Income Tax services provides by GetmyCA, where Income Tax is a fee charged by a government on a product, activity or income there are two types of taxes direct Tax: If tax is levied directly on the income or wealth of a person, then, it is a direct tax Indirect Tax: If tax is levied on the price of a good or service, then, it is a Indirect Tax. E.g. GST or Custom Duty.
Income Tax services constitute the basic source of revenue to the government. Revenue so raised is utilized for meeting the expenses of govt. like defense, provision of education, healthcare, dams etcconstitution of India gives the power to levy and collect taxes, whether direct or indirect, to the central and state government income-tax is the most significant direct tax.
These heads of income exhaust all possible types of income that can accrue to or be received by the tax payer. Accordingly, the income is classified as follows:
The tax payer has to classify the income earned under the relevant head of income.
Income Tax services is to be computed in accordance with the provisions governing a particular head of income. There are certain incomes which are wholly exempt from income-tax.e.g. agricultural income. These incomes have to be excluded and will not form part of Gross Total Income. Also, some incomes are partially exempt from income-tax e.g. House Rent Allowance, Education Allowance. These incomes are excluded only to the extent of the limits specified in the Act. The balance income over and above the prescribed exemption limits would enter computation of total income and have to be classified under the relevant head of income
There are deductions and allowances prescribed under each head of income. For example, while calculating income from house property, municipal taxes and interest on loan are allowed as deduction
An assessee may have different sources of income under the same head of income. He may have profit from one source and loss from the other. For instance, an assessee may have profit from his textile business and loss from his printing business.This loss can be set-off against the profits of textile business to arrive at the net income chargeable under the head "Profits and gains of business or profession". Similarly, an assessee can have loss under one head of income, say, Income from house property and profits under another heads of income, say, profits and gains of business or profession. There are provisions in the Income-tax Act, 1961 for allowing inter-head adjustment in certain cases. However, there are also restrictions in certain cases
The final figures of income or loss under each head of income, after allowing the deductions, allowances and other adjustments, are then aggregated, after giving effect to the provisions for clubbing of income and set-off and carry forward of losses, to arrive at the gross total income.
The rates of tax for the different classes of assessees are prescribed by the Annual Finance Act. For individuals, HUFs etc., there is a slab rate and basic exemption limit. At present, the basic exemption limit is ~ 2,50,000 for individuals. This means that no tax is payable by individuals with total income of up to t 2,50,000 those individuals whose total income is more than t 2,50,000 but less than 5,00,000 have to pay tax on their total income in excess of~ 2,50,000 @ 5% and so on. the highest rate is 30%, which is attracted in respect of income in excess of~ 10,00,000
Surcharge: is an additional tax payable over and above the income-tax. surcharge is levied as a percentage of income-tax. In case where the total income of an individual/HUF/AOP/BOI exceeds ~ 50 lakhs but does not exceed ~ 1 crore, surcharge is payable at the rate of 10% of income-tax and in case total income exceeds r 1 crore, surcharge is payable at the rate of 15% of income-tax
Rebate under section 87A: In order to provide tax relief to the individual tax payers who are in the 5% tax slab, section 87 A provides a rebate from the tax payable by an assessee, being an individual resident in India, whose total income does not exceed~ 3,50,000. The rebate shall be equal to the amount of income-tax payable on the total income for any assessment year or an amount of~ 2,500, whichever is less.
The income-tax, as increased by the surcharge or as reduced by the rebate under section 87 A, if applicable, is to be further increased by an additional surcharge called health and education cess on income-tax @4% of income-tax plus surcharge, if applicable.
Although the tax liability of an assessee is determined only at the end of the year, tax is required to be paid in advance in four installments on the basis of estimated income i.e., on or before 15th June, 15th September, 15th December and 15th March
However, residents opting for presumptive taxation scheme can pay advance tax in one installment on or before 15th March instead of four installments. In certain cases, tax is required to be deducted at source from the income by the payer at the rates prescribed in the Income-tax Act, 1961 or the Annual Finance Act. Such deduction should be made either at the time of accrual or at the time of payment, as prescribed by the Act.
After adjusting the advance tax and tax deducted at source, the assessee would arrive at the amount of net tax payable or refundable. Such amount should be rounded off to the nearest multiple of~ 10. The assessee has to pay the amount of tax payable (called self-assessment tax) on or before the due date of filing of the return. Similarly, if any refund is due, assessee will get the same after filing the return of income.