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:

  1. INCOME FROM SALARIES- [Salary from job]
  2. INCOME FROM HOUSE PROPERTY  -[Income from house like Rent]
  3. PROFITS AND GAINS OF BUSINESS AND PROFESSIONS  -[Business Income also called PGBP Income]
  4. INCOME FROM CAPITAL GAINS- [Profit from sale of Assets like Property]
  5. 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 :-

Old Slab rate.jpg


Slab Rate 1.jpg


Example

Calculation of Tax on Income of Rs 340000

Income Tax New Slab rate.jpg


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.


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