness.
What are the advantages of e-filing income tax returns?
We live in the era of digitization. Nowadays, everything is online! How can e-filing of tax returns stay behind? E-filing or ITR online can be done online in an easy manner, you can do it from anyway irrespective of the time of the day. Besides, online filing gets processed faster than manual returns.
What happens if I fail to file my income tax returns before the deadline?
Usually, the deadline to file income tax returns is July 31st. in some cases, the authorities might extend this date to the next month. In that case, the deadline will be end of August. If you fail to meet the deadline and the extended deadline, you might be charged a penalty. You will have to pay a penalty only then will you be able to file your income tax returns.
Can I get a tax refund if it is calculated that I have paid more tax?
Yes, you can get a tax refund if it is calculated that you have paid more tax. This might happen in cases where you are a salaried employee and your company has already taken the tax into account while paying your salary. You have some other sources of income and those sources have also taken your tax into account. Then you go and make investments at the last moment, which increase your deductions. While income tax returns filing, the deductions will come into play and your refund amount (if applicable) will be transferred in your bank account at the earliest.
IT Dept. Extends ITR Filing Date to End of December
– October 27, 2020
The Finance Ministry has announced that individual taxpayers can file their Income Tax Returns (ITR) filing by 31 December 2020. The deadline for filing has also been extended for taxpayers who are yet to get their account audited by 2 months ending on 31 January 2021. The Ministry had earlier extended the deadline from 31 July 2020 to 30 November 2020, which is now extended to the end of the calendar year. The Central Board of Direct Taxes (CBDT) has said that the deadline has been extended keeping in mind the lockdown which was imposed earlier this year and in a respite to taxpayers, the government has further extended the deadline. The extension is as per the Act and it was done to offer more time to taxpayers to file their income tax returns.
Deadline Extension for Belated ITR
– October 5, 2020
The ongoing COVID-19 pandemic has had a severe impact on the world and national economy. A lot of administrative and operational tasks have also been affected due to it. One such task affected by it is the belated filing of the Income Tax Returns for the Financial Year 2018-19 (Assessment Year 2019-20). The Central Board of Direct Taxes (CBDT) has changed the filing date for belated and revised returns. This date has been extended to 30 November 2020. Initially, the date in question was 31 March 2020. However, due to several concerns related to the COVID-19 pandemic, the date was extended to 30 June 2020. Further, there was another extension that changed the date to 31 July 2020. After 31 July 2020, the date was again extended to 30 September 2020. And as per the recent CBDT statement, the date is extended till 30 November 2020.
New Section Inserted in the IT Act
– October 1, 2020
There has been a change in the Income Tax Act (IT Act). A new section has been added to the act. This new section is 194-O. The change is per The Finance Act, 2020 and pertains to e-commerce operators. The new insertion mandates that from 1 October 2020, a business referred to as an e-commerce entity shall account for 1% income tax. This deduction shall be on the amount (referred to as gross) for the sale of goods or services. It also pertains to sale of both. The sale in this regard must be facilitated through the e-commerce company’s digital platform or any other electronic facility. There has also been an insertion of a subsection per The Finance Act, 2020. This subsection is known as 1-H and pertains to 206C of The Income Tax Act. It mandates a seller to collect a 0.1% tax from the buyer based on certain conditions. This is also with effect from 1 October 2020. The Central Board of Direct Taxes (CBDT) said that these new provisions would not apply to certain transactions.
IT Refunds Worth More Than Rs. 1 Lakh Crore Issued by the IT Department
– September 11, 2020
The Income Tax Department (IT Dept.) announced that it has refunded IT refunds worth more than Rs. 1 lakh crore to more than 27 lakh taxpayers. This is for the period between 1 April 2020 to 8 September 2020. The refunds include Personal Income Tax of more than Rs. 30,000 crore, which has been issued to more than 25 lakh taxpayers and corporate tax refunds of more than Rs. 70,000 crore, which has been issued to close to 2 lakh taxpayers for the said period. Through a tweet, the Central Board of Direct Taxes announced the details of the IT refunds to both Personal Income Tax and Corporate Tax. The announcement comes amid difficulties posed by the general public due to various restrictions of the pandemic. The IT department is striving to provide tax relief to taxpayers by not delaying IT refunds during the pandemic. The IT department has accordingly cleared the current refunds. The novel coronavirus was declared a pandemic in March this year which led to lockdown measures to contain the spread of the virus. Since then there have been several restrictions on travel and movement of people leading to delays in several activities.
IT Refunds More Than Rs.71,000 Crore Issued to 21.24 Lakh Taxpayers
– July 20, 2020
The IT Department has issued more than Rs. 71,000 crore refunds to about 21 lakh taxpayers from 8 April to 11 July 2020. The IT refunds include Rs.24,603 crore as Personal Income Tax and Rs. 46,626 crore as Corporate Tax Refunds. The department added that all refunds are being processed on priority and may be completed by 31 August 2020. The statement issued by the IT Department said that the government has taken utmost priority to provide relief to taxpayers without any issues during this difficult period of novel coronavirus pandemic in the country. Also, it further said that taxpayers need to respond to emails from the department to process the refund as soon as possible. There are several taxpayers who need rectification, tax credits or appeal effects and the department is working on these issues in a timely manner. Also, all refunds have been processed online and have been refunded directly to the taxpayers’ bank account.
IT Department Extends Deadline for Making Tax-saving Investments
– July 3, 2020
The COVID-19 pandemic has caused a lot of inconvenience across sectors. The number of cases is on the rise in India and the economy has also been affected. In such a situation, people are finding it difficult to manage day-to-day activities. With the intent to provide some relief to the tax-paying population, the deadline for making tax-saving payments or investments for FY 2019-20 has been extended by the authorities. The renewed deadline for making tax-saving investments for FY 2019-20 stands at 31 July 2020. This extension can be helpful for the tax-payers to plan their investments, which can be used to claim deductions as per the Income Tax Act. The date for income tax return (ITR) filing for the AY 2020-21 has been revised to 30 November 2020. The tax audit report furnishing date has also been extended to 31 October 2020.
Conveyance Allowance is Allowed Under Income Tax Exemption
– June 30, 2020
Now employees who go on tours or are transferred to another region can claim the cost of travel or ordinary daily charges incurred by them when absent at their daily place of work, can claim conveyance allowance. However, non-alcoholic beverages and free food cannot be claimed if given in exchange for paid vouchers or when made available by the employer during office hours as refreshments for the employees. The tax slabs start from Rs 2.5 lakh to Rs 5 lakh and those who earn this sum will have to pay a tax of 5%. Those who earn Rs 5 and 7.5 lakh should be 10% tax, and for the people who earn between Rs 7.5 and 10 lakh are supposed to pay 15% tax. Similarly, for income between Rs 10 and 12.5 lakh, the tax rate is 20%, for Rs 12.5 and Rs 15 lakh tax rate is 25%, and Rs 15 lakh and above will have to pay a tax of 30%. The date of filing Income Tax returns has been extended till July 31 and November 30, 2020 for financial year 2018-19 and 2019-2020 respectively.
The Date For Filing Income Tax Return For Two Financial Years Extended
– June 26, 2020
Considering the current economic crisis faced by the Indian citizens due to the outbreak of Coronavirus, the Finance Department has extended the dates for filing Income Tax Returns. According to a statement released by CBDT, the returns for the financial year 2018-19 can be filled by July 31, 2020, while the IT Returns for FY 2019-20 can be filled by Numbember 30, 2020. Now the returns that were supposed to be filed by July 31 and October 31, can be filed by November 30, 2020. Thus, the tax audit report can now be submitted by October 30, 2020. Consequently, the taxpayers can claim a refund for investments, payments, or donations under sections 80C, 80D, and 80G by July 31, for the financial year 2019-20. The extended dates for return filing can evoke mixed feelings as taxpayers who are suffering from financial crises need to wait longer for receiving the amount under tax returns. While those who had missed making investments or payments can breathe a sigh of relief as this extension can prove to be helpful for them.
COVID-19: Deadline for Tax Saving Investments is This Month End
– June 19, 2020
In an effort to contain the spread of the novel coronavirus in the country, the Centre has announced several relaxations to the tax filing process. Some of the initiatives were extensions of filing Income Tax Returns (ITR) and linking of Aadhaar and PAN and submission of tax-saving investments. Among the deadlines is the ITR whose deadline has been extended to 30 November 2020. So, taxpayers have to file their Tax Deduction at Source (TDS) before 30 June 2020, that is by the end of this month. Only after filing the TDS on or before the 30th of June, will you receive the Form 16. Also, for those who are yet to link their Aadhaar with PAN, the deadline is 30 June 2020. Hence, you get the two documents linked. Failure to link them will attract a penalty of Rs.10,000. Also, the PAN will be deactivated if it is not linked to Aadhaar. Prior to this deadline, the documents were to be linked by 31 March 2020, which is now extended to 30 June 2020. Also, revised ITRs for the last financial year need to be submitted by the end of this month.
A Detailed Form 26AS Launched By The Income Tax Department For AY 2020-21
– June 12, 2020
The new form will have details about outstanding tax demands. This will help in differentiating if a tax demand is under dispute or is outstanding. The taxpayer can then move on to the next step towards tax settlement. These steps could include filing of an appeal, the rectification of mistake, or application for donation for lapsed petitions. As per the Section 203AA, Rule 31AB of the Income Tax Act, 1961, the Form 26AS i.e. Annual Statement is a combined record for a taxpayer’s TCS, TDS, refund, etc. in simple terms, this form contains particulars of tax amount collected and taken from the taxpayer. This includes advance tax and self-assessment tax both.
IT Dept. Revamps Form 26AS To Include Shares and Real Estate Transactions
– June 1, 2020
The Income Tax Department has revamped the Form 26 AS (Annual Information Statement) to include shares and real estate transactions. In its revamped version, the form will include information related to payment of taxes, specified financial transactions, refund/demand and completed/pending proceedings initiated by the taxpayer in a financial year. The new form will come into effect from 1 June 2020. Once this is implemented, taxpayers can download the comprehensive statement from the IT Department’s web portal using their PAN card. Form 26AS will contain details such as transactions related to shares and real estate.
Safe Harbour Rates for 2019-20 Notified by IT Department
– May 26, 2020
The safe harbour rate for the 2019-20 fiscal year for computation of transfer pricing by foreign establishments in India has been notified by the IT Department. Revision of Rules 10D and 10TE of IT Rules have been notified by the Central Board of Direct Taxes (CBDT). As per the notification, rates for the Assessment Year 2017-18 to 2019-20 will continue for 2020-21 as well. The Government of India introduced the Safe Harbour Rules (SHR) in Finance Act 2009. The first provisions were introduced in 2013, then a revision in rates in 2017, which was applicable until FY 2019-20.
COVID-19: Pune Municipal Corporation Extends Rebate Scheme on Property Tax by 1 Month
– May 21, 2020
The Rebate scheme on payment of property tax has been extended by one month by the Pune Municipal Corporation (PMC) in the wake of the current lockdown measures to contain the spread of COVID-19. With the lockdown in place, citizens are finding it challenging to pay their property tax and avail the rebate. Keeping this in mind, the PMC has announced an extension to the scheme so that citizens can avail 5% to 10% rebate on payment of property tax. The deadline to pay property tax every year is 31 May, which has been extended to 30 June 2020. The rebate for property tax below Rs.25,000 is a discount of 10%, while those which are above Rs.25,000 will get a rebate of 5%. The corporation had sent messages along with the link to pay the property tax online, however, due to the lockdown, citizens were unable to take advantage of the scheme. The PMC has now started sending a hard copy of the property tax bill to the citizens.
COVID-19: ITR for 2020-21 Deadline Extended to End of November
– May 15, 2020
The Centre today announced that the deadline for filing Income Tax Returns for 2020-21 has been extended to 30 November 2020. The Finance Ministry announced several other measures to lift the sagging economy hit by the deadly coronavirus lockdown in the country. The ministry also cut TDS rates for non-salary payments by 25%. This will include payments for interest, rent, contracts, commission or brokerage and dividend payments. The Finance Minister also added that the IT department will speed up the processing of pending IT refunds to LLPs, charitable trusts, proprietary firms and non-corporate businesses, etc. Additionally, assessments which have a deadline of 30 September have been extended till 31 December 2020 and those with a deadline of 31 March 2021, which has been extended to 30 September 2021. The minister also said that the IT department has processed refunds worth Rs.18,000 crore where the limit was up to Rs.5 lakh.
NRIs Can Claim Tax Benefit on Premium Paid on Life Insurance Under Section 80C
– May 13, 2020
Under the Income Tax Act Section 80C, Non-Resident Indians can claim tax benefits for the premium paid towards an insurance policy. NRIs can claim tax deductions of up to Rupees one lakh and fifty thousand under this Section of the IT Act. If the NRI has a rental income it has to be reported under the head income from the house. Hence, while reporting rental income, NRIs are allowed to deduct property tax paid and the standard deduction of 30% of the rental income minus taxes paid. With the balance income, they can claim tax benefit on premium paid on the insurance policy.
5% Rebate on Property Tax Under Early Bird Scheme: Telangana Govt.
– May 12, 2020
The State Government of Telangana has announced a 5% rebate in property tax in residential and non-residential categories. Also, this rebate has been extended to 31 May 2020 to ease taxpayers during the ongoing lockdown to contain the spread of COVID-19. The state government is referring to the scheme as ‘early bird scheme’ and said that it is applicable to GHMC and other municipalities. The property tax to which the rebate has been offered is for the financial year 2020-21 in all Urban Local Bodies, GHMC and other municipalities of the state of Telangana.
IT Rules Amended for Faster Resolution of MNCs’ Tax Disputes
– May 11, 2020
The Government of India has amended Rule 44G for faster resolution of tax disputes of MNCs in the country. In an effort to resolve tax disputes with MNCs in the country, the government said that it has amended the income tax rules in which tax authorities will find solutions through mutual agreement procedure (MAP) within 24 hours. The CBDT has also changed the Form 34F to ensure the amendment is in full compliance. Also, once the dispute is resolved, the decision will be informed to the assessee who has 30 days to communicate if they accept or not. If accepted, then the assessee shall withdraw the plea and pay the agreed tax.
Be Careful of Phishing E-Mails Which Promises IT Refund: IT Dept.
– May 5, 2020
The Income Tax (IT) Department has cautioned taxpayers not to fall prey to the promise of refunds through phishing emails. The department advised not to click on any fraudulent link promising refunds as these are phishing scams and are not issued by the IT department. Between 8 April and 20 April, the department has refunded about 14 lakh transactions worth about Rs.9,000 crore to taxpayers. The finance ministry said it will speed up the process to issue refunds of income tax of up to Rs.5 lakh benefiting nearly 14 lakh taxpayers in the wake of the lockdown which has impacted businesses and individual taxpayers.
Deadline Extended to Submit GAAR and GST in Income Tax Audit
– April 30, 2020
The deadline for submission of the GAAR and GST in their IT Audit Report has been extended to 31 March 2021. This is the third revision of the deadline by the IT department. The Central Board of Direct Taxes (CBDT) said that in the wake of the ongoing lockdown due to the coronavirus pandemic, the deadline for submission of the GAAR and GST in the IT Audit Report has been extended till the end of March 2021. The decision was taken after the board received several memorandums about the issues faced by businesses due to the ongoing lockdown.
Pending IT Refund To Be Issued to Taxpayers Immediately
– April 14, 2020
Amid the lockdown announced by the central government in the wake of the rising COVID-19 infections, in relief to taxpayers the centre will clear all pending IT refunds where the claim amount is less than Rs.5 lakh. The move will benefit about 14 lakh taxpayers in the country. Along with this notification, the centre also said that pending GST refunds and customs refunds of MSMEs will be cleared. The Ministry of Finance has granted about Rs.18,000 crore to the revenue department to clear the pending dues. The ministry said that in relief to business entities and individuals due to the ongoing lockdown, all pending IT refunds will be processed with immediate effect.
Taxpayers Asked to Keep Their E-Filing Account Secure
– April 13, 2020
Taxpayers have been asked to keep their e-filing account secure and inform any misuse. The Income Tax Department issued the advisory to taxpayers amidst rising attacks and vulnerability on online systems as India and the world fight the deadly COVID-19 pandemic. Several online systems are being utilised amid major scaling down of human interface. The IT department said that if taxpayers feel their e-filing may have been attacked by an unauthorised person, then you may be a victim of a cybercrime. In such cases, taxpayers need to inform the cyber-cell or the concerned police as a primary step to stem such cyber-attacks. The IT department also advised taxpayers not to share credentials or sensitive details as a general precaution. They asked taxpayers to file an online complaint or FIR on https://cybercrime.gov.in/.
COVID-19: IT Dept. Cautions Against Any Break-in To Their e-Filing Accounts
– April 9, 2020
The IT Department has cautioned taxpayers to be aware of any break into their e-Filing account and report any such incident to the police cyber security wing. In an advisory, the IT Dept. said that if any taxpayers feel there is a possible breach which has been accessed or compromised in an unauthorised manner, then there could be a cybercrime being committed. The advisory comes amidst the increased attacks and vulnerability on online systems as India battles the deadly Novel Coronavirus in the country. A person can also file an online criminal FIR/complaint by visiting the cybercrime website: https://cybercrime.gov.in, which has been launched by the centre to report cybercrimes online. It said that taxpayers are advised not to share login details or password or other sensitive information.
IT Act Amended to Provide Tax Concession for PM CARES Fund
– April 2, 2020
In an effort to provide relief to taxpayers due to the lockdown in the wake of the Coronavirus infections across the country, the government has amended the IT Act to extend the deadline for filing ITR, central excise and customs returns. The government also amended the IT Act to provide tax relief for PM CARES fund which is as same as to the PM NRF. Under Section 80G of the IT Act, donations shall be eligible for 100% deduction. Also, the limit on the deduction of 10% of gross income is included in the concession offered under the amended IT Act. In the wake of the deadly Novel Coronavirus infection in the country, the government has mandated a 21-day lockdown to arrest the spread of the infection. The government started the new PM CARES Fund to tackle the COVID-19 virus in the country and donations made to the fund shall now be 100% tax-free.
No Special Extension for Filing ITR in India For NRIs
– April 1, 2020
The Finance Ministry of India has said that there is no special extension of the deadline for filing ITR by NRIs in India. This is applicable for NRIs who are not liable to audit under Section 44AB of the IT Act 1961. NRIs need to file ITR if their total income exceeds Rs.2.5 lakh during the assessment year or has deposited an amount more than Rs.1 crore in one or more current accounts in a bank during the fiscal year. Also, if the NRI has incurred expenses of more than Rs.2 lakh for themselves or for persons during the fiscal year will be considered as to file an ITR. Even if the NRI has incurred expenses of Rs.1 lakh or more on use of electricity during the fiscal year, he has to file tax in India.
COVID-19: Deadline Extended For IT Saving for FY 2019-20 by Three Months
– March 30, 2020
The Finance Minister has announced that the deadline for Income Tax Saving for the financial year 2019-20 has been increased by three months. This means that taxpayers have till time until 30 June 2020 to include tax-saving components. Usually, taxpayers rush to make investments during the month of March before the deadline of 31 March ends. However, with the current lockdown situation in India due to the deadly Coronavirus infections, banks and other mutual fund institutions are shut for business and taxpayers may find it difficult to invest in tax-saving instruments. To ease the burden on taxpayers, the government has announced the change in the deadline.
No Timeline Set by the Government to Remove all IT Exemptions: Finance Minister
– February 19, 2020
The Indian finance minister said that the new tax regime which is an exemption-free and reduced rate of the tax regime does not have any timeframe to remove all exemptions. During the Budget 2020, the FM announced an optional tax regime that has lower tax rates and more tax slabs and one can opt it if they are ready to forego all exemptions and deductions. The FM further said that only some exemptions have been removed despite the initial intention was to remove all exemptions.
IT Department’s New IT Calculator Makes it Easier to Opt Between the Old and New Tax Regime
– February 17, 2020
The 2020 Budget announced a new tax regime in which taxpayers will forgo about 70 exemptions for a lower income tax rate. To make it easier to calculate income tax in both regimes, the IT department has launched the new IT calculator. By entering details such as age, income and deductions, the calculator provides the total income tax to be paid in both cases. Taxpayers can use this calculator to understand which suits them better and file for Income Tax Returns (ITR).
IT Department Introduces New Income Tax Calculator
– February 12, 2020
The Income Tax (IT) Department has introduced a new IT calculator for citizens to calculate their income tax based on the new IT regime introduced in the 2020 Budget. The new IT calculator is designed to make it easier for IT payers to file their Income Tax Returns (ITR) without any assistance. Taxpayers can visit the website and know which tax regime is better. Taxpayers need to enter details such as age, income for the assessment year, and total exemptions and the new income tax calculator will let you know the tax amount in both the old and the new tax regime.
No Deductions on Tuition Fee, PF, Insurance on New, Optional Income Tax Regime
– February 4, 2020
Taxpayers opting the new, optional income tax regime to forgo exemptions and deductions on tuition fee, Provident Fund (PF), insurance including the standard deduction of Rs.50,000. However, this new tax regime is optional and taxpayers can choose to pay income tax through the existing tax regime. Income tax on the income of up to Rs.2.5 lakh is nil and for income from Rs.2.5 lakh to Rs.5 lakh, the income tax is 5%. Under the Budget 2020-21, taxpayers choosing the new tax income tax regime cannot raise claims against deductions under Section 80C of the IT Act. Also, deductions and exemptions under 80CCC, 80D, 80E, 80EE, 80EEB, and 80G can be claimed under the new tax regime.
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