#Tax  #Finance 

3.1 Financial Year vs Assessment Year

  • Financial Year (FY)
    • The period between 1 April and 31 March – the accounting year in which you earn an income
  • Assessment year (AY)
    • The year that comes after the FY
    • The time in which the income earned during FY is assessed and taxed
  • If in 2021-2022
    • Total income is 4,20,000
    • Then
      • Financial year is 2021-22
      • Assessment year is 2022-23

3.2 Advance Tax

  • If your total tax liability is Rs 10,000 or more in a financial year you have to pay advance tax
  • Note: After reducing TDS exceeds Rs 10,000

Due Dates for payment of Advance Tax

# FY 2019-20

Due Date		      Advance Tax Payable
On or before 15th June 21 --> 15% of advance tax
On or before 15th Sept 21 --> 45% of advance tax less advance tax already paid
On or before 15th Dec   --> 75% of advance tax less advance tax already paid
On or before 15th March 21 --> 100% of advance tax less advance tax already paid

3.3 Income Tax Return (ITR)

  • Income Tax Return (ITR) is a form in which the taxpayers file information about his income earned and tax applicable to the income tax department.
  • 7 various forms i.e. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7

Why should you file ITR?

  • Annual income > exemption limit
  • Benefits
    • Carry forward losses
    • TDS refund
    • Easy loan approval
    • Valid income proof

3.4 Types of Income / Heads of Income

  • The Income tax department breaks down income into five main heads
  1. Income from Salary
    • Salary
  2. Income from House Property
    • Rent
  3. Income from Capital Gains
    • Mutual funds, Shares,
  4. Income from Business and Profession
    • businesses , freelancers or contractors
  5. Income from Other Sources
    • FD, interest, lotteries

3.5 Which ITR to file?

  1. ITR 1 or SAHAJ
    • Income Type
      • Salary/Pension
      • Income from 1 house property
      • Interest, Dividend, Family Pension
    • Ideal for
      • Salaried individual
    • Income limit
      • Income < 50L
  2. ITR 2
    • Income Type
      • Salary/Pension
      • Income from house property
      • Interest, Dividend, Family Pension
      • Capital Gain
    • Ideal for
      • Salaried + Investors
    • Income limit
      • No Limit
  3. ITR 3
    • Income Type
      • Salary/Pension
      • Income from house property
      • Interest, Dividend, Family Pension
      • Capital Gain
      • Business income(Speculative + Non-speculative)
    • Ideal for
      • Salaried + Investor + Trader + Business income
    • Income limit
      • No limit
  4. ITR 4 or Sugam
    • Income Type
      • Salary/Pension
      • Income from house property
      • Interest, Dividend, Family Pension
      • Business income(presumptive)
    • Ideal for
      • Salaried + Small Busimessman
    • Income limit
      • Income < 50L
    • Not for
      • Capital gains
  5. ITR 5
  6. ITR 6
  7. ITR 7

3.6 Check before Income Tax filing

Form 26AS or Tax Credit Statement

  • e-File > Income Tax Return > View Form 26AS
  • Form 26AS contains details of:
    • Tax deducted by deductors on behalf of Tax Payer
    • Tax collected by collectors on behalf of Tax Payer
    • Advance / Self-Assessment tax deposited by Tax Payer
    • Refund paid by ITD to Tax Payer
    • AIR Transactions

Annual Information Statement (AIS)

  • Services > AIS
  • It shows information about
    • Foreign remittances, off-market transactions, interest on income tax refunds,
    • Mutual fund purchases and dividend details, break-up details of salary
  • Also gives comprehensive view of information for a taxpayer displayed in Form 26AS
  • Taxpayer Information Summary (TIS)
    • Summary of AIS information
    • Category wise aggregated information summary for a taxpayer.
  • Specified financial transaction (SFT)
    • Detail report of AIS information

Specified financial transaction (SFT)

  • Old STF criteria
    • AIS records only high value transaction(>10L) was displayed
  • New STF criteria
    • All specified transaction of any value is recorded
    • All capital-gain, dividend, interest income
  • Securities and MF report to AIS is done by
    • CAMS, KFin tech –> for MF
    • NSDL, CDSL –> for Stocks

Reference