1 Presented By:- Tenzin Ganden (ITP)

CONTENTS 1.Income Tax Basic Concepts 2.Income Tax Rates 3.Permanent Account Number (PAN) 4.Tax Deduction at Source/TAN 5.Salary & TDS on Salary 6.Income Tax Related to CTA 7.Miscellaneous/Others 2

STRUCTURE Govt. of IndiaMinistry of FinanceDepartment of RevenueIncome Tax Office 3

4 1. Income Tax Basic Concepts  Financial year: Beginning from 1 st April and ending on subsequent 31 st March.  Financial Act: The finance bill is commonly referred to as budget and is presented generally on the last day of February of every year. The finance bill when signed by President becomes the Finance Act.

5 Continue….. Previous Year: (section 3) Financial Year in which the income is earned. E.g Assessment Year: [section 2(9)] Next Financial year of previous year. E.g for previous year “Assessment year ” means the period starting from April1 st and ending on March 31 st of the next year. Assessee: [section 2(7)] Tax payee i.e. Individual/Firm/Company etc

6 Continue…..  Residential Status.(section 5 to 9) Resident/Non-Resident: Either He is in India for a period or periods amounting in all to 182 days or more in relevant Previous Year; or He is in India for 60 days or more during the relevant Previous Year and has been in India for 365 days or more during four Previous Years immediately preceding the relevant Previous Year.

2.1-7  Heads of Income/Source of Income Salary (section 15 to 17) House Property Business/Profession Capital Gains Other Sources Continue…..

8 2. Income Tax Rate for Last 3 Years. Assessment Year RateGeneralWomenSenior Citizen 60 to 80 years80 years & above NilUpto 180,000Up to 190,000Up to 250,000Up to 500,000 10%180,001 to 500, ,001 to 500, ,001 to 500, %500,001 to 800,000 30%Above 800,000 For Individuals. 2.1

9 Continue….. Assessment YearRateGeneralWomenSenior Citizen NilUp to 160,000Up to 190,000Up to 240,000 10%160,001 to 500,000190,001 to 500,000240,001 to 500,000 20%500,001 to 800,000 30%Above 800,

10 Continue….. Assessment YearRateGeneralWomenSenior Citizen NilUpto 160,000Up to 190,000Up to 240,000 10%160,001 to 300,000190,001 to 300,000240,001 to 300,000 20%300,001 to 500,000 30%Above 500,000 3% 2.3

11 The Income Tax Department identifies the Assessee/Persons with a Permanent Account Number(PAN), which is a unique 10 digits alpha numeric number. PAN is to be obtained only once. An Assessee need not obtain a new PAN, even if he is transferred to any other place. 3. PERMANENT ACCOUNT NUMBER (PAN)

Continue…..  Person Liable to obtain PAN: 1.Every person whose taxable income exceeds the basic exemption limit during an accounting year. 2.In case of the total sales, turnover of gross receipts of the business or profession of the assessee, exceeds or is likely to exceed ` 500,000 during an accounting year. 3.In case of charitable or religious trust liable to file return of Income.

Continue….. 4.The Central Govt. may require by a notification. 5.Time deposit exceeding ` 50,000 in bank or banking institution. 6.Deposit in cash aggregating ` 50,000 or more with a bank during any one day. 7.PAN is compulsory for any person who have to file income tax return.

 Deposit of Tax in Govt. Account a)Advance Tax b)TDS/TCS (section 190 to 206C) c)Self Assessment Tax d)Tax on regular Assessment Any person responsible for making specified payment, is liable to deduct tax at source, at prescribed rate, from such payment. 1)Specified payments on which TDS is to be deducted. E.g.

SectionParticularsTDSThreshold LimitEducation Cess 192SalaryNormal Rate As per normal computation of income EC 3% 194AInterest from Bank.10% ` 10,000/- and above. Nil 194CPayment to the Individual (Contractors) 1% ` 30,000/- per single contract or ` 75,000/- in aggregate during the financial year. Nil 194CPayment to other contractor (Company) 2% ` 30,000/- per single contract or ` 75,000/- in aggregate during the financial year. Nil 194JFees for Professional/Technical Services 10% ` 30,000/- Nil 15

SectionParticularsTDSThreshold LimitEducation Cess 194 I Land & Building10 % ` 180, Nil Plant & Machinery2 % ` 180, Nil

 Tax Deduction and Collection Account Number. It has to be obtained by every person responsible for deduction or collection of Tax at Source. Without TAN, no one can deduct tax from others. E.g. CTRC & Branches TVHA & Branches TCEWF & Branches  Under Section 206AA, TDS at higher rate of 20% is deductible if the deductee does not provide PAN to the deductor.

 Challan No. 281 for TDS Deposit.  Deposit within one week from the date of deduction.  Quarterly E-TDS Return Filing.  Due Date S.No.Quarter EndedDue Date 11 st April to 30 th June15 th July 21 ST July to 30 th Sept.15 th Oct. 31 st Oct. to 31 st Dec.15 th Jan. 41 st Jan. to 31 st March15 th May

19  Name of Deductee or Payer.  PAN Number.  Date of Payment/Amount credited.  Challan Serial Number.  BSR Code.  Date of Deposit/Amount of TDS.

 Time Line for Issue of TDS Certificates. Deduction U/SForm NumberTime for Furnishing the Form 19216Due date by 31 st May 194C,194J,194 A etc. 16AQuarterly-Due date within 15 days from the due date for furnishing the Quarterly TDS statement.

 What is salary? (u/s15, 16 & 17 ) Employer & Employee Relationship. An Income can be taxed under the head salaries only if there is a relationship of an employer and employee between the payer & payee. Salary includes:-  Wages  Pension  Fees

 Perquisites [section 17(2)]  Leave Encashment  Arrears of Salary  Gratuity  Methods of Calculating TDS from Salary:- Estimation of the salary including perquisites for the financial year. Deduction as per section 80C,80CCC,80CCD etc.. Apply the tax rates for the financial year. Calculate the Tax. Divide it by 12.(i.e. Twelve Months )

The amount of tax so arrived should be deducted every month in equal installments. However any excess or deficit arising out of any previous deduction can be adjusted by increasing or decreasing the amount of subsequent deductions during the same financial year.

Allowance Exempted From Tax Example:- House Rent Allowance:- Least of the following is [section 10(13A)] exempted from tax. A.50% of the salary (4 Metro Cities ) and 40% (for the rest). B.House Rent Allowance received. C.The excess of rent paid over 10% of salary (Rent Paid -10% of salary )  Salary means [ Basic + DA]

25 PERQUISITES Example:- [section 17(2)] Value of Rent Free Accommodation provided to the employee by the employer. 1.15% of salary in the cities ( Population exceeding 25 Lakh as per 2001 census ) 2.10% of salary in the cities (population exceeding 10 Lakh but not more than 25 Lakh ) 3.7.5% of salary in other areas.

 Society Registration  Income Tax Registration under section 12A for the exemption of income tax for charitable societies.  CTRC, TCEWF,TVHA,SARD,TRUST.  Importance of Branch & Division (Consolidation) E.g. CTRC & 42 Branches. TVHA & 12 Branches. TCEWF & 17 Branches.  Treatment for Source of Income:  Donor’s Name/Address/Letters etc..  Corpus Fund & Letter. [section 11(1)d]

 Utilization of Income.  Utilization according to the Aims & Objectives of the Trust.  Utilization of 85% of the Total Income Received during the year.  Set Apart for 5 Years u/s 11(2) in case short fall of utilization.  Disallowance of in case of certain expenses. 1.E.g: u/s40A(3) :Payments made to a person in a day exceeds ` 20,000 must be through an Account payee cheque or an account payee bank draft. (Crossed Ch.)

Personal Expenditure. 3.Expenditure by the way of penalty or fine for violation of any law. 4. Prior Period Expenses i.e. expenses related to the particular financial year only. (Bills & receipts dated) 5. Acknowledgment of Payment above 5,000 on revenue stamps

 Importance of Maintenance of Books of Accounts/Document. Balance Sheet. Income & Expenditure Statement. Receipts & Payments. Details of Receivables & Payables. Bank Balance Conformation Certificate. Vouchers, Receipts Book, Ledger, Cash Book, Journal Book. Details of Capital Expenditure (Bills, Transportation Expenses etc.)

Prior Period Expenses i.e. expenses related to the particular financial year only.(Bills & receipts dated) Acknowledgment of Payment above ` 5,000 on revenue stamps.  Importance of Filing of Income Tax Return. It is declaration of income earned or received during the Financial Year to the Govt. of India. Income above ` 50,000 on during the financial year in case of charitable Trust. Filing of Return before due date i.e. 30 th September of Assessment Year.

Importance of Board of Directors Resolution for Set Apart for next 5 years. Specified purpose must be duly mentioned in the application form. Compulsory to File Application in case of Set Apart in Form No.10 to the Assessing Officer before 30 th September. Compulsory of Auditor’s 10B Report. Consolidation of Income & Expenditure of all the Branches.

 Form 15G & 15H. Declaration by individuals for the non deduction of TDS from certain income. It is against law if an individual has taxable income. Do not declare 15G / 15H in case you have taxable income. e.g.:- Declaration of Form 15G/15H in Bank. Compulsory Declaration of Form 15G/15H in case of non-deduction of TDS from Bank Interest. In that case PAN is Compulsorily needed. 32

 The relevant Acts, Rules, Forms and Notifications are available at the Websites of Income Tax Departments.

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