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Income Tax Returns
The Income Tax services comprise taxation on income earned in a financial year a part of which is taxable as per rates prescribed for that year. With the financial year running from 1 April to 31 March of following year, broadly taxpayers are classified as residents or non- residents where the individual taxpayers can be classified as ‘residents but not ordinary residents’.
Income Tax Returns
The Income Tax services comprise taxation on income earned in a financial year a part of which is taxable as per rates prescribed for that year. With the financial year running from 1 April to 31 March of following year, broadly taxpayers are classified as residents or non- residents where the individual taxpayers can be classified as ‘residents but not ordinary residents’.
Residential Status
An person shall be deemed resident in India if he / she is in India in a tax year for:
- 182 days or more
- 60 days or further if the duration of 60 days is adjusted to 182 days or more for–Indian citizens / Indians of Indian descent on a travel to India
- For citizens of India departing India for jobs to other countries as crew members of an Indian ship within a tax year.
A resident is “not normally resident” in India in every tax year if he/she:
- has been “non-resident” in India in 9 /10 years preceding that year and
- has been in India for a cumulative duration of 729 days / less in the intervening seven years.
Heads of Income
The five main heads of income according to the Section 14 of Income Tax Act, 1961 for the computation of the Income Tax in India are:
This head essentially includes any remuneration, which is received by an individual on terms of services provided by him based on a contract of employment. This amount qualifies to be considered for income tax only if there is an employer-employee relationship between the payer and the payee respectively. Salary also include the basic wages, advance salary, pension, commission, gratuity, perquisites as well as annual bonus.
The important point to note here is that salary is taxable on due basis or received basis whichever is earlier. Let me explain this with the help of an example. If you receive salary for the month of march 2020 in April 2020, it will still be taxable in previous year 2019-20. This is because it was due in march. Similarly if your employer has given you salary of April and May in advance in the month of March, then it will be taxable again in the month of march itself.
Therefore, salary income will be taxable on due basis or received basis whichever is earlier.
According to the Income Tax Act 1961, Sections 22 to 27 is dedicated to the provisions for the income tax computation of the total standard income of a person from the house property or land that he or she owns.
In simple terms, this head includes rental income received from the properties. For tax computation purposes, the property in which you are staying and not earning any rental income can give you benefit. This benefit is in the form of deductions of interest paid on home loan.
However, if the property is utilized for letting out the normal course of business, then the income from the rent will be considered.
The income tax computation of the total income will be attributed from the income earned from the profits of business or profession. The difference between the expenses and revenue earned will be chargeable. Here is a list of the income chargeable under the head:
- Profits earned by the assessee during the assessment year
- Profits on income by an organisation
- Profits on sale of a certain license
- Cash received by an individual on export under a government scheme
- Profit, salary or bonus received as a result of a partnership in a firm
- Benefits received in a business
Capital Gains are the profits or gains earned by an assessee by selling or transferring a capital asset, which was held as an investment.
Capital asset can be real estate, stocks, Mutual funds, Bonds, Gold etc.
So whenever you sell a capital asset and earn gains. This is considered as your income which will be taxable under the head Capital Gain.
Just to clarify, please note that rental income from property is taxed under “Income from house Property” but if you sell the property and experience gain, it will be taxed under “capital gain”.
This is the last head of income. Any other form of income, which is not categorized in the above mentioned 4 heads, can be sorted in this category.
Some of the examples can be interest income from bank deposits, lottery awards, card games, gambling or other sports awards are included in this category.
These incomes are attributed in the Section 56(2) of the Income Tax Act and are chargeable for income tax.
Services by Reliable Innovative
- Obtaining PAN, TAN
- Income Tax Planning and IT Return filing for individuals and corporates.
- Obtaining Lower Tax Certificate both for Resident and Non Resident assessees.
- Obtaining Tax Residency Certificate (TRC)
- E-TDS return filing
- Attending scrutiny assessment
- Drafting appeals and appearing before the CIT
- Conducting Tax Audit and submission of Audit Report
- Conducting Transfer Pricing Study and submission of TP Report
- Issue of Certification for repatriation of funds from India
- Tax planning and tax consultancy for Resident as well as Non Resident assesses
Services by Reliable Innovative
- Obtaining PAN, TAN
- Income Tax Planning and IT Return filing for individuals and corporates.
- Obtaining Lower Tax Certificate both for Resident and Non Resident assessees.
- Obtaining Tax Residency Certificate (TRC)
- E-TDS return filing
- Attending scrutiny assessment
- Drafting appeals and appearing before the CIT
- Conducting Tax Audit and submission of Audit Report
- Conducting Transfer Pricing Study and submission of TP Report
- Issue of Certification for repatriation of funds from India
- Tax planning and tax consultancy for Resident as well as Non Resident assesses