#Taxation  #Income-Tax  #Finance 

📋 Topics Covered

  • Financial Year (FY) vs. Assessment Year (AY)
  • Advance Tax Rules and Due Dates
  • Understanding Income Tax Returns (ITR) and Why You Should File
  • 5 Major Heads of Income
  • Which ITR Form to File (ITR-1 to ITR-4 breakdown)
  • Important Documents: Form 26AS, AIS, and TIS

📅 3.1 Financial Year vs Assessment Year

  • Financial Year (FY)
    • The period between 1st April and 31st March — the accounting year in which you earn an income.
  • Assessment Year (AY)
    • The year that comes immediately after the FY.
    • The period in which the income earned during the FY is assessed and taxed.
  • Example: If you earned a total income of Rs. 4,20,000 between April 2021 and March 2022:
    • 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 are required to pay advance tax.
  • Note: This rule applies if the estimated tax is over Rs. 10,000 after reducing TDS.

Due Dates for Payment of Advance Tax

Due Date		             Advance Tax Payable
On or before 15th June     --> 15% of advance tax
On or before 15th Sept     --> 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    --> 100% of advance tax (less advance tax already paid)

📄 3.3 Income Tax Return (ITR)

  • An Income Tax Return (ITR) is a form in which a taxpayer submits information about their earned income and applicable taxes to the Income Tax Department.
  • There are 7 different forms available (ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7).

🤔 Why Should You File an ITR?

  • Mandatory: If your annual income exceeds the basic exemption limit.
  • Benefits:
    • Allows you to carry forward financial losses to future years.
    • Enables you to claim a TDS refund.
    • Makes loan approvals (home, car, personal) significantly easier.
    • Acts as a valid, government-attested 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: Base salary, bonuses, allowances.
  2. Income from House Property: Rental income.
  3. Income from Capital Gains: Profits from selling mutual funds, shares, property, etc.
  4. Income from Business and Profession: Income generated by businesses, freelancers, or contractors.
  5. Income from Other Sources: FD interest, savings interest, lotteries, etc.

📝 3.5 Which ITR Form to File?

  1. ITR 1 / SAHAJ
    • Income Type: Salary/Pension, Income from 1 House Property, and Other Sources (Interest, Dividends, Family Pension).
    • Ideal For: Purely salaried individuals.
    • Income Limit: Total Income < Rs. 50 Lakhs.
  2. ITR 2
    • Income Type: Everything in ITR 1 + Capital Gains.
    • Ideal For: Salaried Individuals + Active Investors.
    • Income Limit: No Limit.
  3. ITR 3
    • Income Type: Everything in ITR 2 + Business and Professional Income (Speculative + Non-speculative, Intraday trading, F&O).
    • Ideal For: Salaried Individuals + Investors + Traders + Business Owners.
    • Income Limit: No Limit.
  4. ITR 4 / SUGAM
    • Income Type: Salary/Pension, 1 House Property, Other Sources + Presumptive Business Income (Sec 44AD / 44ADA).
    • Ideal For: Salaried Individuals + Small Business Owners & Freelancers using presumptive taxation.
    • Income Limit: Total Income < Rs. 50 Lakhs.
    • Not For: Taxpayers with Capital Gains.
  5. ITR 5, ITR 6, ITR 7: For Firms, LLPs, Companies, and Trusts.

🔍 3.6 Check Before Income Tax Filing

🧾 Form 26AS or Tax Credit Statement

  • Path: e-File > Income Tax Return > View Form 26AS
  • Form 26AS is a consolidated statement containing:
    • Tax Deducted at Source (TDS) by deductors on your behalf.
    • Tax Collected at Source (TCS).
    • Advance / Self-Assessment tax deposited by you.
    • Refunds paid by the ITD.
    • High-value AIR Transactions.

📑 Annual Information Statement (AIS)

  • Path: Services > AIS
  • It provides a massively detailed dataset of your financial footprint:
    • Foreign remittances, off-market stock transactions, interest on income tax refunds.
    • Mutual fund purchases, stock sales, dividend details, and a clear break-up of salary components.
  • Acts as a comprehensive view of information compared to Form 26AS.

📊 Taxpayer Information Summary (TIS)

  • Serves as a Summary of AIS information.
  • Provides a category-wise aggregated information summary for a taxpayer to make filing extremely simple.

🏦 Specified Financial Transaction (SFT)

  • Acts as the Detailed report backing the AIS information.
  • Old SFT criteria: AIS recorded/displayed only high-value transactions (> Rs. 10 Lakhs).
  • New SFT criteria: All specified transactions of any value are recorded (All capital gains, dividends, interest income).
  • Reporting Agencies: Securities and Mutual fund transactions are reported to AIS natively by CDSL/NSDL for Stocks and CAMS/KFintech for Mutual Funds.

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