PROJECT REPORT

ON
INCOME TAX RETURN
MASTER OF COMMERCE (ACCOUNTANCY)
PART-2 (SEMESTER-III)
(2016-2017)
INTERNAL ASSESSMENT
DIRECT TAX
Submitted To:Prof. R.Perumal.
Submitted By:VANITA SHANKAR BHUJBAL
ROLL NO:-07
S.I.E.S. (NERUL) COLLEGE OF ARTS, SCIENCE & COMMERCE

S.I.E.S (NERUL) COLLEGE OF ARTS, SCIENCE & COMMERCE

CERTIFICATE
(2016-2017)
This is to certify that the project entitled

INCOME TAX RETURN is a

project work done by VANITA SHANKAR BHUJBAL, ROLL NO-07 in

fulfillment of the requirements for the M.COM in ACCOUNTANCY
(PART-2) (SEMESTER-III ) during the academic year 2016-2017 is the
original work done of the candidate and completed under guidance of Prof.
R. Perumal.

Date:Place:- NAVI MUMBAI

DECLARATION BY STUDENTS

I, VANITA SHANKAR BHUJBAL, ROLL NO:-07 , the student of

M.COM in ACCOUNTANCY (Part-2) (Semester-III) (2016-2017) hereby
declares that I have completed the project on INCOME TAX RETURN
under the supervision of the internal guidance of PROF. R. Perumal. and
that the contents of the project are not copied any other source such as
internet, earlier projects, textbooks etc. The information submitted is true and
original to best of my knowledge.

Thank you,
Yours faithfully,
VANITA S. BHUJABL
ROLL NO:-07

ACKNOWLEDGEMENT
I would like to thank all the people who helped me in undertaking the study
and completing the project, by imparting me with valuable information and
guidance that was required at every stage of my project work.
I would like thank our principal Dr. Koel Roy. Choudhury . and M.COM Coordinate Prof. Dr. Koel Roy. Choudhury .. for giving me an opportunity and
encouragement to prepare the project.
Last

but

not

the

least,

would like

to

thanks

my

project

guide

for guiding and helping me throughout the preparation of my project, right

from selection of the topic till its completion.

VANITA S. BHUJBAL
Roll No: 07

SR.
NO
.

TOPIC NAME

PG.NO
.

Introduction of Tax

06

Introduction of Income Tax

08

ITR E- Filling

14

ITR Forms

19

Conclusion & reference

24

INTRODUCATION OF TAX
A fee charged ("levied") by a government on a product, income, or activity. Taxes
represent the amount of money we pay to the Government at predefined rates and
periodicity. Taxes are the basic source of revenue to the Government using which it
provides various kinds of services to the tax payers.
TYPES OF TAXES
There are mainly two types of Taxes, direct tax and indirect tax which are
governed by two different boards, Central Board of Direct Taxes (CBDT) and
Central Board of Excise and Customs (CBEC).
1.DIRECT TAXES :
Direct taxes are the personal liability of tax payer. These are collected
directly from the tax payers and they have to be paid by the persons on
whom it is imposed.
Important direct taxes are listed below:
a) Income Tax - This is most important type of direct tax and almost
everyone is familiar with it. TDS is its famous synonym and whosoever is
earning above a minimum amount (tax exemption limit) has to pay income
tax.
b) Wealth Tax - This is in addition to the income tax and is levied if your
net wealth exceeds Rs 30 Lakh at the rate of 1% on the amount exceeding Rs
30 Lakh. Note - In Budget 2013-2014 Finance Minister Mr P. Chidambaram
introduced a surcharge of 10 percent on taxpayers with an annual taxable
income of more than 1 crore (10 million) rupees.
c) Property Tax/Capital Gains Tax - This is levied on the capital gains
arrived by selling property and stocks. Tax rates are different for long term
and short term capital gains.
d) Gift Tax/ Inheritance or Estate Tax - Amount exceeding Rs. 50000
received without consideration by an individual/HUF from any person is
subjected to gift tax as income under "other sources". There are exemptions
like money received from relatives is not taxable. Marriage gifts and money
received through inheritance are also exempt from gift tax. Inheritance tax
was earlier in practice but has been repealed by the government.
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e) Corporate Tax - Companies operating in India are taxed as per the

corporate tax rate on their income. This tax is one of the major sources of
revenue for government.
2) INDIRECT TAX :
Indirect Tax Impact and incidence of indirect Taxes fall on different persons
as opposed to direct taxes where impact and incidence is on the same person.
These taxes are recovered from different groups of people but the liability
remains with the person who collects it. Tax payer recovers the indirect taxes
paid from their consumers and clients and finally pays it to government. For
example, when we purchase any product we pay VAT, when we eat in
restaurants we pay service tax which are ultimately deposited in
government's kitty by the service providers. Brief about various types of
indirect taxes is given below:
a) Service Tax: Service providers in India are subject to service tax, which
is charged on the aggregate amount received by the service provider.
Services like leasing, internet/voice, transport, etc are subject to service tax.
b) Custom Duty: Custom duties are indirect taxes which are levied on
goods imported to/exported from India. There are different rules for different
types of goods and sectors. Government keeps on changing these rates so as
to promote import/export of specific goods.
c) Excise Duty :Excise duties are indirect taxes which are levied on goods
manufactured in India for domestic consumption. Like custom duty, there
are a number of rules which keep on changing as per government discretion.
d) Sales Tax and VAT: Sales tax is levied by the government on sale and
purchase of products in Indian market. As customers, whatever you buy
from the market, you pay sales tax on it. Now, sales tax is supplemented
with new Value Added Tax so as to make it uniform across country.
e) Security Transaction Tax (STT): STT is levied on transactions
(sale/purchase) done through the stock exchanges. STT is applicable on
purchase or sale of various financial products like stocks, derivatives, mutual
funds etc.

INTRODUCATION OF INCOME TAX

MEANING
Many jurisdictions tax the income of individuals and business entities, including
corporations. Generally the tax is imposed on net profits from business, net gains,
and other income. Computation of income subject to tax may be determined under
accounting principles used in the jurisdiction, which may be modified or replaced
by tax law principles in the jurisdiction. The incidence of taxation varies by
system, and some systems may be viewed as progressive or regressive. Rates of tax
may vary or be constant (flat) by income level. Many systems allow individuals
certain personal allowances and other non business reductions to taxable income,
although business deductions tend to be favored over personal deductions.[4]
Personal income tax is often collected on a pay-as-you-earn basis, with small
corrections made soon after the end of the tax year. These corrections take one of
two forms: payments to the government, for taxpayers who have not paid enough
during the tax year; and tax refunds from the government for those who have
overpaid. Income tax systems will often have deductions available that lessen the
total tax liability by reducing total taxable income. They may allow losses from
one type of income to be counted against another. For example, a loss on the stock
market may be deducted against taxes paid on wages. Other tax systems may
isolate the loss, such that business losses can only be deducted against business tax
by carrying forward the loss to later tax years.
Most tax rates are progressive, which means that the tax rate increases as the level
of income increases. The reasoning behind this tax structure is that the poor are
less able to pay taxes, while the rich have more excess cash with which to pay
taxes.
The amount of income tax paid can be reduced by a number of deductions, which
are allowed as the result of legislation by the relevant government entity. These
deductions are usually intended to foster certain types of behavior by taxpayers.
For example, the research and development credit was used to foster more R&D
expenditures within the United States.

Who has to pay income tax?

Income tax is collected on a yearly basis as a percentage of an entitys income in a
fiscal year (April to March). The maximum rate of income tax is capped at 30% in
India, though surcharge and educational cess are also applicable, which may
increase this upper limit by some percentage. Taxpayers are broadly categorized
into:

Individuals and Hindu Unified Families (HUF) entities:

Individuals (both male and female) up to the age of 60 years.

Senior citizens above 60 years and up to 80 years of age.

Super senior citizens above 80 years old.

2 Business Entities
Domestic company, firms and local authority.

Co-operative societies.

Foreign companies.
Income tax rates are levied according to the divisions given above. For the first
category of individual taxpayers, the tax slabs and rates are applicable as per
following.
INCOME TAX SLABS AND RATES

For HUF and individuals (less than 60 years old):

Tax Slabs

Tax Rates

Income up to Rs.2.5 lakhs

Nil

Income between Rs.2.5

lakhs and Rs.5 lakhs

10% of amount
exceeding Rs.2.5 lakhs
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Income between Rs.5

lakhs to Rs.10 lakhs

20% of amount
exceeding Rs.5 lakhs

Income above Rs.10 lakhs

30% of amount
exceeding Rs.10 lakhs

Senior citizens (individuals over 60 years old):

Tax Slabs

Tax Rates

Income up to Rs.3 lakhs

NIL

Tax Slabs
Income between Rs.3
lakhs
and Rs.5
Income
up tolakhs
Rs.5 lakhs

Super senior citizens

(individuals over 80
years old):

Tax Rates
10% of amount
exceeding Rs.3 NIL
lakhs

Income
between
Rs.5
20%
of amount20% of amount exceeding Rs.5
Income
between
Rs.5 lakhs to
Rs.10
lakhs
to Rs.10 lakhs
exceeding Rs.5 lakhs
lakhs
lakhs

Income
above
Rs.10
Income
above
Rs.10 lakhs 30% of amount30% of amount exceeding Rs.10
lakhs
exceeding Rs.10lakhs
lakhs

A point to note here is that if an individual touches the age of 60 or 80 during a

fiscal year, then his/her income is taxable under the senior citizen/super senior
citizen category for the whole fiscal, whichever is applicable.

Surcharge is applicable at 10% of income above Rs.1 crore in a fiscal year.

10

Educational cess is levied as 2% and SHEC (secondary and higher

secondary education cess) is levied at 1%.

Businesses:
For the second category of taxpayers, namely business entities, the following tax
rates and slabs are applicable.
Co-operative societies:

Tax Slabs

Tax Rates

Income up to Rs.10,000

10% of income

Income between Rs.10,000 to

Rs.20,000

20% of amount exceeding

Rs.10,000

Income above Rs.20,000

30% of amount exceeding

Rs.20,000

Domestic Company, Firms and Local Authority:

This category of tax payers arent levied taxes on the basis of income brackets but
rather as a collective percentage of overall earnings. Taxes are collected as flat
30% of overall declared income.
Foreign Companies:
Foreign companies are required to pay taxes at 40% of overall operating income
out of India.

Educational cess is levied at 2%, while SHEC is levied at 1% of taxable

income.
11

Surcharge is collected at 10% of income exceeding Rs.1 crore.

Domestic companies have to pay 5% surcharge on income exceeding Rs.1
crore but less than Rs.10 crores. 10% surcharge is levied on domestic companies
on income above Rs.10 crores.

All the data listed above is for the FY 2014-15 and AY 2015-16. Same slabs and
rates are expected for FY 2015-16 and AY 2016-17. FY denotes fiscal year and
lasts from April to March, while AY stands for assessment year which denotes the
year you actually pay your previous years taxes in. For instance FY 2014-15 has
just ended and you are required to pay taxes for this FY in AY 2015-16.
TDS Deductions:
TDS, or Tax Deducted at Source, is a type of direct tax levied by the government
wherein taxes are deducted at the source of payments. For instance, the salary you
receive from your employer will be released every month only after deducting the
applicable TDS on the amount. As such, it becomes important to report your
income for the coming fiscal to the respective tax authorities.
Residential status determines tax on income from India
Residential status is determined on the basis of physical presence of an individual
in India during a financial year.
Taxability in India depends on the following factors:
a) Source of income
b) Residential status
Any income, the source of which is located in India, is taxable in India
(irrespective of residential status of the person).
Residential status is determined on the basis of physical presence of an individual
in India during a financial year. If the individual satisfies any of the basic
conditions mentioned below, she would qualify as a resident, otherwise she would
qualify as a non-resident for tax purposes.
12

Basic conditions
Stay in India during the financial year is 182 days or more,
or
Stay in India during the financial year is 60 days or more and in the four years
immediately preceding the financial year is 365 days or more.
A resident may either qualify as a resident and ordinarily resident (ROR) or
resident but not ordinarily resident (RNOR). If any of the additional conditions
mentioned below are not met, then the individual would qualify as RNOR,
otherwise the individual would qualify as ROR.
Additional conditions
.Resident in India in nine of 10 financial years preceding the relevant financial
year,
or
Stay in the 7 years preceding the relevant financial year is in aggregate 729 days
or more.
An individual qualifying as ROR is taxed on her global income and is required to
report her global assets in her Indian income tax return. However, an individual
qualifying as a non-resident or RNOR is taxed on her India-source income (i.e.,
income earned in India or received in India).
Accordingly, the salary deposited in the NRE account in India is liable to tax in
India. Benefits under the Double Taxation Avoidance Agreement may also be
explored.

13

INCOME TAX RETURN

E-Filling
The process of using a computer program to transmit information electronically to
another party. This allows the user to complete and submit the information in a
timely fashion. The electronic filing system prevents the user from making small
mistakes by alerting them if something does not register correctly. A large majority
of federal and state revenue departments offer citizens the ability to file yearly tax
returns using an electronic filing system. The Internal Revenue Service provides
this service free of charge for federal tax returns.
PRE-REQUISITE FOR REGISTRATION IN E-FILING
APPLICATION
A user must register at www.incometaxindiaefiling.gov.in
Pre-requisites to register
PAN (Permanent Account Number)
TAN (Tax Deduction Account Number)
Membership with ICAI - For Chartered Accountant
Registration process
Provide PAN / TAN, Password details, Personal details as per PAN /
TAN, Contact details and Digital signature (if available and
applicable)
Submit request

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 On success, Activation link is sent to user through e-mail and a

mobile PIN to mobile number. Click on the activation link and
provide Mobile PIN to activate e-Filing account.
Once registered, LOGIN using User ID, Password ,Date of Birth/
Incorporation and Captcha code
METHODS OF E-FILING
An Income Tax return can be e-Filed by:

Preparing the Income Tax return offline using return preparation

software available free of cost at the Income Tax Department e-Filing
website and Uploading the Income Tax Return data- A taxpayer can e-File
Income Tax Return from ITR 1 to ITR 7.

Submit ITR-1/ITR4S Online- An Individual taxpayer can prepare and

submit Income Tax Return- ITR 1/ITR4S Online.
E-FILING FUNCTIONALITIES
View Status Income Tax Return, ITR-V, Demand/Refund, Rectification
View the status of your ITR, Demand/ Refund and Rectification details.
View e-Filed Return/Form
View the Income Tax Returns, ITR-V Acknowledgment Form and the uploaded
XML for the last three assessment years. You can view these documents online
anytime or save and print.
Refund Re-issue request

15

Request for refund re-issue if the Income Tax Return has been processed. If a
refund is determined and it fails to reach the taxpayer then a request can be
raised.
File Rectification
Rectify e-filed Income Tax Returns online, if required, only after completion of
Income Tax Return processing by CPC of the Income Tax department.
e-File Defective Income Tax Return u/s 139(9)
Taxpayer can e-File Income Tax Return against the Defective Notice issued to
them u/s 139 (9) for AY 2011-12 onwards.
View Status Income Tax Return, ITR-V, Demand/Refund, Rectification
View the status of your ITR, Demand/ Refund and Rectification details.
View e-Filed Return/Form
View the Income Tax Returns, ITR-V Acknowledgment Form and the uploaded
XML for the last three assessment years. You can view these documents online
anytime or save and print.
Refund Re-issue request
Request for refund re-issue if the Income Tax Return has been processed. If a
refund is determined and it fails to reach the taxpayer then a request can be
raised.
File Rectification
Rectify e-filed Income Tax Returns online, if required, only after completion of
Income Tax Return processing by CPC of the Income Tax department.
16

e-File Defective Income Tax Return u/s 139(9)

Taxpayer can e-File Income Tax Return against the Defective Notice issued to
them u/s 139 (9) for AY 2011-12 onwards.
New users - Chartered Accountant (CA), Tax detector and Collector and Third
party Software utility Providers
Add / Dis-engage CA - This is a new feature wherein, an assessee can add or Disengage a CA and assign / authorize the audit Forms which a CA can submit on
their behalf.
e-Filing Vault - Higher Security - User can use the e-Filing Vault - Higher
Security, wherein the user can choose the secured option to login and reset
password.
Refund / Demand Status - User can view the Refund / Demand status under My
Account tab post login.
ITR1/ITR 4S online - Individual users can use this feature to prepare and submit
ITR1 online. The PAN (non-editable) and Tax details (editable) are auto populated.
Download ITR Forms, XML and Pre-fill XML - User can download the
ITR/XML submitted for three AY and also, download and use the pre-fill XML
containing the PAN and Tax details
Compliance - This is a new feature wherein, an assessee can update the reason for
being non-filer / Mismatch in Return filed.
Return of Net Wealth - Form BB, where assessee can submit wealth tax. Its
available for Individual, HUF and Company users.

17

Reset Password additional options- This is a new feature where assessee can
reset the password using the below additional options Using PIN (OTP to mobile number and e-mail id)
Login through Net Banking
Using Aadhaar OTP
Verification and Validation of Contact details of Taxpayers - Capturing valid
mobile number and e-Mail id of Taxpayers enabling effective communication.
Aadhaar Linking Option provided for the taxpayer to link the Aadhaar number,
enabling the taxpayer to use the additional options to e-Verify the return, Secured
login and reset the password.
TAN Registration - Enabling TAN users to file Form 15CA, Form 35, Form 15G,
Form 15H and TDS.
Electronic verification of Returns e-Filed Returns are electronically verified
using e-Filing OTP, Net Banking, Aadhaar OTP, Using Bank ATM (SBI), Using
Bank Account number (PNB) and Demat Account.

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INCOME TAX RETURN

File of income tax returns
By now almost every salaried individual must have got their Form 16 to file their
income-tax returns (ITR), latest by 31 July.
ITR means
First, let us understand what filing ITR means. When you file your tax return, it is
proof that you have an income for which you have paid tax. According to the
Income Tax Act, 1961, you have to file ITR every year. Filing it provides legality
to what you are earning. Not filing it means that you as a person have not disclosed
your income. The ITR gives a standard proof of income to a person and helps to
establish a record with the tax department. Also, if you have paid tax more than
what was required, you will have to file the return to get a refund for the excess
amount paid.
The person file ITR
Any individual who has a taxable income should file a tax return. Currently, if you
are below the age of 60 and have an income up to Rs.2 lakh, you are exempt from
tax. Any income above Rs.2 lakh is taxable. And you have to file the return
irrespective of whether you have paid your tax or not. So, if you were under the
impression that since your employer has deducted the required taxes and deposited
with the central government on your behalf, it is not necessary for you to file any
return, then you are wrong.
It is important to file ITR

19

Your tax obligation basically has two components payment and quantification.
Payment of taxes is the first part. Your company may have deducted tax at source
from your salary and paid it to the I-T Department on your behalf. The second part
is quantification, which happens when you file your ITR. Through this, your actual
tax liabilities after the required adjustments of deductions and the taxes paid get
quantified.
When you dont file your ITR, you carry the risk of not only paying a penalty but
also an interest on it. If you accrue losses, you cannot carry it forward to set off
against your income in the next year if you dont file the ITR for the relevant
previous year.
Otherwise also, a copy of the ITR can help in the role of proof of income if you are
taking a loan. In the same role, it can be used while applying for a visa. Filling the
form also helps you consolidate all your incomes and the taxes paid. Say, you
worked in two companies in one year, and have two Form 16. In the ITR, you can
consolidate the incomes from both the companies, and the taxes deducted.

Types of Income Tax Return Forms

To file tax returns Income Tax Department had issued a series of forms applicable
to different type of assessees:
ITR 1: This form is applicable for an individual whso has no income other than
Salary/ Pension and Interest.

20

ITR 2: This form is applicable for an individual who has income under different
heads but not business /profession income.
ITR 3: This form is applicable for an individual who is partner in a partnership
firm .
ITR 4: This form is applicable for an individual who has income from
business/profession.
ITR 5: This form is applicable for a Firms, AOP,BOI, Local Authority.
ITR 6: This form is applicable for a Company.
ITR 7: This form is applicable for a Trust.
ITR 8: This form is used for filing only FBT Return.

DUE DATE TO FILE INCOME TAX RETURN AY 2016-17 FY 2015-16

Due date to file Income Tax return has been provided under section 139 of the
income tax act . Further section 139 of the Income tax also provide the person who
are

required

to

file

the

compulsory

return

of

Incometax

Mode of Filing and correct form has been prescribed under rule 12 of the Income
Tax

rules.

Before explaining the due date to file Income Tax return for Assessment year 201617 (financial year 2015-16) ,we have provided the persons who are required to file
Income

tax

return.
21

Who

is

required

to

file

Income

1. Every Company

:(Whether earn profit or loss)

2. Every Firm

:(whether earn profit or loss)

Tax

return

22

3. Individual /HUF/AOP/BOI or artificial Judicial person :If Total

Income plus Deduction under chapter VIA(Section 80C to 80U) and
exemption under section 10,10B,10BA is more than maximum amount
which is not chargeable under Income Tax Act.
4. Other :If income more than maximum amount which is not chargeable
under Income Tax Act.
Maximum amount which is not chargeable under the Income Tax act or
Exemption

Limit

for

various

person

are

1. For very senior citizen (age 80 or more)

:Rs 500000

2. For Senior citizen (age 60-80)

:Rs 300000

3. For others (age less than 60)

:Rs 250000

as

under

23

CONCLUSION:
Income Tax Return is the form in which an assesses files information about his
Income and tax thereon to income tax Department. Various forms are ITR 1, ITR
2, ITR3, ITR 4, ITR 5, ITR 6 and ITR 7. The Income Tax Act, 1961 and the
Income Tax Rules, 1962, obligates citizens to file returns with the Income Tax
Department at the end of every financial year. These returns should be filed before
the specified due date. Every Income Tax Return Form is applicable to a certain
section of the Assesses. Only those Forms which are filed by the eligible Assesses
are processed by the Income Tax Department of India. It is therefore imperative to
know which particular form is appropriate in each case. Income Tax Return Forms
vary depending on the criteria of the source of income of the Assesses and the
category of the Assesses.
REFERENCE:
Books:
M.Com. Part-II :Semester III ,Direct Tax, Author Name :Ainapure, Publication
Name: MANAN PRAKASHAN
24

Book Name: INCOME TAX, Author Name: Dr. Vinod k.Singhania & Dr. Monika
Singhania., Publication Name: Taxmann Publication (p.) Ltd.
Online website:
Indiantaxguide.wordloress.com
Calub.in
Cleartax.in
Finotax.com
www.simpletaxindia.net
www.charteredclub.com

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