SUMMER TRAINNIG REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF BACHELOR OF BUSINESS ADMINISTRATION ON “COMARATIVE STUDY OF PHYSICAL FILLING AND E--FILING OF RETURNS” UNDER SPA CAPITAL SERVICES LTD.
Submitted By: Jasmeet kaur 01120601710 Batch-2010-2013
Trinity Institute of Professional Studies Affiliated to Guru Gobind Singh Indraprastha University
1
INDEX S.No Topic
Page No
1
Objective
3
2
Acknowlegement
4
3
Company Profile
5
4
Group companies
8
5
SPA‟s Services
12
6
Vision
15
7
Clients of SPA Group
16
8
Individual heads of income
17
9
Basic information about tax
35
10
Tax Slabs
40
11
Salary
44
12
Income from House Property
48
13
Capital Gain
51
14
Deduction under chap VI A
55
15
Tax rebate and relief
60
16
Permanent Account Number
62
17
Types of Return Filing
64
18
SPA Working
71
18
Conclusion, Limitation, Suggestion
94 2
OBJECTIVE The main objective of my project is to find out that e-filing of return is better than the physical filing of return. And through this project I have come to the conclusion that e-filing is better than physical filing is better at some cases. In spite of some advantages of physical filing.
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ACKNOWLEDGEMENT It is in particular that I am acknowledging my sincere feeling towards my mentors who graciously gave me their time and expertise. They have provided me with the valuable guidance, sustained efforts and friendly approach. It would have been difficult to achieve the results in such a short span of time without their help. I deem it my duty to record my gratitude towards the External project supervisor Mr. Anish Kumar and Internal project supervisor Mrs. Yogita Manhas who devoted their precious time to interact, guide and gave me the right approach to accomplish the task and also helped me to enhance my knowledge and understanding of the project.
Name of Student- JASMEET KAUR Enrollment no. 0110601710
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Income Tax Return (ITR) filing Under SPA GROUP
Objectives of the Study
To discuss the various types of ITR.
To analyze the process of filing ITR in India.
ABOUT THE COMPANY SPA Group was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance, risk management and insurance broking.SPA is being managed by its promoters along with a young and dynamic team of over 1000+ professionals with rich experience, in their respective fields. The Group has established itself as one of India‘s leading financial advisory house, offering various financial solutions to its Institutional, corporate and individual clients. Customer centric approach of SPA‘s dedicated professional team has helped carve a niche for itself in financial services arena and won confidence of its clients. Clients of SPA are from a wide spectrum and comprise of Banks and other financial institutions, Mutual funds, Insurance companies, foreign institutional investors, public sector undertakings and government departments, private corporate, trusts and individuals. Head Office: New Delhi 25, C-Block Community Centre, Janak Puri New Delhi - 110 058 Ph - 011-25517371 / 25515086 Fax - 011-25532644 E-mail -
[email protected] 5
COMPANY PROFILE Established in 1995, SPA Group is a long standing and fast growing integrated financial services group, providing a large range of services to a varied set of customers that include large corporations, high net-worth individuals, financial institutions and retail investors. Our service offerings include merchant banking, securities broking, asset management, mutual funds, insurance, fixed deposits, government securities and bonds. Though each of these business entities exists independently, they reflect the group's core ethos and values that are centered on creating value through customer‘s centric approach. SPA Group's customer-centric approach, backed by strong research and passion to excel has helped us achieve a significant position in the Indian financial services sector. More than 1000 highly skilled professionals are continuously and consistently working towards enhancing the value and wealth of our customers, even as we continue to win many awards and accolades for our innovative services and solutions.
insurance sector
Securities limited
Merchant banking
Mutual fund
Spa Capital Products and services
Financial management system
MANAGEMENT TEAM The Core management team of SPA consists of persons having a rich experience in Corporate Finance and Advisory, Investment Banking, Risk Management, Securities Banking and Wealth Management. Mr. Sanjay Joon, President MBA, having more than 24 years of experience in marketing of financial products and has a vast experience in information technology and administration. His forte lies in his abilities of
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accurately assessing his customers‘ need, meeting them and leading an ever team. He heads Mutual Fund Division of the Group since its inception. Mr. Sanjay Gupta, Associate Director (Investment Banking) B.Com (H), Chartered Accountant, Fellow Member of The Institute of Chartered Accountants of India Has close to 20 years of work experience in the field of investment and merchant banking, Fixed Income Securities, Project Fin ancing, Structured & Corporate Finance. Mr. V K Khattar, Principal Officer He has to his credit 42 years of rich experience of working with Oriental Insurance Company Limited and retired as the Regional Manager. He is associated with our Group as the Principal Officer of the Insurance arm. Mr. Vivek Gautam, Associate Director He is having 30 years of experience in the field of Banking & Merchant Banking including 16 years of exclusive experience in Investment Banking. He has worked for 14 years in PNB till mid 1991 in Managerial positions. Thereafter he was deputed to PNB Capital Services Limited as Senior Vice President and worked as Head Merchant Banking during 1991 - 1996 and was associated in lead managing more than 60 public and rights issues for well known Corporate and Financial Institutions. He was also Head Investment Department dealing in securities for one year. Thereafter he worked as Director - Bajaj Capital Limited and President Merchant Banking for 7 years and also as Head Merchant Banking and Executive Director with Allianz Securities Limited for 1 year. He has wide experience in issue management, private placement of equity and debt, corporate advisory & finance, mergers & takeovers & distribution of financial products. He is with SPA Group since October 2006 and looking after Merchant Banking.
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GROUP COMPANIES SPA Group of companies is the flagship Company of the Group and is engaged in providing Wealth Management and Financial Advisory services to institutions, corporates, and individuals since 1995. The Company is a leading distributor of Mutual Funds in the country and presently has assets over 4500 crores under its management. The Company has successfully positioned itself as a strategic advisor to its customers for wealth management with its customer centric approach and innovative solutions. The Company is registered with Reserve Bank of India as a Non Banking Financial Company. Presently the shares of the Company are listed on the Delhi Stock Exchange. 1) SPA CAPITAL SERVICES LTD. SPA Capital Services Limited is the flagship Company of the Group and is engaged in providing Wealth Management and Financial Advisory services to institutions, corporates, and individuals since 1995. The Company is a leading distributor of Mutual Funds in the country and presently has assets over Rs.14 , 000 crores under its management. The Company has successfully positioned itself as a strategic advisor to its customers for wealth management with its customer centric approach
and
innovative
solutions.
The Company is registered with Reserve Bank of India as a Non Banking Finan cial Company. Presently the shares of the Company are listed on the Delhi Stock Exchange.
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2) SPA MERCHANT BANKERS LTD. SPA Merchant Bankers Limited offers comprehensive investment banking solutions and highest quality independent financial advice to corporates sector and entrepreneurs. Our service offering covers private placement of debt instruments and debt syndication for both public and private sector corporates, Capital raising services through private placement of equity, managing capi tal issues (IPO, FPO and Right Issues). Besides, we also cater to the entire spectrum of capital market needs through other services such as Corporate and Infrastructure advisory, Valuations, Managing Takeovers, Buy Back and Delisting. We have team comprising of multi-disciplinary professionals with a vast financial advisory and investment banking experience, who structure various financial products as per the requirements of the clients. We have the Category –I Merchant Banking license from Securities and Exchange Board of India (SEBI), the Indian Securities Market Regulator. The Company has made notable and considerable progress in a short span in the debt merchant banking activities successful various debt primary issues. This is also reflected through the ranking by Prime Database, which has ranked the Group amongst the top 10 service providers in this segment. The Company was able to achieve above ranks on the basis of its performance in just two financial years since it commenced investment & merchant banking activities. Since the commencement of merchant banking services, the Company has syndicated funds for various Public Sector Undertakings (PSUs), Designated Financial Institutions(DFIs), Banks and several State Level Undertakings (SLUs). The Company for its Merchant & Investment Banking activities has found patronage as an Arranger with various central public sector undertakings like HUDCO, NTC, ITI, MECON, IISCO SAIL, REC, KRCL, public sector banks and financial institutions. Also the Company has had privilege to provide its services to various state level undertakings of Andhra Pradesh, Karnataka, Kerela, Tamil Nadu, West Bengal, Punjab, Haryana, Himachal Pradesh, Jammu & Kashmir, Maharashtra, Gujarat and Rajasthan. In the private sector, the Com pany has provided its services to various domestic and MNC corporates. 9
The achievements corroborate our untiring and sincere efforts towards building and preserving mutually rewarding and sustainable relationships with our clients and giving them our value added services with meaningful performance. We have started providing equity capital market related services in the beginning of 2007 and advise Corporates, Banks and Businesses which are seeking to mobilize capital from Investor. We offer following opp ortunities to clients to raise funds through the following:
Private Equity Advisory Initial Public Offering (IPOs) Follow on Public Offering (FPOs) Qualified Institutional Placements (QIPs) Right Issues Preferential Allotments and Foreign Currency convertible bonds (FCCBs). Our team as Lead Manager/ BRLM has successfully managed/ are managing transactions for client across various industry sectors including:
i. ii. iii. iv. v. vi. vii.
Information technology Telecommunication Infrastructure Power equipments Steel Sugar Textiles We, for execution of a transaction, combine our various strengths including in depth knowledge of regulatory environment, understanding of industry and market dynamics, distribution capabilities and networking with institution investors of our associate concerns. We built our business on strong relationships, innovative ideas and ethical standards.
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3) SPA SECURITIES LTD. SPA Securities Limited is a SEBI registered securities broking Company. The Company is a member of Wholesale Debt Market, Capital Market and Futures and Options Segment of the National Stock Exchange of India Limited. The Company is also a registered member of the Over the Counter Exchange of India. The Company is focused primarily on providing securities broking services to institutional clients and is empanelled as an approved securities broker with all the major Nationalized, Private and Co-operative banks, corporate houses, Insurance Companies, Financial Institutions, Asset Management Companies and Provident Fund Trusts. The Company had a turnover of Rs. 25000 crores at NSE-WDM for the financial year ended March 2005. Equity broking for institutions was commenced in 2004 end. In its first full year of the operations, the Company achieved a turnover of over Rs.1500 crores in calendar year 2005. 4) SPA INSURANCE BROKING SERVICES LIMITED SPA Insurance Broking Services Limited is the arm of the SPA Group providing entire range of insurance service in insurance right from meeting insurance need of clients to cover its risk spectrum, advisory, claim settlement and also meet requirement of clients if they wish to outsource entire gamut of insurances related functions. The Company is registered with Insurance Regulatory Development Authority as approved Broker. The Company is empanelled with almost all the life and general insurance companies as a Direct Broker. The Company is functioning as life and general insurance direct broker and risk assessors. 5) SPA COM TRADE LTD. SPA Comtrade Pvt. Ltd., the commodities broking arm of the group has recently commenced operations. The company is catering to existing customers of the group by providing research based commodity broking services.
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SPA‟S SERVICES 1. MUTUAL FUND The SPA Group, on strength of its research based customer centric approach and impeccable servicing, is recognized as one of the leading financial advisory service providers in the country. 2. INSURANCE SPA Insurance Broking Services Ltd is the insurance broking company of the group providing life and general insurance advisory services. Life Insurance advisory services are process oriented, which include identification of the needs of the clients, offering the best product available, resolution of their queries and post sales service. The company has covered over 2000 lives in 18 months of business with sum assured of over Rs. 20 billion and premium collection of over Rs.3.5 billion. In General Insurance we believe in servicing clients after assessment of their need and the risk involved and cover required and offer the best insurance cover available in the market supported by strong after sales services to the clients. The Company is empanelled with all the general insurance companies operating in the Country enabling it to provide best insurance solutions suitable for the clients. The company has provided insurance coverage across assets classes of over Rs. 200 billion with impeccable claims and other after sales services.
3. EQUITY AND DERIVATIVES Equity Broking The Company is engaged in equity research and broking for its institutional clients. On strength of its research and impeccable servicing the 12
Company in its first year of operation in equity broking is empanelled with all the major domestic institutional players and has achieved a turnover of over Rs. 1,600 crores. Commodities Broking SPA Comtrade Pvt. Ltd., the commodities broking arm of the group has recently commenced operations. The company is catering to existing customers of the group by providing research based commodity broking services.
4. FINANCIAL PLANNING Even though one of the most significant factors in our life is the state of our personal finances, we rarely spend time on managing them since unlike businesses; we are not accountable to any one for our personal financial goals and results. We can make a much larger contribution in every area of our life when our personal finances, investments and taxation are properly planned. The Fundamental corner stones of successful investing
Save regularly, invest regularly Start early Use tax shelter Investment returns should exceed the inflation.
5. MERCHANT BANKING SPA Merchant Bankers Limited is engaged in private placement of debt instruments, structuring of the various financial products as per the 13
requirements of the borrowers along with various other pre -issue and post issue services. The Company has made notable and considerable progress in a short span in the debt-oriented merchant banking activities by successful placement of various debt primary issues. This is also reflected through the ranking by Prime Database, which has ranked the Group amongst the top 10 service providers in this segment. The Company was able to achieve above ranks on the basis of its performance in j ust two financial years since it commenced investment & merchant banking activities. Since the commencement of merchant banking services, the Company has syndicated funds for various Public Sector Undertakings (PSUs), Designated Financial Institutions(DFIs), Banks and several State Level Undertakings (SLUs). The Company for its Merchant & Investment Banking activities has found patronage as an Arranger with various central public sector undertakings like HUDCO, NTC, ITI, MECON, IISCO SAIL, REC, KRCL, publi c sector banks and financial institutions. Also the Company has had privilege to provide its services to various state level undertakings of Andhra Pradesh, Karnatka, Kerela, Tamil Nadu, West Bengal, Punjab, Haryana, Himachal Pradesh, Jammu & Kashmir, Maha rashtra, Gujarat and Rajasthan. In the private sector, the Company has provided its services to various domestic and MNC corporates. The achievements corroborate our untiring and sincere efforts towards building and preserving mutually rewarding and sustai nable relationships with our clients and giving them our value added services with meaningful performance. Now, the Company has started providing Equity Oriented Merchant Banking services to its customers on strength of its research based structuring capab ilities and strong distribution network. Presently, the Company is providing services for private placement of equities, public issues and right issues. 6. SPECIAL TECHNICAL REPORTS Research, undertaken on a continuing basis, forms foundation for all services provided by them. At SPA we have focused on building a strong research team which functions with an exhaustive approach to understand and analyze underlying market dynamics for equities, fixed income, and mutual funds. 14
VISION SPA believes in attaining customer satisfaction, on continuing basis, by providing highest standard of financial services in India. The philosophy at SPA is to provide services to clients after assessment of their profile, needs and risk-appetite. The basic work theme at SPA is: - Dedicated, competent and honest team of professionals - Customer centric work environment - Insight of customers‘ perspectives - Strong research base - Clear understanding of applicable laws - Consistency and passion to excel - Technology savvy
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Clients of spa group
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Individual Heads of Income Income from Salary What is Salary? Income under heads of salary is defined as remuneration received by an individual for services rendered by him to undertake a contract whether it is expressed or implied. According to Income Tax Act there are following conditions where all such remuneration are chargeable to income tax:
When due from the former employer or present employer in the previous year, whether paid or not
When paid or allowed in the previous year, by or on behalf of a former employer or present employer, though not due or before it becomes due.
When arrears of salary is paid in the previous year by or on behalf of a former employer or present employer, if not charged to tax in the period to which it relates.
What Income Comes Under Head of Salary? Under section 17 of the Income Tax Act, 1961 there are following incomes, which come under head of salary:
Salary (including advance salary)
Wages
Fees
Commissions
Pensions
Annuity
Perquisite
Gratuity 17
Annual Bonus
Income From Provident Fund
Leave Encashment
Allowance
Awards
What is Leave Encashment? Leave encashment is the salary received by an individual for leave period. It is a chargeable income whether he is a government employee or not. Under section 10(10A) there is also a provision of exemption in case of leave encashment depending upon whether he is
a
government
employee
or
other
employees.
What is Gratuity?
It is salary received by an individual paid by the employee at the time of his retirement or by his legal heir in the case of death of the employee.
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What is Allowance?
It is the amount received by an individual paid by his/her employer in addition to salary. Under section 15 of the Income Tax Act, 1961 these allowance are taxable excluding few conditions where they are entitled of deduction/ exemptions. Under Income Tax Act following types of allowance are defined
House Rent Allowance:
Under sections 10(13A) of Income Tax Act, 1961 allowance is defined as an amount received by an employee paid by his/ her employer as a rent of his/her house. It is a taxable income. There is no exemption in tax if he is living in his own house or house for which he is not paying rent. There are following amount which are exempt from tax:
Actual house rent paid by that individual Rent paid for the accommodation over 10% of the salary 50% of the salary if house is placed at Delhi, Mumbai, Kolkata, Chennai or 40% of the salary in it is placed in any other city
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Entertainment Allowance:
It is the amount paid by employer for availing entertainment services. Under section 16(ii) of Income Tax Act, 1961 it is entitled to deduction in tax from is salary. But in this case deduction is given to his gross salary which also includes entertainment allowance. Deduction in tax against this allowance can be divided into two parts: In case of Government employee entitled to minimum deduction of
Entertainment allowance received
20% of basic salary excluding any other allowance
Rs. 5000 In case of other employee entitled to minimum deduction of
(a) Entertainment allowance received
20% of basic salary excluding any other allowance
Rs. 7500
Entertainment allowance received during 1954-1955
Other Special Allowances
Children Education Allowance
Tribal Area Allowance
Hostel Expenditure Allowance
Remote Area Allowance
Compensatory Field Area Allowance
Counter Insurgency Allowance
Border Area Allowance
Hilly Area Allowance 20
What is Perquisite? Under section 17(2) of Income Tax Act, 1961 perquisite is defined as:
Amount paid for the rent-free accommodation provided to the assessee by his employer
Any concession in the matter of rent respecting any accommodation provided to the assessee by his employer
Any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases:
1.
By a company to an employee, who is a director thereof
2.
By a company to an employee being a person who has a substantial interest in the company
3.
By any employer to an employee whose income under the head 'Salaries' exceeds Rs.24000 excluding the value of non monetary benefits or amenities
4.
Any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee
5.
Any sum payable by the employer whether directly or through a fund, other than a recognized provident fund or EPF, to effect an assurance on the life of the assessee or to effect a contract for an annuity
There are following perquisites which are tax free:
Medical facility
Medical reimbursement
Refreshments
Subsidized Lunch/ Dinner provided by employer
Facilities For Recreation
Telephone Bills
Products at concessional rate to employee sold by his/ her employer 21
Insurance premium paid by employer
Loans to employees by given by employer
Transportation
Training
House without rent
Residence Facility to member of Parliament, judges of High Court/ Supreme Court
Conveyance to member of Parliament, judges of High Court/ Supreme Court
Contribution of employers to employee's pension, annuity schemes and group insurance
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Income from House Property The annual value of property, consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him, the profits of which are chargeable to income tax, shall be chargeable to income tax under the head "Income from House Property". Is income from any property covered under this section? No. Only the income from buildings or part of a building, held by the assessee as the owner and the income from land appurtenant to the buildings is covered under this section. Income from other property such as open land is out of the purview of this section. Income from such land will be taxed under the head, 'income from other sources.'
When the property is used by the owner for his business or profession, the income of which business or profession is chargeable to income tax, the income of that property is not charged in the hands of the owner. Similarly, when a firm carries on business or profession in a building owned by a partner, no income from such property is added to the income of the partner, unless the firm pays the partner any rent for the same. If the assessee is not the owner of the building but is a lessee and he sublets the property, he would be taxed under the head 'Income from other sources'. 'Buildings' Includes The term 'buildings' includes any building (whether occupied or intended for self-occupation), office building, godown, storehouse, warehouse, factory, halls, shops, stalls, platforms, cinema halls, auditorium etc. Income arising out of the building or a part of the building is covered under this section.
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"Land appurtenant" Land appurtenant includes land adjoining to or forming a part of the building. It would depend on the nature of the land, whether it is appurtenant to the residential building, factory building, hotel building, club house, theatre etc. and will include courtyards, compound, garages, car parking spaces, cattle shed, stable, drying grounds, playgrounds and gymkhana. Income arising from vacant land Any income, arising out of vacant land, is not covered under this section even though it may be received as rent, ground rent or lease rent. Such income would be assessable as income from other sources. Even rent, arising out of open spaces, or quarry rent, is taxed as income from other sources. When is the income from house property wholly exempt from tax?
In the following cases, income from house property is completely exempt from any tax liability: A. Income from any farmhouse forming part of agricultural income; B. Annual value of any one palace in the occupation of an ex-ruler; C. Property Income of a local authority; D. Property Income of an authority, constituted for the purpose of dealing with and satisfying the need for housing accommodation or for the purposes of planning development or improvement of cities, towns and villages or for both. (The Finance Act, 2002, w.e.f. 1.4.2003 shall delete this provision.); E. Property income of any registered trade union; F. Property income of a member of a Scheduled Tribe; G. Property income of a statutory corporation or an institution or association financed by the Government for promoting the interests of the members either of the Scheduled Castes or Scheduled tribes or both; H. Property income of a corporation, established by the Central Govt. or any State Govt. for promoting the interests of members of a minority group;
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I. Property income of a cooperative society, formed for promoting the interests of the members either of the Scheduled Castes or Scheduled tribes or both; J. Property Income, derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities by an authority constituted under any law for the marketing of commodities; K. Property income of an institution for the development of Khadi and village Industries;' L. Self-occupied house property of an assessee, which has not been rented throughout the previous year; M. Income from house property held for any charitable purposes; N. Property Income of any political party. What are the deductions permitted to be made from Income from house property"?
S 24 lays down that 'income chargeable under the head 'Income from house property' shall be computed after making the following deductions: 1. A sum equal to 30% of the annual value; 2. If the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital. Where such property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, on or after 1st April 2003, the amount of deduction under this clause shall not exceed Rs 1, 50,000. The amount of deduction shall not exceed Rs 30,000 where the property consists of a house or part of a house, which the owner occupies for his own residence or which cannot be occupied by him because his employment, business or profession is carried on at any other place and he has to reside at that other place in a building which is not his own.
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Income from business or professions Conditions for an income to fall under the head of income from profits and gains of business For charging the income under the head
"Profits
and
Gains
of
business," the following conditions should be satisfied:
There should be a business or profession.
The business or profession should be carried on by the assessee.
The business or profession should have been carried on by the assessee at any time during the previous year.
Income chargeable to income tax under the head 'Profits and gains of business or profession The following income would be chargeable under the head "Profits and gains of business or profession":
The profits and gains of any business or profession, which was carried on by the assessee at any time during the previous year;
Any compensation or other payment, due or received by the following:A.
Any person, by whatever name called, managing the whole or substantially the whole of the affairs of an Indian company, at or in connection with the termination of his management or the modification of the terms and conditions relating thereto;
B.
Any person, by whatever name called, managing the whole or substantially the whole of the affairs in India of any other company, at or in connection with the termination of his office or the modification of the terms and conditions relating thereto;
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C.
Any person, by whatever name called, holding an agency in India for any part of the activities relating to the business of any other person, at or in connection with the termination of any agency or the modification of the terms and conditions relating thereto;
D.
Any person, for or in connection with the vesting in the Government, or in any corporation owned or controlled by the Government, under any law for the time being in force, of the management of any property or business;
Income, derived by a trade, professional or similar association from specific services performed for its members;
Profits on sale of a license granted under the Imports (Control) Order, 1955, made under the Imports and Exports (Control) Act, 1947;
Cash assistance (by whatever name called), received or receivable by any person against exports under any scheme of the Government of India;
Any duty of customs or excise repaid or repayable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules, 1971;
The value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession;
Any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from such firm.
Deductions allowed in computing income from profits and gains of business or profession S 30: The deductions that are allowed while computing income from 'profits and gains from business or profession' in respect of rent, rates, taxes, repairs and insurance for premises, which are used for the purpose of business or profession while computing income from 'profits and gains from business or profession' are as follows:
Where the premises are occupied by the assessee: 1. As a tenant, the rent paid for such premises; and further if he has undertaken to bear the cost of repairs to the premises, the amount paid on account of such repairs; excluding expenditure in the nature of capital expenditure.
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2. Otherwise than as a tenant, the amount paid by him on account of current repairs to the premises; excluding expenditure in the nature of capital expenditure.
Any sums, paid on account of land revenue, local rates or municipal taxes;
The amount of any premium, paid in respect of insurance against risk of damage or destruction of the premises.
What deductions shall be allowed in respect of repairs and insurance of machinery, plant and furniture?
S 31: The following deductions shall be allowed in respect of repairs and insurance of machinery, plant and furniture:
The amount paid on account of current repairs thereto; excluding expenditure in the nature of capital expenditure.
The amount of any premium, paid in respect of insurance against damage or destruction thereof.
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Income from Capital Gains Capital Assets S 2(14): Capital asset means property of any kind held by an assessee whether or not connected with his business or profession. It however does not include the following: 1. Any stock-in-trade, consumable stores or raw materials held for the purpose of his business or profession; 2. Personal effects, i.e., movable property (including wearing apparel and furniture, excluding jewellery), held for personal use by the assessee or any member of his family dependent on him. 3. Agricultural land in India, not being land situated in the following:a. In any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and, which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or b. In any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette; 4. 6.5 per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National, Defense Gold Bonds, 1980, issued by the Central Government; 5. Special Bearer Bonds, 1991, issued by the Central Government; 6. Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government.
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The assets, which do not fall within the term "capital assets", and which can give rise to a tax-free surplus
Any stock-in-trade, consumable stores or raw materials, held for the purpose of his business or profession;
Personal effects, i.e., movable property (including wearing apparel and furniture, excluding jewellery), held for personal use by the assessee or any member of his family dependent on him;
Agricultural land in India, not being land situated in the following: o
In any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or
o
In any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;
6.5 per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National, Defense Gold Bonds, 1980, issued by the Central Government;
Special Bearer Bonds, 1991, issued by the Central Government;
Gold Deposit Bonds, issued under the Gold Deposit Scheme, 1999 notified by the Central Government.
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The method of computation of short-term and long-term capital gain, as applicable from the assessment year 1993-94 onwards, is as follows: Computation of Short-term capital gain
Computation of Long-term capital gain
1. Find out the full value of consideration
1. Find out the full value of consideration
2. Deduct the following:
2. Deduct the following:
a. Expenditure incurred wholly and exclusively in connection with such transfer.
a. Expenditure incurred wholly and exclusively in connection with such transfer
b. Cost of acquisition. c. Cost of
b. Indexed Cost of acquisition
improvement
c. Indexed Cost of improvement.
3. From the resulting sum deduct the
3. From the resulting sum deduct the
exemption provided by section 54B, 54D and
exemption provided by section 54, 54B, 54D,
54G.
54EC, 54ED, 54F and 54G.
4. The balancing amount is the short-term
4. The balancing amount is the long-term
capital gain.
capital gain.
Full value of consideration: Whole price without any deduction whatsoever. Expenditure incurred wholly and exclusively in connection with such transfer: Expenditure incurred which is necessary to affect such transfer e.g. stamp duty, registration etc. Cost of acquisition of an asset: Value for which it was acquired. Expenses of capital nature for completing or acquiring the title to the property may be included in the cost of acquisition.
Cost of improvement: a. In relation to goodwill of a business or a right to manufacture, produce or process any article or thing, the cost of improvement is taken to be nil. b. In relation to any other capital asset1. Where the capital asset became the property of the assessee before April 1, 1981 the cost of improvement includes all expenditure of capital nature incurred in
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making any addition/alteration to the capital asset on or after April 1, 1981 by the owner. 2. In any other case, the cost of improvement refers to all expenditure of a capital nature that is incurred in making any additions or alterations to the capital asset by the assessee or the previous owner. What is the indexed cost of acquisition? S 48 defines "indexed cost of acquisition" as the amount, which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year, in which the asset is transferred, bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later.
The Cost Inflation Index, in relation to a previous year, means such Index as the Central Government may, having regard to 75% of average rise in the Consumer Price Index for urban non-manual employees for the immediately preceding previous year to such previous year, by notification in the Official Gazette. What is the indexed cost of improvement? S 48 defines indexed cost of improvement as the amount, which bears to the cost of improvement the same proportion as Cost Inflation Index for the year, in which the asset is transferred, bears to the Cost Inflation Index for the year in which the improvement to the asset takes place. Cost Inflation Index, in relation to a previous year, means such Index as the Central Government may, having regard to 75% of average rise in the Consumer Price Index for urban non-manual employees for the immediately preceding previous year to such previous year, by notification in the Official Gazette, specify in this behalf.
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Income from other sources 1. Dividend; 2. Any annuity due or commuted value of any annuity paid under section 280D. 3. Any
winning
from
lotteries,
crossword
puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever. 4. Any sum, received by the assessee from his employees as contributions to any provident fund or Superannuation fund or any fund set up under the provisions of the Employees State Insurance Act, 1948 (34 of 1948), or any officer fund for the welfare of such employees, if such income is not chargeable to income-tax under the head "Profits and gains of business or profession"; 5. Income from machinery, plant or furniture belonging to the assessee and let on hire, if the income is not chargeable to income -- tax under the head "Profits and gains of business or profession"; 6. Where an assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture, the income from such letting, if it is not chargeable to income tax under the head "Profits and gains of business or profession." 7. Any sum received under a Key man insurance policy, including the sum allocated by way of bonus on such policy, if such income is not chargeable to income tax under the heads "Profits and gains of business and profession" or under the head "Salaries". (Key man insurance policy means a life insurance policy taken by a person on the life of another person who is/ was the employee of the 1st mentioned person or who is/was connected in any manner whatsoever with the business
of the 1st
mentioned person.)
So, basically "income from other sources" is the residuary head of income, which takes within its ambit any income, which does not specifically fall under any other head of income. 33
Deductions allowed under the head 'Income from other sources‟ The income, chargeable under the head 'income from other sources,' shall be computed after making the following deductions:
In the case of interest on securities, any reasonable sum, paid by way of commission or remuneration to a banker or to any other person for the purpose of realizing such dividend or interest on behalf of the assessee;
In the case of income, received by the assessee from his employees as contributions to any provident fund or Superannuation fund or any fund set up under the provisions of the Employees'' State Insurance Act, 1948, or any other fund for the welfare of such employees, which is chargeable to income tax under the head "Income from other sources" deductions so far, as may be in accordance with provisions of S 36(1) (va).
In the case of income from machinery, plant or furniture belonging to the assessee and let on hire, if the income is not chargeable to income -- tax under the head "Profits and gains of business or profession or where an assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture, the income from such letting, if it is not chargeable to income tax under the head "Profits and gains of business or profession", deductions, so far as may, be in accordance with the provisions of clause (a), clause (3)of Section 30, Section 31, and subsections (1) and (2) of Section 32 and subject to the provisions of S 38.
In the case of income in the nature of family pension, a deduction of a sum equal to thirty three and one third per cent of such income or fifteen thousand rupees, whichever is less.
Any other expenditure (not being capital expenditure) laid out or used wholly and exclusively for the purpose of making or earning such income.
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What is Tax?? Tax is imposition financial charge or other levy upon a taxpayer by a state or other the functional equivalent of the state. There are two types of Taxes in India – 1) Direct Taxes are those whose burden falls directly on the Tax payers like Income Tax, Wealth Tax etc 2) Indirect Taxes are those in which the burden is passed on to a third party like Service Tax, VAT etc.
An income tax is a tax levied on the financial income of persons, corporations, or other legal entities.
Income tax is an annual tax on income. The Indian Income Tax Act (Section 4) provides that in respect of the total income of the previous year of every person, income tax shall be charged for the corresponding assessment year at the rates laid down by the Finance Act for that assessment year. Section 14 of the Income tax Act further provides that for the purpose of charge of income tax and computation of total income all income shall be classified under the following heads of income:
Salaries
Income from house property
Profits and gains of business or profession.
Capital gains
Income from other sources.
The total income from all the above heads of income is calculated in accordance with the provisions of the Act as they stand on the first day of April of any assessment year. Previous Year is the Financial Year ending on 31st March every year. Assessment Year is the period of 12 35
Months commencing on the 1st day of April immediately after the Previous Year. E.g. for Previous Year/Financial year ending 31.03.2012, the Assessment Year is 2012-13 (01.04.201231.03.2013)
Income Tax Return: After making all possible investments to save tax, it‘s time for Income Tax Return filling, which all about giving details of the income you have earned in that financial year.
Income tax return is a term which is often used when we talk about income tax. It is a way by which we pay this tax. When total annual income of a person, including all sources, is more than maximum exemption limit (at present it is Rs 180000/- and 190000 for female) then that person is liable for income tax return.
According to Income Tax Act 1961, every person, who is an assesses and whose total income exceeds the maximum exemption limit, shall be chargeable to the income tax at the rate or rates prescribed in the finance act.
The Benefits of Filling Income Tax return:
Standard Income Proof: ITR is Considered Customary income proof not only in India but also globally. if you are looking for higher education or employment abroad, ITR is largely accepted income proof.
Speed your loan application process: Apart from a good Credit history, the fact that you are filling your ITR regularly gives you speedier access to credit.
Power of PAN: Permanent Account Number or PAN issued by the IT authority is not only a pre requisite for filling ITR but is also now mandatory for all financial transactions- from opening a bank account, or purchasing mutual fund to real estate for investment.
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Claim your Tax Refund: Filling ITR is not always about paying Tax, It can be used as a means to reduce your tax liability. e.g Salaried employees for whom TDS has been cut during the financial year can claim refund if the tax outgo has been more than the actual tax payable.
Know how of Income Tax:
Income tax is levied on the ‗total income‘ of assesses.
Income of the ‗previous year‘ is taxed in the ‗assessment year‘.
Income is classified into and computed under five categories called ‗heads of income‘
One must pay his taxes an advance and by the due dates, in the prescribed percentages.
Deferment in the payment of advance tax would result in the payment of interest.
The income which are pertaining to the ‗previous year‘ is taxed, but in the ‗assessment year.
Income tax is charged at the rates being fixed for the year by the annual finance act. But the liability to pay the tax is based on the principle „pay as you earn.‘
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FILING OF INCOME TAX RETURN Section 139(1) of the Income-tax Act, 1961 provides that every person whose total income during the previous year exceeded the maximum amount not chargeable to tax shall furnish a return of income. The return of income can be submitted in the following manner:
a paper form;
e-filing
A bar-coded paper return. Where the return is furnished in paper format, acknowledgement slip attached with the
return should be duly filled in. Returns in new forms are not required to be filed in duplicate. Returns can be e-filed through the internet. E-filing of return is mandatory for companies and firms requiring statutory audit u/s 44AB. From A.Y. 2011-12, it is now also mandatory for all business entities (including individuals/HUF) liable to tax audit to e-file their return of income. E-filing can be done with or without digital signatures)
If the returns are filed using digital signature, then no further action is required from the tax payers.
If the returns are filed without using digital signature, then the tax payers have to file ITR-V with the department within 15 days of e-filing.
The tax payer can e-file the returns through an e-intermediary also who will e-file and assist him in filing of ITR-V within 15 days. Where the return of income is furnished by using bar coded paper return, then the tax
payers need to print two copies of Form ITR-V. Both copies should be verified and submitted. The receiving official shall return one copy after affixing the stamp and seal. The Finance Act, 2005 has provided that w.e.f. 01.04.2006 every person shall file a return of income on or before the relevant due date even if his total income without giving effect to the provisions of Chapter VI-A exceeds the maximum amount not chargeable to tax.
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Due Dates for Payment of Advance Tax & Filing Of Return Liability for payment of advance tax arises where the amount of tax payable by the assessee for the year is Rs.10, 00,000/- or more. The due dates for various installments of advance tax are given Below:
Due Date
Amount Payable
1) On or before 15th September of the Amount not less than 30% of such previous year 2) On or before 15th December
advance tax payable Amount not less than 60% of such advance tax payable
3) On or before 15th March of the Entire balance amount of such advance previous year
tax payable
Also, any amount paid by way of advance tax on or before 31st March is treated as advance tax paid during the financial year. The due date of filing of return of income in case of salaried employees is 31st of July. If the return of income has not been filed within the due date, a belated return may still be furnished before the expiry of one year from the end of the assessment year or completion of assessment, whichever is earlier.
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Rates of Income Tax Income tax slabs 2011-2012 (for Men) in India: Income Tax Slab (in Rs.)
Tax
0 to 1,80,000
No Tax
1,80,001 to 5,00,000
10%
5,00,001 to 8,00,000
20%
Above 8,00,000
30%
Income tax slabs 2011-2012 (for Women) in India: Income Tax Slab (in Rs.)
Tax
0 to 1,90,000
No Tax
1,90,001 to 5,00,000
10%
5,00,001 to 8,00,000
20%
Above 8,00,000
30%
Income tax slabs 2011-2012 (for Senior Citizens) in India: Income Tax Slab (in Rs.)
Tax
0 to 2,50,000
No Tax
2,50,001 to 5,00,000
10%
5,00,001 to 8,00,000
20%
Above 8,00,000
30%
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Income tax slabs 2011-2012 (for super Senior Citizens Above 80) in India: Income Tax Slab (in Rs.)
Tax
0 to 5,00,000
No Tax
5,00,001 to 8,00,000
20%
Above 8,00,000
30%
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FORMS TO BE USED The forms to be used for filing the return of income from F.Y. 2011-12 onwards are mentioned below:Form No.
Who It Is For
ITR 1
For Individuals having Income from Salary/ Pension/ family pension) & Interest
ITR 2
For Individuals having Income from dividend profits from mutual funds and shares, rental income etc.
ITR 3
For Individuals who are partners in a partnership firm
ITR 4
For individuals having income from a proprietary business or profession
ITR 5
For Association of Persons (AOP) or Body of Individuals (BOI)
ITR 6
For Companies other than companies claiming exemption under section 11
ITR 7
For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)
ITR 8
Return for Fringe Benefits
ITR V
Where the data of the Return of Income/Fringe Benefits in Form ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-8 transmitted electronically without digital signature
Acknowledgement Acknowledgement for e-Return and non e-Return
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PROCESS FOR TAX ON-LINE: 1. Log on to www.incometaxindia.gov.in 2. On the left hand side of the page select ―Pay taxes online‖ 3. A new page will open up with a list of all the banks through which payment can be made online. Just below this list is a link ―please click here‖. Click on this link. 4. Select Challan No. 280 on the next page. 5. Please fill the Challan that appears. In The two option Box sets on the page, you need to select “(0021) INCOME-TAX (other than companies)” in one set and “(300) SELF ASSESSMENT TAX” in the other. You need to select Assessment Year 2012-2013. 6. Once you click on ―proceed‖ the system will verify your PAN no in the income tax database. 7. Click on Submit to the bank and complete the transaction with the bank.
TDS (TAX DEDUCTION AT SOURCE): TDS is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payments to the other person and deducted amount is remitted to the govt. account. it is similar to ―pay as you earn‖ scheme. It includes salary, interest, commission and contract fees, rent, professional fees, etc. This type of deduction is popularly known as TDS. Such tax is subject to certain limits and certain conditions.
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TCS (TAX COLLECTED AT SOURCE): TCS is the tax collected by the seller from the buyer at the time of debiting of amount payable by buyer or at the time of receipt of amount by way of cash, DD, cheque or any other means whichever is earlier for the sales of prescribed goods under section 206c(1) for business purpose and not for personal use. Tax also collected by person who grants lease or a license in respect of parking lot, toll plaza, mine quarry to another person. THINGS USED IN FILING INCOME TAX SALARY Salary is the remuneration received by or accruing to an individual, periodically, for service rendered as a result of an express or implied contract. The actual receipt of salary in the previous year is not material as far as its taxability is concerned. The existence of employer-employee relationship is the sinequanon for taxing a particular receipt under the head ―salaries.‖ For instance, the salary received by a partner from his partnership firm carrying on a business is not chargeable as ―Salaries‖ but as ―Profits & Gains from Business or Profession‖. Similarly, salary received by a person as MP or MLA is taxable as ―Income from other sources‖, but if a person received salary as Minister of State/Central Government, the same shall be charged to tax under the head ―Salaries‖. Pension received by an assessee from his former employer is taxable as ―Salaries‖ whereas pension received on his death by members of his family (Family Pension) is taxed as ―Income from other sources‖. Section 17(1) of the Income tax Act gives an inclusive and not exhaustive definition of ―Salaries‖ including therein
Wages
Annuity or pension 44
Gratuity
Fees, Commission, perquisites or profits in lieu of salary
Advance of Salary
Amount transferred from unrecognized provident fund to recognized provident fund
Contribution of employer to a Recognized Provident Fund in excess of the prescribed limit
Leave Encashment
Compensation as a result of variation in Service contract etc.
Contribution made by the Central
Government to the account of an employee under a notified pension scheme.
DEDUCTION FROM SALARY INCOME The following deductions from salary income are admissible as per Section 16 of the Income-tax Act.
Professional/Employment tax levied by the State Govt.
Entertainment Allowance- Deduction in respect of this is available to a government employee to the extent of Rs. 5000/- or 20% of his salary or actual amount received, whichever is less.
It is to be noted that no standard deduction is available from salary income w.e.f. 01.04.2006 i.e. A.Y.2006-07 onwards. PERQUISITES ―Perquisite‖ may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. ―Perquisite‖ is defined in the section17 (2) of the Income tax Act as including: 1) Value of rent-free/concessional rent accommodation provided by the employer. 2) Any sum paid by employer in respect of an obligation which was actually payable by the assessee. 3) Value of any benefit/amenity granted free or at concessional rate to specified employees etc. 45
4) The value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at concessional rate to the assessee. 5) The amount of any contribution to an approved superannuation fund by the exployer in respect of the assessee, to the extent it exceeds one lakh rupees; and 6) The value of any other fringe benefit or amenity as may be prescribed. PERQUISITES EXEMPT FROM INCOME TAX Some instances of perquisites exempt from tax are given below: Provision of medical facilities (Proviso to Sec. 17(2)): Value of medical treatment in any hospital maintained by the Government or any local authority or approved by the Chief Commissioner of Income-tax. Besides, any sum paid by the employer towards medical reimbursement other than as discussed above is exempt up to Rs.15,000/-. Perquisites allowed outside India by the Government to a citizen of India for rendering services outside India (Sec. 10(7)). Rent free official residence provided to a Judge of High Court or Supreme Court or an Official of Parliament, Union Minister or Leader of Opposition in Parliament. No perquisite shall arise if interest free/concessional loans are made available for medical treatment of specified diseases in Rule 3A or where the loan is petty not exceeding in the aggregate Rs.20,000/-. No perquisite shall arise in relation to expenses on telephones including a mobile phone incurred on behalf of the employee by the employer. ALLOWANCES Allowance is defined as a fixed quantity of money or other substance given regularly in addition to salary for meeting specific requirements of the employees. As a general rule, all allowances are to be included in the total income unless specifically exempted. Exemption in respect of following allowances is allowable to the extent mentioned against each:
House Rent Allowance:- Provided that expenditure on rent is actually incurred, exemption available shall be the least of the following : 46
a) HRA received. b) Rent paid less 10% of salary. c) 40% of Salary (50% in case of Mumbai, Chennai, Kolkata, Delhi) Salary here means Basic + Dearness Allowance, if dearness allowance is provided by the terms of employment.
Leave Travel Allowance: The amount actually incurred on performance of travel on leave to any place in India by the shortest route to that place is exempt. This is subject to a maximum of the air economy fare or AC 1st Class fare (if journey is performed by mode other than air) by such route, provided that the exemption shall be available only in respect of two journeys performed in a block of 4 calendar years.
Certain allowances given by the employer to the employee are exempt u/s 10(14). All these exempt allowance are detailed in Rule 2BB of Income tax Rules and are briefly given below: For the purpose of Section 10(14) (I), following allowances are exempt, subject to actual
expenses incurred:
Allowance granted to meet cost of travel on tour or on transfer.
Allowance granted on tour or journey in connection with transfer to meet the daily charges incurred by the employee.
Allowance granted to meet conveyance expenses incurred in performance of duty, provided no free conveyance is provided.
Allowance granted to meet expenses incurred on a helper engaged for performance of official duty.
Academic, research or training allowance granted in educational or research institutions.
Allowance granted to meet expenditure on purchase/maintenance of uniform for performance of official duty.
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INCOME FROM HOUSE PROPERTY Under the Income Tax Act what is taxed under the head ‗Income from House Property‘ is the inherent capacity of the property to earn income called the Annual Value of the property. The above is taxed in the hands of the owner of the property. COMPUTATION OF ANNUAL VALUE 1. GROSS ANNUAL VALUE (G.A.V.) is the highest of (a) Rent received or receivable (b) Fair Market Value. (c) Municipal valuation. (If however, the Rent Control Act is applicable, the G.A.V. is the standard rent or rent received, whichever is higher). It may be noted that if the let out property was vacant for whole or any part of the previous year and owing to such vacancy the actual rent received or receivable is less than the sum referred to in clause(a) above, then the amount actually received/receivable shall be taken into account while computing the G.A.V. If any portion of the rent is unrealizable, (conditions of unrealisability of rent are laid down in Rule 4 of I.T. Rules) then the same shall not be included in the actual rent received/receivable while computing the G.A.V. 2. NET VALUE (N.A.V.) is the GAV less the municipal taxes paid by the owner. Provided that the taxes were paid during the year. 3. ANNUAL VALUE is the N.A.V. less the deductions available u/s 24. DEDUCTIONS U/S 24:Are exhaustive and no other deductions are available:
A sum equal to 30% of the annual value as computed above.
Interest on money borrowed for acquisition/construction/repair/renovation of property is deductible on accrual basis. Interest paid during the pre construction/acquisition period will be allowed in five successive financial years starting with the financial year in which construction/acquisition is completed. This deduction is also available in respect of a self 48
occupied property and can be claimed up to maximum of Rs.30,000/-. The Finance Act, 2001 had provided that w.e.f. A.Y. 2002-03 the amount of deduction available under this clause would be available up to Rs.1,50,000/- in case the property is acquired or constructed with capital borrowed on or after 1.4.99 and such acquisition or construction is completed before 1.4.2003. The Finance Act 2002 has further
removed the
requirement of acquisition/ construction being completed before 1.4.2003 and has simply provided that the acquisition/construction of the property must be completed within three years from the end of the financial year in which the capital was borrowed. SOME NOTABLE POINTS In case of oneself occupied property, the annual value is taken as nil. Deduction u/s 24 for interest paid may still be claimed there from. The resulting loss may be set off against income under other heads but can not be carried forward. If more than one property is owned and all are used for self occupation purposes only, then any one can be opted as self occupied, the others are deemed to be let out. Annual value of one house away from workplace which is not let out can be taken as NIL provided that it is the only house owned and it is not let out. If a let out property is partly self occupied or is self occupied for a part of the year, then the value in proportion to the portion of self occupied property or period of self occupation, as the case may be is to be excluded from the annual value. From assessment year 1999-2000 onwards, an assessee who apart from his salary income has loss under the head ―Income from house property‖, may furnish the particulars of the same in the prescribed form to his Drawing and Disbursing Officer who shall then take the above loss also into account for the purpose of TDS from salary. A new section 25B has been inserted with effect from assessment year 2001-2002 which provides that where the assessee, being the owner of any property consisting of any buildings or lands appurtenant thereto which may have been let to a tenant, receives any arrears of rent not charged to income tax for any previous year, then such arrears shall be taxed as the income of the previous year in which the same is received after deducting there from a sum equal to 30% of the amount of arrears in respect of repairs/collection charges. It may be noted that the above 49
provision shall apply whether or not the assessee remains the owner of the property in the year of receipt of such arrears.
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CAPITAL GAINS
Profits or gains arising from the transfer of a capital asset during the previous year are taxable as ―Capital Gains‖ under section 45(1) of the Income Tax Act. The taxability of capital gains is in the year of transfer of the capital asset.
CAPITAL ASSET
As defined in section 2(14) of the Income Tax Act, it means property of any kind held by the assessee except:
1. Stock in trade, consumable stores or raw materials held for the purpose of business or profession. 2. Personal effects, being moveable property (excluding Jewellery, archaeological collections, drawings, paintings, sculptures or any other work of art) held for personal use. 3. Agricultural land, except land situated within or in area up to 8 kms, from a municipality, Municipal Corporation, notified area committee, town committee or a cantonment board with population of at least 10,000. 4. Six and half percent Gold Bonds, National Defence Gold Bonds and Special Bearer Bonds.
TYPES OF CAPITAL GAINS
When a capital asset is transferred by an assessee after having held it for at least 36 months, the Capital Gains arising from this transfer are known as Long Term Capital Gains. In case of shares of a company or units of UTI or units of a Mutual Fund, the minimum period of holding for long term capital gains to arise is 12 months. If the period of holding is less than above, the capital gains arising there from are known as Short Term Capital Gains.
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COMPUTATION OF CAPITAL GAINS (Sec.48)
Capital gain is computed by deducting from the full value of consideration, for the transfer of a capital asset, the following:-
a) Cost of acquisition of the asset(COA):- In case of Long Term Capital Gains, the cost of acquisition is indexed by a factor which is equal to the ratio of the cost inflation index of the year of transfer to the cost inflation index of the year of acquisition of the asset. Normally, the cost of acquisition is the cost that a person has incurred to acquire the capital asset. However, in certain cases, it is taken as following:
1. When the capital asset becomes a property of an assessee under a gift or will or by succession or 2. inheritance or on partition of Hindu Undivided Family or on distribution of assets, or dissolution of a firm, or liquidation of a company, the COA shall be the cost for which the previous owner acquired it, as increased by the cost of improvement till the date of acquisition of the asset by the assessee? 3. When shares in an amalgamated Indian company had become the property of the assessee in a scheme of amalgamation, the COA shall be the cost of acquisition of shares in the amalgamating company. 4. Where the capital asset is goodwill of a business, tenancy right, stage carriage permits or loom hours the COA is the purchase price paid, if any or else nil. 5. The COA of rights shares is the amount which is paid by the subscriber to get them. In case of bonus shares, the COA is nil. 6. If a capital asset has become the property of the assessee before 1.4.81, the assessee may choose either 7. The fair market value as on 1.4.81 or the actual cost of acquisition of the asset as the COA. b) Cost of improvement, if any such cost was incurred. In case of long term capital assets, the indexed cost of improvement will be taken. c) Expenses connected exclusively with the transfer such as brokerage etc. 52
SOME IMPORTANT EXEMPTIONS FROM LONG TERM CAPITAL GAINS
a) Section 54: In case the asset transferred is a long term capital asset being a residential house, and if out of the capital gains, a new residential house is constructed within 3 years, or purchased 1 year before or 2 years after the date of transfer, then exemption on the LTCG is available on the amount of investment in the new asset to the extent of the capital gains. It may be noted that the amount of capital gains not appropriated towards purchase or construction may be deposited in the Capital Gains Account Scheme of a public sector bank before the due date of filing of Income Tax Return. This amount should subsequently be used for purchase or construction of a new house within 3 years.
b) Section 54F: When the asset transferred is a long term capital asset other than a residential house and if out of the consideration, investment in purchase or construction of a residential house is made within the specified time as in sec. 54, then exemption from the capital gains will be available as: 1. If cost of new asset is greater than the net consideration received, the entire capital gain is exempt. 2. Otherwise, exemption = Capital Gains x Cost of new asset/Net consideration.
It may be noted that this exemption is not available, if on the date of transfer, the assessee owns any house other than the new asset. It may be noted that the Finance Act 2000 has provided that with effect from assessment year 2001-2002, the above exemption shall not be available if assessee owns more than one residential house, other than new asset, on the date of transfer. Investment in the Capital Gains Account Scheme may be made as in Sec.54.
c) Section 54EA: If any long term capital asset is transferred before 1.4.2000 and out of the consideration, investment in specified bonds/debentures/shares is made within 6 months of the date of transfer, then exemption from capital gains is available as computed in Section 54F.
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d) Section 54EB: If any long term capital asset is transferred before 1.4.2000 and investment in specified assets is made within a period of 6 months from the date of transfer, then exemption from capital gains will be available as :-
1. If cost of new assets is not less than the Capital Gain, the entire Capital Gain is exempt. 2.
e) Section 54EC: This section has been introduced from assessment year 2001-2002 onwards. It provides that if any long term capital asset is transferred and out of the consideration, investment in specified assets (any bond issued by National Highway Authority of India or by Rural Electrification Corporation redeemable after 3 years), is made within 6 months from the date of transfer, then exemption would be available as computed in Sec. 54EB. The Finance Act, 2007 has laid an annual ceiling of Rs. 50 lakh on the investment made under this section w.e.f. 1.4.2007. f) Section 54ED: This section has been introduced from assessment year 2002-03 onwards. It provides that if a long term capital asset, being listed securities or units, is transferred and out of the consideration, investment in acquiring equity shares forming part of an eligible issue of capital is made within six months from the date of transfer, then exemption would be available as computed in Sec. 54EB. As per the Finance Act 2006 it has been provided that with effect from assessment year 2007-08, no exemption under this Section shall be available.
LOSS UNDER CAPITAL GAINS Cannot be set off against any income under any other head but can be carried forward for 8 assessment years and be set off against capital gains in those assessment years.
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DEDUCTIONS UNDER CHAPTER VIA The Income Tax Act provides that on determination of the gross total income of an assessee after considering income from all the heads, certain deductions there from may be allowed. These deductions detailed in chapter VIA of the Income Tax Act must be distinguished from the exemptions provides in Section 10 of the Act. While the former are to be reduced from the gross total income, the latter do not form part of the income at all. The chart given below describes the deductions allowable under chapter VIA of the I.T. Act from the gross total income of the assesses having income from salaries. Section 80CCC Payment of premium for annuity plan of LIC or any other insurer. Deduction is available up to a maximum of Rs.10,000/Section 80CCD Deposit made by an employee in his pension account to the extent of 10% of his salary. Section 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. Section 80D Payment of medical insurance premium. Deduction is available up to Rs.15,000/ for self/family and also up to Rs. 15,000/- for insurance in respect of parent /parents of the assessee.
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Section 80DD Deduction of Rs.40,000/- in respect of (a) Expenditure incurred on medical treatment, (including nursing ) , training and rehabilitation of handicapped dependant relative. (b) Payment or deposit to specified scheme for maintenance of dependant handicapped relative . W.e.f. 01.04.2004 the deduction under this section has been enhanced to Rs.50,000/. Further, if the dependant is a person with severe disability a deduction of Rs.1,00,000/- shall be available under this section. Section 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 actually paid, whichever is less. In case of senior citizens, a deduction up to Rs.60,000/- shall be available under this Section. Section 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 deduct ion over a period of up to 8 years. Further, by Finance Act, 2007 deduction under this section shall be available not only in respect of loan 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. Section 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 56
Section 80GG Deduction available is the least of
Rent paid less 10% of total income
Rs.2000 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 be in receipt of house rent allowance.
Section 80U Deduction of Rs.50,000/- to an individual who suffers from a physical disability (including blindness) or mental retardation. Further, if the individual is a person with severe disability, deduction of Rs.75,000/ - shall be available u/s 80U. W.e.f. 01.04.2010 this limit has been raised to Rs. 1 lakh.Certificate should be obtained on prescribed format from a notified ‗Medical authority‘ Section 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.3lacs 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. Section 80QQB Deduction in respect of royalty or copy right income received in consideration for authoring any book of literary, artistic or scientific nature other than text book 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 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. 57
Section 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 lakh only. The following investments/payments are inter alia eligible for deduction u/s 80C:NATURE OF INVESTMENT
REMARKS For individual, policy must be in the name of self Life Insurance Premium or spouse or any child‘s name. For HUF, it may be on life of any member of HUF. — Contribution made under Employee‟s Provident Fund Scheme For individual, can be in the name of self/spouse, any child & for HUF, it can be in the name of any member of the family.
Contribution to PPF
a
—
Subscription to any notified securities/notified deposits scheme.
—
Subscription to any notified savings certificates
e.g. NSC VIII issue.
Contribution to Unit Linked Insurance Plan of LIC Mutual Fund
e.g. Dhanrakhsa 1989
Contribution to notified deposit scheme/Pension fund set up by the National Housing Bank.
—
Certain payment made by way of instalment or part payment of loan taken for purchase/ construction of residential house property
Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year.
Contribution by employee Recognised Provident Fund
to
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Subscription to units of a Mutual Fund notified u/s 10(23D)
—
Subscription to deposit scheme of a public sector company engaged in providing housing finance.
—
Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.
—
Tuition fees paid at the time of Available in respect of any two children admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education. Any term deposit for a fixed period of This has been included in Section 80C by the not less than five years with the Finance Act 2006. scheduled bank. Subscription to notified bonds issued by This has been included in Section 80C by the Finance Act 2007 and has come into effect from NABARD 1.4.2008. Payment made into an account under This has been introduced by Finance Act, 2008 the Senior Citizens Savings Scheme and shall come into effect from 1.4.2009 Rules, 2004 Payment made as five year time deposit This has been introduced by Finance Act, 2008 in an account under the Post Office and shall come into effect from 1.4.2009 Time Deposit Rules, 1981
It may be noted that the aggregate amount of deductions under sections 80C, 80CCC and 80CCD are subject to an overall ceiling of Rs.1 lakh.
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TAX REBATE & RELIEF
The total income of an assessee is determined after deductions from the gross total income are made as discussed in the previous chapter. It is on this total income that the tax payable is computed at the rates in force. The Income Tax Act further provides for rebate from the tax payable as computed above, if certain investments or payments are made. Rebate provided u/s 88 of the Act must be distinguished from deductions provided in Chapter VIA of the Act. While the latter reduces the gross total income, rebate is a reduction from the tax payable.
The Finance Act 2002 introduced some changes in the above which came into effect from A.Y. 2003-2004. The rate of rebate has been kept at 20% in case the gross total income, before giving effect to the deductions under chapter VIA, is below Rs. 1.5 lacs while the rate would be 15% if gross total income is higher than Rs. 1.5 lacs but lower than Rs. 5 lacs. On the other hand, if the gross total income exceeds Rs. 5 lacs, no rebate under this chapter would be available. It has also been provided that an individual whose income under the head ‗Salaries‘ is below Rs. 1 lakh during the previous year and constitutes at least 90% of his gross total income, shall be entitled to rebate @ 30% on the investments/ payments specified in Section 88.
The maximum amount of investment qualifying for rebate u/s 88 has been enhanced to Rs.70,000, however, additional rebate on investment up to Rs. 30,000 is available in respect of subscription to specified infrastructure equity share/debentures. Investment qualifying for rebate u/s 88 must be out of income chargeable to tax in the relevant previous year. The above requirement has, however, been deleted by the Finance Act 2002 w.e.f. A.Y. 2003-2004.
With effect from assessment year 2001-2002 onwards a new section 88C has been inserted. It provides that in case of assessee being a woman resident in India and below 65 years of age, tax rebate of an amount of Rs. 5,000 or 100% of tax, whichever is less, shall be available. The above 60
rebate is to be allowed from the amount of Income Tax computed before allowing for tax rebate u/s 88 in respect of various investments expenditures
It is important to note that no tax rebate u/s 88 shall be available from A.Y.2006-07 onwards. Similarly, sections 88B and88C providing special rebates to senior citizens and ladies stand omitted w.e.f. 01.04.2006.
RELIEF UNDER SECTION 89 (1):It is available to an employee when he receives salary in advance or in arrear or when in one financial year, he receives salary of more than 12 months or receives ‗profits in lieu of salary‘.W.e.f. 1.6.89, relief u/s 89(1) can be granted at the time of TDS from employees of all companies, co-operative societies, universities or institutions as well as govt./public sector undertakings, the relief should be claimed by the employee in Form No. 10E and should be worked out as explained in Rule 21A of the Income Tax Rules.
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PERMANENT ACCOUNT NUMBER
P.A.N. or Permanent Account Number is a number allotted to a person by the Assessing Officer for the purpose of identification. P.A.N. of the new series has 10 alphanumeric characters and is issued in the form of laminated card. PAN was introduced to facilitates linking of various documents, including payment of taxes, assessment, tax demand, tax arrears etc. relating to an assessee, to facilitate easy retrieval of information and to facilitate matching of information relating to investment, raising of loans and other business activities of taxpayers collected through various sources, both internal as well as external, for detecting and combating tax evasion and widening of tax base.
TRANSACTIONS IN WHICH QUOTING OF PAN IS MANDATORY
Purchase and sale of immovable property.
Purchase and sale of motor vehicles.
Transaction in shares exceeding Rs.50000.
Opening of new bank accounts.
Fixed deposits of more than Rs.50000.
Application for allotment of telephone connections.
Payment to hotels exceeding Rs.25000.
Provided that till such time PAN is allotted to a person, he may quote his General Index register Number or GIR No.
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WHY IS IT NECESSARY TO HAVE P.A.N?
It is mandatory to quote PAN on return of income, all correspondence with any income tax authority. From 1 January 2005 it will be mandatory to quote PAN on challans for any payments due to Income Tax Department. It is also compulsory to quote PAN in all documents pertaining to the following Financial transactions:
sale or purchase of any immovable property valued at five lakh rupees or more
sale or purchase of a motor vehicle or vehicle, [the sale or purchase of a motor vehicle or vehicle does not include two wheeled vehicles, inclusive of any detachable
side-car having an extra wheel, attached to the motor vehicle
a time deposit, exceeding fifty thousand rupees, with a banking company
a deposit, exceeding fifty thousand rupees, in any account with Post Office Savings Bank
a contract of a value exceeding one lakh rupees for sale or purchase of securities;
opening a bank account
making an application for installation of a telephone connection (including a cellular telephone connection)
payment to hotels and restaurants against their bills for an amount exceeding twenty-five thousand rupees at any one time
payment in cash for purchase of bank drafts or pay orders or banker‘s cheques for an amount aggregating fifty thousand rupees or more during any one day
Deposit in cash aggregating fifty thousand rupees or more with a bank during any one day
Payment in cash in connection with travel to any foreign country of an amount exceeding twenty-five thousand rupees at any one time
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TYPES OF INCOME TAX RETURN FILING: 1.) E-Filing (Electronic file). 2. Manually or Physical Filing.
E-Filing E-File is the term for electronic filing, or sending your income tax return from tax software via the Internet to the IRS or state tax authority. Two benefits of filing taxes electronically over mailing in your return are that you will receive a tax refund sooner and your tax data goes directly to IRS computers with a greatly reduced chance of human keying or document scanning errors. E-filed returns cost 20 times less to process compared to a paper return, which saves tax payers a lot of money. What is E-Filing?
The process of electronically filing Income tax returns through the internet is known as efiling. It is mandatory for companies and Firms requiring statutory audit u/s 44AB to submit the Income tax returns electronically for AY 2007-08 onwards. E-filing is possible with or without digital signature.
Types of E-Filing
There are three ways to file returns electronically.
Option 1: Use digital signature, in which case no further action is required.
Option 2: File without digital signature, in which case the duly signed ITR-V form is to be submitted to CPC Bengaluru using Ordinary Post or Speed Post within 120 days of transmitting the data electronically. This completes the Return filing process for nondigitally signed returns. Option 3: File through an e-return intermediary who would do e-Filing and also assist the Assessee file the ITR – V form.
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Types of E-Filing
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Option 1: Use digital signature, in this case no further action required.
Option 2: File without digital signature, in which case ITR-V form is to be filled with
the
department. This is a single page receipt cum verification Form.
Option 3:
File through an E-return intermediary Who would do e-filing and also assist the
assesses file the ITR-V form.
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Documents required in e-filing:
Form no. 16 (for tax deducted by employers)
Account statements of bank accounts
Property details.
Sale and purchase of investments/ assets
Details of tax payments made
PAN card number.
Birth date.
TAN number
Bank account no.
Bank details – MICR code, type of a/c.
Email id.
Address details.
Important Date for filing ITR:
31st march For Tax Deposit.
31st July for Filing Income Tax return.
What is Form 26AS? Form 26AS is a consolidated Tax statement issued under Rule 31 AB of Income Tax Rules to PAN holders. This statement with respect to a financial year will include details of: a) Tax deducted at source (TDS), b) Tax collected at source (TCS), and c) Advance tax/Self assessment tax/Regular assessment tax etc. deposited in the bank by the taxpayers (PAN holders). Form 26AS will be prepared only with respect to Financial Year 05-06 onwards.
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E – Filing process: This is explained below with the help of a flow chart.
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Steps Process For Filing Income tax return: Whether you go for E-filing Process or manually filing income tax return. These links assist you in completing and submitting Your ITR. 1) Go to the website http://www.incometaxindia.gov.in/
2) Click the link e- file income tax return at the top left corner of the home page 3) Select the correct form – there are two income tax forms for salaried individuals. ITR-1 is for those who derive their income from salary, pension or interest while ITR-2 is for income from capital gains, house property and other sources. Those who wish to submit their tax returns manually may download the PDF forms – external website that opens in a new window form here. These forms need to be printed, 69
filled by hand and signed before submitting to your local income tax office. 4) Use of return Preparation Software – Those citizens who wish to avail the e-filing system need to download the return preparation software-external website that opens in a new window for each ITR form. This software is an excel file that requires one to type in personal details as well as financial information from TDS certificates, bank statements, deductions made and interest statements. 5.) Generating an XML file – After filling the details, check once for accuracy. After you are satisfied, click the „generate‘ button to create your tax return in XML format. Save this XML file on your computer 6.) Register – The next step requires you to register at the income tax website – external website that opens in a new window. You registered Permanent Account Number (PAN card) has to be entered as your username. 7.) Login – after registering, enter your user id and password to login. Click on the relevant form on the left panel and select ‗submit return‘. 8.) Upload XML – browse to select the XML file, which you had generated and saved in step 3. Click on the ‗upload‘ button to upload the file. 9.) Acknowledgement – after the file is successfully uploaded, acknowledgement details or the ITR-V form will be displayed. Take a printout of this acknowledgement for your records. Digital signature – if your income tax return was digitally signed, then no further paperwork or Visit to the income tax office is needed but if it was not digitally signed, in this case the ITR-V form should be filled and send to Income Tax office, Bangalore. You need to Print and fill up the verification part of the acknowledgement cum Verification form (ITR-V). This has to be signed and submitted to the local income tax office within 60 days to complete the e-filing process. Additional assistance – In case you require any more help in filing the paper copy of the return, please contact the public relations officer at your local income tax office. One may also phone the
Aayakar
Sampark
Kendra
(ASK)
call
[email protected]
70
centre
at
124-2438000
or
email
at
How SPA Capital Services Limited Files ITRs Of its Prospective Clients: SPA capital services ltd. Files approximately more than 18000 ITRs of its Prospective Clients all over India. The Work Process in Delhi-NCR is as follows: The Employees who are engage in this process are divided at three locations Janakpuri (Head Office) Noida Gurgaon And the respective works are assigning by these Way: Noida and Gurgaon‟s employees With the help of Trainee Students Distributes Questionnaires form to their Clients (Different companies), now these trainee students Collect completely duly filled questionnaires forms and Form 16 of every Client and if any query arise from the client side, with the help of their mentor they solve it. If the Income of employees is less than 5 lakh, they filled ITRs Manually. Income more than 5 lakh, they send it to Janakpuri location for e-filing.
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Role of janakpuri‟s employees: 1. To generate the XML file using the compute Tax or Web based portal with the help of Form-16 and the questionnaire filled by the client Steps to Generate ITR XML file through FORM-16 Step 1: Add New ITR
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Step 2: After adding new ITR we receive this page
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Step3: Enter personal information
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Step 4: Filling Information like PAN no. , Address etc
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Step 5: To fill the Salary, Deductions etc
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Step 6: Filling of Employer‘s detail
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Step 7: Adding the details of Form-16 Snapshot-1
Snapshot-2
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Step 8: Adding the Investment
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Step 9: Adding the Expenditures
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Step 10: Filling up the Tax Details
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Step 10: Filling up the Bank Details
82
Step 11: Check the tax computation Snapshot-1
Snapshot-2
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Step 12: Verification
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Step 13: Prepartion of XML file in case of E-file
And paper return in case of physical filing
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2. Upload these xml files online on income tax department websites. 3. After successful upload, a Token number along with Acknowledgement generate. 4. These Token number and Acknowledge are keeps for future benefits. 5. Then the ITR-V is generated and signed by the client and is sent to Bangalore office of Income Tax Dept. 6. Within a month the confirmation mail is received from the Income Tax Dept. that the return is been filed. Note: People from outside Delhi send theirs form 16 and filled questionnaires via e- mail with the help of using Company link to get filled theirs ITRs and Janakpuri‘s employees do it.
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ADVANTAGE OF E-filing.
E-filing is easy, fast, and the most reliable and secure method.
Fast
Processing:
The
acknowledgment of ITR submission is fast and the refunds are processed faster by the ITD for E-Filed ITRs.
More Accurate: E-Filing software with built-in validations and electronic connectivity to ITD are seamless and help minimize errors. Paper based filing with self calculations can be prone to error. Also, when any paper based form is transferred to electronic system, there is always a possibility of human error in data entry.
No Time, place constraint: You can file anytime, anywhere. E-Filing is available 24 hours a day, seven days a week, so taxpayers may always file at their own convenience.
More Secure than Paper based filing: E-filing is safer than paper based filing. With paper based filing your confidential identity information is lying in files and can be passed from person to person in the CA‘s office or in ITD‘s office.
You can easily access and use your data for future returns: Most of the paid E-filing software applications store your data in a secure manner and allow you to access it whenever you are ready to file subsequent returns.
It is good for the environment: E-Filing is environment friendly. You just need to print no or at most one page instead of multiple copies of multiple pages that is required in case of paper based filing.
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DISADVANTAGE OF E-filing:
Lack of control is another issue that certain individuals have with e-filing. Using an electronic technology that you may not thoroughly understand can be daunting and the idea of a paper-based tax return over which you have more control is more comfortable.
The average taxpayer wouldn‘t want to consider giving e-filing a try.
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PHYSICAL FILING / MANUAL FILING Physical Filling Method leaving behind, because of the new trend of e-filling. Physical filling method is very easy but time consuming method of filling the ITR. Facility of physical filling of ITR is also available in SPA capital. In the physical filling advantages are less but disadvantages are more. Physical filing is also called as a Manual filing. For Manual/physical filing, the individual takes a print out of the respective ITR form, from the income tax site, along with the acknowledgment form, and after duly filling it, files it with the respective income tax office. Forms are available free of cost. PROCESS OF PHYSICAL FILE: Prepare the ITR through manually/through software. Take the print out (hardcopy) of the ITR if prepare through software. Take the signature of the respective clients on that ITR. Go to Nearest Income tax office. Submit the duly signed return. Take acknowledgement slip.
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PHYSICAL FILING‟S ADVANTAGE:
It is reliable on primary data provided by the user.
In Physical filing numbers of defects are less.
Physical filing are filled in only original form, form can‘t be download by internet.
PHYSICAL FILING‟S DISADVANTAGE:
Physical filing is lengthy process.
Physical filing takes more time.
Refund from physical filing come after 3 month.
Physical filing is not filled by some companies when the annual salary of user is not more than 5 Lac.
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COMPARISON BETWEEN E-FILING AND PHYSICAL FILING
Physical filing and e-filing are only two ways to file the ITRs. Because of the increasing demand of internet mostly people are using e-filing method .e-filing is easy and if a person is filing its ITR through the internet then refund easily comes in only 2 month, but if you are using physical method refund comes after 3 months in your bank account . Apart from it there are several advantages of e-filing that‘s why Numbers of assesses are using efiling for filing theirs ITRs.
Last Year record 1.64 Crores people filled theirs ITRs
electronically. So if you don‘t have time and have to file your ITR then you should go for e-filing, and you don‘t want to share your personnel information to other then in this case you should also go for e- filing Otherwise Physical filing process takes long time and personal information can be share by maximum people.
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Graphical Representation of ITRS filing in SPA Capital Services Limited. Physical Filing 20%
e-filing 80%
80% 70% 60% 50% 40% 30% 20% 10% 0% Physical Filing
e-filing
Graphical representation of % of different ITR filing at SPA Capital Services Ltd. ITR 4 (5%) ITR 2 (10%)
ITR 1 (85%) ITR 2 (10%) ITR 1 (85%)
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ITR 4 (5%)
Common mistakes people make while filing tax returns
The most common notion among salaried employees is that since tax has already been deducted from their salary, there is no need to file their income tax returns. This is not at all true or legal. Even though tax has been deducted and there is no further liability to pay tax, an employee has to compulsorily file his / her income tax return. Form No. 16 received from employer is not their income tax return.
Employees do not include the interest that they receive on their savings bank account. The entire interest earned on your savings bank account is taxable.
Omission of income received by a minor child. A minor child is not required to file a separate return of income. However, this income has to be included in the hands of either of the parents, although it might be a small amount of bank interest.
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Conclusion: From the study it can be concluded that e-filing of return is any time better than physical filing because It saves time Can be filed 24X7 If there is any refund then the assessee receives the money within 3 months. It is more secure than physical filing Good for environment It is fast than physical filing
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Limitations: Every study has its own advantages and disadvantages. No study is perfect as there is always a room for improvement. In this study though every effort has made to bring it into perfection and no stone is left unturned, there are still certain limitations, which need to be highlighted without which the study can become biased. Such limitations are: The data has been generated from the secondary source thus any error in the information would have got replicated in the report. Time constraint was another limitation. As no efficient research can be done in this short period of time. The biasness of the sample units may also cause the wrong results.
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Suggestion: SPA Capital is a growing organization which has through its corporate clients, grown at a considerable pace, which is quite appreciable.
One of the selling strategies adopted by SPA is assisting the corporate employees in their ITR filing. This has, for sure proven to be a successful strategy in building long-term relationship with their clients and thus grows in this competitive era.
As Income Tax Return filing is a mandatory procedure for every citizen of India who is earning money from any source, most of the people approach to such type of companies who file their ITR at a nominal rate and thus saving their time, so this is a great opportunity for SPA and to boost its business level.
There are some deficiencies in the working of SPA yet this can be removed by working on them and by proper handling of queries of clients.
SPA is an emerging organization which helps the people to fulfil their almost every financial need at one stop.
It is serving to various corporate employees such as Wipro, TCS, Aricent Technologies etc. and generating a good amount of business. If u are working person then you should go for e-filing If you want to file your ITR by yourself then you should go for physical filing SPA capital is taking care of all your personal information.
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