Income tax in India
The Constitution of India → Schedule VII → Union List → Entry 82 has given the power to the Central Government to levy a tax on any income other than agricultural income, which is defined in Section 10 of the Income Tax Act, 1961. The Income Tax Law consists of Income Tax Act 1961, Income Tax Rules 1962, Notifications and Circulars issued by Central Board of Direct Taxes, Annual Finance Acts and judicial pronouncements by the Supreme Court and High Courts.
The government imposes a tax on taxable income of all persons who are individuals, Hindu Undivided Families, companies, firms, LLP, an association of persons, a body of individuals, local authority and any other artificial juridical person. Levy of tax on a person depends upon his residential status. The CBDT administers the Income Tax Department, which is a part of the Department of Revenue under the Ministry of Finance, Govt. of India. Income tax is a key source of funds that the government uses to fund its activities and serve the public.
The Income Tax Department is the biggest revenue mobilizer for the Government. The total tax revenues of the Central Government increased from in 1997–98 to in 2007–08. In 2018–19, the Direct tax collections reported by CBDT were approximately INR 11.17 lakh crore
History
Ancient times
Taxation has been one of the key functions of the sovereign state since ancient times. The earliest archaeological evidence of income tax in India is found at Ashoka's pillar inscription at Lumbini. According to this inscription, some tax relief was given to the people of Lumbini who had to pay one-eighth of their total income as compared to one-sixth previously taxed.In Manusmriti, Manu stated that the king has the sovereign power to levy and collect tax according to Sastras.
In Bodhayana Dharmasutras, it is mentioned that the king received one-sixth of the income from his subjects which were legally termed as tax. In return for the tax money, it is incumbent upon the king to protect his subjects.
According to Kautilya's Arthashastra, an ancient treatise on the study of economics, the art of governance and foreign policy – artha has a much wider significance than wealth. According to him, the power of the government depended upon the strength of its treasury. He states: "From the treasury comes the power of the government, and the earth, whose ornament is the treasury, is acquired utilizing the treasury and army."
Kalidasa's Raghuvamsha, eulogizing King Dilipa, said, "it was only for the good of his subjects that he collected taxes from them just as the sun draws moisture from the earth to give it back a thousand time."
Modern times
The 19th century saw the establishment of British rule in India. Following the Mutiny of 1857, the British government faced an acute financial crisis. To fill up the treasury, the first Income-tax Act was introduced in February 1860 by James Wilson, who became British-India's first Finance Minister. The Act received the assent of the Governor-General on 24 July 1860 and came into effect immediately. It was divided into 21 parts consisting of no less than 259 sections. Income was classified under four schedules: i) income from landed property; ii) income from professions and trade; iii) income from securities, annuities, and dividends; and iv) income from salaries and pensions. Agricultural income was subject to tax.Subsequently, many laws were brought to streamline income tax laws. For example, the Super-Rich Tax was introduced in 1918, and the new Income-tax Act was passed in 1918. However, the Act of 1922 marked an important change from the Act of 1918 by shifting the administration of the income tax from the hands of the Provincial Government to the Central government. Another remarkable feature of this Act was that the rules were to be enunciated by the annual finance Acts instead of the basic enactment. Again, a new Income-tax Act came in 1939.
Contemporary times
The 1922 Act, was amended not less than twenty-nine times between 1939 and 1956. A tax on capital gains was imposed for the first time in 1946, although the concept of ‘capital gains’ has been amended many times by later amendments. In 1956, Nicholas Kaldor was appointed to investigate the Indian tax system in the light of the revenue requirement of the second five-year plan. He submitted an exhaustive report for a coordinated tax system and the result was the enactment of several taxation Acts, viz., the wealth-tax Act 1957, the Expenditure-tax Act, 1957 and the Gift-tax Act, 1958.The Direct Taxes Administration Enquiry Committee, under the Chairmanship of Mahavir Tyagi, submitted its report on 30 November 1959 and the recommendations made therein took shape of the Income Tax Act, 1961. The 1961 Act came in to force with effect from 1 April 1962, by replacing the Indian Income Tax Act, 1922 which had remained in operation for 40 years. The present law of income tax is governed by the Income Tax Act, 1961, which has 298 sections and 4 schedules and applies to the whole of India including the state of Jammu and Kashmir.
The Direct Taxes Code Bill was tabled in the Parliament on 30 August 2010 by the then Finance Minister to replace the Income Tax Act, 1961 and Wealth Tax Act. The bill, however, could not go through and eventually lapsed after the revocation of the Wealth Tax Act in 2015.
Amnesty scheme
Government of India allowed the people to declare their undisclosed incomes in Income Declaration Scheme, 2016 and pay a total of 45% tax for one time settlement. 64,275 disclosures were made amounting to.Charge to income tax
For the assessment year 2016–17, individuals earning an income up to were exempt from income tax.About 1% of the national population, called the upper class, fall under the 30% slab. It grew 22% annually on average during 2000–10 to 0.58 million income taxpayers. The middle class, who fall under the 10% and 20% slabs, grew 7% annually on average to 2.78 million income taxpayers.
Agricultural income
Agricultural income is exempt from tax as per section 10 of the Act. Section 2 defines agricultural income as:- Any rent or revenue derived from land, which is situated in India and is used for agricultural purposes.
- Any income derived from such land by agricultural operations including processing of agricultural produce, raised or received as rent-in-kind to render it fit for the market or sale of such products.
- Income attributable to a farmhouse.
- Income derived from saplings or seedlings grown in a nursery.
Income partly agricultural and partly business activities
| Income | Business income | Agricultural income |
| Growing & manufacturing tea in India | 40% | 60% |
| Sale of latex or Cenex or latex-based crepes or brown crepes manufactured from field latex or coal gum obtained from rubber plants grown by a seller in India | 35% | 65% |
| Sale of coffee grown & cured by seller in India | 25% | 75% |
| Sale of coffee grown, cured, roasted & grounded by a seller in India | 40% | 60% |
For apportionment of a composite business-cum-agricultural income, other than the above-mentioned, the market value of any agricultural produce, raised by the assessee or received by him as rent-in-kind and utilized as a raw material in his business, should be deducted. No further deduction is permissible in respect of any expenditure incurred by the assessee as a cultivator or receiver of rent-in-kind.
Permissible deductions from gross total income
Ministry of Finance has notified certain deductions from the gross total income of an assessee. Below are deductions as updated by Finance Act, 2015.| Section | Nature of deduction | Remarks |
| 80C | This section has been introduced by the Finance Act, 2005. Broadly speaking, this section provides deduction from total income in respect of various investments/ expenditures/payments in respect of which tax rebate u/s 88 was earlier available. The total deduction under this section is limited to Rs. 1.50 lakh only. Deductions can be claimed for: Provident Fund & Voluntary Provident Fund : PF is automatically deducted from your salary. Both you and your employer contribute to it. While the employer's contribution is exempt from tax, your contribution is counted towards section 80C investments. You also have the option to contribute additional amounts through voluntary contributions. The current rate of interest is 8.5% per annum and is tax-free. Public Provident Fund : Among all the assured returns small saving schemes, Public Provident Fund is one of the best. The current rate of interest is 8.70% tax-free and the normal maturity period is 15 years. The minimum amount of contribution is Rs 500 and the maximum is Rs 1,50,000. A point worth noting is that the interest rate is assured but not fixed. Life Insurance Premiums: Any amount that you pay towards life insurance premium for yourself, your spouse or your children can also be included in. Please note that life insurance premium paid by you for your parents or your in-laws is not eligible for deduction under section 80C. If you are paying premiums for more than one insurance policy, all the premiums can be included. It is not necessary to have the insurance policy from Life Insurance Corporation – even insurance bought from private players can be considered here. Equity Linked Savings Scheme : There are some mutual fund schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. The investments that you make in ELSS are eligible for deduction under Sec 80C. Home Loan Principal Repayment: The Equated Monthly Installment that you pay every month to repay your home loan consists of two components – Principal and Interest. The principal component of the EMI qualifies for deduction under Sec 80C. Even the interest component can save you significant income tax – but that would be under Section 24 of the Income Tax Act. Please read "Income Tax Benefits of a Home Loan / Housing Loan / Mortgage", which presents a full analysis of how you can save income tax through a home loan. Stamp Duty and Registration Charges for a home: The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house. Sukanya Samriddhi Account: Sukanya Samriddhi Account meaning Girl Child Prosperity Scheme is a special deposit scheme launched by Prime Minister Narendra Modi on 22 January 2015. The scheme of Sukanya Samriddhi Account came into effect via notification of the Ministry of Finance. The notification details are Notification No. G.S.R.863 Dated 02.12.2014. The scheme will be governed by ‘Sukanya Samriddhi Account Rules, 2014’.
NSC is a time-tested tax saving instrument with a maturity period of Five and Ten Years. Presently, the interest is paid @ 8.50% p.a. on 5 year NSC and 8.80% Per Annum on 10 years NSC. Interest is Compounded Half Yearly. While the minimum investment amount is Rs 100, there is no maximum amount. Premature withdrawals are permitted only in specific circumstances such as the death of the holder. Investments in NSC are eligible for a deduction of up to Rs 150,000 p.a. under Section 80C. Furthermore, the accrued interest which is deemed to be reinvested qualifies for deduction under Section 80C. However, the interest income is chargeable to tax in the year in which it accrues. Infrastructure Bonds: These are also popularly called Infra Bonds. These are issued by infrastructure companies and not the government. The amount that you invest in these bonds can also be included in Sec 80C deductions. Pension Funds – Section 80CCC: This section – Sec 80CCC – stipulates that an investment in pension funds is eligible for deduction from your income. Section 80CCC investment limit is clubbed with the limit of Section 80C – it means that the total deduction available for 80CCC and 80C is Rs. 1.50 Lakh. This also means that your investment in pension funds up to Rs. 1.50 Lakh can be claimed as deduction u/s 80CCC. However, as mentioned earlier, the total deduction u/s 80C and 80CCC can not exceed Rs. 1.50 Lakh. 5-Yr bank fixed deposits : Tax-saving fixed deposits of scheduled banks with tenure of 5 years are also entitled to section 80C deduction. Senior Citizen Savings Scheme 2004 : A recent addition to section 80C list, Senior Citizen Savings Scheme is the most lucrative scheme among all the small savings schemes but is meant only for senior citizens. The current rate of interest is 9.20% per annum payable quarterly. Please note that the interest is payable quarterly instead of compounded quarterly. Thus, unclaimed interest on these deposits won't earn any further interest. Interest income is chargeable to tax. | |
| 80CCC | Payment of premium for annuity plan of LIC or any other insurer Deduction is available up to a maximum of Rs. 1,00,000/- | The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving a pension from the fund. The Finance Act 2015 has enhanced the ceiling of deduction under Section 80CCC from Rs.100,000 to Rs. 1,50,000 with effect from A.Y. 2016–17 |
| 80CCD | Deposit made by an employee in his pension account to the extent of 10% of his salary. | Where the Central Government makes any contribution to the pension account, deduction of such contribution to the extent of 10% of salary shall be allowed. Further, in any year where any amount is received from the pension account, such amount shall be charged to tax as income of that previous year. The Finance Act, 2009 has extended benefit to any individual assesse, not being a Central Government employee. |
| 80CCF | Subscription to long term infrastructure bonds | Subscription made by individual or HUF to the extent of Rs. 20,000 to notified long term infrastructure bonds is exempt from A.Y. 2011–12 onwards. This deduction is discontinued w.e.f. A.Y. 2013–14. |
| 80CCG | Investment under Rajiv Gandhi Equity Savings Scheme, 2013 | The deduction was 50% of the amount invested in such equity shares or ₹ 25,000, whichever is lower. The maximum Investment permissible for claiming deduction under RGESS is Rs. 50,000. The benefit is in addition to deduction available u/s Sec 80C. |
| 80D | Payment of medical insurance premium. The deduction is available up to Rs.25,000/ for self/ family and also up to Rs. 25,000/- for insurance in respect of parent/parents of the assessee. In the case of senior citizens, a deduction up to Rs.50,000/- shall be available under this Section. The insurance premium of senior citizen parent of the assessee is also eligible for an enhanced deduction of Rs. 50000/- | The premium is to be paid by any mode of payment other than cash and the insurance scheme should be framed by the General Insurance Corporation of India & approved by the Central Govt. or Scheme framed by any other insurer and approved by the Insurance Regulatory & Development Authority. The premium should be paid in respect of the health insurance of the assessee or his family members. The Finance Act 2008 has also provided deduction up to Rs. 15,000/- in respect of health insurance premium paid by the assessee towards his parent. w.e.f. 01.04.2011, contributions made to the Central Government Health Scheme is also covered under this section. |
| 80DD | Deduction of Rs.40,000/ — In respect of expenditure incurred on medical treatment,, training, and rehabilitation of handicapped dependent relative. Payment or deposit to specified scheme for maintenance of dependent handicapped relative. W.e.f. 01 .04.2004 the deduction under this section has been enhanced to Rs.50,000/- Further, if the dependent is a person with severe disability a deduction of Rs.1,00,000/– shall be available under this section budget 2015 has Further Proposed to hike the limit from A.Y. 2016–17 to Rs. 75000 from existing Rs. 50,000/- and for a person with a severe disability to Rs. 1.25 lakh from existing Rs. 1 Lakh. | The handicapped dependent should be dependent relative suffering from a permanent disability or mentally retarded, as certified by a specified physician or psychiatrist. Note: A person with severe disability means a person with 80% or more of one or more disabilities as outlined in section 56 of the "Persons with Disabilities Act.," |
| 80DDB | Deduction of Rs.40,000/- in respect of medical expenditure incurred. W.e.f. 01.04.2004, deduction under this section shall be available to the extent of Rs.40,000/- or the amount paid, whichever is less. Earlier, the deduction for a senior citizen and a super senior citizen were Rs 60,000 and Rs 80,000 or the amount paid, whichever is less respectively. Now, as per Finance Act 2018, the deduction has been raised to Rs 1,00,000 for both senior citizens as well as a very senior citizen. | Expenditure must be incurred by the resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10I is to be furnished by the assessee from a specialist working in a Government hospital. Budget 2015 has proposed for claiming deduction under section assessee will be required to obtain a prescription from a specialist doctor instead of a Certificate. |
| 80E | Deduction in respect of payment in the previous year of interest on loan taken from a financial institution or approved charitable institution for higher studies. | This provision has been introduced to provide relief to students taking loans for higher studies. The payment of the interest thereon will be allowed as deduction over eight years. Further, by Finance Act, 2007 deduction under this section shall be available not only in respect of loans for pursuing higher education by self but also by spouse or children of the assessee. W.e.f. 01.04.2010 higher education means any course of study pursued after passing the senior secondary examination or its equivalent from any recognized school, board or university. |
| 80EE | Deduction in respect of interest on loan taken for residential house property | Vide Finance Act 2013, an individual is allowed a deduction up to a limit of Rs 1,00,000 being paid as interest on a loan taken from a financial institution, sanctioned during the period 01-04- 2013 to 31-03-2014 for the acquisition of a residential house whose value does not exceed Rs 40 lakhs. However, the deduction is available if the assessee does not own any residential house property on the date of sanction of the loan. |
| 80G | Donation to certain funds, charitable institutions, etc. | The various donations specified in Sec. 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in Sec. 80G. |
| 80GG | Deduction available is the least of Rent paid less 10% of total income. Rs.5000 per month. 25% of total income. | Assessee or his spouse or minor child should not own residential accommodation at the place of employment. He should not receive a house rent allowance. He should not have a self-occupied residential premise in any other place. |
| 80TTA | Deduction in respect of interest on deposits in a savings account | Section 80TTA is introduced wef A.Y. 2013–14 to provide a deduction to an individual or a Hindu undivided family in respect of interest received on deposits in a savings account held with banks, cooperative banks and post office. The deduction is restricted to Rs 10,000 or actual interest whichever is lower. |
| 80TTB | Deduction on the interest of time deposits for Senior Citizen | Section 80TTB is introduced w.e.f FY 2018–19 to provide deduction specifically to senior citizen of Rs 50,000 or the amount of interest on deposits whichever is lower. This section includes the post office deposits, bank deposits or deposits in cooperative society engaged in banking. Consequential amendments have been made in section 194A in respect of TDS of senior citizens. Now, no TDS shall be deducted on the interest from FD up to Rs. 50,000 in case of senior citizens. Further, it is to be noted that as section Section 80TTB has been introduced exclusively for senior citizens, so no deduction under Section 80TTA shall be available to senior citizens. |
| 80U | Deduction in case of a disabled person | If an assessee furnishes the certificate issued in a prescribed format from a notified ‘medical authority’, then shall become eligible to avail this deduction. The quantum of deduction shall be Rs. 75,000 in the case of a person with a disability. However, in case of severe disability, the deduction shall be raised to Rs. 1,25,000. In this deduction, a person can claim a deduction when he is disabled. |
| 87A | Rebate of Rs 2500 for individuals having total income up to Rs 3.5 lakh | Finance Act 2017 has provided relief in the form of rebate to individual taxpayers, residents in India, who are in the lower-income bracket, i. e. having total income not exceeding Rs 3,50,000/-. The amount of rebate is Rs 2500/- or the amount of tax payable, whichever is lower. WEF A.Y. 18–19. |
| 80RRB | Deduction in respect of any income by way of royalty in respect of a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available as -Rs. 3 lacs or the income received, whichever is less. | The assessee who is a patentee must be an individual resident in India. The assessee must furnish a certificate in the prescribed form duly signed by the prescribed authority along with the return of income. |
| 80QQB | Deduction in respect of royalty or copyright income received in consideration for authoring any book of literary, artistic or scientific nature other than textbook shall be available to the extent of Rs. 3 lacs or income received, whichever is less. | The assessee must be an individual resident in India who receives such income in the exercise of his profession. To avail of this deduction, the assessee must furnish a certificate in the prescribed form along with the return of income. |
Due date of submission of return
The due date of submission of return shall be ascertained according to section 139 of the Act as under:-| 30 September of the Assessment Year | -If the assessee is a company, or -If the assessee is any person other than a company whose books of accounts are required to be audited under any law, or -If the assessee is a working partner in a firm whose books of accounts are required to be audited under any law. |
| 30 November of the AY | If the assessee is a company and it is required to furnish report under section 92E pertaining to international transactions. |
| 31 July of the AY | In any other case. |
If the Income of a Salaried Individual is less than ₹ 500,000 and he has earned income through salary or Interest or both, such Individuals are exempted from filing their Income Tax return provided that such payment has been received after the deduction of TDS and this person has not earned interest more than ₹ 10,000 from all source combined. Such a person should not have changed jobs in the financial year.
CBDT has announced that all individual/HUF taxpayers with income more than ₹ 500,000 are required to file their income tax returns online. However, digital signatures won't be mandatory for such class of taxpayers.
Advance tax
Advance tax is also known as pay as you earn tax as it can be deposited from time to time with the income tax department in advance as opposed to the lump sum amount. The advance tax is to be paid as per the due dates mentioned by the income tax department in the form of installments.Under these schemes, every assessee is required to pay tax in a particular financial year, preceding the assessment year, on an estimated basis. However, if such estimated tax liability for an individual who is not above 60 years of age at any point in time during the previous year and does not conduct any business in the previous year, and the estimated tax liability is below ₹ 10,000, the advance tax will not be payable.
Until FY 2015–16, the due dates and amount of advance tax were different for corporate taxpayers and individual taxpayers. However, from FY 2016–17, both categories of taxpayers were brought at par. Further, individuals opting presumptive scheme of taxation u/s 44AD, 44ADA are liable to pay advance tax in a single installment.
The due dates of payment of advance tax for FY 17–18 are:-
| In the case of the corporate assessee as well as Individuals | For Persons opting sec 44AD & 44ADA | |
| On or before 15 June of the previous year | Up to 15% of advance tax payable | – |
| On or before 15 September of the previous year | Up to 45% of the balance of advance tax payable | – |
| On or before 15 December of the previous year | Up to 75% of the balance of advance tax payable | - |
| On or before 15 March of the previous year | Up to 100% of the balance of advance tax payable | Up to 100% of the advance tax payable |
Any default in payment of advance tax attracts interest under section 234B and any deferment of advance tax attracts interest under section 234C.
Tax deducted at source (TDS)
The general rule is that the total income of an assessee for the previous year is taxable in the relevant assessment year. However, income tax is recovered from the assessee in the previous year itself by way of TDS. The relevant provisions therein are listed below.| Section | Nature of payment | Threshold limit | TDS to be deducted |
| 192 | Salary to any person | Exemption limit | As specified for individual in Part III of I Schedule |
| 193 | Interest on securities to any resident | Subject to detailed provisions of given section | 10% |
| 194A | Interest to any resident | In case of Bank/cooperative bank – ₹ 10000 & 50000 and in any other case – ₹ 5000 | 10% |
| 194B | Winning from lotteries etc. to any person | ₹ 10000 | 30% |
| 194BB | Winning from horse races to any person | ₹ 10000 | 30% |
| 194C | Payment to resident contractors | ₹ 30000 & ₹ 100000 | 2% & 1% otherwise |
| 194D | Insurance commission to resident | ₹ 15000 | 5% & 10% |
| 194DA | Payment in respect of life insurance policy | ₹ 100000 | 1% |
| 194E | Payment to non-resident sportsmen or sports association | Not applicable | 20% |
| 194EE | Payment of deposit under National Savings Scheme to any person | ₹ 2500 | 10% |
| 194F | Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India | NIL | 20% |
| 194G | Commission on sale of lottery tickets to any person | ₹ 15000 | 5% |
| 194H | Commission/brokerage to a resident | ₹ 15000 | 5% |
| 194-I | Rents paid to any resident | ₹ 180000 | 2% & 10% |
| 194IA | Payment for Purchase of Immovable Property | ₹ 5000000 | 1% |
| 194IB | Payment of rent by individual or HUF not liable to tax audit | ₹ 50000 | 5% |
| 194J | Fees for professional/technical services; Royalty | ₹ 30000 | 10% |
| 194LA | Payment of compensation on acquisition of certain immovable property | ₹ 250000 | 10% |
| 194LB | Interest paid by Infrastructure Development Fund under section 10 to non-resident or foreign company | – | 5% |
| 194LC | Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds | – | 5% |
| 195 | Interest or other sums paid to non-residents or foreign company except under section 115O | Amount as computed by the Assessing Officer on application made under section 195 or 195 | As per double taxation avoidance treaty or regular provisions of Income Tax Act, which is beneficial to the recipient |
At what time tax has to be deducted at source and some other specifications are subject to the above sections.
In most cases, these payments shall not to deducted by an individual or a HUF if books of accounts are not required to be audited under the provisions of the Income Tax Act,1961 in the immediately preceding financial year.
In most cases, the tax deducted should be deposited within 7 days from the end of the month in which tax was deducted.
Corporate income tax
For domestic companies, as of 20 September 2019, the tax rate shall be flat 25%. For new companies incorporated after 1 October 2019 and commencing production before 31 March 2023, the tax rate is 15%. However, these rates are applicable only if the companies don't claim any exemptions or concessions.For foreign companies, the tax rate shall be 40% in India for normal income. However, specifically in case of Royalty income or fees for rendering technical services, the tax rate shall be 50%. Surcharge and Cess shall be levied over and above the flat rate of tax.
Note: For both companies, an EC and SHEC of 3% will be payable till FY 17–18. But, from FY 18–19, the EC and SHEC have been replaced by Health and Education Cess at 4%. From 2005–06, electronic filing of company returns is mandatory till date.
Surcharge
Applicable from assessment year 2015–16 onwards.Tax returns
Categories
There are five categories of income tax returns.;Normal return u/s 139
Any assessee who's income exceeds the maximum amount which is not chargeable to tax is required to file return u/s 139 within the due date. Currently, the maximum amount not chargeable to tax for individuals is Rs. 2,50,000 for below 60 years, 3,00,000 for 60 years to 79 years and 5,00,000 for 80 years and above. The due date is different for various assessments.
;Belated return u/s 139
In case of failure to file the return on or before the due date, a belated return can be filed. As per Budget 2016, it can be filed before the expiry of the relevant assessment year.
;Revised return u/s 139
In case of any omission or any wrong statement mentioned in the normal return can be revised. As per Budget 2017, the return can be revised at any time before the expiry of the relevant assessment year. Further, from FY 16–17, the belated return can also be revised.
;Defective return u/s 139
If the assessing officer considers the return as defective, he may intimate the defect. One has to rectify the defect within fifteen days from the date of such intimation.
;Apart from the above-mentioned categories, the return is also required to file in response to notices under the various sections like section 142, 143, 139, 154, etc. of the income tax act, 1961.
Intimation under section 143 is sent to a taxpayer only in case any tax or interest is found payable or refundable or there is any increase/reduction in loss. In case, one has received such an intimation, he should first check the reason for receiving it.
Annual information return and statements
Annual information return
Those who are responsible for registering,----- or, maintaining books of account or other documents containing a record of any specified financial transaction, shall furnish an annual information return in Form No.61A.Statements by producers
Producers of a cinematographic film during the financial year shall, prepare and deliver to the Assessing Officer a statement in the Form No.52A,- within 30 days from the end of such financial year or
- within 30 days from the date of the completion of the production of the film,
Statements by non-resident having a liaison office in India
With effect from 01 June 2011, Non-Resident having a liaison office in India shall prepare and deliver a statement in Form No. 49A to the Assessing Officer within sixty days from the end of such financial year.Income tax rates for individuals
In the Finance Act, 2020 the Government introduced a new tax regime for individuals giving them to opt for the new regime or continue with the old regime.Income Tax Rates for Financial Year 2017–2018
Income Tax Rates Slab for FY 2017–18 – The Finance Bill, 2017:In cases in which income-tax has to be charged under sub-section of section 172 of the Income-tax Act or sub-section of section 174 or section 174A or section 175 or sub-section of section 176 of the said Act or deducted from, or paid on, from income chargeable under the head "Salaries" under section 192 of the said Act or in which the "advance tax" payable under Chapter XVII-C of the said Act has to be computed at the rate or rates in force, such income-tax or, as the case may be, "advance tax" shall be charged, deducted or computed at the following rate or rates:—
Assessments
Self-assessment is done by the assessee himself in his Return of Income. The department assess the tax of an assessee under section 143, 144, 147 and 153A. The notices for such assessments are issued under section 143, 148 and 153A respectively. The time limits are prescribed under section 153.Tax penalties
There are various penalties & fees which can be levied as per the Income Tax Act, 1961. Some of the important penalties and fees are discussed as under :1. Penalty under section 271 for either concealment of income or for furnishing inaccurate particulars of income:-
If the Assessing Officer or the Commissioner or the Commissioner in the course of any proceedings under this Act, is satisfied that any person-
has failed to comply with a notice under sub-section of section 142 or sub-section of section 143 or fails to comply with a direction issued under sub-section of section 142, or
has concealed the particulars of his income or furnished inaccurate particulars of such income,
he may direct that such person shall pay by way of penalty,-
in the cases referred to in clause, in addition to any tax payable by him, a sum of ten thousand rupees for each such failure;
in the cases referred to in clause, in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded because of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income.
In other words, u/s 271, the penalty may range from 100 % to 300% of the amount of tax sought to be evaded.
2. Penalty u/s 270A for under reporting or misreporting of income :-
The Assessing Officer or the Commissioner or the Principal Commissioner or Commissioner may direct any person to pay a penalty in addition to tax if he has under-reported or misreported his income while filing his return.
In case of under-reported income, the penalty shall be 50% of the amount of tax payable on under-reported income. Further, in case of misreporting income, the penalty shall be 200% of the amount of tax payable on misreported income.
3. Fee u/s 234F for late filing of ITR :-
As per the budget 2017, a new section 234F has been introduced to ensure the timely filing of returns of income. According to Section 234F, if a person is required to file an income tax return as per income tax law but does not file it within the due date then late fees shall be levied upon him. The number of fees shall depend upon the time of filing the return and total income.
The quantum of fees u/s 234F has been enumerated as below :
If the return is filed after 31st July but on or before the 31st day of December of the assessment year – Rs. 5000
If the return is filed after 31st December of the assessment year – Rs. 10,000
However, if the total income is less than or equal to five lakh rupees, then, in that case, the fee amount shall not exceed Rs. 1000.
The provisions of this section shall be applicable from in respect of Income Tax returns to be filed for FY 2017–18. This section shall apply to all persons including Individual, HUF, Company, Firm, AOP, etc. if the return is filed after their respective due dates. Financial year 17–18 would be the first year when any such fees would be leviable without the intervention of Assessing Officer.