Here we will learn in easy language about Income Tax for Financial Year 2017-18 (Assessment Year 2018-19) like
- What is income Tax
- Types of incomes Under Income Tax
- Concept of Previous Year and Assessment Year
- Who is Assessee
- What is Income tax Challan
- Income Tax Return (ITR)
- Changes in Finance Act. (Budget)
- Changes in ITR Dues Dates (AY 2016-17 to 2018-19)
- How to Calculate Income Tax Slab Rate for Individuals
- What is Gross Total income,Deductions and Net Total Income
- Difference between Exemptions and Deductions
What is INCOME TAX
Income tax is a tax charged charged on Income earned during the year
Name of the Law
Income Tax Act, 1961
Under Which Government
Central Govt.
Hence same tax applies to whole of India
Types of Income under Income Tax
5 HEADS OF INCOME
Income is categorized into 5 major heads:
- INCOME FROM SALARIES- [Salary from job]
- INCOME FROM HOUSE PROPERTY -[Income from house like Rent]
- PROFITS AND GAINS OF BUSINESS AND PROFESSIONS -[Business Income also called PGBP Income]
- INCOME FROM CAPITAL GAINS- [Profit from sale of Assets like Property]
- INCOME FROM OTHER SOURCES- [All other type of Income like Interest or Dividend]
Hence those income which are not falling under any other heads are taxable under Income from Other Sources
All these combine to form Gross Total Income as shown below :
| Particulars | Amt |
| Income from Salaries | xx |
| Income from House Property | xx |
| Profits and Gains of Business and Profession | xx |
| Income from Capital Gains | xx |
| Income from Other Sources | xx |
| Gross Total Income | xx |
Concept of Previous Year and Assessment Year:
Current Financial Year is 2018-19
- It starts from 1 April 2018 till 31 March 2019
- ITR Will be filed after end of the year
- Since ITR is filed in next year,Financial Year 2018-19 is called Assessment Year 2019-20
Similarly
- Last Financial Year was 2017-18
- It started from 1 April 2017 till 31 March 2018
- ITR to be filed after the end of year
- Since ITR is filed in next year,Financial Year 2017-18 is called Assessment Year 2018-19
Hence in Income Tax,Current Financial Year is called Previous Year and Assessment Year is one year ahead
| Financial Year (FY) or Previous Year | Assessment Year |
| 2018-19 | AY 2019-20 |
| 2017-18 | AY 2018-19 |
| 2016-17 | AY 2017-18 |
| 2015-16 | AY 2016-17 |
| 2014-15 | AY 2015-16 |
| 2013-14 | AY 2014-15 |
Who is Assessee
Assessee means a person liable to pay Income.
Following persons are liable to pay Income tax.
- Individual [Even Proprietorship covered here]
- HUF [Hindu Undivided Family]
- Partnership
- AOP [Association of Person]
- BOI [Body of Individual]
- Cooperative Society
- Companies [Private Limited Company or Public Limited Companies]
Note: - All these apply for PAN Card and are called Assessees as per Income Tax Act.
What is Income Tax Challan
Income tax Challan
- It is a simple form used to pay tax to the government.
- Tax is deposited in Authorized Banks and not directly with Income tax Department.
- It can be paid
- Direct Online – through Net Banking
- Manually – By Going to Bank Physically
- Prescribed Challan form. is Challan 280.
Note:-While paying challan,it is to be mentioned what type of Income Tax it is
Types of Income tax
- Self-Assessment tax
It is the tax paid at the time of filing Return (i.e. after 31 March)
- Advance tax
It is the tax paid in advance during financial year
(i.e. from 1 April to 31 March)
- Tax on Regular Assessment
It is tax paid when some notice is received by Income tax.Department
Income Tax Return (ITR)
- It is also called Return of Income
- It contains details of how income tax is Computed
- It is given in special form prescribed by the government for the purpose.
- Different ITR forms are prescribed for different types of Income
Note: - First tax should be paid by Challan and only then then ITR should be filed mentioning how the tax is computed
Different ITR Forms List
ITR forms for for INDIA
ITR 1 if salary or int or one house property( if income upto 50 lac)
ITR 2 if any other income except business
ITR 3 itr for business whose audit done by CA
ITR 4 itr for small business (non audit)
List of all ITR Forms for Financial Year 2016-17 (AY 2017-18)
|
Form |
Used for |
|
ITR 1 |
Small Salaried or Interest or One House Property upto 50 lacs |
|
ITR 2 |
2 House Property or Capital Gain or Salary >50 lacs |
|
ITR 3 |
Large Proprietorship (Audit Case) |
|
ITR 4 |
Small Business Proprietorship/Partnership/Small Professionals |
|
ITR 5 |
Large Partnership (Audit Case) |
|
ITR 6 |
Companies (Private Limited) |
|
ITR 7 |
NGO/Trust/Temple/Hospital |
Changes in Finance Act. (Budget)
- Every Year, Central Government passes Budget where it makes Changes to different laws including Income tax.
- Such budget is Normally passed on 28 th February
- Changes in Budget take effect from normally 1 April onwards.
- However sometimes it is specified the date from which changes will take effect
- Sometimes it is done Retrospectively also (i.e. from back date)
Changes in ITR Dues Dates (AY 2016-17 to 2018-19)
FY 2017-18 (AY 2018-19)
Due Date of ITR is normally 31 July 2018/(30 Sept 2018 in case of Audit)
However it has been extended as follows
For Salaried and Small Business
31-07-2018 31 Aug 2018
For Audit Business
30-Sep-2018 15 Oct 2018 31 Oct 2018
- However,Return can be filed late also till
1. 31 Dec 2018 (With Penalty of 5000)
2. 1 Jan 2019 to 31 Mar 2019 (With Penalty of 10000)
(Note If Total income is upto 5 lacs,then Penalty is reduced to 1000)
If income between 250000-500000,then 1000 Late fees
| Particulars | Salaried and Non Audit | Audit |
| Without Late fees | 31-07-2018 31 Aug 2018 | 30-Sep-2018 15 Oct 2018 |
| With Late fees of 5000 | 31-Dec-18 | 31-Dec-18 |
| With Late fees of 10000 | 31-Mar-19 | 31-Mar-19 |
- Penalty to be taken into account while determining demand and refund.
- Both Original and Revised Return can be revised
- However,Revised Return can be filed till 31.3.2019 till end of assessment year and (not one year from end of ay)
FY 2016-17(AY 2017-18)
- Due Date of ITR is normally 31 July 2017/(30 Sept 2017 in case of Audit)
- However,Return can be filed late also till
1. 31.3.2018 (Without penalty)
( Now It cannot be filed after 31.03.2018)
- Hence Return can be filed till end of Assessment Year (and not one year from end of assessment year)
- Both Original and Revised Return can be revised
- However,Revised Return can be filed till 31.3.2019 (till one year from end of assessment year)
FY 2015-16 (AY 2016-17)
- Due Date of ITR is normally 31 July 2016/(30 Sept 2016 in case of Audit)
- However,Return can be filed late also till
1. 31.3.2017 (Without penalty)
2. 31.3.2018 (With Penalty of Rs 5000)
- Hence,Return can be filed till one year from end of Assessment Year)
- if return filed on time,then only it can be revised under Section 139(5)
How to Calculate Income Tax Slab Rate for Individuals
Income Tax Slab Rate is as follows :-
Example
Calculation of Tax on Income of Rs 340000
What is Gross Total income,Deductions and Net Total Income
We know that five heads of Income combine to form Gross Total Income
Out of these,Certain Items called Deductions are reduced to arrive at Net total Income.
Tax is imposed on this Net total income as shown below
| Particulars | Amt |
| Income from Salaries | xx |
| Income from House Property | xx |
| Profits and Gains of Business and Profession | xx |
| Income from Capital Gains | xx |
| Income from Other Sources | xx |
| Gross Total Income | xx |
| Less | |
| Deductions under Chapter VIA | xx |
| Net Total Income | |
| Tax on Net total Income | xx |
hence Deductions lead to decrease in Income and hence decrease in tax
Hence these are beneficial to the assessee
Lets study these in detail here
Difference between Exemptions and Deductions
What are Exemptions
- Income which is not taxable is called Exempt Income.
- Government has given lots of tax concessions called Exemptions
- If exemption is given,by government, no tax is payable Under Income tax Act.
Example: - Agricultural Income is exempt
What are Deductions
Items which are reduced from Income are called Deductions.
Example:
Gross Total Income
Less: Deductions
Net total Income
Hence Deductions lead to decrease in Income and hence decrease in tax.