PART – I

SYNOPSIS OF THE PROJECT

1
 INTRODUCTION

Government has to play an important role in all round development of society in the modern
era. It has not only to perform its traditional functions (defence, maintenance of law and
order) but also to undertake welfare and development activities such as health, education,
sanitation, rural development, water supply etc. It has also to pay for its own administration.
All these functions require huge public finance.

Taxes constitute the main source of public finance whereby government raises revenue for
public spending. Taxes have been broadly categorized into direct and indirect taxes. “Direct
taxes” include those taxes which are paid by the person on whom these are levied like income
tax, wealth tax etc. On the other hand, “indirect taxes” are levied on one person, but paid by
another e.g. sales tax, excise duty, custom duty etc.

Income tax is the most important of all direct taxes and with the application of progressive
rate schedule, provision of exemption limit and incorporation of a number of incentive
provisions. It can be used not only to satisfy all the canons of a sound tax system but may
also go a long way in realizing variety of socio economic objectives set out by the economic
system.

It also helps in bringing distributional justice through higher rate of tax on the rich class of
the society. It may also act as a tool for controlling inflation. Due to all these factors, income
tax has assumed great 2 importance in the structure of direct taxation.

Therefore, all politically advanced democracies impose some form of personal taxation,
generally based on income.

2
 NEEDS AND SCOPE OF THE STUDY

 Income-tax in India is one of the important sources of revenue for the government.
But the major contribution comes from the business class whereas the contribution
from Salaried class is negligible.
 The present study seeks to discuss the various aspects of salary taxation. It will
include the basic considerations for tax policy and structure for taxation for India.
 The study will embrace the present status of salary taxation in India analyzing the
available statistics on it.
 The present study seeks to reveal the current weaknesses of the system and its status
in the society and economy.

OBJECTIVES OF THE STUDY

The study was conducted with the following objectives:

 To review the tax reforms being introduced by the Government in respect of Income
Tax Laws.
 To assess the efficiency of the administrative machinery for collection of income tax
and management of taxation matters as per the Income Tax Act.
 To ascertain the level of awareness of the salaried class on various tax planning
measures available under the Income Tax Act.
 To analyze the perception of taxpayers regarding tax planning, savings habits and
investment pattern of the assesses belonging to the salaried class.

3
 RESEARCH METHODOLOGY

Research Design
The research methodology shall be descriptive in nature. The study shall be based on the
secondary literature and data with respect to historical perspective, tax policy, its structure,
and present status.

Primary Data
For the purpose of case study primary data have been collected through phone calls, social
network and interview.

Secondary Data
For the study purpose the required secondary data is collected by using various published
sources. Some government publications are also used for national and state level information.
General taxation information is collected from various types of office records, committee
reports and articles and books published on the issue. Information related to Income-Tax
Department of India has been collected through the internet surfing.

Sampling Methodology

The Primary data have been collected through a survey with a pre-tasted structured
Questionnaire on a sample of randomly selected 50 people in which some are, business
persons, service holders, working women and some people who belong to 20-60 age group.
The data is collected to know the individual perception towards income tax system.

LIMITATIONS OF THE STUDY

 The subject ‘Income Tax’ requires vast study of the tax law and has limitations of
material and time for its study of all aspects.
 The study is mostly depend on secondary data.
 Modern statistical tools have not used for analysis of data.
 A small sample size of 50 respondents are taken for primary analysis, so cannot draw
proper inferences.

4
 LITERATURE REVIEW

Kumat, 2014
In his research paper on Taxation laws of India- overview and fiscal analysis focuses on the
overview of Indian tax system and challenges ahead. He thinks that there should be a
coordinated consumption tax system. He also states that improving the productivity of Indian
tax system continues to be a major challenge in India.

Jha, 2013
In his research paper on Tax structure in India & its effect on corporate and individual in
India suggests that high dependence on indirect taxes should be reduced and direct
taxes should be in increased on super rich to compensate the losses. He also states that
corporate tax evasion techniques like transfer pricing should be checked.

Rao, 2005
In his research paper on Tax system reforms in India: achievement and challenges ahead
focuses on the union and state level reforms. He state that the reforms are just the
beginning and considerable distance in reforming the tax system is yet to be covered

Jayakumar and Elavarasan (2015) This paper concerns about Impact of Tax Reforms
among Salaried Assesses. The aim of the paper is find out whether and how the tax reforms
affect the level of salaried assesses. Conveyance non-random sampling method was used and
100 tax payers were returned and usable in the pilot study. This study data were analyses
descriptive statistics, Chi square test and Anova test the formulated hypotheses and the
significant relationship between assesses personal information and opinion level of tax
allowances. Tax payers are asked to indicate their level of agreement with a given statement
by of a Likert’s five point scale. This study shows that, overall the assesses have been
negative opinion towards Impact of Tax Reforms made tax system in India.

Sopan Kasinath (2013) The taxpayers in India are the elite group and contribute tax purely
in the economic growth and development of Indian economy. Direct and indirect taxes are
one of the sources of revenue to the government for the welfare of the general public. As per
the income tax act, 1961, the taxpayers should avail the deductions of Rs. 100,000 for reduce
the tax liability. Tax payers can reduce the tax liability through tax avoidance but not through
tax evasion.

5
 PART - II
COMPANY PROFILE

6
 TAXLEGAL

TaxLegal Sharma & Company in Mumbai. Income Tax Consultants View Sharma &
Company, Mumbai on Justdial.
TaxLegal is established in 1990 near CBD Belapur, New Mumbai, is an acknowledged
consultant for financial planning.
This consultancy provides a full spectrum of financial and accounting services, investment
consultancy, project evaluation and services related to all types of business and corporate
agreements.
Their speciality lies in providing end-to-end support to start-ups as well as in shop act
consultancy.

MISSION

To become one of the leading firms of Chartered Accountants in the country, well known for
its integrity and competence offering value based taxation and advisory services to the
industrial, financial and the services sectors covering the widest range of economic activities.

STRATEGY
 Offering highly professional and personalized services to all our clients.
 Upgrading on an ongoing basis the efficiency and capability levels of our team to
meet the emerging needs of our clients.
 Expanding and broad basing the range of our services in keeping with the
developments in the various segments.
 Enlarging our clientele base and the area of our operation for achieving a continuous
and steady growth in our business.

Services offered at TaxLegal Sharma & Company

TaxLegal offers a wide range of services which are tailored to our clients' needs.
The spectrum of services cover
 accountancy
 internal audit
 management audit
 Direct taxes
 Indirect taxes
 Business setup
 BPO/KPO setup
 Specialising in providing end-to-end support to start-ups
 The services cover company formation
 LLP formation
 Shop act registration
 IEC code
 MVAT/ CST registration and excise registration
 GST registration.

7
 ORGANIZATION CHART

FOUNDER

Mr. Suresh Sharma

MANAGER
Mr. Ankush
HR
Mr. Abhishek

SENIOR SENIOR
ACCOUNTING ACCOUNTING ACCOUNTING
EXECUTIVE EXECUTIVE EXECUTIVE &
Mr. Anil Mr. Yadav TEAMLEADER
Mr. Ravikant

ACCOUNTING ACCOUNTING ACCOUNTING ACCOUNTING

EXECUTIVE EXECUTIVE EXECUTIVE EXECUTIVE
Ms. Suman Ms. Gulnaz Mr. Rupesh Ms. Ramya

8
 PART - III
THEROTICAL BACKGROUND
OF THE PROJECT

9
 GENERAL DEFINITIONS

 Income tax is the most common and most important tax that an Indian must pay.
 It is charged directly on the income of a person.
 The rate at which it is charged varies, depending on the level of income.
 It's charged to individuals, co-operative societies, firms, companies, Hindu Undivided
Families (HUFs), trusts and any artificial judicial person.
 Income tax is charged on an income known as "taxable income".
 Taxable income = (total income) - (applicable deductions and exemptions).
 Taxes are collected by the government in three primary ways :
 Voluntary payment by taxpayers into designated banks like advance tax and self-
assessment tax.
 Tax Deducted Source (TDS) which is deducted from your monthly salary, before you
receive it.
 Taxes Collected (TCS).
 The different heads of income under which income tax is chargeable are:
 Income from house and property.
 Income from business or profession.
 Income from salaries.
 Income in the form of capital gains.
 Income from other sources.
 It is levied differently for different people depending on their residency status.

10
 DEFINITIONS UNDER INCOMETAX ACT, 1961

In India income tax is payable by every Person on his total income (calculated depending up
on his residential status) which is earned during Previous year at the Rate of tax applicable
for the relevant Assessment year?

DEFINITION OF INDIA SECTION 2(25 A)

"India" means the territory of India as referred to in article 1 of the Constitution, its territorial
waters, seabed and subsoil underlying such waters, continental shelf, exclusive economic
zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf,
Exclusive Economic Zone and other Maritime Zones Act, 1976 and the air space above its
territory and territorial waters.

DEFINITION OF PERSON SECTION 2 (31)

i) Individual:-

It refers to a natural human being whether male or female, minor or major.

ii) Hindu Undivided Family :-
It is a relationship created due to operation of Hindu Law. The manager of HUF is
called "karta" and its members are called 'Coparceners'.
iii) Company:-

It is an artificial person registered under Indian Companies Act 1956 or any other law.
iv) Firm :-
Section 4 of Indian partnership act 1932 defines partnership as "relationship Between
persons who have agreed to share profit of the business carried on by all or any one of
them on behalf of all".
Person who has entered into partnership are individually called partner and
collectively known as firm.

11
v) Association of Persons or Body of Individuals :-
The term AOP and BOI have not been defined in the act under the common
understanding. When there is a combination of person formed for the promotion of
joint enterprise and where there is no partnership then it is called AOP. BOI would
mean more or less the same but there are only individuals who come together to carry
on some activity with the object of the income.

vi) Local Authority:-

The term Local Authority means Municipality, District Board, Gram Panchayat,
Municipal Corporation or any other body, which has the control and management of
funds of government.

vii) Artificial Juridical Person:-

The seventh category is a residual category and includes all sorts of artificial juridical
bodies not covered under the above six categories. It covers not only Hindu deities but
all other artificial person with a juridical personality. Thus, the definition of person is
an inclusive definition and not an exhaustive definition.

CONCEPT OF AOP AND BOI

An Association Of Person (AOP) means two or more person who comes together with the
purpose of earning income. It need not be on the basis of a contract. Therefore where 2 or
more person join hands to carry on, a business but do not constitute a partnership, they may
be assessed as an AOP. In the case of INDIRA BALKRISHNAN the respected supreme court
defined an AOP as to mean two or more person joining in for a common purpose or for
common action with an object to produce income or profit.

A BOI means a group of individual who carry on some activity with the objective of earning
some income. It consists of only individuals. Entities such as companies, firm cannot be the
members of BOI.

12
 DIFINITION OF ASSESSMENT

SECTION 2(9)
Assessment means a procedure by which an income of an assessee is determined by the
assessing officer. It may of normal assessment or by the way of re-assessment of an income
previously assessed.

DEFINITION OF ASSESSEE
Assessee means any person by whom any tax or any other sum of money is payable under
this act and includes
1) every person in respect of whom any proceeding under this act has been taken for
the assessment of :
a. His own income or
b. Of the income of any other person for which he liable or
c. The loss sustained by him or by such other person.
2) Every person who is deemed to be an assessee under any provision of this Act.
(representative assessee)
3) Every person who is deemed to be an assessee in default under any provision of
this act.

DEFINITION OF PREVIOUS YEAR

SECTION 2 (34)
Previous year means the year as defined in section 3 and as per section 3 previous years
means the financial year immediately preceding the assessment year.

DEFINITION OF ASSESSMENT YEAR

Assessment year means the period of 12 month commencing on the1st date of April every
year.

13
 DEFINITION OF INCOME
SECTION 2 (24)
INCOME INCLUDES:
1) Profit and gains.
2) Dividend.
3) Voluntary contributions received by a trust.
4) The value of any perquisites or profit in lieu of salary received by employee.
5) Any allowance or benefit granted to employee to meet official expenses.

6) The following sums chargeable to tax under the head of:

a. Compensation money.
b. Income derived by a trade, professional or similar association for specific
services performed for its members.
c. Value of any benefit or perquisites arising from business or the exercise of
profession.
d. Any interest, salary, bonus, commission or remuneration received by a partner
of a firm from such firm.
7) Any capital gains chargeable under section 45.
8) Any winning from lotteries, crossword puzzles, race including horse races, card
games any other games of any sort or from.
9) Amount received under key man insurance policy.
10) Any sum of money or value of property referred to in section 56 (2)(vii).
11) Donation received by an electoral trust shall be regarded as income of the electoral
trust.

14
 DEFINITION OF GROSS TOTAL INCOME

Gross total income means the aggregate of incomes under all the five head of incomes.

In other words Gross Total Income shall be:

INCOME FROM SALARY

+ INCOME FROM HOUSE PROPERTY
+ INCOME FROM BUSINESS AND PROFESSION
+ INCOME FROM CAPITAL GAINS
+ INCOME FROM OTHER SOURCES
____________________________________________________________
GROSS TOTAL INCOME
____________________________________________________________

DIFINITION OF TOTAL INCOME

SECTION 2(45)
Total Income means total amount of Income computed by deduction from gross total income.
In other words, from the gross total income certain deduction of chapter VI-A (Section 80C
to 80U) of income Tax act are allowed and the balance income after the deduction is known
as total income.

HEADS OF INCOME
1. Salary
2. Income from House Property
3. Income from Business or Profession
4. Capital gains
5. Income from Other Sources

The sum of the incomes under all the heads will be the total income of the assesse with
further relief available under other sections like under Section 80 C

15
 DETAILS OF INCOME TAX
 Income tax is that percentage of your income that you pay to the government to fund
infrastructural development, pay the salaries of those employed by the state or central
governments, etc. All taxes are levied based on the passing of a law, and the law that
governs the provisions for our income tax is the Income Tax Act, 1961.
 Income tax is only of the direct means of taxation like capital gains tax, securities
transaction tax, etc.
 The income tax you pay every month or upon every contractual earning is what forms
a large part of the revenue for the Government of India. These revenue functions are
managed by the Ministry of Finance, which has delegated the responsibility to
managing direct taxes (like income tax, wealth tax, etc.) to the Central Board of
Direct Taxes (CBDT).
 Income tax is applicable for individuals, businesses, corporate, and all other
establishments that generate income. The Income Tax Act, 1961 regulates the
collection, recovery, and administration of income tax in India. The government
requires the tax amount for various purposes ranging from building the infrastructure
to paying the state and central government's employees. It helps the government in
generating a steady source of income that is used for the development of the nation.
 The income tax is paid every month from the monthly earnings, however, it is
calculated on an annual basis. The amount of income tax an individual has to pay
depends on many factors.
 Income tax has to be paid by every individual person, Hindu Undivided Family
(HUF), Association of Persons (AOP), Body of Individuals (BOI), corporate firms,
companies, local authorities and all other artificial juridical persons that generate
income.

 Taxes are calculated on the annual income of a person, and an annual cycle (year) in
the eyes of the Income Tax law starts on the 1st of April and ends on the 31st of
March of the next calendar year. The law recognizes and classifies the year as
"Previous Year" and "Assessment Year".
 The year in which income is earned is called the previous year and the year in which
it is charged to tax is called the assessment year.

16
 INCOME TAX DEPARTMENT

Under the Department of Revenue of the Ministry of Finance, the Income Tax Department
(IT Department) is responsible for monitoring the collection of Income Tax, Expenditure
Tax, and various other Financial Acts that are passed every year in the Union Budget. The
Central Board of Direct Taxes (CBDT) regulates the policy and planning of taxes. CBDT is
also responsible for administering the direct tax laws through the IT Department. In addition
to the collection of taxes, the IT department is also involved in prevention and detection of
tax avoidance.

TYPES OF INCOME TAX SLABS

In India, Income Tax is charged according to slabs which outline the details for different tax
rates for different levels of income.

For individual residents under 60 years of age:

INCOME SLABS TAX RATES

Taxable income under Rs. 2,50,000. Nil.

Taxable income between Rs. 2,50,000 5% of the amount by which the taxable income
and exceeds Rs.2,50,000. Less: Tax Credit u/s 87A -
Rs. 5,00,000. 5% of taxable income

Taxable income above Rs.5,00,000 and Rs.12,500 plus 20% of the amount by which the

Rs.10,00,000. taxable income exceeds

Taxable income above Rs.10,00,000.

Rs.1,12,500 plus 30% of the amount by which

the taxable income exceeds Rs.10,00,000.

17
For individual residents between 60 and 80 years of age:

INCOME SLABS TAX RATES

Taxable income under Rs.2,50,000. NIL.

Taxable income between Rs.2,50,000 and 5% of the amount by which the taxable

Rs.5,00,000. income exceeds Rs.2,50,000. Less: Tax

Credit u/s 87A - 5% of taxable income

Taxable income between Rs.5,00,000 and Rs.10,000 plus 20% of the amount by which

Rs.10,00,000. the taxable income exceeds Rs.5,00,000.

Taxable income above Rs.10,00,000.

Rs.1,10,000 plus 30% of the amount by

which the taxable income exceeds

Rs.10,00,000.

18
For Individual residents above 80 years of age:

INCOME SLABS TAX RATES

NIL.
Taxable income under Rs.5,00,000.

Taxable income between Rs.5,00,000 and 20% of the amount by which taxable

Rs.10,00,000. income exceeds Rs.5,00,000.

Taxable income above Rs.10,00,000. Rs.1,00,000 + 30% of the amount by

which taxable income exceeds

Rs.10,00,000.

* Amounts invested in certain specific investments like EPF, PPF, NSC, Tax Saving FDs,
etc. are eligible for deductions under Section 80C up to Rs.1,50,000 per year.

For Non Resident Individuals [ NRI ], the basic exemption limit is of Rs. 2.5 lakh in a
financial year irrespective of their age. If the net income exceeds Rs. 50 lakh a surcharge of
10% is levied on the income tax payable before levy of cess at 4% and for income exceeding
Rs. 1 crore , then a surcharge of 15% is levied.

19
Income Tax Slab for Co-operative societies :

Income Tax Slab Tax Rates

Total income upto Rs.10,000. 10% of total income.

Total income greater than Rs.10,000 but less 1,000 plus 20% of the amount by which
than Rs.20,000. it exceeds Rs.10,000.

Total income greater than Rs.20,000.

3,000 plus 30% of the amount by which
it exceeds Rs.20,000.

Firms, Local Authorities, Corporate and Domestic Companies:-

Income tax slab rates do not apply for these, as they are taxed at a flat rate of 30% on the total
income declared.

A surcharge of 12% is levied on the total income tax of domestic companies if their income
exceeds Rs.l crore. This surcharge does not apply to firms and local authorities.

20
Income Tax Slab Rate Hindu Undivided Families (HUF)

Income Tax Slab Income Tax Rate

Income up to Rs. 2,50,000 Nil

Income between Rs. 2,50,001 - Rs.

5% of Income exceeding Rs. 2,50,000
500,000

Income between Rs. 500,001 - Rs.

20% of Income exceeding Rs. 5,00,000
10,00,000

30% of Income exceeding Rs.

Income above Rs. 10,00,000
10,00,000

21
 INCOME TAX REFUNDS

 The government provides an option to save on tax amount by making certain kind of
investments. These kinds of investments can be declared for tax exemption under
Section 80C and 80D. T Section 80C allows an individual to reduce up to Rs.1,50,000
as investment amount that can be claimed from the annual income The Section 80D
deals with the tax deduction on medical insurance for up to Rs.25,000 for a financial
year.
 There are many instances when an individual declares more tax amount at the
beginning of a financial year than the actual chargeable tax amount. This could be due
to investment decision made at a later or mid-year stage or due to investments which
provide tax exemption that you have not declared.
 An individual can claim for the tax refund by filing the Form 16. Components such as
HRA (House Rent Allowance), life insurance premium amount, investments in
mutual funds, equity, fixed deposit, tuition fee etc, are included in Form 16 to be
declared investments.
 Online Income Tax Refund Status :
An individual can visit the Income tax refund website to check the status of income
tax refund for a particular financial year. Alternately, an email is sent by the IT
department with the details of the refund as well. The individual can also call the CPC
Bangalore on 1800-4250-0025 (toll-free) number to check for the status of the income
tax refund.

22
 INCOME TAX RETURN (ITR)

If an individual need to claim for income tax refund, he/she will need to fill up the required
Income Tax Return (ITR) form. In order to file the ITR, an individual will require producing
the bank statement, Form 16, and a copy of previous years1 return. The individual will need
to visit the Income Tax Department's website to register and file the returns.
Depending on the income assessment group, the individual will need to submit one of the
ITR forms listed below:

ITR FORM
NAME DESCREPTION

ITR-1 For Individuals having Income from Salaries, One house property, Other
sources (Interest etc.)

ITR-2 For Individuals and HUFs not having Income from Business or Profession

For Individuals and HUFs not having Income from Business or Profession
ITR-2A and Capital Gains and who do not hold foreign assets

ITR-3 For Individuals/HUFs being partners in firms and not carrying out business
or profession under any proprietorship

ITR-4
For individuals and HUFs having income from a proprietary business or
profession

ITR-4S
Presumptive business income tax return

ITR-5 For persons other than,- (i) individual, (ii) HUF, (iii) company and (iv)
person filing Form ITR-7

ITR-6 For Companies other than companies claiming exemption under section 11

ITR-7 For persons including companies required to furnish return under sections
139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)

ITR-V The acknowledgment form of filing a return of income

23
 SAVE INCOME TAX

Declaring investments - From HRA, Life Insurance Premiums, National Savings Certificate,
Leave Travel Allowance to Fixed Deposit (minimum of 5 years), ELSS Tax Saving Mutual
Funds, and more, by ensuring that you have declared all your investments, you can achieve
more deductions on tax. The following options can be considering for saving on income tax:
 Investment options :
 Mutual funds such as Equity Linked Savings Schemes (ELSS) can be claimed
for tax deduction under Section 80C. Compare to fixed deposits and PPF's, the
ELSS offers shorter lock-in period and more benefits when it comes to making
money.
 Unit Linked Insurance Plans (ULIP) are insurance schemes that are linked to the
market. The investment made under ULIP qualifies for tax deductions.
 Insurance :

 Life insurance and health insurance - The money paid towards life insurance and
health insurance policies are considering for tax deductions under Section 80C
 Loans :

 When we take a loan for buying a house or for renovation purpose, we are
eligible for tax deductions up to Rs.1,50,000 for a financial year.
 You can also consider the following options for reducing tax amount on your income:
 Fixed Deposits (FD) - An FD with a lock-in period of five years can help you
save on tax while earning the interest on the deposited amount.
 National Saving Certificate (NSC) - The NSC offers a safe and reliable method of
investing money. You can deposit as low as Rs.100 for a 5-10 year lock-in
period. The investments made under NSC are eligible for tax deductions
 Provident Fund (PF) - You can also choose to invest more amount towards your
PF account that will help you reduce your taxable amount.

24
 INCOME TAX FORMS

FORM DESCRIBTION
Audit report under section 44AB of the Income-tax Act, 1961 in a case
Form No.: 3CA
where the accounts of the business or profession of a person have been
audited under any other law

Form No.: 3CB Audit report under section 44AB of the Income-tax Act, 1961, in the
case of a person referred to in clause (b) of sub-rule (1) of rule 6G

Form No.: 3CD Statement of particulars required to be furnished under section 44AB of
the Income-tax Act, 1961

Form No.: 3CEB Report from an accountant to be furnished under section 92E relating to
international transaction(s)

Form No.: 10A Application for registration of charitable or religious trust or institution
under section 12A(l)(aa) of the Income-tax Act, 1961

Form No.: 10B Audit report under section 12A(b) of the Income-tax Act, 1961, in the
case of charitable or religious trusts or institutions

Form No.: 15CA Information to be furnished for payments, chargeable to tax, to a non-
resident not being a company, or to a foreign company

Form No.: 15CB Certificate of an accountant

Form No.: 15G Declaration under sub-sections (1) and (1A) of section 197A of the
Income-tax Act, 1961, to be made by an individual or a person (not
being a company or a firm) claiming certain receipts without deduction
of tax
Form No.: 15H Declaration under sub-section (1C) of section 197A of the Income-tax
Act, 1961, to be made by an individual who is of the age of sixty years
or more claiming certain receipts without deduction of tax

25
Form No.: 16 Certificate under section 203 of the Income-tax Act, 1961 for tax
deducted at source from income chargeable under the head "Salaries"

Form No.: 16A

Certificate under section 203 of the Income-tax Act, 1961 for tax
deducted at source

Form No.: 26 AS Annual Tax Statement under section 203AA

Form No.: 35 Appeal to the Commissioner of Income-tax (Appeals)

Form No.: 36 Form of appeal to the Appellate Tribunal

Form No.: 49A Application for allotment of Permanent Account Number under section
139A of the Income-tax Act, 1961

Form No.: 49AA Application for Allotment of Permanent Account Number [Individuals
not being a Citizen of India/Entities incorporated outside India/
Unincorporated entities formed outside India]
Form No.: 49B Form of application for allotment of Tax Deduction and Collection
Account Number under section 203A of the Income-tax Act, 1961

Form No.: 60 Form of declaration to be filed by a person who does not have a
permanent account number and who enters into any transaction
specified in rule 114B

26
 DEDUCTION FROM GROSS TOTAL INCOME

 Deduction For The Saving Done and Investment Made (Section 80C) :-

Deduction shall be allowed to an individual (whether resident or nonresident) or HUF

(whether resident or nonresident). These saving and investments can be made from
taxable income or from exempted income. Deduction be lower of :

a) Investments and savings done or

b) Rs 1,50,000 pa.

DEDUCTION UNDER SECTION 80 C

1. National saving certificates.
2. Deposit in post office schemes.
3. Public provident fund.
4. Provident fund.
5. Mutual fund units of uti.
6. Repayment of loan for house.
7. Life insurance premium.
8. Education expenses.

DEDUCTION IN RESPECT OF CONTRIBUTION TO CERTAIN

PENSION FUND SECTION 80CCC

1. Deduction is available only to an individual who can be either resident or can be a non
resident or can be a foreign national.
2. Deduction is available if individual has in the previous year deposited any amount out
of his taxable income (which can be from current year's income or preceding year's
income) towards annuity plan of LIC or any other insurer for receiving pension.
3. Deduction is lower of the amount Paid for annuity plan or Rs 1,50,000 PA.

4. The amount which is received by assessee himself or any of his nominees out of this
scheme shall be taxable in the hands of the recipient in the year of receipt.

27
 DEDUCTION FOR THE NEW PENSION

SCHEME SECTION 80 CCD

1. Individual who is an employee of some organization.

2. Individual who is oneself employee.
3. Amount received on maturity of NPS.

DEDUCTION FOR INVESTMENT IN LONG

TERM INFRASTRUCTURE BONDS.
SECTION 80CCF
1) This section has been introduced WEF AY 2011- 2012.
2) Deduction is allowed to individual and HUF, Whether resident or nonresident.
3) A deduction shall be allowed if investment is made in notified long term
infrastructure bonds and such deduction shall be lower of

a) Actual investment made in bonds.

b) Maximum limit of Rs 20,000 pa.

4) This deduction is in addition under section 80 C, section 80 CCC, section 80 CCD.

DEDUCTION IN RESPECT OF MADICAL

INSURANCE PREMIUM.
SECTION 80D

1) Deduction is available to an individual or HUF whether resident or non-resident.

2) Deduction is available if any sum of premium has been paid by any mode other than cash
in a previous year out of the taxable income, for insuring the health.
3) Such sum of premium can be paid by :
a) An individual for himself, spouse, dependent children and parents (whether dependent
or not)
b) HUF for any member of the family.

28
4) In case of an individual, deduction shall be the aggregate of the following
a) Premium paid for self, spouse and dependent children : deduction allowed is lower of
i) The amount of premium paid for medical insurance.
ii) Maximum limit of Rs 15,000 pa.
b) Premium paid for parents whether dependent or not: deduction allowed is lower of:
i) The amount of premium paid for medical insurance.
ii) Maximum limit of Rs 15,000 pa.
5) In case of HUF, deduction shall lower of
a) The amount of premium paid for medical insurance
b) Maximum limit of Rs 15,000 pa.

6) If any of the person as mentioned in d) or e) is a senior citizen then the limit shall be
raised to Rs 20,000 pa. Senior citizen is a person who is the age of 65 years or more and
is a resident in India.

7) the health insurance should be in accordance with the scheme framed in this behalf by:
a) GIC and approved by central government or
b) Any other insurer and which is approved by IRDA.

8) WEF AY 2011 - 2012 if government employee, including retired government employee

and employee of certain autonomous bodies, invest the amount to central government
health. Scheme (CGHS) then amount invested in CGHS shall also be allowed as
deduction subject to the limits as discussed above.

29
 DEDUCTION FOR REPAYMENTOF LOAN TAKEN FOR THE

HIGHER EDUCATION. SECTION 80 E

1) Deduction is available to an individual being a resident or a non - resident.

2) Deduction is available if loan has been taken for self or relatives for pursuing studies
(including vocation studies) after passing of senior secondary examination or its
equivalent from any school, board or university which is recognized by central
government or state government or local authority.
3) Relative have been defined as spouse of individual and children of the individual.
Further relative shall include any student for whom the individual is legal guardian.
4) Deduction is available in respect of the amount of interest on the education loan,
which has been paid by individual in the previous year. No deduction shall be
available for the principal amount repaid.
5) This amount of interest should have been paid out of his taxable income.
6) The loan should have been taken from any financial institution or a charitable
institution.
7) Deduction is available for 8 consecutive years starting from the year in which loan
has been repaid for the first time.

DEDUCTION ALLOWED TO
PHYSICALLY HANDICAPPED PERSON.
SECTION 80 U
 Eligible Assesse - Resident individual with disability (may be ordinarily resident or
not ordinarily resident)
i) The amount of deduction under section 80U is fixed, irrespective of the
amount of expenditure or the amount paid/deposited as under:-
 Person suffering from at least 40% disability can claim a tax deduction
upto Rs. 75,000 on the taxable income.
 Person with sever disability of 80% can claim tax deduction upto Rs.
1.25 lakh under Section 80U.

30
 Certificate - A certificate issued by the medical authority is required for claiming
deduction under this section. If the disability requires reassessment, then a fresh
certificate has to be obtained. Form no:- 10IA is to be filed for this purpose. If the
certificate is expiring in a year then also deduction can be claimed in that year but
should be renewed to continue deduction in next financial years.
i) In present day scenario, such certificate is not required to furnish with return
of income, but to be submitted to Assessing officer only if demanded by him.

ii) If the handicapped dependant himself takes deduction under section 80U,
then deduction under section 80DD is not available in respect of such
handicapped decision.

 Meaning of disability-
i) blindness;
ii) low vision;
iii) leprosy-cured;
iv) hearing impairment;
v) locomotors disability;
vi) mental retardation;
vii) mental illness;

 Certificates can be obtained from medical authorities as authorized by the government

which can include a MD in Neurology, pediatric neurologist Chief Medical Officer
(CMO) or Civil Surgeon at a government hospital.

31
 ASSESSMENT PROCEDURE

VOLUNTARY FILING OF INCOME TAX RETURN (ITR) SECTION 139 (1) :-

1) It is compulsory for every company and a partnership firm to file its income tax
return on or before due date irrespective of level of income.

2) It is compulsory for every person other than a company and partnership firm to file
income tax return on or before the due date if his total income or total income of some
other person in respect of which he is assessable during the year exceeds the basic
exempt limit.

3) Due Dates means :

A. Where the Assesseeis :
a) Company.
b) Partnership firm (including limited liability partnership firm)
c) A person (other than company) whose accounts are required to be audited.
d) In case of a co-operative.
e) The person is working partner of a firm whose accounts are required to be
audited.
DUE DATE IS 30/ SEPTEMBER /AY

B. In Any Other Case:-

DUE DATE is 31 / JULY/ AY

4) If on the last date on which Income Tax Return ought to be filed is a holiday then it can
be filed on the next working day and it will be assumed as if return was filed on the due
date.

5) As per section 119 of Income Tax Act 1961 CBDT has power to extend the due date to
file the Income Tax Returns.

32
 CONSEQUENCES FOR DEFAULT

IN FURNISHING INCOME TAX RETURN

If an assesse has defaulted in filling income tax return then he shall be liable to :-
1) Interest under section 234A .
2) Penalty under section 271 F.
3) Few losses can't be carried forwarded.
4) Deduction under section 10A, 10B, 80IA, 80IAB, 801B, 801C, 80ID and 80IE will not be
available.

INTEREST PAYABLE BY ASSESSEE

If the ITR is furnished after the due date or is not furnished at all then assesseehas to pay
interest under section 234A.
1) Rate of the interest payable shall be 1.5% pm or part of the month.
2) If ITR is filed after the due date; Interest shall be paid for the period starting from the
date next to the due date of ITR and ending on the date when ITR is filed.
3) If no return is filled : interest shall be paid for the period starting from the date next to
the due date of ITR and ending on the date when best judgment assessment is over by
the department.

TAX DEDUCTED AT SOURCE

TDS is a tax that is deducted from the earning of the employee by the employer in other
words it is a tax that is deducted at source. It is deducted as per the finance act of that year.
TDS should not be confused with Income tax return; TDS is different than Income tax. Tax
deduction is useful to reduce the income tax and provide tax relief. TDS is deposited in
government treasury and later on assigned to central government.
TAN (Tax Deduction Account Number)
 The persons who are accountable for TDS on behalf of Income Tax Department have
to compulsorily obtain a TAN which is a 10 digit alphanumeric number.
 If a person responsible for TDS/TCS fails to apply for TAN or does not comply with
the provisions of the act, he may have to pay a penalty of Rs.10000 /-.

33
 TDS RATE CHART FY 2016-17 AY 2017-20 (%)
Sec Nature of Payment Cut off (Rs.) Indi/HUF Oth
ers
192 Salaries Slab Rate Avg. rates NA
192 A Premature withdrawal from EPF 30000 (50000) 10 NA
193 Interest on securities 10000 10
194 Dividends 2500 10
194A Interest Banks/Other 40k sr.c.50k/5000 10
194B Winning from Lotteries 10000 30
194BB Winnings from Horse Race 10000 30
194C Contractor -Single/Yearly 30K single bill/ 1 1 2
Lakh aggregate bills
during year
Transporter (44AE) Declaration with As above - -
PAN
194D Insurance Commission 15000 5% 10%
194DA Life insurance policy 100000 1%
194EE NSS 2500 10% 10
194G Commission /Lottery 15000 5%
194H Commission / Brokerage 15000 5%
194I Rent Land and Building F&F 240000 5%
Rent-plant/Machinery /Equipment 240000 5%
194IA Immovable property 50 Lakh 1
194 J Professional Fees 30000 10
194LA Immovable Property 250000 10
Cut off limit and rates given in Red color applicable wef. 01.06.2016

34
TDS PAYMENT DUE DATES :-
Due date for TDS payment in case of Government Assessee :

Sr. No. Particulars Due Date

1. Tax deposited without challan Same Day

2. Tax deposited with challan 7th of Next Month

3. 7th of Next Month

Tax on perquisites opted to be deposited by the

employer

Due date for TDS payment in case of Non-Government Assessee :

Sr. No. Particulars Due Date

1. Tax deduction in March 30th April of Next Year

2. Other Months and Tax opted to be deposited by the 7th of Next Month
employer

NOTE: Challan no. for TDS Payment 281

35
TDS RETURN FORM :-

Form No. Particulars

Form 24Q Statement for tax deducted at source from salaries

Form 26Q Statement for tax deducted at source on all payment except salaries

Form 27Q
Statement for deduction of tax from interest, dividend, or any other sum

Payable to non-residents

Form 27EQ
Statement for collection of tax at source (sale of scrap, cash payment more

than Rs. 2,00,000)

Form 16 For salary

Form16A For other then salary

The quarterly return statements should be accompanied by a signed verification in Form No.
27A. Form 27A is a control chart of quarterly TDS/TCS statements to be filed by
deductors/collectors along with quarterly statements. It is a summary of TDS/TCS returns
which contains control totals of 'amount paid' and 'income tax deducted at source.

36
TDS RETURN DUE DATE :-

Quarter Form 27Q Form 27EQ

Due Date for Form

24Q & Form 26Q

31st July 31st July 31st July

April to June

July to September 31st October 31st October 31st October

31st January 31st January 31st January

October to December

January to March 31st May 31st May 31st May

INTEREST ON LATE PAYMENT OF TDS :-

In case the assesse deposits the TDS Payment after the due date of payment of the Tax
Deducted at Source, he shall be liable to pay interest @ 1.5%for every month or every part of
the month during the amount is not deposited with the Government. Earlier, the Interest liable
to be paid was 1% but this has been increased to 1.5%pm with a view to discourage the
practice of delaying the deposit of tax after deduction.
Interest @1.5% is liable to be paid from the date on which the TDS was deducted and not
from the date the TDS was due. This can be explained with the help of an example.
For example: TDS was deducted on 25th June and the due date for TDS Payment was 7th July.
The assesse fails to deposit the TDS by 7th July. In such a case, the interest would be
calculated from 25th June and from 7th July.
Failure to deduct TDS is 1% pm from the date of payment to date of deduct.

37
 ADVANCE TAX

Advance tax means income tax should be paid in advance instead of lump sum payment at
year end. Advance tax is to be paid by all assesse, if the income tax liability is more than
Rs.10,000/-

PAYMENT OF ADVANCE TAX SECTION 211

In case of assesse other than company:-

Due Date of Installment Amount Payable

On or before 15th September Not less than 30% of the Advance Tax Liability

On or before 15th December Not less than 60% of the Advance Tax Liability as

reduced by the amount, if any, paid in earlier

installment.

On or before 15th March 100% of the Advance Tax Liability as reduced by the

amount, if any, paid in earlier installment.

38
In case of Companies :-

Due Date of Installment Amount Payable

On or before 15th June Not less than 15% of the Advance Tax Liability

On or before 15th September

Not less than 45% of the Advance Tax Liability as

reduced by the amount, if any, paid in earlier

installment.
th
On or before 15 December
Not less than 75% of the Advance Tax Liability as

reduced by the amount, if any, paid in earlier

installment.
th
On or before 15 March
100% of the Advance Tax Liability as reduced by

the amount, if any, paid in earlier installment.

Earlier the percentage of Advance Tax to be paid was different for companies and other than
companies. However, Budget 2016 has standardized the rate for both companies and assesses
other than companies.

Payment of Advance Income Tax is to be made through Challan No. 280 by selecting
Advance Tax (100) as the type of payment.

39
CONCEQUENCES FOR NON PAYMENT OF ADVANCE TAX
1) If advance tax is not Paid then the assessee is known as assessee in default.
2) Assessee shall be liable to pay interest under section 234C and section 234B .
3) Assessee shall be liable to pay penalty under section 140A (3) which can be
maximum of 100% of such tax.

INTEREST PAYABLE BY ASSESSEE :

In following 3 cases:

1) DEFAULT IN FURNISHING RETURN OF INCOME SECTION 234 A:-

If the income tax return is furnished after the due date or is

not furnished at all then assesse has to pay interest under section 234A.
a) Rate of interest payable shall be 1% pm or part of the month.
b) Interest shall be paid for the period starting from the date next to the due date of
income tax return and ending on the date when income tax return is filed.
c) Interest shall be paid for the period starting from the date next to the due date of
income tax return and ending on the date when best judgment assessment is over
by the department.
2) DEFAULT IN PAYMENT OF ADVANCE TAX SECTION 234B :-
If assesse has paid advance tax less than 90%of the assessed tax then he shall be liable
to pay interest under section 234B:-
a) Rate of interest payable shall be l% pm or part of the month.
b) Interest shall be paid for the period starting from the 1/4/AY and ending on the

date when such tax is paid.

3) DEFERMENT IN PAYABLE OF ADVANCE TAX SECTION 234C:-

If any person has not paid his advance tax on the due dates as mentioned in section

211 then such person has to pay interest under section 234C:

a) The rate of interest shall be 1% per month or for part of the month.

b) The period of interest shall be 3 months for every installment but for the last

installment the period shall be only 1 month.

40
 CALCULATION OF GROSS TOTAL
INCOME AND TAX LIABILITY
Tax is calculated on total income for the previous year. The total income is calculated as
Follows :-
Income under the head SALARY
Income under the head HOUSE PROPERTY
Income under the head BUSINESS AND PROFESSION
Income under the head CAPITAL GAINS
Income under the head other sources

GROSS TOTAL INCOME

LESS : Deduction of chapter VI - A under section 80C to 80U
TOTALINCOME_______________________________________________________

41
DATA ANALYSIS AND
INTERPRETATION

42
 QUESTIONNAIRE

Type of person ?

a) Individual
b) Company
c) Firm
d) HUF

Type of Person

5%

18%
Individual
45% Company
Firm
HUF
32%

INTERPRETATION :

45% of survey sample are individual person while 32% of survey is conducted from
company. 5% of respondents were HUF and 18% of survey is conducted from firm holder.

43
Age group ?

a) 20-30
b) 31-45
c) 45-60
d) 60 above

Age Group

5%
15%

20%
20-30
31-45
45-60
60 Above

60%

INTERPRETATION :

For the analysis 60% of response is collected from age group of 31-45. 20% of responses got
from age group 45-60 and 15% age group was 20-30 while 5% of respondents are retired.

44
Annual Income ?

a) 2,50,000
b) 2,50,000 to 5,00,000
c) 5,00,000 to 10,00,000
d) 10,00,000 Above

Annual Income

15%
25%

2,50,000
2,50,000 to 5,00,000

25% 5,00,000 to 10,00,000

10,00,000 Above

35%

INTERPRETATION :

25% of respondents belong to 2,50,000 annual income and 35% of respondents receive
annual income of 2,50,000 to 5,00,000.
Income from 5 lakhs to 10 lakh received by 25% of respondents and remaining 15%
respondents receive above 10 lakh as annual income.

45
How well informed would you consider yourself to be regarding your tax affairs?

a) Very well informed

b) Quiet well informed
c) Neutral
d) Not well informed
e) Do not know

Awareness

5%
11%
28%
Very well informed
Quiet well informed
17% Neutral
Not well informed
Do not know

39%

INTERPRETATION :

From the above analysis it can be seen that 39% respondents are well informed about their
tax affairs while 28% of respondents are very well aware of tax policies. 17% of respondents
are neither well aware nor completely unaware. 11% of respondents said that they are not
well informed and remaining 5% do not know.

46
Which is the easy way to pay taxes or tax returns?

a) Online
b) Paper forms

Tax Payment

29%

online
Paper forms

71%

INTERPRETATION :

from the above data it can be seen that 71% of people think that online mode of tax payments
if better while 29% respondents prefer paper forms.

47
Do you consider that amount of income tax which you have to pay is too high?

a) Yes
b) No
c) Can not say

Perception

10%

Yes
25%
No
Can not say
65%

INTERPRETATION :
65% of respondents consider that taxes are too heavy while 25% think that taxes are suitable
and remaining 10% respondents neither said yes nor no.

48
Do you consider that tax evasion is ethical even if the large amount of money is spent on
worthy projects?

a) Agree
b) Somewhat agree
c) Neutral
d) Somewhat disagree
e) Disagree

Perception

15%
20%

Agree
10% Somewhat agree
Neutral
Somewhat disagree
Disagree
30%
25%

INTERPRETATION :

20% respondents consider, it is ethical, 30% of respondents are somewhat agree that tax
evasion is ethical if money is spent on worthy projects, 25% respondents gave neutral
response while. 25% respondents are disagree.

49
Do you think that taxes are heavy that tax evasion is an economic necessity for many to
survive?

a) Agree
b) Somewhat agree
c) Neutral
d) Somewhat disagree
e) Disagree

Perception

10%

25%
Agree
20% Somewhat Agree
Neutral
Somewhat Disagree
Disagree
15%
30%

INTERPRETATION :

55% of people think tax evasion is necessity for the people who receive low income while
30% people are disagree and remaining 15% respondents given neutral response.

50
Do you think the present tax system benefits the rich class?

a) Agree
b) Somewhat agree
c) Neutral
d) Somewhat disagree
e) Disagree

Perception

10%

28%
11% Agree
Somewhat agree
Neutral
15% Somewhat disagree
Disagree

36%

INTERPRETATION :

From the responses, 64% people consider that present tax system is benefiting the rich class
while 21% respondents are disagree and 15% respondents given neutral response.

51
Would you cheat on tax if you get the chance?

a) Yes
b) No
c) Can not say

Perception

25%

40%
Yes
No
Can not say

35%

INTERPRETATION :

40% of respondents consider that they will cheat on tax if they get the chance while 35%
people are against cheating and 25% respondents are not sure.

52
 FINDINGS

 It was found that the practice of seeking the services of professional financial advisor
are making investment easy.
 The awareness on the proposed tax code was found to be considerable as far as
salaried income tax assesse are concerned.
 The service of income tax consultant was found to be helpful as far as employees are
concerned.
 The importance of time factor in formulation of tax plan in matter on concern.
 The respondents are well informed and the perceptions differs as per the person’s
attitude, personality and incomes,

53
 CONCLUSION

Income tax helps in increasing the level of economic activity, reduce income inequalities and
promote economic growth. The tax collected is reinvested by the government for public
welfare. So one most pay income tax to government on time as it is used by government for
betterment of us and our country.
People have to consider that paying tax is economic necessity for the development of
community. People should be well aware of their tax affairs and get advice from tax
consultancy if needed.

54
 BIBLIOGRAPHY

 Books – Income Tax Act, 1961

 www.google.com
 https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx

 https://www.justdial.com/Mumbai/Sharma-Company-Opposite-Cbd-Belapur-Police-

Station-Sector-No-A-1-Cbd-Belapur/022PXX22-XX22-091028005320-T6H3_BZDET

55
 Annexure

Type of person ?

a) Individual
b) Company
c) Firm
d) HUF

Age group ?

a) 10-30
b) 31-45
c) 45-60
d) 60 above

Annual Income ?

a) 2,50,000
b) 2,50,000 to 5,00,000
c) 5,00,000 to 10,00,000
d) 10,00,000 Above

How well informed would you consider yourself to be regarding your tax affairs?

a) Very well informed

b) Quiet well informed
c) Neutral
d) Not well informed
e) Do not know

Which is the easy way to pay taxes or tax returns?

a) Online
b) Paper forms

Do you consider that amount of income tax which you have to pay is too high?

a) Yes
b) No
c) Can not say

56
Do you consider that tax evasion is ethical even if the large amount of money is spent on
worthy projects?

a) Agree
b) Somewhat agree
c) Neutral
d) Somewhat disagree
e) Disagree
Do you think that taxes are heavy that tax evasion is an economic necessity for many to
survive?

a) Agree
b) Somewhat agree
c) Neutral
d) Somewhat disagree
e) Disagree

Do you think the present tax system benefits the rich class?

a) Agree
b) Somewhat agree
c) Neutral
d) Somewhat disagree
e) Disagree

Would you cheat on tax if you get the chance?

a) Yes
b) No
c) Can not say

57
58