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Taxpayers attitude towards e-return filing

A Summer Training Project Report Submitted in partial fulfilment of


the requirement for the Award of Degree of
Master of Business Administration

2015 2016

Under the Guidance of:


Submitted by:
Ms. PREETI BANSAL
ashwani kumar yadav

048

DEPARTMENT OF MANAGEMENT

MAHARAJA AGRASEN INSTITUTE OF TECHNOLOGY

(Affiliated to G.G.S.I.P. University)

Sector 22, Rohini, Delhi -110086

An ISO 9001:2008 Certified Institute


AICTE NBA Accredited Institute
UNDERTAKING

This is to certify that I ASHWANI KUMAR YADAV had


completed the Project Titled TAX PAYERS ATTITTUDE
TOWARDS E-RETURN FILING in SPA CAPITAL SERVICES
LIMITED under the guidance of Ms. PREETI BANSAL in the
partial fulfillment of the requirement for the award of degree of
MBA from Maharaja Agrasen Institute of Technology (Affiliated
to G.G.S.I.P. University), New Delhi. This is an original piece of
work and I had neither copied nor submitted it earlier
elsewhere.

Student name and signature: Ashwani kumar yadav

Course: MBA

Dated:
Certificate from Guide

This is to certify that the project titled Tax Payers Attitude


Towards E-Return Filing is an academic work done by
Ashwani Kumar Yadav submitted in the partial fulfillment of
the requirement for the award of the Degree of MBA from
Maharaja Agrasen Institute of Technology (Affiliated to G.G.S.I.P.
University), New Delhi under my guidance and direction. To the
best of my knowledge and belief the data and information
presented by him/her in the project has not been submitted
earlier.

Name and signature of faculty

Mrs. PREETI BANSAL

( Assistant professor)
ACKNOWLEDGEMENT

Knowledge as an important tool that play important role in


our daily life, however is necessary to apply it on the right way
and gain experience. The project work has placed an important
part to explore the practical work, to learn in detail apart from
the theoretical studies. Hence, such type of project work is
valuable for the management students of these days. I
perceived this work as an opportunity to gain knowledge and
experience apart from study.

I am highly gratified to Mrs. Rajni singh who permitted me


to do the project work and provided me with useful knowledge.
I am also thankful to other personnel of the company who gave
me valuable guidelines during the course of preparation of this
project report.

I am thankful to Mrs. PREETI BANSAL my project guider for


providing me valuable guidelines during the preparation of this
project report.
ABSTRACT
Information-communication technology is being integrated to deliver better and convenient
public services by government in various ways under the e-governance program around the
world. Filing income tax return online is one such ambitious initiative under e-governance.
The purpose of this paper is to understand tax payers attitude towards this new information
system. The survey is administered over one hundred eight respondents through a close ended
structured questionnaire. The study employed factor analysis and multiple regression analysis
to understand tax payers attitude towards e-return filing. The study found that perceived ease
of use, perceived usefulness, perceived credibility, and computer awareness significantly
influence the customers acceptance of e-filing. The empirical findings of the study are useful
for governments, tax policy makers, tax authorities, software developers and tax payers.

KEYWORDS E-return filing, Factor analysis, Perceived usefulness, Perceived ease of use.

Chapter-1

Introduction
Information communication technology is regarded as one of the most remarkable scientific
and technological development during last couple of decades which has impacted the life of
human being so deeply. Governments around the world are increasingly integrating this
technological development to reinvent public service and dissemination of information for
better public administration under various e-governance initiatives. The basic objective of all
e-governance projects is promotion of administrative efficiency through innovative executive
practices directed to make citizen services more convenient, efficient and customized. A
successful implementation of any e-governance initiative is a step towards citizen-directed
smart government. The success of any e-governance initiatives, however, depends upon the
importance that people place on particular project in terms of its usability. One of the
prominent e-governance initiatives which have been launched by a number of governments is
in the form of online return filing. The rapid development of internet technology, information
transmission through internet and improved safety mechanism has made e-return filing a
more convenient method of using service in many countries (Lu et al., 2010). The electronic
filing has various advantages over traditional methods of filing return. It is convenient, saves
time by avoiding queue in the tax department and can be completed in just 20-30 minutes
time. For tax payers who have digital signature, they can download their tax statement and
finish tax declaration within 5-10 minutes. Furthermore, electronic tax filing offers many
benefits to service providers also. It substantially minimize their workload and operational
cost due to submission of tax return in a paperless environment resulting reduced cost of
processing, storing, handling of tax returns and conservation of environment (Azmi et al.,
2010). For better tax administration and good governance practices, Indian Tax Department
launched e-return filing, TRPs and a Saral form (for individual tax payers) in new avatar in
2007.The Tax Department made huge investment in terms of system development, safety and
security of submitted information and sensitizing tax payers about the benefits of e-return
filing using mass-media campaign. The campaign was targeted over the facility of
anywhere/anytime filing, fast processing and automatic tax calculations with full safety and
security of the information submitted. Despite all the efforts on part of the Tax Department,
the tax payers perception about this new information technology oriented system is a cause
of worry. Since the public dont directly communicate with tax personnel, see or touch the tax
forms as the service is provided online, the e-return filing system may provide little
psychological satisfaction. Other problems may lies in reluctance of learning new system,
time involvement, stability and reliability of system during e-return filing process,
confidentiality and privacy issues may also create challenges in acceptance of electronic
return filing (Azmi et al., 2010). Due to all these issues the acceptance of e-return filing as a
method of tax filing has not gained good acceptance among the various categories of tax
payers in India. (table1).It is therefore, important for the government to identify the reasons
for the slow acceptance of this system by the individual tax payers.

1.2 ABOUT THE ORGANISATION

S.P.A. is one of the fast growing composite financial services providers with all India
presence. The Group has been engaged in providing financial services for investments,
insurance, loans, stock broking at NSE and BSE, currency derivatives, depository participant
activity, merchant banking for domestic and multinational corporates, institutions and public
sector undertakings with over a decade of experience.

S.P.A. CAPITAL SERVICES LIMITED is the flagship company of the Group based in
Mumbai and New Delhi. It is ranked amongst the top 10 mutual funds distributors in the
country. The company is engaged in providing financial planning and risk management
solutions to various customer segments. Advisory services for alternate investment
options like portfolio management services in equity, debt and commodities besides
investments in structured products, venture capital funds and real estate funds are also
provided.

The company has a nation-wide distribution network serviced by its branches, regional
offices and associates. The company has mobilized more than 150000 crores for various
mutual funds during the last 8 years and is currently having Asset under Management of
over 14000 crores with more than 60000 satisfied customers.

Spa capital Services head office is registered at- 25, C-Block, Community CenterJanakpuri
New Delhi, 110058
1.2.1 COMPANY PROFILE

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 Indias leading financial advisory house, offering various financial solutions to its
Institutional, corporate and individual clients.

Customer centric approach of SPAs 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 corporates, trusts and individuals.

PROMOTERS

Mr. Kamal Somani, FCA, is a senior finance professional with over 30 years of experience
in investment banking, securities broking and corporate finance. His vast experience and
vision has enabled the Group to establish itself as a respected financial services provider in
the country. He looks after the overall group strategies and leads securities broking,
investment advisory and investment banking activities of the Group.
Mr. Sandeep Parwal, B.Com (Hons.), FCA, has over 26 years of experience in various
aspects of financial services. He handles investment advisory, insurance broking and
merchant banking activities of the Group. His expertise in providing customized innovative
solutions with unmatched speed provides a distinctive edge to the Group's capability.

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 26 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 accurately assessing his customers need, meeting
them and leading an ever enthusiastic 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 Financing,
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.VivekGautam, 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 Corporates
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.

1.2.2 COMPETITIVE STATUS OF THE COMPANY

(a) 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

(b) MILESTONES

Since 1994, with the coming into existence of the SPA Group, we have diversified into a
complete financial solution providing house, catering varied needs of our clients ranging
from investment advisory services to investment banking, corporate re-structuring,
distribution and broking services, risk management and insurance advisory. Within a short
span of time, the Group has made a place for itself in the midst of the top financial solutions
provider in the country.

(c) GROUP OF COMPANIES

SPA capital services ltd.


SPA capital Advisors Limited
SPA securities limited
SPA insurance broking Services limited
SPA com Trade ltd.

(d) SERVICES OFFERED BY SPA GROUP

Investment Banking.

Management on public & rights offers.


Privet placement of equity & debt.
Managers to takeovers/Mergers/Acquisitions.
Delisting & Buyback offers.
Equity Research.
Overseas listing. (FCCB)
ESOPs Advisory.
Debt Restructuring.
Financial structuring.
Loan syndication.
Short Term Debt.
Distribution of Financial Products
Mutual Funds.
Public Issues.
Bonds.
Fixed Deposits.
Debt Issues.
Other financial Products.
Security Broking
Cash Market.
Wholesale Debt.
Market.
Futures & Options.
Insurance Broking
Life Insurance Broking
Non-Life Insurance Broking

CHAPTER-2

Research methodology

Research methodology refers to the tools or the technique which is used for the analysis or
for the formation of the project report. It is meant to find out detailed information and closely
investigate the study. It may be of two types:

1. Primary data research project.


2. Secondary data research project.
Primary data research projects: Primary data research project refers to gather the
information form the external environment for some specific purpose for which they are
originally collected. For this, the person forming the project has to collect the information on
his own. For Eg. If a person wants to collect some information about a particular company, he
should work as trainee for some time period.

A secondary data research project involves the gathering and/or use of existing environmental
data for purpose other than those for which they were originally collected. These secondary
data may be obtained from many sources, including literature, industry surveys, compilations
form computerized databases and information systems, and computerized or mathematical
models of environmental processes.

PURPOSE OF THE STUDY


The purpose of the study is to identify that from the service sector point of view, through
which procedure will be best suitable for filing of income tax return.

Types of research

Exploratory or Formulate research: in this type of research, preliminary data is


gathered and then on the basis of it the Hypotheses is suggested accordingly.
Descriptive research: In this research, qualitative terms are considered.
Quantitative research: This considers the quantitative analysis only.
Casual research: This research is not done according technically or on nay method
but it is just a simple research.

Our research is based on descriptive, qualitative and quantitative research.

Descriptive research: - Descriptive research includes surveys and fact finding enquires of
different kinds. The major purpose of descriptive research is description of the state of affairs
as it exists at present. Researcher has no control over the variables of this type of research.

Qualitative research: In our research we need to analyse the attitude of service sector. So
this based on all qualitative data. In short, qualitative research is especially important in the
behavioural sciences where the aim is to discover the underline motives of human behaviour.
Through such research we can analyses various factors which motivate to people to behave in
a particular manner or which make people like or dislike a particular thing.

Quantitative research: Quantitative research is based on the measurement of quantity or


amount. It is applicable to phenomena that can be expressed in terms of quantity. So we can
use it in our research for collection of all the numerical data.

Sources of data collection

While deciding about the method of data collection to be used for the study the researcher
should keep two types of data.

1. Primary data
2. Secondary data

We use in our research primary data, as well as secondary data. Primary means collected a
fresh, and the first time data and secondary means which are already available like annual
report, magazines etc.

Survey method: survey refers to the method of securing information concerning phenomena
under study form all or selected number of respondents of the concerned area. In a survey the
investigator examines those phenomena which exist in the universe independent of his action.
We used the scheduling method.

Scheduling: In this method the enumerators along with schedules, go to respondents, put to
them the questions from the Performa in the order the questions are listed and recorded the
repiles in the space meant for the same in the Performa.

SIGNIFICANCE OF RESEARCH
Research methodology is a very significant technique as helps to understand the topic deeply
and in the complete manner so that even the minute points can also be determined and the
detailed knowledge about the topic can be taken.

CHAPTER-3

Finding and analysis

1. Lack of experience and knowledge to e-file


70
60
58
50
40
30
20 24
19
10 13
0 6

2. Do not trust e-filing

40

35 36
34
30

25 26

20

15 16

10

8
5

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE STRONGLY DISAGREE

SERIES1

3. Unsuccessful attempt to e-file


Series 1

48

34 36

16

4. I do not have a step by step explanation to use e-Filing, therefore I feel nervous to
use e-Filing.

Series 1
60

50

40

30

20

10

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE STRONGLY DISAGREE

Series 1

5. Network problem during peak hours


Series 1
60

50

40

30

20

10

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE STRONGLY DISAGREE

Series 1

6. Difficult to remember Reg. No/ Password

Series 1
60

50

40

30

20

10

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE STRONGLY DISAGREE

Series 1

7. Delay in execution
Series 1
60

50

40

30

20

10

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE STRONGLY DISAGREE

Series 1

8. Digital sign renewal cost is high

Series 1
50
45
40
35
30
25
20
15
10
5
0
STRONGLY AGREE AGREE NEUTRAL DISAGREE STRONGLY DISAGREE

Series 1

9. Computer illiterate & so to depend on others


Series 1
60

50

40

30

20

10

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE STRONGLY DISAGREE

Series 1

10. Genuine usage of computer software

Series 1
70

60

50

40

30

20

10

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE

Series 1

11. Usage of e-forms to be published effectively


120

100

80

60

40

20

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE

Series 1

12. Free training to individual

80

70

60

50

40

30

20

10

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE

Series 1

13. Tax payers to be motivated


90

80

70

60

50

40

30

20

10

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE

Series 1

14. Website of income tax dept. to be made user friendly


80

70

60

50

40

30

20

10

0
STRONGLY AGREE AGREE NEUTRAL DISAGREE

Series 1

BASIC INFORMATION ABOUT TAX

While filling the return online one should know the basic information about tax
Taxes in India are of two types, Direct tax and indirect tax.
Direct taxes are like income tax, wealth tax, etc. are those whose burden falls directly
on the tax payer.
The burden of indirect tax are like service tax, VAT etc. can be passed on to a third
party.

Income tax is all income other than agricultural income levied and collected by the central
government and shared with states.

According to income tax act 1961, every person who is assessee and whose total income
exceeds the maximum exemption limit, shall be chargeable to the income tax at the rates or
rates prescribed in the finance act. Such income tax shall be paid on the total income of the
previous year in the relevant assessment year.

1.0 INTRODUCTION

Before one can embark on a study of the law of income-tax, it is absolutely vital to
understand some of the expressions found under the Income-tax Act, 1961. The purpose of
this Chapter is to enable to comprehend basic expressions. Therefore, all such basic terms are
explained and suitable illustrations are provided to define their meaning and scope.

1.1 OBJECTIVES

After going through this chapter you should be able to understand:

Importance and History of Income Tax in India


Meaning of Person and Assessee
Definitions of various Terms used in Income Tax
What is regarded as Income under the Income-tax Act
What is Gross Total Income
Concept of Assessment Year and Previous Year
How to charge tax on income
Income-tax rates

1.2 IMPORTANCE , HISTORY, PRESENT ACT


IMPORATANCE
The Taxation Structure of the country can play a very important role in the working of our
economy. Some time back the emphasis was on higher rates of Tax and more incentives. But
recently, the emphasis has shifted to Decrease in rates of taxes and withdrawal of incentives.
While designing the Taxation structure it has to be seen that it is in conformity with our
economic and social objectives. It should not impair the incentives to personal savings and
investment flow and on the other hand it should not result into decrease in revenue for the
State.
In our present day economy structure Income Tax plays a vital role as a source of Revenue
and a measure of removal economic disparity. Our Taxation structure provides for Two types
of Taxes --- DIRECT and INDIRECT; Income Tax, Wealth Tax and Gift Tax are Direct Taxes
whereas Sales Tax and Excise Duties are Indirect Taxes.

HISTORY
The Income Tax was introduced in India for the first time in 1860 by British rulers following
the mutiny of 1857. The period between 1860 and 1886 was a period of experiments in the
context of Income Tax. This period ended in 1886 when first Income Tax Act came into
existence. The pattern laid down in it for levying of Tax continues to operate even to-day
though in some changed form. In 1918, another Act- Income Tax Act, 1918 was passed but it
was short lived and was replaced by Income Tax Act, 1922 and it remained in existence and
operation till 31st. March, 1961.

PRESENT ACT
On the recommendation of Law Commission & Direct Taxes Enquiry Committee and in
consultation with Law Ministry a Bill was framed. This Bill was referred to a select
committee and finally passed in Sept. 1961. This Act came into force from 1st.April 1962 in
whole of the country.
Income Tax Act, 1961 is a comprehensive Act and consists of 298 Sections. Sub-Sections
running into thousands Schedules, Rules, Sub-Rules, etc. and is supported by other Acts and
Rules. This Act has been amended by several amending Acts since 1961. The Annual
Finance Bills presented to Parliament along with Budget make far-reaching amendments in
this Act every year.

1.3 PERSON [ Section 2(31) ]

The word Person is a very wide term and embraces in itself the following :

Individual: It refers to a natural human being whether male or Female, Minor or


Major.

Hindu Undivided Family (HUF): It is a relationship created due to operation of


Hindu Law. The Manager of HUF is called Karta and its member are
called Coparceners.

Company: It is an artificial person registered under Indian Companies Act 1956 or


any other Law.

Firm: It is an entity which comes into existence as a result of partnership agreement.


The Income Tax accepts only these entities asFirms which are accessed as Firms
under Section 184 of the Act.

Association of Persons (AOP) or Body of Individuals (BOI): Co-operative


societies, MARKFED, NAFED, etc. are the example of such persons. When persons
combine together to carry on a joint enterprise and they do not constitute partnership
under the ambit of law, they are assessable as an Association of Persons. An A.O.P.
can have firms, companies, associations and individuals as its members.A Body of
Individual (B.O.I.) cannot have non-individuals as its members. Only natural human
being can be members of a Body of Individuals.

Local Authority: Municipality, Panchayat, Cantonment Board, Port Trust etc. are
called Local Authority.

Artificial Judicial Person: Statutory Corporations like Life Insurance Corporation, a


University etc. are called Artificial Judicial Persons.
These are seven categories of person chargeable to tax under the Act. The aforesaid
definition is inclusive and not exhaustive. Therefore, any person, not falling in the above-
mentioned seven categories, may still fall in the four corners of the term Person and
accordingly may be liable to tax under Sec.4.

1.5 ASSESSEE [ Section 2(7) ]

Assessee means a Person by whom any Tax or any other sum of money is payable under
this Act. And this is divided into 3 categories.

1.6 MEANING OF INCOME [ Section 2(24) ]

The Definition given u/s 2 (24) is inclusive and not exhaustive. According to English
dictionary, the term Income means periodical monetary return coming in regularly from
definite sources like ones business, Land, Work, Investments etc..

Its nowhere mentioned that Income refers to only monetary return. It includes value of
Benefits and Perquisites.

The term Income includes not only what is received by using the property but also the
amount saved by using it himself. Anything which is convertible into income can be regarded
as source of accrual of income.

Income includes :

Profit and Gains: For instance, Profit generated by a businessman is taxable as


Income.

Dividend: For instance, Dividend declared/paid by a company to a shareholders is


taxable as income in the hands of shareholders.

Voluntary contribution received by a Trust: In the hands of a Trust, income


includes voluntary contributions received by it. This rule is applicable in the
following cases.

o Such contribution is received by a trust created wholly or partly for charitable


or religious purpose ; or

o Such contribution is received by a scientific research association ; or

o Such contribution is received by any fund or institution established for


charitable purposes ; or

o Such contribution is received by any university or other educational


institutions or hospital.

FEATURES OF INCOME
The following features of income can help a person to understand the concept of income.

(i) Definite Source: Income has been compared with a fruit of a tree or a crop from the
field. Fruit comes from a tree and crop from fields. Thus the source of income is definite in
both cases. The existence of a source for income is somewhat essential to bring a receipt
under the charge of tax.

(ii) Income must come from Outside: No one can earn income from himself. There can be
no income from transaction between head office and branch office. Contributions made by
members for the mutual benefit and found surplus cannot be termed as income of such
group.

(iii) Tainted Income: Income earned legally or illegally remains income and it will be
taxed according to the provisions of the Act. Assessment of illegal income of a person does
not grant him immunity from the applicability of the provisions of other Act. Any
expenditure incurred to earn such illegal income is allowed to be deducted out of such
income only.

(iv) Temporary or Permanent: Whether the income is permanent or temporary, it is


immaterial from the tax point of view.
(v) Voluntary Receipt: The receipts which do not arise from the exercise of a profession or
business or do not amount to remuneration and are made for reasons purely of personal
nature are not included in the scope of total income.

(v) Dispute regarding the Title: In case a person is receiving some income but his title to
such receipts is disputed, it will not free him from tax liability. The receipt of such income
has to pay tax.

(vi) Income in Money or Moneys worth: The income may be in Cash or in kind. It is
taxable in both cases.

TAX TREATMENT OF INCOME


For the purposes of treatment of income for tax purposes it can be divided into 3 categories:

A. Taxable Income: These incomes form part of total income and are fully taxable. These
are treated u/s 14 to 69 of the Act. These are Salaries, Rent, Business Profits, Professional
Gain, Capital Gain, Interest, Dividend, Winning from Lotteries, Races etc.

B. Exempted Incomes: These incomes do not from part of total income either fully or
partially. Hence, No Tax is payable on such incomes. These incomes are given u/s 10(1) to
10(32) of the Act.

C. Rebate able (Tax Free) Incomes: These incomes form part of total income and are fully
taxable. Tax is calculated on total income out of which a Rebate of Tax at average Rate is
allowed. The rebate able incomes given u/s 86 of the Act are :

Share of income received by a member of an association of persons provided the total


income of such AOP is assessed to tax at the rates applicable to an individual.

Share of income received by a partner of a firm assessed as an association of persons


(PFAOP) provided the total income of such PFAOP is assessed to tax at the rates
applicable to an individual.

1.7 GROSS TOTAL INCOME (GTI) & TOTAL INCOME

U/s 14 the term Gross Total Income [ GTI ] means aggregate of incomes computed under
the following Five heads :

Income under the head Salaries

Income under the head House Property

Income under the head Profit and Gains of Business or Profession.

Income under the head Capital Gain.

Income under the head Other Sources.

After aggregating income under various heads, losses are adjusted and the resultant figure is
called Gross Total Income [ GTI ]
From Gross Total Income, Deductions u/s 80 are allowed. The resultant figure is called
Total Income on which Rates of Taxes are applied

1.8 ASSESSMENT YEAR [ Section 2 (9) ]

Assessment Year means the period of 12 months commencing on the 1st day of April every
year.
In India, the Govt. maintains its accounts for a period of 12 months i.e. 1st April to 31st
March every year. As such it is known as Financial Year. The Income Tax department has
also selected same year for its Assessment procedure.

The Assessment Year is the Financial Year of the Govt. of India during which income a
person relating to the relevant previous year is assessed to tax. Every person who is liable to
pay tax under this Act, files Return of Income by prescribed dates. These Returns are
processed by the Income Tax Department Officials and Officers. This processing is called
Assessment. Under this Income Returned by the assessee is checked and verified.
Tax is calculated and compared with the amount paid and assessment order is issued. The
year in which whole of this process is under taken is called Assessment Year.

At present the Assessment Year 2008-2009 (1-4-2008 to 31-3-2009) is going on.

1.9 PREVIOUS YEAR [ Section 3 ]

As the word Previous means coming before , hence it can be simply said that the Previous
Year is the Financial Year preceding the Assessment Year e.g. for Assessment Year 2008-
2009 the Previous Year should be the Financial Year ending 31st March 2008.

Previous Year in case of a continuing Business :

It is the Financial Year preceding the Assessment Year. As such for the assessment year 2008-
2009, the Previous Year for continuing business is 2007-2008 i.e. 1-4-2007 to 31-3-2008.

Previous Year in case of newly set up Business :

The Previous Year in case of newly started business shall be the period between
commencement of business and 31st March next following. e.g. in case of a newly started
business commencing its operations on Diwali 2007, the Previous Year in relation to
Assessment Year 2008-2009. Shall be the period between Diwali 2007 to 31 March 2008.

Previous Year in case of newly created source of income :

In such case the Previous Year shall be the period between the day on which such source
comes existence and 31st March next following.

Sl.
Income Section Previous Year
No.

1. Cash Credit [68] Financial Year in which found to be entered.


2. Unexplained Investment [69] Financial Year preceding the Assessment Year

3. Unexplained Bullion, Cash, Financial Year in which found in the possession


[69A]
Jewellery of the assessee.

4. Partly explained Investment [69B] Financial Year in which Investment was made.

5. Financial Year in which expenditure was


Unexplained Expenditure [69C]
incurred.

6. Payment of Hundi, Money in Financial Year in which such payment was


[69D]
Cash made.

1.10 WHEN INCOME OF PREVIOUS YEAR IS NOT TAXABLE IN THE


IMMEDIATELY FOLLOWING ASSESSMENT YEAR.

The rule that the income of the previous year is taxable as the income of the immediately
following assessment year has certain exceptions. These are:

1. Income of non-residents from shipping business [ Section 172] ;

In case a Non-Resident Shipping Company, which has no representative in India, earns


income by carrying passengers, livestock, mail or goods loaded from any Indian Port, such
Ship will have to pay Tax on such Income, otherwise the Ship will not be allowed to leave
the Port till the tax on such income has been paid or alternative arrangements to pay tax are
made. Such income will be assessed to paid tax at current years rates.

2. Income of persons leaving India either permanently or for a long period of time
[ Section 174] ;

In case I.T.O. has the reasons to believe that an individual will leave India with having no
intention of returning to India during the current assessment year, the total income of such
individual will be taxable in the current assessment year for the period between the expiry of
last previous year and till the date of his departure.

3. Income of a person trying to transfer his assets with a view to avoiding payment of
tax.
[ Section 175]

4. Income of a discontinued business [ Section 176]

In these cases, income will be taxed in the same year it is earned.

These exceptions have been incorporated in order to ensure smooth collection of income tax
from the aforesaid taxpayers who may not be traceable if tax assessment procedure is
postponed till the commencement of the normal assessment

On the basis of the aforesaid discussion, it can be said that a financial year plays a double
roleit is a Previous Year as well as an Assessment Year.

1.11 WHAT ARE DIFFERENT HEADS OF INCOME ACCORDING TO INCOME


TAX ACT?

There are 5 different Income heads. The Income under each head will be charged to Income
Tax. Thus the tax will be computed on the basis of total income.

1. Salaries including Allowances, value of Perquisites, Profits in lieu of salary and


Pensions.

2. Income from House Property whether residential, commercial or let out.

3. Profits & Gains of Business / Profession.

4. Capital Gains - Short & Long Term.

5. Income from other Sources including Bank Interest, Interest on Securities, Lotteries,
and Cross word Puzzles, Races, Games, Gift received on or after 1-9-2004 in excess
of Rs. 50,000 in cash etc. from unrelated persons.
1.12 WHO ALL HAVE TO PAY INCOME-TAX?

a. Individual including Non-resident, Hindu Undivided Families (HUF), Bodies of


Individuals (BOI), Association of Persons (AOP) & Artificial Juridical Persons ( such
as Deities of Temples) having taxable income exceeding Rs. 1.5 lakh (Rs. 1,80,000
for Resident Women assesses below 65 Years and Rs. 2,25,000 for Resident Senior
Citizens.)

b. Societies & Charitable / Religious Trusts having taxable income exceeding Rs.1.5
lakh.

c. All Partnership Firms irrespective of their Income.

d. Co-Op. Societies irrespective of their Income.

e. All Companies irrespective of Income.

f. Local Authorities like, Panchayats, Municipal Corporation etc.

1.13 HOW INCOME-TAX WILL BE CHARGED BY THE INCOME


TAX DEPARTMENT?

Income Tax is charged on 5 different heads. Aggregate of taxable income under each head of
income is known as Gross Total Income and so

Taxable Income = Gross Total Income - Allowance Deductions.

Deduction of Expenditure:
In computing income under various heads, deduction is allowed towards expenditure
incurred in relation to earning the income. However, no deduction shall be allowed in respect
of expenditure incurred in relation to incomes exempt from tax.

Computation of Gross Total Income:


It is the aggregate of incomes under various heads of income calculated after set-off of
unabsorbed depreciation/loss, carried forward from earlier years.

Set-off and Carry Forward:


Set-off means adjustment of certain losses against the income under other sources / heads.
Carry forward implies carrying forward of certain losses for set-off in subsequent years.

Total / Taxable Income:


Total / Taxable Income is computed after deducting permissible deductions under section
80A to 80U, from the Gross Total Income.

Where the Gross Total Income of the Assesses includes Short-Term Capital Gains from
transfer of equity shares / units of an equity oriented mutual fund subject to Securities
Transaction Tax or any Long-Term Capital Gains, then no deduction shall be allowed against
such Capital Gains.

On this Taxable Income, Income Tax will be calculated as per the applicable rates.

1.14 WHAT IS AGRICULTURAL INCOME?

Sec.10(1) exempts Agricultural Income from Income-Tax. Bu virtue of Sec.2(1)A the


expression Agricultural Income means :

Any Rent or Revenue derived from Land which is situated in India and is used for
agricultural purposes. [Sec. 2(1A)(a)]

Any income derived from such land :

o Use for Agricultural purposes ; or

o Used for agricultural operations means- irrigating and harvesting, sowing,


weeding, digging, cutting etc. It involves employment of some human skill,
labour and energy to get some income from land. ; or

According to Sec. 2(1)(a) , if the following 3 conditions are satisfied, income derived from
Land can be termed as Agricultural Income.

Condition-1: Income derived from Land


It is essential that for any income to be termed as agricultural Land must be effective and
immediate source of Income and not indirect and secondary.
As a result, interest on arrears of land revenue, dividend paid by a company out of its profits
which included agricultural income also and salary paid to a manager for managing
agricultural farms are not agricultural incomes because in all these cases land is not the
effective and immediate source of income.

Condition-2: Land is used for Agricultural Purposes


To term any income as agricultural income, it is necessary that income must be the result of
agricultural operations performed on agricultural land. Agriculture means performance of
some basic operations irrigating and harvesting, sowing, weeding, digging, cutting etc. it
involves employment of some human skill, labour and energy to get some income form land.

Condition-3: Land is situated in India


To qualify the exemption u/s 10(1) of the Act, it is necessary that agricultural income must be
derived from land situated in India. In case income is derived from agricultural land situated
outside India or is from any non-agricultural land, it will not be exempted u/s 10(1). It is
taxable income under the head Income from other Sources.

What is the Tax Treatment of Income which is partially Agricultural and partially from
Business [ Rules 7, 7A, 7B and 8]

For disintegrating a composite business income which is partly agriculture and partly non-
agricultural, the following rules are applicable

Business Agricultural
Types of Income
Income Income

Tea Business 40% 60%

Coffee Business 40% 60%

Rubber Businss 35% 65%


Tax benefits- Income Tax Exemption, Deduction and Rebate
Before we know what are the various deductions and exemptions are there in income tax act.
1961, we should know the difference between deductions, rebate and exemptions.
A common man is most of the times confused between the terms- Income tax rebate, income
tax deduction and income tax exemption and ends up using them interchangeably. Although,
all these terms are beneficial to the taxpayer and reduce their tax burden, the meaning and
treatment of all these terms is different and is explained under this chapter.

Income tax exemptions


Income tax exemptions are allowed to be claimed from a specific source of income and not
from the gross total income. For eg: income tax exemptions allowed under head salary are not
allowed to be claimed from any other head.
Similarly, income tax exemptions allowed to be claimed under head capital gains under
section 544, 54EC, 54F etc. are not allowed to be claimed under any other head.

Other exemptions cover under section 10


Income Tax Exemption from Leave Travel Allowance
Income Tax Exemption from Pension Income
Income Tax Exemption from Leave Encashment
Income Tax Exemption from House Rent Allowance
Thus, income tax exemptions are those items which are allowed to be claimed only from a
specific source of income and not from the total income.

Income Tax Deduction


Income tax deduction is allowed to be claimed from the total income under each head and
also from the gross total income. Deductions are allowed to be claimed in case the taxpayer
has incurred some specified expenditure or made specified investments.

Deduction in income tax act for assessment year 2015-16 (F.Y 2014-15)

S.N Section Details of deduction Limit


o
1. 80C Total Deduction under section 80C,
The deduction under section 80C is
80CCC and 80CCD (1) together
allowed from your Gross Total Income.
cannot exceed Rs 1, 50,000 for the
These are available to an Individual or a
financial year 2014-15 (assessment
HUF. The deduction is allowed for
year 2015-16).
various investments, expenses and
payments.
2. 80CCC The limit for maximum deduction
Deduction in respect of Premium
available under Sections 80C,
Paid for Annuity Plan of LIC or
80CCC and 80CCD (1) (combined
Other Insurer
together) is Rs. 1, 50,000/-.
This section provides deduction to an
Individual for any amount paid or
deposited in any annuity plan of LIC or
any other insurer for receiving pension
from a fund referred to in Section
10(23AAB).
In case the annuity is surrendered
before the date of its maturity, the
surrender value is taxable in the year of
receipt.

3. 80CCD
Deduction in respect of Contribution
Total Deduction under Section 80C,
to Pension Account
80CCC and 80CCD (1) cannot
exceed Rs 1, 50,000.
4. 80D Deduction is available up to Rs.
Deduction in respect of Medical
15,000/- to an assessee for insurance
Insurance
of self, spouse and dependent
children. If individual or spouse is
more than 60 years old the deduction
available is Rs 20,000. An additional
deduction for insurance of parents
(father or mother or both) is
available to the extent of Rs.
15,000/- if less than 60 years old and
Rs 20,000 if parents are more than
60 years old. Therefore, the
maximum deduction available under
this section is to the extent of Rs.
40,000/-. (From AY 2013-14, within
the existing limit a deduction of up to
Rs. 5,000 for preventive health
check-up is available).
5. 80DD Deductions on Medical Expenditure
Where disability is 40% or more but
for a Handicapped Relative
less than 80% - fixed deduction of Rs
Deduction is available on:
50,000. Where there is severe
disability (disability is 80% or more)
1. expenditure incurred on medical
fixed deduction of Rs 1, 00,000. A
treatment, (including nursing),
certificate of disability is required
training and rehabilitation of
from prescribed medical authority.
handicapped dependent relative Note: A person with 'severe
disability' means a person with 80%
2. Payment or deposit to specified
or more of one or more disabilities as
scheme for maintenance of
outlined in section 56(4) of the
dependent handicapped relative.
'Persons with disabilities (Equal
opportunities, protection of rights
and full participation)' Act.

A deduction to the extent of Rs.


40,000/- or the amount actually paid,
whichever is less is available for
expenditure actually incurred by
resident assessee on himself or
dependent relative for medical
Deductions on Medical Expenditure treatment of specified disease or
6. 80DDB
on Self or Dependent Relative ailment. The diseases have been
specified in Rule 11DD. A certificate
in form 10 I is to be furnished by the
assessee from any Registered Doctor.
In case of senior citizen the
deduction can be claimed up to Rs
60,000 or amount actually paid,
whichever is less.
7. 80E
Deduction with respect to Interest on
Actual amount paid as interest and
Loan for Higher Studies
start from the financial year in which
he/she starts paying interest and runs
till the interest is paid in full.
8. 80G
Deduction for donations towards
The various donations specified in
Social Causes
Sec. 80G are eligible for deduction
up to either 100% or 50% with or
without restriction as provided in
Sec. 80G. 80G deduction not
applicable in case donation is done in
form of cash for amount over Rs
10,000.
9. 80GG Deduction available is the least of
Deduction with respect to House Rent
Paid
1. Rent paid minus 10% of total
income
This deduction is available for
rent paid when HRA is not 2. Rs. 2000/- per month
received. Assessee or his spouse
or minor child should not own 3. 25% of total income
residential accommodation at
the place of employment.

Assessee should not be in


receipt of house rent allowance.

He should not have self-


occupied residential premises in
any other place.

10. 80GGA Only those tax payers who have no


FOR DONATION TO ENTITIES IN
business income can claim this
SCIENTIFIC RESEARC OR
deduction. Maximum is equivalent to
RURAL DEVELOPMENT.
100% of donation.
11. 80U Deduction of Rs. 50,000/- to an
Deduction with respect to Person
individual who suffers from a
suffering from Physical Disability
physical disability (including
blindness) or mental retardation.
Further, if the individual is a person
with severe disability, deduction of
Rs. 100,000/- shall be available u/s
80U. Certificate should be obtained
from a Govt. Doctor. The relevant
rule is Rule 11D.
12. 80TTA Deduction from gross total income of
Deduction from gross total income
an individual or HUF, up to a
maximum of Rs. 10,000/-, in respect
with respect to any Income by way of
of interest on deposits in savings
Interest on Savings account. Section
account with a bank, co-operative
80TTA deduction is not available on
society or post office.
interest income from fixed deposits.

13. 80GGC Deduction is allowed to an assessee


Deduction in respect of contributions
for any amount contributed to any
given by any person to Political Parties.
political party or an electoral trust.
Political party means any political party
Deduction is allowed for
registered under section 29A of the
contribution done by any way other
Representation of the People Act.
than cash.

There are many more deductions in Indian tax act 1961 provisions which we also called
loopholes, which can be used to minimise the tax legally, and thats also called tax evasion.

Income tax rebate

Income tax rebates are those items which are allowed to be claimed from total tax payable. It
is pertinent to note that income tax exemptions and income tax deductions are allowed from
to be claimed from the income whereas rebate is allowed to be claimed from the tax payable.

Income tax rebate of Rs. 2000 for persons with income up to Rs.5 lakh
For this assessment year 2015-2016 (financial year 2014-2015) IT act specified Rs. 2000
as rebate if your income is less than Rs. 5,00,000. To claim this rebate you have to first
calculate your net tax liability and deduct Rs. 2,000. Out of it to find out your tax liability
that needs to be paid to government.
SOME HELPFUL TIPS FOR FILING INCOME TAX RETURNS

Income-tax return is a legal document and it should be filed by the assessee with due care and
caution. There should be no corrections or overwriting and it should be properly signed and
verified by the person authorized to do so under the provisions of the Income-tax Act. The
following important points may be taken care of while filling up the return forms:

1. ITR Applicable Each assessee has to identify the correct ITR Form applicable in its case
before filing the return of income.

2. No enclosures to the return- Rule 12(2) of the I.T Rules provides that the return of
income and return of fringe benefits required to be furnished in Form No. ITR-1, ITR-2, ITR-
3, ITR-4, ITR-4S ITR-5, ITR-6, or ITR-8 shall not be accompanied by a statement showing
the computation of tax payable on the basis of return, or proof of tax, if any, claimed
deducted or collected at source or the advance tax or tax on self-assessment, if any, claimed
to have been paid or any document or copy of any account or form or report of audit required
to be attached with the return of income or return of fringe benefits under any provisions of
the Act.

3. For timely delivery of refunds, ensure correct address and account number on your
Return of Income From 1.10.07 onwards, all income tax refunds in Bangalore, Chennai,
Delhi, Kolkata and Mumbai will be delivered by the Refund Banker directly at the
communication address mentioned on the Return of Income. Taxpayers are requested to fill in
the correct address(available during working hours for delivery) to ensure speedy delivery of
refunds. In the case of taxpayers who opt for refunds through ECS, it will be credited directly
to the bank account for which correct MICR code/ Bank Account Number has to be furnished
on the Return.

4. Manner of filing the new Forms


These Forms can be submitted in the following manner:
(i) Furnishing the return in a paper form;
(ii) Furnishing the return electronically under digital signature;
(iii) Transmitting the data in the return electronically and thereafter submitting the
verification of the return in Form ITR-V;
(iv)Furnishing a bar-coded return in a paper form:

Mandatory E-Filing of Income Tax Return


E-filing of Income Tax return with digital signature is mandatory for Individuals,
HUF and firms requiring statutory audit u/s 44AB of the Income Tax Act, 1961.
E-filing of Income Tax return with digital signature is mandatory for all Companies
irrespective of Income.
A person, other than a company and a person required to furnish the return in Form
ITR-7 ] if his or its total income, or the total income in respect of which he is or it is
assessable under the Act during the previous year, exceed [five lakh rupees], shall e-file their
Income Tax return either with or without digital signature.
Individual and HUF having assets (including financial interest in any entity) located
outside India; or are signing authority in any account located outside India have to e-file their
Income Tax return either with or without digital signature.
If Assessee claims any relief of tax under section 90 or 90A or deduction of tax under
section 91 of the Act than Assessee have to e-file their Income Tax return either with or
without digital signature.
All the Assessee who are required to file ITR-5 and not covered by tax audit
provisions have to e-file their Income Tax return either with or without digital signature.
In addition to above all the Assessees who are required to file furnish a report of audit
specified under sub-clause (iv), (v), (vi) or (via) of clause (23C) of section 10, section 10A,
section 10AA, clause (b) of sub-section (1) of section 12A, section 44AB, section 44DA,
section 50B, section 80-IA, section 80-IB, section 80-IC, section 80-ID, section 80JJAA,
section 80LA, section 92E, section 115JB or section 115VW or to give a notice under clause
(a) of sub-section (2) of section 11 of the Act have to e-file their Income Tax return either
with or without digital signature.

5. Filling out acknowledgement- Where the return is furnished in paper format,


acknowledgement slip attached with the return should be duly filled in. The new forms are
not required to be filed in duplicate.

6. Intimation of processing under section 143(1) The acknowledgement of the return is


deemed to be the intimation of processing under section 143(1). No separate intimation will
be sent to the taxpayer unless there is a demand or refund.

7. Filing your return through Tax Return Preparers (TRPs)


If you are an individual or an HUF assessee and you are not required to get your accounts
audited (called eligible person) under the provisions of the Income Tax Act, then you can
use the services of a Tax Return Preparer (TRP). However, if the eligible person is not a
resident in India during the previous year relevant to such assessment year, he can not avail of
the services of a TRP.
If you are filing your returns through a TRP then you should ensure that:
i) You are eligible to file return of Income under this Scheme;
ii) You give your consent to any Tax Return Preparer to prepare your return of income for any
assessment year;
iii) You verify that the facts mentioned in the return are true and correct before you sign the
return;
iv) You certify the amount which has been paid by you under this Scheme to the Tax Return
Preparer for preparing and furnishing of the return of income; and
v) You take a receipt of the payment made to the Tax Return Preparer and produce the same
before the Resource Centre or Assessing Officer, if required,

Incentive to Tax Return Preparers


The Tax Return Preparer shall charge a fee of two hundred and fifty rupees for any
assessment year from the eligible person for preparing and furnishing his return of income for
that assessment year:
Provided that he will charge no fees for preparing and furnishing the return for any eligible
assessment year if the amount disbursable to him as per the scheme notified by the
government for that eligible assessment year exceeds two hundred and fifty rupees. If the
amount disbursable is less than two hundred and fifty rupees, we can charge the difference
between rupees two hundred fifty and the amount disbursable.

8. Verification
The verification must be signed by the authorized person before furnishing the return and the
name and designation of the person signing the return should also be written. Any person
making false statement is liable to be prosecuted under section 277 of the Act.

WHO CAN VERIFY AND SIGN THE INCOME TAX RETURN?


a) Individual: The individual filing his Income Tax Return has to sign the return. In case the
individual is mentally incapable, then the return may be signed by his Guardian or by any
other person competent to act on his behalf.
In case the individual is absent from India or because of any other reason he is not able to
sign and verify his return of income, then any person duly empowered by him through valid
Power of Attorney may sign on his behalf. In such a case, a certified copy of the Power of
Attorney must accompany the return.
b) Hindu Undivided Family: By the Karta or where he is absent from India or is mentally
incapacitated from attending to his affairs, by any other adult member of such family.
c) Company: In this case by the following:-
1) Resident : Managing Director or, where there is no Managing Director or he is not able to
sign and verify the return due to any unavoidable reason, by any director thereof.
2) Non-Resident: The return may be signed and verified by a person holding a valid Power of
Attorney from the Company, which should be attached to the return.
3) Wound up/taken over by the Govt.: The return should be signed and verified by the
Liquidator or the Principal Officer as the case may be.
d) Firm: Managing Partner, or where there is no Managing Partner or due to some
unavoidable reasons, he is not able to sign and verify the return, by any partner thereof not
being a minor.
e) Local Authority: By the Principal Officer.
f) Association of Persons: By any member of the Association or the Principal Officer thereof.

9. WHERE TO FILE THE INCOME TAX RETURNS?


An existing assessee must file his Income-Tax Return with the Assessing Officer who had
previously assessed him or with the Assessing Officer where his case stands transferred. A
new assessee should file the Return with the Assessing Officer having territorial jurisdiction
over the area where he resides or his principal place of business is situated or with the
Assessing Officer having special jurisdiction over specific assessees or classes of income. For
example, where the major source of income of an assessee is the income from contract
business, the IT Return should be filed with the assessing officer having jurisdiction over the
contractor circles. A doctor or C.A. or an Advocate should file the returns in professional
circles if any specified.
The return may be delivered at the counter in the concerned Range/Circle or it may be sent by
registered post. The return is attached with two acknowledgement forms which should be
duly filled in by the assessee. One copy of the acknowledgement form is to be returned by the
official at the counter duly signed, stamped, numbered and dated in support of having
received the return. In case of any doubt or problem, the taxpayer should contact the Public
Relations Officer for guidance and help.
How To e-File Income Tax Return of AY 2015-16

Income tax return e-Filing in India for AY 2015-16 is open now. You can e-file
yourincome tax return through the sitewww.incometaxindiaefiling.gov.in. Theincome tax
return e-Filing has made our life very easy. Now most of the taxpayer dont need the service
of the chartered accountant. A salaried person can easily e-file income tax return using his
form 16. Government is also trying hard to 100% shift to e-Filing. In 2013-14, 2.96
crore income tax return has been filed through the e-Filing facility. While in 2014-15 the
number increased to 3.41 crore.

So, it is time to e-file your income tax return. Last year I have written a detailed post on how
to file income tax return for AY 2014-15. This year Also I will tell you how to e-file
theincome tax return. I could also refresh the old article for this year, but there are many
changes. Hence, I am writing a new post. In this post I will discuss the following topics.

Also Read- e-Filing Income Tax Return Form ITR-2, It is Not a Big Deal

Benefits of e-Filing Income Tax Return

The benefits of e-Filing is evident. Once, you adopt this method of income tax return filing,
you will never go back to the offline mode. Have look at the benefits.

1. You can e-File income tax return from your home or office

2. You can e-file income tax return 247.

3. Your personal details and tax paid amount would be already there in the ITR.

4. The income tax return utility will immediately calculate the tax liability. You can
tally it with the TDS.

5. You will have online record of income tax return for further verification.

6. The income tax refund is swift through the e-Filing.

What is Income Tax Return e-Filing

The process of electronically filing Income tax returns through the internet is known as e-
Filing. You fill your income details, deductions and tax payments in the income tax
returnforms using internet. The income tax return forms are called ITR. There are many ITR
forms for each class of tax payers. You can download all these ITR through the income tax e-
Filing website https://incometaxindiaefiling.gov.in. This website deals with all theincome
tax return related issues. You can e-file income tax return, check the status of tax refund and
rectify the income tax return through this portal.

Types of e-Filing

The income tax return e-Filing is done through the two ways.

In the first method you have to download the suitable ITR in your computer. You fill it
and upload it back to the https://incometaxindiaefiling.gov.in portal.

In the second method you fill all the details into an online form. It does not involve
any download or upload.

The second method is easy and today I will guide you through this method. However, you
cant fill all the ITR forms through the online method.

Which ITR Should You Use

There are 6 ITR for individuals. The tax payer who earns from the salary, should use the
ITR-1. It is the simplest form and applicable for most of the people. If you are a professional
or businessperson or earns from other sources, use other ITR forms. I am giving the ITR use
table from the income tax website.
ITRs for Individuals and HUF
Individual Individual, HUF

S.No Source of Income ITR-1 ITR-2A ITR-2 ITR-3 ITR-4 ITR-4S

1 Income from Salary/Pension

Income from Other Sources (only


2 Interest Income or Family Pension)

3 Income/Loss from Other Sources

4 Income/Loss from House Property

Capital Gains/Loss on sale of


5 investments/property

6 Partner in a Partnership Firm

Income from Proprietary


7 Business/Profession

8 Income from presumptive Business

ITRs for Others


Firms,AOP,BOI, Local Authority Companies Trusts

S.No Source of Income ITR-5 ITR-6 ITR-7

Income / Loss from Other


1 Sources

Income / Loss from House


2 Property

Capital Gains / Loss on sale


3 of Investments / Property

4 Income / Loss from Business


While e-Filing income tax return, the most confusing thing is the selection of ITR form. If
you still have some confusion please read the FAQ section at the end of the article.

Change in Filing of Income Tax Return for AY 2015-16

The government has made some changes in the ITR forms. The change is applicable for
the income tax return of AY 2015-16. If you have been e-Filing earlier, you must pay
attention to these changes.

1. Now there are 5 ITR forms instead of 4 for the individual tax payers.
2. The ITR 2 is divided into 2. The ITR 2 and ITR 2A.
3. ITR 2A would be used by the salaried taxpayer who has income from more than
one property.

4. The salaried taxpayer who has income from one property can use ITR-1.
5. The taxpayers with capital gains, foreign assets and income to file ITR-2
6. The new ITR-2 and ITR-2A form is of only 3 pages. The income details can be
filled in schedules.
7. Now you will have column to fill 2 mobile numbers.
8. You will also have option to give Adhaar number.
9. An individual/Hindu Undivided Family (HUF) can now give details of exempt
income in ITR-1 as well. These income includes dividend, long term capital gains on
equity, EPF, PPF and gratuity. Earlier, ITR-2 was used for the exempt income of more
than Rs 5000.
10. However, agriculture income of more than Rs 5000 is still part of ITR-2.
11. The taxpayer of ITR-2 or ITR-2A, should give the passport number, if available.
12. In the all ITR you need to give the details of all active bank accounts. Besides
one account for income tax refund you have to mention the IFSC code and account
number of other bank accounts. You need not to give details of dormant bank account.
13. The most useful change of efiling in AY 2015-16 is the e-verification of income
tax return. It makes the complete procedure of efiling online. You are not required to send
ITR-V by post.
The ITR Controversy of 2015

The above rules of ITR are modified after the big controversy. On 18th April government has
notified the new ITR forms. Those new forms were opposed by various sections of
businesses. The forms required detailed information from the taxpayer. It was so detailedthat
ITR 2 was of 14 page long. These were two point of contention from the new ITR forms.

1. In the ITR 2 and ITR 2A, you needed to give full details of foreign travel.
Theassessee would have to report passport number, the issuance place of the passport,
countries visited, number of times such journeys made. In case of a resident taxpayer, the
expenses incurred from own sources in relation to such travel should be also reported.

2. They assesse would have to furnish the number of bank accounts along with the
account number, address, IFSC code, any possible joint account holder and balance in the
accounts. It also included the dormant bank account.

After the uproar the finance minister Arun Jaitely immediately put these forms on hold. Now
in the revised ITR forms you need to give only passport number and details of active bank
account. You need not to mention the account balance. Also, this year government
hasextended the last date of income tax return filing.

The Income Tax Return of Salaried

Most of the income tax payers in the country is salaried. The employer deduct tax at source
from the salary of employees. The employer takes care to the applicable tax of the employee.
Therefore, most of you are not concerned about the payment of income tax. Since your
employer do the taxation job, the filing of income tax return of salaried is easier.
Important Documents for Income Tax Return e-Filing

There are some documents which are required during e-Filing of income tax return.

The Importance Of Form-16

The salaried employees get form 16. This form 16 has the details of your income and TDS.
The 80C deduction is also incorporated in the form 16. The government has prescribed a
format of form 16. This form 16 is used to file income tax return. Please note form 16 is not
required with the income tax return form. It is used only for reporting the income and tax
details. It is a certificate of TDS from the employer to the employee. You should preserve
it for any further query.

Form 16A

This is also a TDS certificate similar to form 16. But it is used for TDS other than the salary
income. There are many payments other than salary which is given after the tax deduction at
source. The certificate of this deduction is given in the form 16A. Form 16 is given annually
while form 16A is given quarterly.

Form 26AS

Form 26AS is provided by the income tax department. It shows all the taxes paid against a
PAN. This form incorporates the TDS details of form 16 and form 16A. You can verify the
TDS on your payments through the form 26AS. Anyone can access his form 26AS through
the income tax e-Filing website. The login ID and password of e-Filing is used to view the
form 26AS. You can also see your form 26AS through the internet banking.

You should also have details of your bank accounts and passport number while you e-File
the income tax return.
The ITR-1 Form for Salaried Taxpayer

Who Should Use ITR-1


You should use ITR-1 to e-File income tax return if your income for the assessment year
2015-16 (financial year 2014-15) includes:
Income from Salary/Pension; or
Income from One House Property
Income from Other Sources (excluding winning from Lottery and Income from Race
Horses) and does not have any loss under the head.

Note: You should also note that these conditions of ITR-1 is also applicable for the dependent
spouse or minor child. As there income is clubbed with you. If wife or minor child is self-
dependent and filing her own income tax return, this clubbing rule is not applicable.

Who Should Not Use ITR-1

This Return Form should not be used by an Individual whos Total Income for the assessment
year 2015-16 includes:-

a) Income from more than one House Property; or


b) Income from Lottery Winnings or horse races; or
c) Income under the head Capital Gains ,e.g., short-term capital gains or long-term capital
gains from sale of house, plot, shares and gold ; or
d) Agricultural income in excess of 5,000; or
e) Income from Business or Profession ;or
f) Loss under the head Income from other sources; or
g) Person claiming double taxation relief under section 90 and/or 91;or
h) Any resident having any asset (including financial interest in any entity) located outside
India or signing authority in any account located outside India or
i) Any resident having income from any source outside India
How To e-File Income Tax Return Online

In this method of e-Filing the form is presented online. You fill the form and keep saving the
draft. After the completion of form you have to submit it online. In this method you do not
download anything. It is an easier process therefore It is listed as Quick e-File. But, to use
this facility you should have the reliable internet connection.

I am showing you the steps of e-Filing process with complete illustration. The step by step
guide with images would be very useful for the new taxpayer.

Steps To e-Filing

Login at www.Incometaxindiaefiling.gov.in portal. The PAN is used as user ID. You must
remember password. Otherwise you should use forget password facility to reset the password.
You need to give date of birth in MM/DD/YYYY format for login.

After the login into dashboard, click at Quick e-File in left sidebar. It is the first option.

Choose ITR form name. For salaried it should be ITR-1.


The assessment year should be 2015-16. Please take care while selecting the
assessment year. The assessment year 2015-16 is chosen for the income of financial year
2014-15.

Select an option for the address.

If you have digital signature, you can choose yes on the next item. Most of us dont
have digital signature, therefore it should remain No.

In the next page you will see the instruction. Read them carefully. You can also download
detailed instruction, if required. However, I am trying to guide you.

In the personal information tab you may see your name, address, pan, date of birth, email and
mobile number. You can edit these information if there is any change. You can also give two
mobile numbers.
In the filing status section, at column A19 you have to choose the employer
category. For private employees it would be others.

Go through the column A20-A22. Most of you dont need to change the default.
You have to select an option in the column 23. For 99% people it would be No

Wait! You must go up to the last column this year. The A27 and A28 gives you the
option to provide the Adhaar number. Adhaar number will make the e-Filing process
easier.

In the Income Details tab you need to use the form 16. Go through the instruction of every
column.
B1- you have to fill the taxable income from the head salaries. Refer to column 6 of form 16.

B2- This column for those assesse who has taken home loan or earning rent from the house
property. Choose the type of property accordingly. Note, if you have more than one property
to mention, you must use the ITR form 2A.

Fill the income from house property. If you are earning rent, fill the 70% of earned amount in
this column. If you are paying interest on home loan fill it in this column. In case of home
loan you must write the amount in negative (e. g. -85000) otherwise, your tax will increase
instead of decreasing.

B3- This column is for the other income. This other income can be interest on bank
deposit, interest waiver on company loan, ex gratia amount etc.

In the next section you have to give details of investment and expense which are eligible for
tax deductions.

C1 In this column you have to fill the total amount eligible for tax deduction under section
80C. You can refer it from the form 16. However, If you could not tell some 80C investment
to your employer, you can add it here. You should keep the proof with yourself.
C2-C18 I have given the instruction of these columns in the screenshot. Please see at the
image. These column are for various income tax exemptions.

In the tax computation section, except column D7 all the columns would be prefilled. The
column D7 is provision of tax relief under section 89 . Section 89 gives you some tax relief if
your total taxable income also includes arrears.
Schedule TDS-1

In this section you have to mention the taxes paid. You may find this section prefilled, as
income tax department has data of your taxes paid against the salary. You should verify it
with the form 16. The taxes paid information is mentioned in the beginning of form 16.
Schedule TDS -2

In this section you have to fill the tax paid details of other income. However, It should be pre-
filled from the record of income tax department. You should have form 16A to verify the
values in this column. If you dont have any other income, leave this section blank.

Schedule IT
This section is to include the self-assessment tax or advance tax paid by you. You may have
some earning without the TDS. You should pay income tax on such earning. In my case you
can see there is a mention of Rs 51 tax paid. I have paid this tax to show theprocedure of
income tax e-payment. This section may be also pre-filled, you need to verify only. It is
editable, you can fill your values if required.

The taxes paid and verification tab shows the total tax calculation. In this tab you will see the
payable tax by you according to the given information in the form. You will also see the value
of total taxes paid. The difference of taxes paid and tax payable should be zero. If not, you
may get refund or pay the remaining income tax.

D17 If you see any value in column 17, hold your income tax return submission process.
Now you need to check the all values once again. If there is still some tax payable, you need
to pay the required tax. You can pay income tax online within 10 minutes. After the payment
of remaining income tax, you need to mention it in the Sch IT. You can add rows to enter the
BSR code, challan number and amount of recently paid tax.

After the mention of taxes paid, there should be zero in column 17.
D18- If there is any refund, you will see the value in column D18. This refund process starts
after you submit the income tax return form and income tax department verifies it. You can
also check the status of income tax refund.

D19 In this column, you need to give the amount of exempted income. This income can be
of dividend, gratuity, and PF proceeds. Please dont ignore because it keeps away tax sleuths.
Income tax department has an eye on your bank balance.

Bank Account Details

You are required to give bank account number to get income tax refund. Earlier it was not
mandatory but, now you have to give one bank account number, whether you get tax refund
or not.

Besides this you have to also give details of other active bank accounts. You can get IFSC
code and bank account number from the cheque leaf.

Verification

You need to fill the place and submit the online income tax return form ITR-1.
Now you have to click at the submit button. If you have filled the all mandatory columns, the
income tax return form would be submitted. After the successful submission you see the links
to e-verify the income tax return.

The e-verification has put an end to the requirement of ITR-V verification. Now you can
easily e-verify the income tax return instantly. However, there is still ITR-V option.

The ITR-V Method Of Verification

Download the ITR-V and open it using the PAN as password. Take a printout of ITR-V, sign
at the mentioned place.

You must send the ITR-V to CPC Benagaluru as soon as possible. If you dont send ITR-V
within 120 days, the income tax return would be null and void.

You can send ITR-V by speed post or ordinary post. You can send many ITR-V form in a
single envelope.

You can also check the status of ITR-V receipt through the incometaxindiae-Filing.gov.in.

I have tried to give you detailed procedure of income tax return e-Filing.
There are some common questions which are

FAQ About Income Tax Return e-Filing

Question: I have got the gratuity amount, do I need to pay income tax on it? If yes
where should I mention it?

Answer: Gratuity, leave encashment and EPF is exempted from tax. However, you need to
mention it while filing income tax return. Now, you can mention this amount in ITR-1 as
well. There is a column to fill such exempted income.

Question: Why do I need to mention the exempted income such as dividend and
agriculture income?

Answer: It is true that some class of income does not attract. But, you sould mention it in the
return to avoid in hassle in future. Now, income tax department tracks every transaction. If it
finds an unaccounted big amount in your bank account, It can send you tax notice. Hence, it
better to intimate it.

Question: What if I dont file income tax return?

Answer: It is obligatory to file income tax return if your income is more than the tax free
limit. The income tax return fulfils these objectives.

It presents the complete picture of income tax liability and taxes paid.

It is a self-certification that you have paid the correct tax.

It give the justification of taxes paid.


There would not be any ambiguity in earning and paid tax.

It avoid unnecessary search and notice by the income tax department.

However, non-filing income tax return is not a crime. Not paying income tax is a crime.

Question: Is it mandatory to file return after getting the PAN

Answer: No, it is not mandatory.

Question: Is it mandatory to file income tax return online?

Answer: e-Filing income tax return is not mandatory for all till now. It can be in future.

It is mandatory for these taxpayers

Who earns more than Rs 5 lakh taxable income in a financial year.

Resident Individual/ HUF, being resident who has assets outside of the India.
The taxpayer who is required to audit his income.

All companies.

Firm, AOP, BOI, Artificial Juridical Person, Co-operative Society and Local
Authority.
A resident who has signing authority in any account located outside India.

A person who claims relief of double taxation under sections 90 or 90A or deduction
under section 91.

Question: Which Address should be given in the Income Tax Return form? Should it be
the one mentioned in the PAN or the present Address?

Answer: You should give only current address.


Question: I want to change the Address/ e-mail ID/ Mobile Number which I have
given in the Income Tax Return.

Answer: LOGIN and GO TO My Profile Settings Change in ITR Form Particulars.


Provide the new Address/ e-mail ID/ Mobile Number and SUBMIT. Once submitted, the
Address/ e-mail ID/ Mobile number is updated in your profile and also sent to CPC (Central
Processing Center) to update on the Income Tax Return.This has to be done within 7 days of
e-filing the Return.

Question: My bank details mentioned on the Income Tax Return has changed and I
have to receive a Refund. How can I change the bank details?

Answer: You can ONLY change the Address/Bank details once the Income Tax Return is
processed and refund fails. To know the status of Income Tax Return, LOGIN and GO TO
My Account My Returns/Forms. If the status is shown as Refund unpaid and Refund
generated, you can raise a request to change Address/ Bank details at My Account
Refund Re-issue request.

Question: I could not send ITR-V within 120 days. Should I file revised return or
original return?

Answer: If 120 days period has lapsed then you should file a revised return. However, the
revised return filed will be treated as original return.

Question: I did not receive any intimation from CPC Bangalore u/s 143 (1) or 154, then
what is the procedure to contact CPC?

Answer: The intimation u/s 143(1) is the proof of income tax return filing. If you dont
receive it, call toll free number at 1800-425-2229 or paid number at 080-22546500. Once
connected, Press 9 to speak to CPC executive on the IVR response.

You can also request for Intimation u/s 143(1) and 154 on e-Filing application. LOGIN and
GO TO My Account Request for Intimation.

Question: How can I open the PDF for Intimation u/s 143(1) OR Rectification Order
u/s154 PDF?
Answer: The password is a combination of PAN (in lower case) and DOB in ddmmyyyy
format for e.g. for PAN : bcmps1106b and dob : 02/10/1980, the password should be entered
as bcmps1106b02101980.

Question: I have e-Filed my Income Tax Return but not received my refund till now.

Answer: If you have not received refund till date, it could be due to the following reasons:
1. Your Income Tax Return has not been processed yet. Once the return is processed you may
receive a Refund.. To check the status of your e-Filed IT Return, LOGIN and GO TO My
Account My Returns/Forms.
2. Your Income Tax Return has been processed but no refund is determined.
3. Your Income Tax Return has been processed, a refund has been determined, but the
Cheque/ ECS credit could not reach you. This could be because of wrong address, not being
available at home (door locked), wrong Bank Account number for ECS credit. To check if
your Refund has returned back to us, LOGIN and GO TO My Account My
Returns/Forms and check the status.

Question: I checked the status of my IT Return and it is displayed as Refund


Returned. How can I apply for it again?

Answer: LOGIN and GO TO My Account Refund Re-issue request. Select the mode
of re- receiving refund- ECS or Cheque, Provide Bank Account number (if changed) and
Provide Address details.

Question: How To File a Revised Return?

Answer: The process of filing revised return is same as original return. Only you have to
choose the revised return in filing status section. You are also required to give details of
original return. You can read detailed procedure of revised return in my another post.

Question: How many times I can file the revised return?

Answer: Legally, a return can be revised any number of times before the expiry of one year
from the end of the Assessment Year OR before the completion of the assessment by the
Department; whichever is earlier.
Question: Can I Send ITR-V through the courier

Answer: No, you can send ITR-V only through the ordinary post or speed post. You would
not get the acknowledgment.

Question: I have not received a copy of ITR-V in my e-mail ID or the ITR-V received in
my mail ID is not opening. What should I do?

Answer: You should LOGIN and GO TO My Account My Returns/Forms and download


the ITR-V again for the relevant Assessment Year.

CHAPTER-4

LIMITATIONS OF STUDY

This study suffers from three major limitations.

The first limitation is related to the sample size which is relatively small in
comparison to similar other studies.

The second limitation is related with the scope to analyze acceptance of e-return filing
comprehensively by including additional independent variables like trust in its
domain.
The third limitation ismany finding and analysis part is taken from one place that is
from company, so we have to mainly depend upon secondary data.

Chapter-5

SUGGESTIONS/RECOMMENDATION

The basic objective of this research study was to analyze various factors that affect the
acceptance of E-filling returns by listing out the advantages, the process and there
availability. Some new conceptual foundation is proposed in this study that systematically
explores the critical success factors in acceptance of e-return filing in India. The study is
unique because it investigated the customer acceptance of e-return filing from the perspective
of its empirical generalization in developing economies like India. The study posits that
acceptance of e-return filing can be improved by focusing perceived ease of use, perceived
usefulness, perceived credibility and computer awareness. The study reveals the importance
of focusing on enhancing a positive attitude of how easy e-return filing is to use and the
degree it is useful to the focused group. In this parlance, the tax authorities should keep the
ease of use and perceived usefulness in their priority. When designing the software for e-
return filing, the ease of use and personalization should be kept in mind. This move will
motivate customers in developing beliefs around the e-return filing services and in turn will
lead to customers accepting of e-return filing. The decision makers need to understand that
the familiarity with new information system varies from person to person so they are required
to develop mechanism to familiarize customers with the procedure of their services. Tax
authorities can provide a manual reference or video presentations at the various points to
explain ease of use. The study also reveals that perceived credibility also plays a substantial
role in the customer acceptance of e-return filing. The study founds the role of perceived cost,
perceived social pressure and perceived risk statistically insignificant in relation to other
factors. Furthermore, this study suffers from three major limitations. The first limitation is
related to the sample size which is relatively small in comparison to similar other studies. The
second limitation is related with the scope to analyze acceptance of e-return filing
comprehensively by including additional independent variables like trust in its domain. The
third limitation which is prominent in nature is that the present study is tested using
correlation and regression analysis among variables. However, this technique can only
examine a single relationship at a time (Hair, at el, 1998). An area of upcoming research is to
test the proposed model using Structural Equation Modeling (SEM). SEM is a multivariate
statistical technique used to estimate a number of interrelated dependence relationship
simultaneously. Finally, in this information communication technology era, every government
is required to develop a reliable, fast and customized channel for service delivery under
various e-governance initiatives. The present study is a systematic attempt in this direction to
explore customer acceptance of one such input in the form of e-return filing. Future studies
may be conducted to validate the findings of this study.
BIBLOGRAPHY
http://taxguru.in/income-tax/helpful-tips-filing-income-tax
http://www.planmoneytax.com/e-file-income-tax-return-ay-2015-16/