A RESEARCH PROJECT REPORT

ON
“ONLINE FILLING OF INCOME TAX RETURN”
A report submitted to Delhi Technical CAMPUS for the partial

Fulfillment of MBA Degree 2017-2019

Submitted to :- Submitted by:-

Mrs- ANUPAMA SHARMA SALMAN BEG

PROFESSOR MBA (2 yrs)

DELHI TECHNICAL CAMPUS EN. NO.-52718003917

Knowledge Park-III, Greater Noida (U.P)

 CERTIFICATE

This is to certify that the Research Project Report entitled “ONLINE FILLING OF

INCOME TAX RETURN” being submitted by SALMAN BEG fulfillment of the

requirement of DELHI TECHNICAL CAMPUS is a record of an independent work

done by his under my guidance and supervision.

Dr. ANUPAMA SHARMA

ASSISTANT PROFESSOR

DELHI TECHNICAL CAMPUS

KNOWLEDGE PARK III, GREATER NOIDA

UTTAR PRADESH-201306
 ACKNOWLEDGEMENT

It is a matter great pleasure and privilege to record here my deep sense of gratitude and

indebtedness to a number of persons who extended their valuable cooperation in the study

undertaken for partial fulfilment of “RESEARCH REPORT” on “ONLINE FILLING OF

INCOME TAX RETURN” for the award of the Degree of Master of Business

Administration(M.B.A) and submitted to the DELHI TECHNICAL CAMPUS, KNOWLEDGE

PARK III , GREATER NOIDA.

I also take the opportunity to thanks all gentlemen who have directly or indirectly

helped me during the project work.

I would also like to thank all my respondents, without whose cooperation my project would not

have been possible.

I also wish to give thanks to my college DELHI TECHNICAL CAMPUS Gr.Noida. I

thank my ASSISTANT PROFESSOR – DR. ANUPAMA SHARMA MA’AM for his encouraging

words.

I am also very thankful to my parents,I will be failed In my duty,if I could not record my gratitude

to my respected parents for their regular encouragement.support and love.

SALMAN BEG
 TABLE OF CONTENTS

CERTIFICATE

ACKNOWLEDGEMENT

Chapter - 1 INTRODUCTION

Chapter - 2 HISTORY OF INCOME

Chapter - 3 LITERATURE REVIEW OF INCOME TAX IN INDIA

Chapter - 4 ONLINE FILLING OF I.T.R

Chapter - 5 RESEARCH METHODOLOGY

Chapter -6 DATA ANALSIS AND FINDINGS

Chapter - 7 SUGGESTIONS/RECOMENDATION

Chapter -8 ANNEXTURE

Chapter- 9 BIBLIOGRAPHY
 CH-1 INTRODUCTION

Online procedure of filing income tax return has simplified the process Here are two genre of returns

i.e. individual and professional. Under the individual category, one is supposed to file return

personally, on the basis of the amount earned by an individual. In the case of professional income tax

return, the amount is deducted from the salary of persons . The process of filing return involves filling

of some forms, with all the information regarding the salary of the tax payer. Filing return happened

to be a cumbersome task earlier. But , with passage of time, government has simplified the procedure

up to a great extent by introducing the process of filing online income tax return.Government has

launched its Websites which is being proved to be quite helpful in filing return. On the website of

the income tax department, launched by the government of India, millions of people can file their

return online. The websites even allow the tax payers to pay the amount through their credit cards.

The Internet portals facilitate the users to pay the amount while sitting comfortably in front of their

computers. For paying through e-mode one requires to fill an online form with ll the details. Once

you have filled your form, you are required to enter the credit card number and a special code which

is written behind the card. After these simple steps your income tax return will be paid. This method

has solved the problem of paying return for those who are familiar with the Internet. They can conduct

the online procedure of paying the taxes easily.

You can go through the terms and conditions of filing return on the official Website of income

tax commission. These specified terms and condition on the site help to get complete and genune

information about the rules and procedure of paying tax. It also facilitates the users to download the

form for paying tax offline. There are sample number of other Internet portals that provide many

facilities related to the tax return.With these portals, applicant can also calculate their tax amount

within a minute by entering their income details.

So, it can be concluded with the above analysis that filing the income tax return is no more a

tedious task and can be performed easily while sitting at home. Internet users can find such portals

with simple search on Internet. Government has simplified the procedure of paying the return and it
no more remained a dilemma for the people. For the betterment and growth of our country, filing

return is a way to contribute to our nation. There is no doubt in the fact that in the coming time we

can expect simpler procedure as compared to the existing one.

E filing is the process of electronically filing Income tax returns through the Internet. One

must have experienced the trouble in doing the same after standing for long hours in the endless long

queues to file the income tax, however, now-a-days, the IT department has brought a transformation

in the entire process and has launched a revolutionary feature called e-filing taxes which allows

people to file their income tax returns using the Internet. After paying online for bills, booking the

rail and air tickets online, one can now file his income tax as well Online which has made life even

simpler and easier without getting tense about the last tax-filing date. For people, Online tax filing is

nothing less than a boon and has helped them immensely in filing taxes regularly without fearing

about the last date. The technology has completely changed the way by which an assessee used to

pay his or her taxes to the IT Department. In line with the provisions of Income Tax Act, 1961, filing

of income Tax return is a legal obligation of each and every Individual of the country whose income

exceeds the maximum limit of non-taxable income slab for the full financial year which begins on 1

April and ends on March 31 of the next year. For those earning salaries, the information about the

income in the particular financial\ year supported with the form 16 (which is the certificate for tax

deducted at source), is issued by the employer at the end of the financial year. By filing income tax

return online, one enjoys a number of benefits such as great convenience, fast processing and time

and energy savings. To encourage the people to file their taxes regularly at the right time, the IT

department has taken a number of initiatives which have really made the lives of many who file taxes

simple and tension free.

Last but not the least, to use the facility of online paying income tax, one requires the Internet

banking facility by the bank so as to operate account online. And to add to the comfort, there are a

number of web sites which provides help with the e-tax filing. It has brought an array of positive

changes in the lives of many and has a number of advantages which include convenience, user

friendly and hassle free process, accuracy in data, for each and every short detail, expert advice, filing
tax any time sitting anywhere. In short, e-tax filing is nothing less than a big relief for those who have

suffered badly shuttling between one counter to another.

1. What is Tax

What is Tax?

Tax is imposition financial charge or other levy upon a taxpayer by a state or other the functional

equivalent of the state.

How many Types of Taxes are there and what are they?

There are two types of Taxes in India – 1.Direct Taxes, 2.Indirect Taxes

The Taxes whose burden falls directly on the Tax payers are the Direct Taxes like Income Tax,

Wealth Tax etc.,

The taxes in which the burden is passed on to a third party are called Indirect Taxes like Service Tax,

VAT etc.,

What is Income Tax?

An income tax is a tax levied on the financial income of persons, corporations, or other legal entities.

Who has to pay Income Tax?

A Person, corporations or other legal entities, whose earned Income in India, exceeds a prescribed

limit has to pay tax

What is the meaning of Previous Year and Assessment Year?

Previous Year is the Financial Year ending on 31st March every year. Assessment Year is the period

of 12 Months commencing on the 1st day of April immediately after the Previous Year. For eg. For

Previous Year/Financial year

ending 31.03.2009, the Assessment Year is 2009-10 (01.04.2009-31.03.2010).

What happens if I don’t pay the Income Tax?

A Person, corporations or other legal entities, whose earned Income in India, exceeds a prescribed

limit has to pay tax. Any person who willfully attempts to evade the payment of any tax, penalty or

interest levied under Income Tax is

liable to be prosecuted u/s 276C(2) of Income Tax Act, 1961.

Whether I can get refund in case I pay any extra tax by mistake?
If a person has paid more tax than he is required to pay by the tax rules, he may seek refund of the

excess amount deposited. The refund will be made after processing of the income tax return.

What are tax penalties?

"If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any

proceedings under this Act, is satisfied that any person-

(b) has failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of

section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, or

(c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he

may direct that such person shall pay by way of penalty,-

(ii) in the cases referred to in clause (b), in addition to any tax payable by him, a sum of ten thousand

rupees for each such failure;

(iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall

not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by

reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of

such income"

How I can know as to how much Tax had been paid by me so far?

You can know the details of tax paid by you for any financial year online for which you have to

register with the

NSDL’s website www.tin-nsdl.com.

2. Filing of Returns

What is Filing of Return?

Filing of Income Tax Return is compulsory if the taxable income exceeds the basic exemption limit

even if the tax payable is nil or refundable.

As per the Sec 139 of Income Tax Act

Every person,-

(a) Being a company; or

(b) being a person other than a company, if his total income or the total income of any other person

in respect of which he is assessable under this Act during the previous year exceeded the maximum
amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of

his income or the income of such other person during the previous year, in the prescribed form and

verified in the prescribed manner and setting forth such other particulars as may be prescribed.

Who has to file the Income Tax Return?

For the Financial Year 2009-10, following persons are required to file their return of Income Tax :

a. Individuals having taxable income exceeding Rs.1,60,000 per annum.

b. Women having taxable income exceeding Rs.1,90,000 per annum.

c. Senior Citizens having taxable income exceeding Rs.2,40,000 per annum.

I have paid more Income Tax than what I have to pay. Can I get the refund of the excess amount paid

by me?

Yes. The refund can be claimed while filing the Return of Income Tax showing the amount of income

tax excess deposited/deducted as refundable in the appropriate column. The assessing officer shall

grant the refund.

What happens if I have paid the Income Tax but did not file the Return?

Any person who willfully fails to furnish in due time return of Income or return of fringe benefits is

liable to be prosecuted u/s 276CC of Income Tax Act, 1961. I am a salaried person. I do not know

how much Income Tax I have to pay for the Financial Year 2009-

10. For the Financial Year 2011-12, the tax rates are as below:-

. → Up to 2,00,000 = 0,

→ 2,00,001 – 5,00,000 = 10%,

→ 5,00,001 – 10,00,000 = 20%,

→ 10,00,001 upwards = 30%,

Up to 2,50,000 (for resident individual of 60 years or above)= 0,

Up to 5,00,000 (for very senior citizen of 80 years or above)= 0.

Education cess is applicable @ 3 per cent on income tax, surcharge = NA

How can I pay the Income Tax?

For Salaried Persons: Income Tax can be paid on the basis of Form 16 Certificate, which is issued

by the employer which contains the details of salary received from the employer. The employer

would have deducted the income tax (TDS – tax deducted at source) while making the payment of

your salary on monthly basis. The details of tax deducted by the employer shall be available in form

16 and pay-slips given. The persons receiving any other income (other than salary) shall get the

details of TDS deducted by the paying person / entity in form 16A.

Who is an Assessee?

'Assessee' as a person by whom any tax or any other sum of money is payable under Income Tax

Act, 1961

What are different forms for filing returns?

S No Assessee Form No

1 For Individuals having Income from Salary

/ Pension / Family Pension & Interest

ITR - 1

2 For Individuals and HUFs not having

Income from Business or Profession

ITR - 2

3 For Individuals / HUFs being partners in

firms and carrying out business or

IPR - 3

profession under any proprietorship

4 For Individuals & HUFs having Income

from proprietary business or profession

ITR - 4

5 For Firms, AOPs and BOIs ITR - 5

6 For Companies other than Companies

claiming exemption under Section11

ITR – 6
7 For Persons including Companies

required to furnish return under Section11

ITR - 7

3. Various sources of Taxations

What are the various heads of Taxable Income?

a. Income from Salary

b. Income from House Property

c. Income from profits and gains of Business or Profession

d. Income from Capital gains

e. Income from Other sources.

What are the items which are included under the Head “Salary”?

Salary includes the pay, allowances, bonus or commission payable monthly or otherwise or any

monetary payment, in whatever name called from one or more employers, as the case may be, but

does not include the following, namely:

a. dearness allowance or dearness pay unless it enters into the computation of superannuation or

retirement benefits\ of the employee concerned;

b. employer's contribution to the provident fund account of the employee;

c. allowances which are exempted from payment of tax;

d. the value of perquisites specified in sub-section (2) of section 17 of the Income-tax Act;

It also includes the following:

a. Wages;

b. Any annuity or pension;

c. Any gratuity;

d. Any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;

e. Any advance of salary;

f. Any payment received by an employee in respect of any period of leave not availed of by him;

g. The annual accreditation to the balance at the credit of an employee participating in a recognized

provident fund, to
the extent to which it is chargeable to tax under Rule 6 of Part A of the Fourth Schedule; and

h. The aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule

(2) of rule 11 of

part A of the Fourth Schedule of an employee participating in a recognized provident fund, to the

extent to which it is

chargeable to tax under sub-rule (4) thereof.

How is Income under House Property computed?

Income from House property is computed by taking what is called Annual Value. The annual value

(in the case of a let out property) is the maximum of the following:

• Actual Rent received

• Municipal Valuation

• Fair Rent (as determined by the I-T department)

If a house is not let out and not self-occupied, annual value is assumed to have accrued to the owner.

Annual value in case of a self occupied house is to be taken as NIL. (However if there is more than

one self occupied house then the annual value of the other house/s is taxable.) From this, deduct

Municipal Tax paid and you get the Net Annual Value. From this Net Annual Value, deduct :

• 30% of Net value as repair cost •

• Interest paid or payable on a housing loan against this house In the case of a self occupied house

interest paid or payable is subject to a maximum limit of Rs,1,50,000 (if loan is taken on or after 1

April 1999) and Rs.30,000 (if the loan is taken before 1 April 1999). For all non self-occupied homes,

all interest is deductible, with no upper limits. The balance is added to taxable income.

4. Income Exemptions

What are the various Income Exemptions?

a. Agricultural Income

b. Value of Leave Travel concession, only where journey is actually performed.

c. Gratuity amount paid to the employee on the retirement on superannuation, retirement on VRS,

termination, resignation or any gratuity paid to the spouse, children or dependents on his/her death

subject to the limits prescribed.

d. Any Payment on Voluntary Retirement subject to maximum of Rs. 5 lakhs.

e. Payment of Provident Fund under the Provident Fund Act, 1925 or Public Provident Fund Scheme,

1968.

f. Payment of commutation of Pension (1/3rd) is fully exempt.

g. Encashment of Leave on Retirement subject to a maximum limit of Rs.300000.

g. House Rent Allowance : HRA paid to the assessee to meet the expenditure incurred on payment

of rent for

accommodation.

i. Special Allowance or Benefits : Any special allowance or benefit as may be prescribed which is

not in nature of

perquisites, specially granted to meet expenses wholly in performance of duties to the extent of such

expenses are

actually incurred for the purpose.

What are the other Permissible Deductions?

1) Professional Tax

2) Interest paid on Housing Loan to the extent of Rs.30,000/- Rs.150000/- as the case may be) in

respect of self occupied House.

3) Deduction in respect of Medical Treatment for specific ailments for self or dependents up to

Rs.1.00 lakh.

4) Interest paid on Educational loans for self or dependents availed from any Bank / Financial

Institutions/ charitable trusts is eligible for deduction.

5) A deduction of Rs .50,000 p.a. can be deducted from Income of the if the assessee is suffering

from any disability and a deduction up to Rs.1.00 lakh can be made if suffering from severe disability

6) Donations made to Prime Minister / Chief Minister’s Relief fund etc., are eligible for deductions

@ 100%. In other cases 50% of donations paid are eligible for deduction.

7) Medical Insurance premium up to Rs.30,000 u/s 80D i.e. Rs. 15,000 for self, spouse, children and

Rs.15,000 for

parents (Rs.20,000 pa if parents are 65 years above)

Whether it is necessary to disclose tax-free income while preparing my income tax return?

You are required to disclose all the incomes whether taxable or tax-free while filing your income tax

return.

5. Rebates & Relief Permission

what is various Rebates & Relief’s permissible IT Act?

Section 80C of the Income Tax Act [1] allows certain investments and expenditure to be tax-exempt.

The total limit under this section is Rs. 100,000 (Rupees One lakh) which can be any combination of

the below:

• Contribution to Provident Fund or Public Provident Fund

• Premium paid on Insurance paid on the life of self, spouse or children.

• Investment in pension Plans

• Investment in Equity Linked Savings schemes (ELSS) of mutual funds

• Investment in specified government infrastructure bonds

• Investment in National Savings Certificates (interest of past NSCs is reinvested every year and can

be

added to the Section 80 limit)

• Payments towards principal repayment of housing loans and any registration fee or stamp duty paid

upto

overall ceiling of Rs.1.00 lakh.

• Tuition fees paid to any University/college/school or Educational Institutions in India for purpose

of full time education for any two children upto an overall ceiling of Rs.1.00 lakh.

• Post office investments The investment can be from any source and not necessarily from income

chargeable to tax.

• Specified Term Deposit made in any Scheduled Bank with maturity of 5 years or more. (eg. Synd

Tax Shield)

What are the other Permissible Deductions?

1) Professional Tax
2) Interest paid on Housing Loan to the extent of Rs.30,000/- (Rs.150000/- as the case may be) in

respect of self Soccupied House.

3) Deduction in respect of Medical Treatment for specific ailments for self or dependents up to

Rs.1.00 lakh.

4) Interest paid on Educational loans for self or dependents availed from any Bank / Financial

Institutions/ charitable trusts is eligible for deduction.

5) A deduction of Rs.50,000 p.a. can be deducted from Income of the if the assessee is suffering from

any disability and a deduction up to Rs.1.00 lakh can be made if suffering from severe disability

6) Donations made to Prime Minister / Chief Minister’s Relief fund etc., are eligible for deductions

@ 100%. In other cases 50% of donations paid are eligible for deduction.

7) Medical Insurance Premium up to Rs.15000 u/s 80D.

What is the overall limit under Sec 80 C?

The aggregate limit of deduction u/s 80 CC.and 80 CCC are subject to overall limit of Rs.1.00 lakh

only.

Section 80 CCC:

An amount paid or deposited upto maximum of Rs.1.00 lakh by the assessee during the previous year

to the annuity plan of LIC or other Insurance Companies for receiving pension from the fund referred

to in section 10(23AAB). The

amount within the overall limit of Rs.1.00 lakh including Sec 80C.:

Section 80CCE : The aggregate limit of deduction u/s 80 CC.and 80 CCC are subject to overall limit

of Rs.1.00 lakh only.

Section 80D: Medical Insurance Premiums Medical insurance, popularly known as Mediclaim

Policies, provide deduction up to Rs 30,000 . This deduction is additional to Rs.1,00,000 savings.

For senior citizens, the deduction up to Rs. 20,000 is allowable and for non senior citizens, the limit

is Rs. 15000. This deduction is available for premium paid on medical insurance for oneself, spouse,

parents and children. It is also applicable to the cheques paid by proprietor firms.

Section 80 DDB: Maintenance & Medical Treatment:

Amount actually incurred for medical treatment for self or for spouse/children/dependant parents for

specified diseases or ailments are eligible for deduction up to Rs.1.00 lakh u/s 80 DDB.

Section 80E: Interest on Educational Loans:

Any amount paid out of Income chargeable to tax towards interest on Education loan availed from

any Bank/Financial Institution/charitable Institution for purpose of pursuing Higher Education for

self, spouse or children is eligible for deduction

Section 80 U: Person with Disability for Self:

U/s 80 U, a deduction of Rs.50,000 p.a. can be deducted from Income of the if the assessee is

suffering from any disability and a deduction up to Rs.1.00 lakh can be made if suffering from severe

disability .

Section 80G: Donations made to Charitable Institutions;

Donations made to Prime Minister / Chief Minister’s Relief fund etc., are eligible for deductions @

100%. In other cases 50% of donations paid are eligible for deduction.

How about the amount of Salary arrears which I have received?

Relief U/S 89 Where an assessee is in receipt of a sum in the nature of salary, being paid in arrears

or in advance or is in receipt, in any one financial year, of salary for more than twelve months or a

payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, or is in

receipt of a sum in the nature of family pension as defined in the Explanation to clause (iia) of section

57, being paid in arrears, due to which his total income is assessed at a rate higher than that at which

it would otherwise have been assessed, the Assessing Officer shall, on an application made to him in

this behalf, grant such relief as may be prescribed.

6. PAN & TDS

What is PAN?

PAN (Permanent Account Number) is unique alphanumeric combination issued to all juristic entities

identifiable under the Indian Income Tax Act 1961. It is issued by the Indian Income Tax Department

under the auspices of the Central Board for Direct Taxes (CBDT).

Who has to obtain PAN?

Every person, whose taxable income exceeds the basic exemption limit during an accounting year, is

required to obtain Permanent Account Number by making an application in form No 49A.

Why Is It Necessary To Have PAN?

It is mandatory to quote PAN on return of income, all correspondence with any income tax authority.

It is also necessary to quote PAN in all transactions such as sale and purchase of properties or

payments in cash, travel to foreign country. Similarly, the PAN is necessary for making term deposit

for Rs. 50000/- and above with the bank.

Is it compulsory to quote PAN on return of income?

Yes, it is mandatory to quote PAN on return of income

Who must have a PAN?

i. All existing assesses or taxpayers or persons who are required to furnish a return of income, even

on behalf of others, intends to enter into financial transaction where PAN is mandatory, must obtain

PAN.

6. Can a person obtain or use more than one PAN?

Obtaining or possessing more than one PAN is not permitted.

What is TDS?

TDS (Tax Deduction at Source) means the tax required to be paid by the Assessee, which is deducted

by the person paying the income to him.

Whether I need to club the income shown in two or more form 16 given to me by my employer for

tax purposes?

Yes, you must arrive at the tax payable after clubbing the income received by you in a financial year.

The employers would not have deducted the tax hence you must calculate the tax payable and pay

the tax at the prescribed rate.

What is TDS Certificate?

A certificate issued by the person deducting tax as per the provisions of Sec 203 of Income Tax Act

issued to the person whose income tax has been deducted specifying the amount so deducted, the rate

at which the tax has been deducted and such other particulars as have been prescribed. This certificate
enables the payee to get the credit of TDS in the Return of Income. TDS Certificates are issued within

the prescribed time in the prescribed forms as under:

Form 16 : For Salaries : This certificate will be having the details of the employee’s Income from

salary, other sources declared by the employee, deductions claimed and tax deducted from the

employee and paid to the income tax department.

Form 16A: For Other payments.

What Is a TAX

A tax that governments impose on financial income generated by all entities within their jurisdiction.

By law, businesses and individuals must file an income tax return every year to determine whether

they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds that the

government uses to fund its activities and serve the public.

 INCOME TAX

An income tax is a tax levied on the income of individuals or businesses (corporations or

other legal entities). Various income tax systems exist, with varying degrees of tax incidence. Income

taxation can be progressive, proportional, or regressive. When the tax is levied on the income of

companies, it is often called a corporate tax, corporate income tax, or profit tax. Individual income

taxes often tax the total income of the individual (with some deductions permitted), while corporate

income taxes often tax net income (the difference between gross receipts, expenses, and additional

write-offs). Various systems define income differently, and often allow notional reductions of income

(such as a reduction based on number of children supported).

CH-2 HISTORY OF INCOME TAX

 2 History

o 2.1 China

o 2.2 United Kingdom

o 2.3 United States

 3 Types

o 3.1 Personal

o 3.2 Corporate

o 3.3 Payroll

o 3.4 Inheritance

o 3.5 Capital gains tax

Principles of taxes

The "tax net" refers to the types of payment that are taxed, which included personal earnings

(wages), capital gains, and business income. The rates for different types of income may vary and

some may not be taxed at all. Capital gains may be taxed when realized (e.g. when shares are sold)

or when incurred (e.g. when shares appreciate in value). Business income may only be taxed if it is

significant or based on the manner in which it is paid. Some types of income, such as interest on bank

savings, may be considered as personal earnings (similar to wages) or as a realized property gain

(similar to selling shares). In some tax systems, personal earnings may be strictly defined where

labor, skill, or investment is required (e.g. wages); in others, they may be defined broadly to include

windfalls (e.g. gambling wins). Tax rates may be progressive, regressive, or proportional. A

progressive tax applies progressively higher tax rates as earnings reach higher levels. For example,

the first $10,000 in earnings may be taxed at 7%, the next $10,000 at 10%, and any more income at

30%. Alternatively, a flat tax takes all earnings at the same rate. A regressive income tax may apply
to income up to a certain amount, such as taxing only the first $90,000 earned. A tax system may use

different taxation methods for different types of income.

Personal income tax is often collected on a pay-as-you-earn basis, with small corrections

made soon after the end of the tax year. These corrections take one of two forms: payments to the

government by taxpayers who did not pay enough during the tax year; and tax refunds from the

government to those who overpaid. Income tax systems often have deductions available that lessen

the total tax liability by reducing total taxable income. They may allow losses from one type of

income to be counted against another. For example, a loss on the stock market may be deducted

against taxes paid on wages. Other tax systems may isolate the loss, such that business losses can

only be deducted against business tax by carrying forward the loss to later tax years.

The idea of a progressive tax has garnered support from macro economists and political

scientists of many different ideologies - ranging from Adam Smith to Karl Marx, although there are

differences of opinion about the optimal level of progressivity. Some economists trace the origin of

modern progressive taxation to Adam Smith, who wrote in The Wealth of Nations: The necessaries

of life occasion the great expense of the poor. They find it difficult to get food, and the greater part

of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal

expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the

other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general

fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very

unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not

only in proportion to their revenue, but something more than in that proportion.

Income taxes are used in most countries around the world, but are not without criticism. Frank

Chodorov wrote "... you come up with the fact that it gives the government a prior lien on all the

property produced by its subjects." The government "unashamedly proclaims the doctrine of

collectivized wealth. ... That which it does not take is a concession." Some have argued that the

economic effects of an income tax system penalize work, discourage saving and investing, and hinder

the competitiveness of business and economic growth. Income taxes are also not border-adjustable;

meaning the tax component embedded into products via taxes imposed on companies cannot be
removed when exported to a foreign country (see Effect of taxes and subsidies on price). Alternate

tax systems such as a national sales tax or value added tax remove the tax component when goods

are exported and apply the tax component on imports.

History

The concept of taxing income is a modern innovation and presupposes several things: a

money economy, reasonably accurate accounts, a common understanding of receipts, expenses and

profits, and an orderly society with reliable records. For most of the history of civilization, these

preconditions did not exist, and taxes were based on other factors. Taxes on wealth, social position,

and ownership of the means of production (typically land and slaves) were all common. Practices

such as tithing, or an offering of firstfruits, existed from ancient times, and can be regarded as a

precursor of the income tax, but they lacked precision and certainly were not based on a concept of

net increase.

2.1 China

In the year 10 CE, Emperor Wang Mang of the Xin Dynasty instituted an unprecedented

tax—the income tax—at the rate of 10 percent of profits, for professionals and skilled labor.

(Previously, all taxes were either head tax or property tax.) He was overthrown 13 years later in 23

CE and earlier laissez-faire policies were restored during the Later Han.

United Kingdom

One of the first recorded taxes on income was the Saladin tithe introduced by Henry II in

1188 to raise money for the Third Crusade. The tithe demanded that each layperson in England be

taxed a tenth of their personal income and moveable property. However, the inception date of the

modern income tax is typically accepted as 1799. Income tax was announced in Britain by William

Pitt the Younger in his budget of December 1798 and introduced in 1799, to pay for weapons and

equipment in preparation for the Napoleonic wars. Pitt's new graduated income tax began at a levy

of 2d in the pound (0.8333%) on annual incomes over £60 and increased up to a maximum of 2s in

the pound (10%) on incomes of over £200 (£170,542 in 2007). Pitt hoped that the new income tax

would raise £10 million (£8,527,100,000 in 2007), but actual receipts for 1799 totaled just over £6
million. The tax was repealed in 1816 and opponents of the tax, who thought it should only be used

to finance wars, wanted all records of the tax destroyed along with its repeal. Records were publicly

burned by the Chancellor of the Exchequer but copies were retained in the basement of the tax

court.United States of America In order to help pay for its war effort in the American Civil War, the

United States government imposed its first personal income tax, on August 5, 1861, as part of the

Revenue Act of 1861 (3% of all incomes over US $800) ($20,693 in 2011 dollars),.This tax was

repealed and replaced by another income tax in 1862. In 1894, Democrats in Congress passed the

Wilson-Gorman tariff, which imposed the first peacetime income tax. The rate was 2% on income

over $4000 ($107,446.15 in 2011 dollars), which meant fewer than 10% of households would pay

any. The purpose of the income tax was to make up for revenue that would be lost by tariff reductions.

Also, the Panic of 1893 is said to have something to do with the passage of Wilson-Gorman. In 1895

the United States Supreme Court, in its ruling in Pollock v. Farmers' Loan & Trust Co., held a tax

based on receipts from the use of property to be unconstitutional. The Court held that taxes on rents

from real estate, on interest income from personal property and other income from personal property

(which includes dividend income) were treated as direct taxes on property, and therefore had to be

apportioned. Since apportionment of income taxes is impractical, this had the effect of prohibiting a

federal tax on income from property. However, the Court affirmed that the Constitution did not deny

Congress the power to impose a tax on real and personal property, and it affirmed that such would

be a direct tax. Due to the political difficulties of taxing individual wages without taxing income from

property, a federal income tax was impractical from the time of the Pollock decision until the time of

ratification of the 16th Amendment in 1913.

In 1913, the Sixteenth Amendment to the United States Constitution made the income tax a

permanent fixture in the U.S. tax system. The United States Supreme Court in its ruling Stanton v.

Baltic Mining Co. stated that the amendment conferred no new power of taxation but simply

prevented the courts from taking the power of income taxation possessed by Congress from the

beginning out of the category of indirect taxation to which it inherently belongs. In fiscal year 1918,

annual internal revenue collections for the first time passed the billion-dollar mark, rising to $5.4

billion by 1920. With the advent of World War II, employment increased, as did tax collections—to
$7.3 billion. The withholding tax on wages was introduced in 1943 and was instrumental in

increasing the number of taxpayers to 60 million and tax collections to $43 billion by 194

INCOME TAX IN INDIA

The government of India imposes an income tax on taxable income of individuals, Hindu

Undivided Families (HUFs), companies, firms, co-operative societies and trusts (identified as body

of individuals and association of persons) and any other artificial person. Levy of tax is separate on

each of the persons. The levy is governed by the Indian Income Tax Act, 1961. The Indian Income

Tax Department is governed by the Central Board for Direct Taxes (CBDT) and is part of the

Department of Revenue under the Ministry of Finance, Govt. of India. There are close to 35 million

income tax payers in India.

 CH-3 OVERVIEW OF INCOME TAX IN INDIA

Charge to Income-tax

Everyone exceeds the maximum amount which is not chargeable to the income tax is an

assesse, and shall be chargeable to the income tax at the rate or rates prescribed under the finance act

for the relevant assessment year, shall be determined on basis of his residential status.

Income tax is a tax payable, at the rate enacted by the Union Budget (Finance Act) for every

Assessment Year, on the Total Income earned in the Previous Year by every Person. The

chargeability is based on nature of income, i.e., whether it is revenue or capital. The rates of taxation

of income are-:

Income Tax Rates/Slabs Rate (%) (as per budget 2012)

→ Up to 2,00,000 = 0,

→ 2,00,001 – 5,00,000 = 10%,

→ 5,00,001 – 10,00,000 = 20%,

→ 10,00,001 upwards = 30%,

Up to 2,50,000 (for resident individual of 60 years or above)= 0,

Up to 5,00,000 (for very senior citizen of 80 years or above)= 0.

Education cess is applicable @ 3 per cent on income tax, surcharge = NA

Residential Status

The three residential status, viz.,

 Resident Ordinarily Residents

 Under this category, person must be living in India at least 182 days during previous year Or

must have been in India 365 days during 4 years preceding previous year and 60 days in

previous year. Ordinary residents are always taxable on their income earned both in India and

Abroad.

 Resident but not Ordinarily Residents

 Must have been a non-resident in India 9 out of 10 years preceding previous year or

have been in India in total 729 or less days out of last 7 years preceding the previous

year. Not residents are taxable in relation to income received in India or income

accrued or deemed to be accrue or arise in India and income from business or

profession controlled from India.

 Non Residents

 Non Residents are exempt from tax if accrue or arise or deemed to be accrue or arise

outside India. Taxable if income is earned from business or profession setting in India

or having their head office in India.

Heads of Income

The total income of a person is divided into five heads, viz., taxable

Individual Heads of Income

Income from Salary

All income received as salary under Employer-Employee relationship is taxed under this head.

Employers must withhold tax compulsorily, if income exceeds minimum exemption limit, as Tax

Deducted at Source (TDS), and provide their employees with a Form 16 which shows the tax
deductions and net paid income. In addition, the Form 16 will contain any other deductions provided

from salary such as:

1. Medical reimbursement: Up to ₹15,000 per year is tax free if supported by bills.

2. Transport allowance: Up to ₹800 per month (₹9,600 per year) is tax free if provided as

transport allowance. No bills are required for this amount.

3. Conveyance allowance:is tax exempt.

4. Professional taxes: Most states tax employment on a per-professional basis, usually a slabbed

amount based on gross income. Such taxes paid are deductible from income tax.

5. House rent allowance: the least of the following is available as deduction

1. Actual HRA received

2. 50%/40%(metro/non-metro) of basic 'salary'

3. Rent paid minus 10% of 'salary'. basic Salary for this purpose is basic+DA forming

part+commission on sale on fixed rate.

Income from salary is the least of all the above deductions.

Income from House property

Income from House property is computed by taking into account what is called Gross Annual

Value of the property. The annual value (in the case of a let out property) is the maximum of the

following:

 Rent received

 Municipal Valuation

 Fair Rent (as determined by the I-T department)

If a house is not let out and not self-occupied, annual value is assumed to have accrued to the owner.

Annual value in case of a self occupied house is to be taken as NIL. (However if there is more than

one self occupied house then the annual value of the other house/s is taxable.) From this, deduct

Municipal Tax paid and you get the Net Annual Value. From this Net Annual Value, deduct :

 30% of Net value as repair cost (This is a mandatory deduction)

 No other deduction available

 Interest paid or payable on a housing loan against this house

In the case of a self occupied house interest paid or payable is subject to a maximum limit of

Rs,1,50,000 (if loan is taken on or after 1 April 1999 and construction is completed within 3 years)

and Rs.30,000 (if the loan is taken before 1 April 1999). For all non self-occupied homes, all interest

is deductible, with no upper limits.

The balance is added to taxable income.

 Income from Business or Profession

The income referred to in section 28, i.e., the incomes chargeable as "Income from Business

or Profession" shall be computed in accordance with the provisions contained in sections 30 to 43D.

However, there are few more sections under this Chapter, viz., Sections 44 to 44DA (except sections

44AA, 44AB & 44C), which contain the computation completely within itself. Section 44C is a

disallowance provision in the case non-residents. Section 44AA deals with maintenance of books and

section 44AB deals with audit of accounts.Under the existing provisions of section 44AB, every

person carrying on business is required to get his accounts audited if the total sales, turnover or gross

receipts in the previous year exceed sixty lakh rupees. Similarly, a person carrying on a profession is

required to get his accounts audited if the total sales, turnover or gross receipts in the previous year

exceed fifteen lakh rupees.Limits has been proposed to increased by Finance Bill 2012

In summary, the sections relating to computation of business income can be grouped as under: -

1. Deductible Expenses - Sections 30 to 38 [except 37(2)].

2. Inadmissible Expenses - Sections 37(2), 40, 40A, 43B & 44-C.

3. Deemed Incomes - Sections 33AB, 33ABA, 33AC, 35A, 35ABB & 41.

4. Special Provisions - Sections 42 & 43D

5. Self-Coded Computations - Sections 44, 44A, 44AD, 44AE, 44AF, 44B, 44BB, 44BBA,

44BBB, 44-D & 44-DA.

The computation of income under the head "Profits and Gains of Business or Profession" depends

on the particulars and information available. If regular books of accounts are not maintained, then

the computation would be as under: -

Income (including Deemed Incomes) chargeable as income under this head xxx Less: Expenses

deductible (net of disallowances) under this head xxx Profits and Gains of Business or Profession

xxx

However, if regular books of accounts have been maintained and Profit and Loss Account has been

prepared, then the computation would be as under: -

Net Profit as per Profit and Loss Account xxx

Add : Inadmissible Expenses debited to Profit and Loss Account xxx

Deemed Incomes not credited to Profit and Loss Account xxx

xxx

Less: Deductible Expenses not debited to Profit and Loss Account xxx

Incomes chargeable under other heads credited to Profit & Loss A/c xxx

xxx

Profits and Gains of Business or Profession xxx

Income from Capital Gains

Transfer of capital assets results in capital gains. A Capital asset is defined under section

2(14) of the I.T. Act, 1961 as property of any kind held by an assessee such as real estate, equity

shares, bonds, jewellery, paintings, art etc. but does not include some items like any stock-in-trade

for businesses and personal effects. Transfer has been defined under section 2(47) to include sale,

exchange, relinquishment of asset, extinguishment of rights in an asset, etc. Certain transactions are

not regarded as 'Transfer' under section 47. For tax purposes, there are two types of capital assets:

Long term and short term. Long term asset is that which is held by a person for three years except in

case of shares or mutual funds which becomes long term just after one year of holding. Sale of such

long term assets gives rise to long term capital gains. There are different scheme of taxation of long

term capital gains. These are:

  As per Section 10(38) of Income Tax Act, 1961 long term capital gains on shares or securities

or mutual funds on which Securities Transaction Tax (STT) has been deducted and paid, no

tax is payable. STT has been applied on all stock market transactions since October 2004 but

does not apply to off-market transactions and company buybacks; therefore, the higher capital

gains taxes will apply to such transactions where STT is not paid.

 In case of other shares and securities, person has an option to either index costs to inflation

and pay 20% of indexed gains, or pay 10% of non indexed gains. The indexation rates are

released by the I-T department each year.

 In case of all other long term capital gains, indexation benefit is available and tax rate is 20%.

All capital gains that are not long term are short term capital gains, which are taxed as such:

 Under section 111A, for shares or mutual funds where STT is paid, tax rate is 10% From Asst

Yr 2005-06 as per Finance Act 2004. For Asst Yr 2009-10 the tax rate is 15%.

 In all other cases, it is part of gross total income and normal tax rate is applicable.

For companies abroad, the tax liability is 20% of such gains suitably indexed (since STT is not paid).

For charging the income under the head "Profits and Gains of business," the following conditions

should be satisfied: There should be a business or profession. The business or profession should be

carried on by the assessee. The business or profession should have been carried on by the assessee at

any time during the previous year. What income will be chargeable to income tax under the head

'Profits and gains of business or profession'?

The following income would be chargeable under the head "Profits and gains of business or

profession": The profits and gains of any business or profession, which was carried on by the assessee

at any time during the previous year; Any compensation or other payment, due or received by the

following:- Any person, by whatever name called, managing the whole or substantially the whole of

the affairs of an Indian company, at or in connection with the termination of his management or the

modification of the terms and conditions relating thereto; Any person, by whatever name called,

managing the whole or substantially the whole of the affairs in India of any other company, at or in

connection with the termination of his office or the modification of the terms and conditions relating

thereto; Any person, by whatever name called, holding an agency in India for any part of the activities
relating to the business of any other person, at or in connection with the termination of any agency

or the modification of the terms and conditions relating thereto; Any person, for or in connection

with the vesting in the Government, or in any corporation owned or controlled by the Government,

under any law for the time being in force, of the management of any property or business; Income,

derived by a trade, professional or similar association from specific services performed for its

members; Profits on sale of a license granted under the Imports (Control) Order, 1955, made under

the Imports and Exports (Control) Act, 1947; Cash assistance (by whatever name called), received

or receivable by any person against exports under any scheme of the Government of India; Any duty

of customs or excise repaid or repayable as drawback to any person against exports under the

Customs and Central Excise Duties Drawback Rules, 1971; The value of any benefit or perquisite,

whether convertible into money or not, arising from business or the exercise of a profession; Any

interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received

by, a partner of a firm from such firm.

However, it is provided that where any interest, salary, bonus, commission or remuneration,

by whatever name called, or any part thereof has not been allowed to be deducted under Clause (b)

of section 40, the income under this clause shall be adjusted to the extent of the amount not so allowed

to be deducted.

Would the interest income be assessed as business income or as income from other sources?

Interest Income is either assessed as Business Income or as Income from other sources depending

upon the activities carried on by the assessee. If the investment yielding interest were part of the

business of the assessee, the same would be assessable as business income but where the earning of

the interest income is incidental to and not the direct outcome of the business carried on by the

assessee, the same is assessable as Income from other sources. Business implies some real, substantial

and systematic or organized course of activity with a profit motive. Interest generated from such an

activity is considered Business Income. Otherwise, it would be interest from other sources.

What deductions are allowed in computing income from profits and gains of business or profession?

A number of other deductions under Section 36 of the Income-Tax Act are allowed while computing

income from profits and gains of business or profession:

S36 (i): The amount of any premium, paid in respect of insurance against risk of damage or

destruction of stocks or stores, used for the purposes of the business or profession;

(ia) The amount of any premium, paid by a federal milk co-operative society to effect or to keep in

force an insurance on the life of the cattle owned by a member of a co-operative society, being a

primary society engaged in supplying milk, raised by the members of such federal milk co-

operative society; (ib) The amount of any premium, paid by cheque by the assessee as an employer

to effect or to keep in force an insurance on the health of his employees under a scheme, framed in

this behalf by the General Insurance Corporation of India, formed under section 9 of the General

Insurance Business (Nationalization) Act, 1972 (57 of 1972) and approved by the Central

Government; (ii) Any sum, paid to an employee as bonus or commission for services rendered,

where such sum would not have been payable to him as profits or dividend if it had not been paid

as bonus or commission; (iii) The amount of the interest paid in respect of capital borrowed for

acquisition of the asset from the date it is put to use for the purposes of the business or profession;

(iv) Any sum, paid by the assessee as an employer by way of contribution towards a recognized

provident fund or an approved Superannuation fund, subject to such limits as may be prescribed for

the purpose of recognizing the provident fund or approving the Superannuation fund, as the case

may be; and subject to such conditions as the Board may think fit to specify in cases where the

contributions are not in the nature of annual contributions of fixed amounts or annual contributions,

fixed on some definite basis by reference to the income chargeable under the head "Salaries" or to

the contributions or to the number of members of the fund; (v) Any sum, paid by the assessee as an

employer by way of contribution towards an approved gratuity fund created by him for the

exclusive benefit of his employees under an irrevocable trust; (va) Any sum, received by the

assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of

section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant

fund or funds on or before the due date. (vi) In respect of animals which have been used for the

purposes of the business or profession, otherwise than as stock-in-trade and have died or become

permanently useless for such purposes, the difference between the actual cost to the assessee of the

animals and the amount, if any, realized in respect of the carcasses or animals; (vii) Subject to the
provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as

irrecoverable in the accounts of the assessee for the previous year;

(viia) in respect of any provision for bad and doubtful debts made by the following:

A scheduled bank or non -- scheduled bank, an amount not exceeding five per cent of the total income

and an amount not exceeding ten per cent of the aggregate average advance made by the rural

branches of such bank computed in the prescribed manner; A bank, being a bank incorporated by or

under the laws of a country outside India, an amount not exceeding five per cent of the total income;

public financial institution or a State financial corporation or a State industrial investment

corporation, an amount not exceeding five per cent of the total income. (viii) In respect of any special

reserve created by a financial corporation which is engaged in providing long term finance for

industrial or agricultural development in India or, by a public company formed and registered in India

with the main object of carrying on the business or providing long - term finance for construction or

purchase of houses in India for residential purposes, an amount not exceeding forty per cent of the

total income can be carried to the reserve account; (ix) Any bona fide expenditure incurred by a

company for the purpose of promoting family planning amongst its employees; (x) Any sum, paid

by a public financial institution by way of contribution towards any Exchange Risk Administration

Fund, set up by public financial institutions, either jointly or separately. (xi) Any expenditure,

incurred by the assessee on or after the 1st day of April 1999 but before the 1st day of April 2000,

wholly and exclusively in respect of a non-Y2K compliant computer system, owned by the assessee

and used for the purposes of his business or profession, so as to make such computer system Y2K

compliant. (xii) Any expenditure (not being in the nature of capital expenditure) incurred by a

corporation or a body corporate, by whatever name called, constituted or established by a Central,

State or Provincial Act for the objects and purposes authorized by the Act, under which such

corporation or body corporate was constituted or established. It is important to note that deductions

are subject to certain conditions being satisfied.

What deductions are allowable in respect of rent, rates, taxes, repairs and insurance for premises,

which are used for the purpose of business or profession?

S 30: The deductions that are allowed while computing income from 'profits and gains from business

or profession' in respect of rent, rates, taxes, repairs and insurance for premises, which are used for

the purpose of business or profession while computing income from 'profits and gains from business

or profession' are as follows:

Where the premises are occupied by the assessee:

As a tenant, the rent paid for such premises; and further if he has undertaken to bear the cost of repairs

to the premises, the amount paid on account of such repairs; excluding expenditure in the nature of

capital expenditure. Otherwise than as a tenant, the amount paid by him on account of current repairs

to the premises; excluding expenditure in the nature of capital expenditure. Any sums, paid on

account of land revenue, local rates or municipal taxes; The amount of any premium, paid in respect

of insurance against risk of damage or destruction of the premises.

What deductions shall be allowed in respect of repairs and insurance of machinery, plant and

furniture?

S 31: The following deductions shall be allowed in respect of repairs and insurance of machinery,

plant and furniture: The amount paid on account of current repairs thereto; excluding expenditure in

the nature of capital expenditure. The amount of any premium, paid in respect of insurance against

damage or destruction thereof

Income from Other Sources

This is a residual head, under this head income which does not meet criteria to go to other heads

is taxed. There are also some specific incomes which are to be taxed under this head.

1. Income by way of Dividends

2. Income from horse races

3. Income from winning bull races

4. Any amount received from key man insurance policy as donation.

5. Income from shares (dividend otherthan Indian company)

Deduction
While exemptions is on income some deduction in calculation of taxable income is allowed for

certain payments.

Section 80C Deductions

Section 80C of the Income Tax Act [1] allows certain investments and expenditure to be deducted

from total income up to the maximum of 1 lac. The total limit under this section is ₹100,000 ) which

can be any combination of the below:

 Contribution to Provident Fund or Public Provident Fund. PPF provides 8.6% [6]
return

compounded annually. Maximum limit to contribute in it is 100,000 for each year. It is a long

term investment with complete withdrawal not possible till 15 years though partial

withdrawal is possible after 5 years. Besides, there is employee providend fund which is

deducted from the salary of the person. This is about 10% to 12% of the BASIC salary

component. Recent changes are being discussed regarding reducing the instances of

withdrawal from EPF especially when one changes the job. EPF has the option of full

settlement on leaving the job, taking VRS, retirement after 58. It also has options of

withdrawal for certain expenses related to home, marriage or medical. EPF contribution

includes 12% of basic salary from employee and employer. It is distributed in ratio of

8.33:3.67 in Pension fund and Providend fund

 Payment of life insurance premium. It is allowed on premium paid on self, spouse and

children even if they are not dependent on father or mother(Tax On Maturity of LIfe Insurance

Policy

 Investment in pension Plans. National Pension Scheme is meant to save money for the post

retirement which invests money in different combination of equity and debt. depending upon

age up to 50% can go in equity. Annuity payable after retirement is dependent upon age. NPS

has six fund managers. Individual can make minimum contribution of Rs6000/- . It has 22

point of purchase (banks).

 Investment in Equity Linked Savings schemes (ELSS) of mutual funds. Among other

investment opportunities, ELSS has the least lock-in period of 3 years. However, one should
 note that after the Direct Tax Code is in place, ELSS will no longer be an investment for 80C

deduction.

 Investment in National Savings Certificates (interest of past NSCs is reinvested every year

and can be added to the Section 80 limit)

 Tax saving Fixed Deposits provided by banks for a tenure of 5 years. Interest is also taxable.

 Payments towards principal repayment of housing loans. Also any registration fee or stamp

duty paid.(Read more about House Loan deduction 80C

 Payments towards tuition fees for children to any school or college or university or similar

institution (Only for 2 children)Read read FAQ about Tuition Fees

 Post office investments

The investment can be from any source and not necessarily from income chargeable to tax.

Section 80CCF: Investment in Infrastructure Bonds

From April, 1 2011, a maximum of ₹20,000 is deductible under section 80CCF provided that

amount is invested in infrastructure bonds. This is in addition to the 100,000 deduction allowed under

Section 80C. However this deduction has not been extended to Financial year 2012-13. Good bye to

80CCF bonds from Fy 2012-13 AY 2013-14.

Section 80D: Medical Insurance Premiums

Health insurance, popularly known as Mediclaim Policies, provides a deduction of up to

₹35,000.00 (₹15,000.00 for premium payments towards policies on self, spouse and children and

(read as in addition to) ₹15,000.00 for premium payment towards non-senior citizen dependent

parents or ₹20,000.00 for premium payment towards senior citizen dependent). This deduction is in

addition to ₹1,00,000 savings under IT deductions clause 80C. For consideration under a senior

citizen category, the incumbent's age should be 65 years during any part of the current fiscal, e.g. for

the fiscal year 2010-11, the incumbent should already be 65 as on March 31, 2011), This deduction

is also applicable to the cheques paid by proprietor firm. This Deduction is not available if Paid

through CASH.read more.

Interest on Housing Loans Section

 For self occupied properties, interest paid on a housing loan up to Rs 150,000 per year is

exempt from tax. This deduction is in addition to the deductions under sections 80C, 80CCF and

80D. However, this is only applicable for a residence constructed within three financial years after

the loan is taken and also the loan if taken after April 1, 1999. If the house is not occupied due to

employment, the house will be considered self occupied. For let out properties, the entire interest

paid is deductible under section 24 of the Income Tax act. However, the rent is to be shown as income

from such properties. 30% of rent received and municipal taxes paid are available for deduction of

tax. The losses from all properties shall be allowed to be adjusted against salary income at the source

itself. Therefore, refund claims of T.D.S. deducted in excess, on this count, will no more be necessary.

Use of Deductions

While the use of the above sections helps one to make savings for the long-term, one should

look at this more as an investment-return opportunity. One should still file income tax return, even if

one doesn't fall into the bracket of paying tax, if there are sources of income as defined by Income

Tax rules. Except ELSS (Equity Linked Savings Scheme) and the NPS (National Pension Scheme),

other schemes under 80C typically offer a relatively risk-free investment and guaranteed returns.
Tax Rates In India

In India, individual income tax is a progressive tax with three slabs. About 10 per cent of the

population meets the minimum threshold of taxable income From April 1, 2012 new tax slabs apply,

which are as follows:

 No income tax is applicable on all income up to ₹2,00,000 per year. (₹2,00,000 for women,

₹2,50,000 for senior citizens of 60 till 80 yrs (excluding 80) and ₹5,00,000 for very senior

citizens of 80 yrs and above and must be resident of India)

 From 2,00,001 to 5,00,000 : 10% of amount greater than ₹2,00,000 (Lower limit changes

appropriately for women and senior citizens)

 From 5,00,001 to 10,00,000 : 20% of amount greater than ₹5,00,000 + 30,000 ( ₹29,000 for

women and ₹25,000 for senior citizens)

 Above 10,00,000 : 30% of amount greater than ₹10,00,000 + 130,000 ( ₹129,000 for women

and ₹85,000 for senior citizens)

Surcharge

Surcharge has been abolished for personal income tax in the financial year 2009-10. A 7.5%

surcharge (tax on tax) is applicable if the taxable income (taking into c9 All taxes in India are subject

to an education cess, which is 3% of the total tax payable. With effect from assessment year 2009-

10, Secondary and Higher Secondary Education Cess of 1% is applicable on the subtotal of income

tax. The education cess is mainly applicable on excise duty and service tax From income tax year

2010-11, education cess would be 3% and no surcharge would be levied.

Tax Rate for non-Individuals

There are special rates prescribed for Firms, Corporates, Local Authorities & Co-operative

Societies.

Refund Status for Salaried tax payers

The Income Tax Department has put on its website the list of income tax refunds of all salary tax

payers which could not be sent to the concerned persons for want of correct address. (link to check

refund) Salary taxpayers who have not received refunds for assessment years 2003-04 to 2006-07
can click on the link below and query using the PAN number and assessment year whether any refund

due to them has been returned undelivered. . 123

Corporate Income tax

For companies, income is taxed at a flat rate of 30% for Indian companies, with a 5%

surcharge applied on the tax paid by companies with gross turnover over ₹1 crore (10 million).

Foreign companies pay 40%. An education cess of 3% (on both the tax and the surcharge) are

payable, yielding effective tax rates of 32.5% for domestic companies and 41.2% for foreign

companies. From 2005-06, electronic filing of company returns is mandatory.

Tax Penalties

The major number of penalties initiated every year as a ritual by I T Authorities is under

section 271(1)(c)[15] which is for either concealment of income or for furnishing inaccurate particulars

of income.

"If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any

proceedings under this Act, is satisfied that any person-

(b) has failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of

section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, or

(c) has concealed the particulars of his income or furnished inaccurate particulars of such income,

he may direct that such person shall pay by way of penalty,-

(ii) in the cases referred to in clause (b), in addition to any tax payable by him, a sum of ten thousand

rupees for each such failure;

(iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall

not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by

reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of

such income.

Permanent Account Number(PAN)

PAN is unique alphanumeric combination issued to all juristic entities identifiable under the

Indian Income Tax Act 1961. It is issued by the Indian Income Tax Department under the supervision
of the Central Board for Direct Taxes (CBDT) and is almost equivalent to a national identification

number. It also serves as an important ID proof. This number is almost mandatory for financial

transactions such as opening a bank account, receiving taxable salary or professional fees, sale or

purchase of assets above specified limits.

The primary purpose of PAN is to bring a universal identification key factor for all financial

transactions and indirectly prevent tax evasion by keeping a track of monetary transactions of high

net worth individuals. The PAN is unique, national, and permanent. It is unaffected by a change of

address, even between states.

PAN Card

CH-4 ONLINE FILING OF ITR

Online procedure of filing income tax return has simplified the process Here are two genre of

returns i.e. individual and professional. Under the individual category, one is supposed to file return

personally, on the basis of the amount earned by an individual. In the case of professional income tax

return, the amount is deducted from the salary of persons . The process of filing return involves filling

of some forms, with all the information regarding the salary of the tax payer. Filing return happened

to be a cumbersome task earlier. But , with passage of time, government has simplified the procedure

up to a great extent by introducing the process of filing online income tax return.
 Government has launched its Websites which is being proved to be quite helpful in filing

return. On the website of the income tax department, launched by the government of India, millions

of people can file their return online. The websites even allow the tax payers to pay the amount

through their credit cards. The Internet portals facilitate the users to pay the amount while sitting

comfortably in front of their computers. For paying through e-mode one requires to fill an online

form with ll the details. Once you have filled your form, you are required to enter the credit card

number and a special code which is written behind the card. After these simple steps your income

tax return will be paid. This method has solved the problem of paying return for those who are

familiar with the Internet. They can conduct the online procedure of paying the taxes easily. You can

go through the terms and conditions of filing return on the official Website of income tax

commission. These specified terms and condition on the site help to get complete and genune

information about the rules and procedure of paying tax. It also facilitates the users to download the

form for paying tax offline. There are ample number of other Internet portals that provide many

facilities related to the tax return. With these portals, applicant can also calculate their tax amount

within a minute by entering their income details. So, it can be concluded with the above analysis that

filing the income tax return is no more a tedious task and can be performed easily while sitting at

home. Internet users can find such portals with simple search on Internet. Government has simplified

the procedure of paying the return and it no more remained a dilemma for the people. For the

betterment and growth of our country, filing return is a way to contribute to our nation. There is no

doubt in the fact that in the coming time we can expect simpler procedure as compared to the existing

one.

E-filing: Filing income tax technological style

Standing in long queues and waiting multiple hours for term to come to file income tax return.

But now income tax department has certainly executed a techno savvy solution to the problem of a

common man, in the form of E-filing.Come the first quarter of the year, thoughts of filing income

tax return just circulates in people's mind all time, again and again, which is certainly bound to give
nightmares. ITR filing has never been as easy, after the introduction of the facility known.as.E-filing.

In this Internet-driven age every sector and segment are partially or completely dependent on the

world's most important invention of the modern times, Internet. Facilities like online banking,online

news, online mutual fund investments, online buying and selling are few common practices people

come across in our daily life. Forming it as the base, the Income Tax Department of India launched

the Electronic filing of income tax returns. The process of electronically filing of income tax return

through the Internet is known as e-filing. Under the process, citizens of the country can file the tax

returns in a hassle free way. One just needs to have a PC enabled with Internet connection. Just log

on to the official website of the income tax department and fill the form and submit it, Online or

Offline. So, paying tax in just few clicks is the latest style of serving government financially.

The whole Income tax filing process needs to be done with care such as gathering all the

important files and a latest rule book of filing income tax returns as it keeps changing with fresh year.

Decision of whether the personal tax return will be filed as single, head of house hold, married or

what ever, should be taken at the proper time. One also needs to have proper data about income,

expenditure and savings with him. Filing tax returns online is the simplified method of filing ITR as

once log on to the income tax site and follow the simple instructions.

There are three different types of E-filing:

1.Use digital signature, in which case no further action is required.

2.File without digital signature, in which case ITR-V single page receipt cum verification form is to

be filed with the department.

3.Consult a e-return intermediary who would do e-Filing and also assist the Assessee

File the ITR-V Form.

For e- filing process one needs to download software application from the website of Income Tax

Department, which will help in generating the income tax form. Now, the most important thing is

that selection of the right kind of the form filing for the ITR. Individuals, who have been earning

from Salary / Pension or have income from other sources like Interest / Family Pension are supposed

to use Form ITR1. However, person having income from Capital Gain, House Property (e.g. Rented

out the Property), Business & Profession are not supposed to fill this form . Form ITR2, will be used
by the Individuals and HUF (Hindu Undivided Family) having income from Salary / Pension / Family

Pension, interest, house Property, capital gains. A person as the partner in a firm or representing on

behalf of an HUF that is a partner in a firm will have to fill the Form ITR-3 and Form ITR-4 will be

filled by Individuals, HUFs (Hindu Undivided Family) having income from proprietary business or

profession.

There are 4 more types of ITR form, which are to be used by the specific person. After downloading

a proper form from the official website of the Income Tax department. Fill up Income and tax details,

ensuring accuracy about the data submitted . Than save the IT return document in XML file format

on the computer. Finally, log on to the Income Tax Department E-Filing website by using personal

log in ID and 'Submit the IT return'.

Hence, one can easily say that E-filing has transformed the way of filing of income tax return in a

more simplified and techno savvy way.

Income Tax e-filing technology for people

E filing is the process of electronically filing Income tax returns through the Internet. One

must have experienced the trouble in doing the same after standing for long hours in the endless long

queues to file the income tax, however, now-a-days, the IT department has brought a transformation

in the entire process and has launched a revolutionary feature called e-filing taxes which allows

people to file their income tax returns using the Internet. After paying online for bills, booking the

rail and air tickets online, one can now file his income tax as well Online which has made life even

simpler and easier without getting tense about the last tax-filing date. For people, Online tax filing is

nothing less than a boon and has helped them immensely in filing taxes regularly without fearing

about the last date. The technology has completely changed the way by which an assessee used to

pay his or her taxes to the IT Department. In line with the provisions of Income Tax Act, 1961, filing

of income Tax return is a legal obligation of each and every Individual of the country whose income

exceeds the maximum limit of non-taxable income slab for the full financial year which begins on 1

April and ends on March 31 of the next year. For those earning salaries, the information about the
income in the particular financia year supported with the form 16 (which is the certificate for tax

deducted at source), is issued by the employer at the end of the financial year. By filing income tax

return online, one enjoys a number of benefits such as great convenience, fast processing and time

and energy savings. To encourage the people to file their taxes regularly at the right time, the IT

department has taken a number of initiatives which have really made the lives of many who file taxes

simple and tension free. Last but not the least, to use the facility of online paying income tax, one

requires the Internet banking facility by the bank so as to operate account online. And to add to the

comfort, there are a number of web sites which provides help with the e-tax filing. It has brought an

array of positive changes in the lives of many and has a number of advantages which include

convenience, user friendly and hassle free process, accuracy in data, for each and every short detail,

expert advice, filing tax any time sitting anywhere. In short, e-tax filing is nothing less than a big

relief for those who have suffered badly shuttling between one counter to another.
 people-bid- Income tax return :

A good way to Contribution in national development It is possible for all of us to serve our

nation by filing income tax return. The amount is used for the development of the country and its

residents. It can be filed easily by efiling system, in which one has to file the tax on Internet. We have

a lot of responsibilities among which our nation is our first responsibility. People who keep some

feelings for their nation are always ready to give some contribution for their country. But, sometime,

it may not be possible for us to contribute directly due to our busy time schedules. But, still we have

the options to

serve our nation. It can be done simply by abiding the rules of the country that also include filing

income tax return on time. It is the tax that is imparted on the gross

annual income of a person. The amount gotten by this is used for the development of the nation and

for welfare of the society. So, by paying the return is the way to contribute for the development of

the nation. There are number of methods which are used to file the return. The E-filing is one of the

latest ways through which return can be paid with ease. In this method, no need to go anywhere in

order to file the return. Payment will be done by the Internet simply while sitting at your home. The

Government of India has started this facility on the website of the Income Tax department. By filling

the online form and making the online payment you can file the return. Your payment can be made

through credit card by entering the card number and a code number which is given behind the card.

Once you have made the payment and filed the return, the full details of tax payment and TDS will

reach to your email address. Moreover, you can also get the complete information about the rules and

regulations of income tax on the numerous website. Apart from the website of the income tax

department, there are some other sites also available that provide the facility to calculate your income

tax. The E-filing system has simplified the procedure of paying the taxes. Now, there is no need to

stand in the long queues in order to file the tax. However, lots of amendments have also been made

in the traditional filing system. Filling up long forms is no more required. Return can be filed just by

filling an easy form. Moreover, the number of counters have also increased in order to avoid long

queues. The forms can be taken from these counters or can be downloaded from the website easily.
Some rebates are also offered by the tax department to the people. It is availed to you if you pay the

donation to some authorised organisations such as charitable trusts, religious GNIT BUSINESS

School organization etc. All such rebates are mentioned in the rules and regulations of the return. In

the past times, some people used to avoid filing of taxes due to long procedures. But now, when the

procedure has become so simple, there should be no problem for them in filing the income tax return.

The tax filing is not only our moral duty, but it is also for our own wellness. The development of the

nation surely helps in our personal growth als in-national-development)

STATE WISE RECEIPT OF E-

RETURN IN F.Y. 2011-12 (UPTO

31/12/2011)

NUMBER

SNO STATE OF E-

RETURNS

1 MAHARASHTRA 24,14,526

2 GUJARAT 13,10,269

3 KARNATAKA 9,45,342

4 DELHI 9,08,602

5 TAMIL NADU 7,83,397

UTTAR
6 7,45,254
PRADESH

ANDHRA
7 6,17,390
PRADESH

8 RAJASTHAN 5,95,751
 9 WEST BENGAL 5,63,617

10 PUNJAB 4,91,715

MADHYA
11 3,86,437
PRADESH

12 HARYANA 3,48,224

13 KERALA 2,37,039

14 ORISSA 1,14,447

15 CHHATISHGARH 1,02,782

16 JHARKHAND 93,783

17 BIHAR 91,585

18 UTTARANCHAL 71,936

19 ASSAM 62,269

20 CHANDIGARH 59,449

HIMACHAL
21 46,580
PRADESH

22 GOA 39,753

JAMMU AND
23 29,558
KASHMIR

24 PONDICHERRY 16,028

25 FOREIGN 8,922

26 TRIPURA 6,057
 DADRA AND
27 5,098
NAGAR HAVELI

ANDAMAN AND

28 NICOBAR 4,407

ISLANDS

DAMAN AND
29 3,150
DIU

30 MEGHALAYA 2,756

ARUNACHAL
31 1,400
PRADESH

32 NAGALAND 1,325

33 MANIPUR 1,171

34 SIKKIM 1,036

35 MIZORAM 204

36 LAKHSWADEEP 145

Total 1,11,11,404
 For Individuals, HUF

For Individual Individual, HUF

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

1 Income from Salary/Pension • • • • •

Income from Other Sources

2 (only Interest Income or • • • • •

Family Pension)

Income/Loss from Other

3 • • • •
Sources

Income/Loss from House

4 • • • •
Property

Capital Gains/Loss on sale of

5 • • •
investments/property

6 Partner in a Partnership Firm • •

Income from Proprietary

7 •
Business/Profession

Income from presumptive

8 •
Business

For Firms, Associations of Persons (AOP), Body of Individuals (BOI), Local Authority,

Companies, Trusts, Fringe Benefit Tax (FBT) Return

Firms,AOP,BOI, Only
S.No For Companies Trusts
Local Authority FBT
 ITR-6 ITR-7
Source of ITR-
ITR-5 #See
Income 8
Note

Income /

Loss from
1 • • •
Other

Sources

Income /

Loss from
2 • • •
House

Property

Capital

Gains /

Loss on
3 • • •
sale of

Investments

/ Property

Income /

4 Loss from • • •

Business

Fringe
5 • • • •
Benefit Tax
 Chapter-5

RESEARCH DESIGN AND METHODOLOGY

1. INTRODUCTION

This chapter presents the methodology used to collect and to analyze the data. Specifically,

the chapter provides an overview of qualitative research and the theoretical paradigm employed

throughout the study, outlines the method used to collect the data related to online filling of income

tax in india.

2. RESEARCH DESIGN

Research design is the researchers overall plan for answering the research questions. The

design indicates whether or not there is an intervention, the type of intervention, the nature of any

comparison to be made, the method to be used to control extraneous variables and enhance the

study's interpretability and the timing and location of data collection. There are three broad types

of approaches to research. These are i) Historical approach, ii) Survey Research Approach; and iii)

Experimental Research Approach. Selection of approach depends on the objectives of the study, for

this study Survey Research Method were find suitable Research approach because the kind of data,

Introduction to Reading habit of Online newspapers gather with the help of structured questionnaire,

interview and observation. (Creswell, 81-7)

3. RESEARCH METHODS

Research methods indicate the general pattern for organizing the procedure to be used to

collect and analyze the data to accomplish the research objectives and to test the hypothesis. Research

design is the overall plan for organizing a scientific investigation. There are mainly three types of

research approaches-Historical (Past), Survey (Present), Experimental (Future). For this study survey

method were chosen

3.1 Literature Survey

 The term literature review is used to refer to both the activities involved in searching for

information on a topic as well as the actual written report that summarizes the state of existing

knowledge on a research problem. A Literature Review is a critical assessment and summary of the

range of past and contemporary Literature in a given area of knowledge. Review of literature

generally begins with a research problem in mind. Literature review will help to select the research

problem, previous research studies will decide to replicate the existing study and to examine another

aspect of the problem. The review of literature is necessary, so that to narrow the problem to be

studied the review must be brief but complete in it. Systematic review should be considered. The

review should use statements of opinions, sparingly, if at all, and should be explicit about the sources

of the opinion. A description of the point of view of knowledgeable or influential person may be

useful in establishing the need to investigate the problem a literature survey, or literature review,

means that you read and report on what the literature in the field has to say about the research problem

or subjectFor this study entitle ‘Online filling of income tax in india’ a depth literature survey were

carried out with the help of primary and secondary sources of information to understand the research

problem and the similar researches on the same area.

3.2 Survey Method

Survey is that branch of research that examines the characteristics, attitudes, behaviors and

intentions of a group of people by asking individuals to answer questions either through interview or

questionnaire.A survey research is undertaken to study and describe the ground realities or current

State-of-the art of a situation, group of users or institutions. The answers sought are what, when and

where by gathering the facts and data. Descriptive surveys pertain both to qualitative and quantitative

research. It requires collection of primary data from the population. It could also be collection of data

by a sample survey to solve a research problem, study relations between two variables by statistical

methods, or to provide scientifically collected facts and figures to draw theory based conclusions.

Trend started with long and vast social surveys to collect data for planning policies and actions.

Survey basically involves data, facts or textual/verbal information or opinion gathering by formal

and systematic method. There are many techniques and instruments to do so: by direct but stand aside

observation, by observing as one of the participant of the activities and by meeting individual
informants for asking specific questions. This individual survey could be done by a formal and

structured printed questionnaire by telephone, or through email. For this study the structured

questionnaire was designed keeping in view of the stated objectives comprising of various types of

questions.

3.2.1 Sampling Technique

A sample is any subset of the elements of the population that is obtained (by same process)

for the purpose of being studied. The process by which elements are drawn from the population is

known as sampling.(Fox and Mohamed, 50-6).

The primary data were collected from the 50

3.2.2 Questionnaire

Questionnaire is a data collection instrument. The researchers most commonly use this

method for collecting data. In order to gather data on a particular research topic, the researcher lists

the questions to which s/he requires answers. The list of questions grouped in some order is given

personally, or sent / mailed to the target population. In simple words, a questionnaire is a set of written

questions for respondents to answer. These answers become primary data for investigation.

According to Krishan Kumar (121-73) “a questionnaire is a written document listing a series of

questions pertaining to the problem under study, to which the investigator requires the answers”.

Busha and Harter (1980) opined that questionnaires are often used in surveys as the primary data

collection instruments

3.2.4 Administration of the Questionnaire

The questionnaire was finalized and administered personally to the respondents Delhi vill-

jagatpur . The questionnaires were given to users at the time when they are fre at home.and I requested

to all of them to return me on time please. A total number of 50 questionnaires were distributed

among the group of people and I get back only 32 respondents.

3.2.5 Interview

Interview is a process of communication or interaction in which the subject or interviewee

gives the needed information verbally in a face-to-face situation. In a sense, it is an oral questionnaire.
In a research situation it may be seen as an effective, informal: conversation, initiated for a specific

purpose as it focuses on certain areas. The main objective may be the exchange of ideas and

experiences and eliciting of information

According to Neuman (227-69) “the interview is a short term, secondary social interaction

between two strangers with the explicit purpose of one person’s obtaining specific information from

the other…. Information is obtained in a structured conversation in which the interviewer asks pre

arranged questions and records answers, and respondent answers.”

3.2.6 Observation

Observation means watching carefully. We do see many things, situations in our routine life.

There may not be any motive behind seeing. What we see is mostly casual and without any purpose.

But observation is different from casual seeing; it is being done systematically with a definite

purpose. In the process of observation the observer uses all his sensory organs in an integrated

manner. The observer obtains information about the World around him for a definite purpose. This

is one of the best scientific tools to collect the data for research. Observation means “to watch

attentively in a scientific manner”. In an observational study, the current status of phenomenon is

determined not by asking but by observing (Powell, 56-112)

5 ANALYSIS OF DATA

Analysis of data is a process of inspecting, cleaning, transforming, and modeling data with

the goal of highlighting useful information, suggesting conclusions. Data analysis was done through

the process of statistical techniques, examining, comparing, conceptualizing, and categorizing data.

The information was categorized according to problem areas and information irrelevant to the study

was discarded. After gathering all the completed questionnaires from the respondents, total responses

for each item were obtained and tabulated. In order to use the pie chart, weighted mean to represent

each question was computed.The problem areas were refined and information within each area was

then subcategorized.
LEARNINGS FROM LITERATURE VIEW

As all of these articles have been stating the benefit and convenience of filing the return online

than offline ,my learning’s have become even more stronger than they were during the entire duration

of project. It can be easily assessed that through e-filing a lot of time and money could be saved and

is very much equipped for a country like india where CAs cant be trusted and corruption has reached

till the grass root levels of the management. So the learning’s have strengthen the views that e-filing

has a lot of potential and a huge way ahead and in the time coming it will surely overcome the CAs

and offline manual process.

RESEARCH INSTRUMENTS USED

The key instruments used in this research are;

1. QUESTIONNAIRE

2. INTERVEIW

Sampling Unit: The respondents who were asked to fill out questionnaires are the

Sample size: The sample size was restricted to only 100.

Duration of Study: The study was carried out for a period of 60 days, from 25

Jan to 15 april 2012.

Response Rate

The response rate was average. As the questionnaire asked for the financial information of

the respondent, most of the people hesitated to provide the required information. Also the

questionnaire contained some financial terms that were technical in nature, which resulted into

reduced response rate.

RESEARCH AREA Delhi

CHAPTER-6 DATA ANALYSIS AND FINDINGS

FINDINGS AND DATA ANALYSIS

As per our research we found the following results related to the objective, sub

objective of my research

The finding of my research start with the respondent‘s views on tax paying system in

India that is it legal or not.

Should Paying taxes be a legal obligation

So most of the respondents(74%) feel that paying taxes should be a legal obligation,

while some of them(26%)feel that its not an legal obligation.

Tax Evaders should be Penalized or not

So it can be seen that almost (81%)of the respondents feel that the tax evaders should

be penalized and only mere 19% feel that they should be let off.

Now the next finding is about to found whether the people in India should show their income or

not. This finding is very important for the research point of view.

So

So most of the respondents nearly (78%) feel that every Indian should show his or her income

while only (22%) feel that they should not show their entire income.
The next finding is to find out the way respondents file their income tax? (online or offline)

Here we received a positive response from the respondents that in such a short duration nearly 38%

have started filing their taxes online while 62% still file their taxes offline.

The next finding is to find out the convenience level while filing the return with Online.
The response here was quite unsatisfactory, almost 33% of respondents feel that the service level

was usual, and 21% fell that it was inconvenient while 21% feel that its convenient 13% found it

very inconvenient and only 12% found the service to be very convenient.

This finding is to know the annual income of the respondents.

annual income of the respond.

40% of the respondents fall under the income range of 1,50,001-3,00,000, meanwhile only 28% fall

under the range of 3,00,001-5,00,000 and the rest 32% lie above 50,0,000.
DATA ANALYSIS

As in the first few findings we tried to found out the loyalty

employees towards paying taxes and we saw that these people are loyal enough towards that as in

the first there findings the results were quite satisfactory

People were ready to show their full income.

They believe that paying taxes is a legal obligation for every Indian.

They also support the fact that tax evaders should be penalized and were against those people

The income group of all respondents was also known as 40% lied in the tab of 150001-300000;

nearly 28% of the respondents were in the range of 300001- 500000 and the rest 32% were above

500000
CHAPTER-7 SUGGESTIONS AND RECOMMEDATIONS

SUGGESTIONS FOR FILING OF ITR ONLINE

· Improve the software designed for this utility as it has number of loopholes in

it.

· There are a lot of delays and the company is not able to provide the

acknowledgement from Income tax department within 5 days which the

company promised to do so.

· Make the back office staff much more efficient than it is currently so that the

sales people can fulfill the promise or commitment which they are giving to

the clients.

· Modes for online Payment should be having much more banks and service

providers than they were.

· Process should be as simple as it can because a lot of people are not aware of

the terms like MICR number and various sections.

· Company should tie up with more organizations outside delhi ncr region as all

the current tie ups are within delhi and near about.

· Fliers and other marketing material should clearly state the benefit and

convenience of filing the return online rather than offline.

SUGGESTIONS FOR FILING OF ITR OFFLINE

· Give equal importance to the offline process as well ,results have shown that

they are giving equal revenues to the company and are matching online

process.

· Still a lot more people believe in the concept of offline filing as it has been
trusted over the years.

· Have standard pricing for all the companies throughout,as this time there were

different fees for different organizations.

· Reduce the fees or prices for the offline filing as offline filing gives a direct

competition to the CAs across the city.

· Chances of errors are much more in offline process as it is completely manual

so the company’s CAs and accounts people should be very efficient.

· Give importance to this process because in offline process there is much more

chance of building client relations than there is in online process.

ADVANTAGES OF E-FILLING OF I.T.R

 IT SAVES TIME OF AN APPLICANT.

 IT SAVES A PERSON FROM THE LONG QUE.

 IT SAVES THE RESOURCES OF APPLICANT LIKE MONEY,TIME ETC.

 IT PROVIDES THE PERMANENT RECORDS OF TRANSACTION.

 EASY PROCEDURE TO FOLLOW.

DIS-ADVANTAGES OF E-FILLING OF I.T.R

 THE COMPUTER KNOWLEDGE IS MUST FOR E-FILLING OF I.T.R

 IT NEEDS A PROPER SIGNAL OF INTERNET.

 THE DATA IS SHARED WITH EVERYONE

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

[CENTRAL BOARD OF DIRECT TAXES]

New Delhi, the 1

st
July, 2011

INCOME-TAX

S.O.1497(E).- In exercise of the powers conferred by section 295

read with section 139 of the Income-tax Act, 1961 (43 of 1961), the Central

Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules,

1962, namely:-

1. (1) These rules may be called the Income-tax (Sixth Amendment) Rules,

2011.

(2) They shall come into force from the date of its publication in the Official Gazette.

2. In the Income-tax Rules, 1962, in rule 12, in sub-rule (3), in the proviso, for clauses (a) and (aa)

the following clause shall be substituted, namely: –

“ (a) a firm required to furnish the return in Form ITR-5 or an individual or Hindu Undivided Family

(HUF) required to furnish the return in Form ITR-4 and to whom provisions of Section 44AB are

applicable, shall furnish the return for Assessment year 2011-12 and subsequent Assessment Years

in the manner specified in clause (ii);”

[Notification No.37/2011/ F.No.149/68/2011- SO (TPL)]

(Ashis Mohanty)

Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India,

Extraordinary Part-II, Section 3, Sub-section (ii), vide number.S.O.969(E),

dated the 26th

March, 1962 and last amended by Income-tax (Fifth

Amendment) Rules, 2011 vide number S.O. 1214(E) dated 26.05.2011.

About Tax in India

Tax, in general, is the imposition of financial charges upon an individual or a company by the

Government of India or their respective state or similar other functional equivalents in a state. The

computation and imposition of the varied taxes prevalent in the country are carried on by the Ministry
of Finance’s Department of Revenue. During the last financial year of 2010 – 2011, the gross

collection of tax amounted to around INR. 7.92 trillion, where the direct tax has got 56 % contribution

and the indirect tax has got 44 % contribution.

Type of Taxes

Prevalence of various kinds of taxes is found in the nation. Taxes in this nation can be either of direct

or indirect ones. However, the types of taxes even depend on whether a particular tax is being levied

by the central or the state government or any other municipalities. Following are some of the major

Indian taxes, which are categorized below:

Direct Taxes

This kind of tax is named so as such a tax is directly paid to the Union Government of India. As per

a survey, the Republic of India has witnessed a consistent rise in the collection of such taxes over a

period of the past years. The visible growth in these tax collections as well as the rate of taxes reflects

a healthy economical growth of India. Besides that, it even portrays the compliance of high tax along

with better administration of taxation. To name a few of the direct taxes, which are imposed by the

India Government are:

 Banking Cash Transaction Tax

 Corporate Tax

 Capital Gains Tax

 Double Tax Avoidance Treaty

 Fringe Benefit Tax

 Securities Transaction Tax

 Personal Income Tax

 Tax Incentives

Indirect Taxes

As opposed to the direct taxes, such a tax in the nation is generally levied on some specified

services or some particular goods. An indirect tax is not levied on any particular organisation

or an individual. Almost all the activities, which fall within the periphery of the indirect

taxation, are included in the range starting from manufacturing goods and delivery of services

to those that are meant for consumption. Apart from these, the varied activities and services,

which are related to import, trading etc. are even included within this range. This wide range

results in the involvement as well as implementation of some or other indirect tax in all lines

ofbusiness. Usually, the indirect taxation in the Indian Republic is a complex procedure that

involves laws and regulations, which are interconnected to each other. These taxation

regulations even include some laws that are specific to some of the states of the country. The

regime of indirect taxation encompasses different kinds of taxes. The organizations offer

services in all or most of the related fields, some of which are as follows:

 Anti Dumping Duty

 Custom Duty

 Excise Duty

 Sales Tax

 Service Tax

 Value Added Tax or V. A. T.

Other Taxes in India

Besides the taxes, the names of which are mentioned earlier, the nation has got the prevalence of

many other taxes. Listed below are some of those Indian taxes:
 Consumption Tax

 Death Tax

 Dividend Tax

 Endowment Tax

 Estate Tax

 Flat Tax, which is even known as the Flat Rate Tax

 Fuel Tax

 Gift Tax

 Inheritance Tax

 Sales Tax (Solely on goods that do not include payment of sales tax on services)

 S. E. T. or Self Employment Tax

 Social Security Tax

 Transfer Tax

 Payroll Tax

 Poll Tax

 Property Tax

 Wealth Tax

Municipal or Local Taxes in India

The most known tax, which is levied by the local municipal jurisdictions on the entry of goods, is

known as the Entry Tax or the Octori Tax.

Central government

S.
Parliament of India
No.
1 Taxes on income other than agricultural income (List I, Entry 82)

2 Duties of customs including export duties (List I, Entry 83)

Duties of excise on tobacco and other goods manufactured or produced in India except

(i) alcoholic liquor for human consumption, and (ii) opium, Indian hemp and other
3
narcotic drugsand narcotics, but including medicinal and toilet preparations containing

alcohol or any substance included in (ii). (List I, Entry 84)

4 Corporation Tax (List I, Entry 85)

Taxes on capital value of assets, exclusive of agricultural land, of individuals and

5
companies, taxes on capital of companies (List I, Entry 86)

6 Estate duty in respect of property other than agricultural land (List I, Entry 87)

7 Duties in respect of succession to property other than agricultural land (List I, Entry 88)

Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway
8
fares and freight (List I, Entry 89)

Taxes other than stamp duties on transactions in stock exchanges and futures
9
markets (List I, Entry 90)

Taxes on the sale or purchase of newspapers and on advertisements published therein

10
(List I, Entry 92)

Taxes on sale or purchase of goods other than newspapers, where such sale or purchase
11
takes place in the course of inter-State trade or commerce (List I, Entry 92A)

Taxes on the consignment of goods in the course of inter-State trade or commerce (List
12
I, Entry 93A)

13 All residuary types of taxes not listed in any of the three lists (List I, Entry 97)
State governments

S.
State Legislature
No.

Land revenue, including the assessment and collection of revenue, the maintenance of

1 land records, survey for revenue purposes and records of rights, and alienation of

revenues (List II, Entry 45)

2 Taxes on agricultural income (List II, Entry 46)

3 Duties in respect of succession to agricultural income (List II, Entry 47)

4 Estate Duty in respect of agricultural income (List II, Entry 48)

5 Taxes on lands and buildings (List II, Entry 49)

6 Taxes on mineral rights (List II, Entry 50)

Duties of excise for following goods manufactured or produced within the State (i)

7 alcoholic liquors for human consumption, and (ii) opium, Indian hemp and other

narcotic drugs and narcotics (List II, Entry 51)

Taxes on entry of goods into a local area for consumption, use or sale therein (List II,
8
Entry 52)

9 Taxes on the consumption or sale of electricity (List II, Entry 53)

10 Taxes on the sale or purchase of goods other than newspapers (List II, Entry 54)

Taxes on advertisements other than advertisements published in newspapers and

11
advertisements broadcast by radio or television (List II, Entry 55)

Taxes on goods and passengers carried by roads or on inland waterways (List II, Entry
12
56)

13 Taxes on vehicles suitable for use on roads (List II, Entry 57)

14 Taxes on animals and boats (List II, Entry 58)

15 Tolls (List II, Entry 59)

16 Taxes on profession, trades, callings and employments (List II, Entry 60)

17 Capitation taxes (List II, Entry 61)

Taxes on luxuries, including taxes on entertainments, amusements, betting and

18
gambling (List II, Entry 62)

19 Stamp duty (List II, Entry 63)

Any tax levied by the government which is not backed by law or is beyond the powers of the

legislating authority may be struck down as unconstitutional.

Income Tax Department

Main article: Income tax in India

Income Tax Department functions under the Department of Revenue in Ministry of Finance. It is

responsible for administering following direct taxation acts passed by Parliament of India.[6]

 Income Tax Act

 Wealth Tax Act

 Gift Tax Act

 Expenditure Tax Act

 Interest Tax Act

 Various Finance Acts (Passed Every Year in Budget Session)

Income Tax Department is also responsible for enforcing Double Taxation Avoidance Agreements

and deals with various aspects of international taxation such as Transfer Pricing. Finance Bill 2012

seeks to grant Income Tax Department powers to combat aggressive Tax avoidance by enforcing

General Anti Avoidance Rules.

Central Bard of Direct Taxes

The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue in the

Ministry of Finance, Government of India. The CBDT provides essential inputs for policy and

planning of direct taxes in India and is also responsible for administration of the direct tax laws
through Income Tax Department. The CBDT is a statutory authority functioning under the Central

Board of Revenue Act, 1963.It is India’s official FATF unit.The Central Board of Revenue as the

Department apex body charged with the administration of taxes came into existence as a result of the

Central Board of Revenue Act, 1924. Initially the Board was in charge of both direct and indirect

taxes. However, when the administration of taxes became too unwieldy for one Board to handle, the

Board was split up into two, namely the Central Board of Direct Taxes and Central Board of Excise

and Customs with effect from 1.1.1964. This bifurcation was brought about by constitution of the

two Boards u/s 3 of the Central Boards of Revenue Act, 1963.

Organisational Structure of the Central Board of Direct Taxes : The CBDT is headed by Chairman

and also comprises six members, all of whom are Special Secretary to Government of India.

 Member (Income Tax)

 Member (Legislation and Computerisation)

 Member (Revenue)

 Member (Personnel & Vigilance)

 Member (Investigation)

 Member (Audit & Judicial)

The Chairman and Members of CBDT are selected from Indian Revenue Service (IRS), a premier

civil service of India, whose members constitute the top management of Income Tax Department.

Income Tax Act of 1961

The major tax enactment in India is the Income Tax Act of 1961 passed by the Parliament, which

imposes a tax on income of individuals and corporations. This Act imposes a tax on income under

the following five heads:Income from house and property,

 Income from business and profession,

 Income from salaries,

 Income in the form of Capital gains, and

 Income from other sources

However, this Act is about to be repealed and be replaced with a new Act which consolidates the law

relating to Income Tax and Wealth Tax, the new proposed legislation is called the Direct Taxes

Code(to become the Direct Taxes Code, Act 2010). Act was referred to Parliamentary standing

committee which has submitted its recommendations. Act is expected to be implemented with

changes from the Financial Year 2013-14.

Income tax rates

In terms of the Income Tax Act, 1961, a tax on income is levied on individuals, corporations and body

of persons. The rate of taxes are prescribed every year by the Parliament in the Finance Act, popularly

called the Budget. In terms of the Finance Act, 2009, the rate of tax for individuals, HUF, Association

of Persons (AOP) and Body of individuals (BOI) is as under;

 A surcharge of 2.50% of the total tax liability is applicable in case the Payee is a Non-Resident

or a Foreign Company; where the total income exceeds Rs 10,000,000.

Note : -

Education cess is applicable @ 3 per cent on income tax, inclusive of surcharge if there is any. A

marginal relief may be provided to ensure that the additional IT payable, including surcharge, on

excess of income over Rs 1,000,000 is limited to an amount by which the income is more than this

mentioned amount.

Service tax

Service tax is a part of Central Excise in

India. It is a tax levied on services provided in India, except the State of Jammu and Kashmir. The

responsibility of collecting the tax lies with the Central Board of Excise and Customs(CBEC).

The Finance Minister of India, Pranab Mukherjee in his Budget speech has indicated the

government's intent of merging all taxes like Service Tax, Excise and VAT into a common Goods

and Service Tax by the year 2011. To achieve this objective, the rate of Central Excise and Service

Tax will be progressively altered and brought to a common rate In budget presented for 2008-2009
It was announced that all Small service providers whose turnover does not exceed Rs10 lakhs need

not pay service tax.

BIBLIOGRAPHY
BOOKS

 H.C.MEHROTRA(587-589)

Business today, March 18 ,2008, 4 Steps of online

Filing

WEBSITES

www.Income tax.india

www.economist.com

www.google.com
ANNEXTURE

1. Are you employed anywhere?

Yes No

2. In which sector are you employed ?

 Govt private public self business

3. Belief in showing the income?

 Yes

 no

4. What is your annual income?

 Below-150000

 1.5lac to 3lac

 3lac to 5lac

 Above 10lac

5. Would you pay income tax?

 Yes

 No

6. Should paying taxes is legal Obligation?

 Yes

 No

7. Tax evaders should be penalized?

  Yes

 no

8.Modes of filling Income tax?

 Offline

 Online

9.It is easy to fill I.T.R with online?

 Yes

 No

10. Online filling of I.T.R provides you?

 Time saving

 Secrecy of data

 Easy to fill

 Resource saving

 All of them

11.Which is the best way to pay the tax?

 Online

 Offline

12.How much tax you pay?

 Upto Rs 50,000.

 Upto Rs 1,00,000.

 Upto Rs 5,00,000.

 More than Rs 10,00,000.

13. The following details are not mandatory but we would appreciate if you could specify
so i can get better result . The data is purely confidential and would not be used

anywhere.

NAME-

ANNUAL INCOME-

HOW MUCH DO YOU PAY TAX-

ADDRESS-

Mob no-

BIBLIOGRAPHY
Websites

 www.google.com
 https://www.incometaxindiaefiling.gov.in/home

 www.incometaxindia.gov.in

BOOKS

-Direct Taxes: Ready Reckoner

BY:- V.K. Singhania

- Income Tax Act, India (eBook)

As Amended by Finance Act, 2016

by Pratik Kikani