Comprehensive Guide to Income Tax on Capital Gains in India

 

In this article we will discuss about capital gains on transfer of assets and its taxability in India. To start with let us understand what is meant by capital gains.

 

What is capital gain?

Capital gain means the gain that arises on the transfer of a ‘capital asset’. The gain will be taxed under the head ‘capital gains’ in the year in which the asset was transferred.  To put it simply, it means the profit you generate from sale of any asset, say your house, jeweler etc.

 

What is meant by capital asset?

Now that we know that capital gain arise of the transfer of ‘capital asset’, it is important to understand the meaning of capital asset under the Income tax act.

Capital asset means any property held by a person (example securities, land, building, patents etc.).  The definition of capital gains specifically excludes the following:

  • Stock-in-trade, consumables or raw material
  • Personal effects (excluding jewelry, archaeological collections, paintings, drawings, sculptures or any work of art)
  • Agricultural land in rural areas
  • 5% gold bonds, 7% gold bonds or national defense gold bonds
  • Special bearer bonds
  • Gold deposit bonds

 

Which means, any property held by you (except the above) would quality as a capital asset for income tax purposes. Which also means that whenever you sell a property, you have to check whether you are subject to income tax.

Short term capital asset and long term capital asset – the difference? 

Before we understand the meaning of short-term capital asset and long-term capital asset, it is relevant to understand the need for such classification. Under the income tax law, the tax rate for gains arising on short-term capital asset and long-term capital asset is different. Therefore, it is very relevant for you to first identify, under which category your asset falls.

 

  • Short term capital asset means a capital asset held by a person for not more than thirty-six (36) months.

 

  • Long term capital asset means a capital asset held by a person for more than thirty-six (36) months.

 

However from the financial year 2017-18, the limit of thirty-six (36) months has been reduced to twenty-four (24) months with respect to land and building.

For shares (equity as well as preference shares) listed on recognized stock exchange (ie National Stock Exchange, Bombay Stock Exchange etc), units of equity oriented mutual funds, listed securities, units of UTI, zero coupon bonds, a period of twelve (12) months is applicable (ie if you hold these assets for more than 12 months, it would qualify as a long-term capital asset).

However the limit is twenty-four (24) months in respect of unlisted shares of a company (instead of thirty six months). Remember that unlisted securities (other than shares) will be called long term capital asset only when they are held for more than thirty six months.

How is capital gains computed?

 

Particulars Amount (₹)
Full value of consideration (Sales value) xxxx
Less: Expenses incurred on transfer (Eg. Brokerage, commission) (xxxx)
Net sales consideration xxxx
Less: Cost of acquisition (Indexed cost for long term capital assets) (xxxx)
Less: Cost of improvement ( Indexed cost for long term capital assets) (xxxx)
Capital Gain xxxx

 

Indexed cost =     (Cost x Cost inflation index of the year of transfer)/ Cost inflation index of base year (1981-82 for FY 2016-17)

Note: STT paid on securities will not be allowed as expense incurred on transfer.

 

Tax on long term capital gains

Long term capital gains are taxable at the rate of 20% (plus education cess and surcharge, if any).

However, long term capital gains arising on transfer of equity shares or units of equity oriented mutual funds (mutual funds whose 65% of investible funds are invested in equity shares of an Indian company) or units of business trust are exempt from income tax if STT is paid on their sale.

An option of availing lower rate of 10% is available to a resident in respect of listed securities (other than units), zero coupon bond, provided indexation benefit is not taken. In other words, if indexation is done then the tax rate will be 20% and if indexation benefit is not taken the rate will be 10%. Whichever option is more beneficial to you can be adopted by you.

For non-residents, in respect of unlisted securities, tax shall be calculated at the rate of 10% without taking into consideration the indexation benefit and the benefits of first proviso of section 48 (related to foreign currency treatment). This is not optional.

 

Taxability of short term capital gains

Short term capital gains are liable to tax at normal slab rates. However, in case of short term capital gains arising on transfer of equity shares or units of equity oriented mutual funds (mutual funds whose 65% of investible funds are invested in equity shares of an Indian company) or units of business trust the tax shall be levied at the rate of 15% if STT is paid on their sale.

Adjustment of gains against the basic exemption limit

Basic slab limit means the level of income up to which a person is not required to pay any tax (eg. ₹ 2,50,000 for resident other than a senior citizen). Only a resident individual or HUF can adjust the basic exemption limit from capital gains (short term or long term). A non-resident or resident other than individual or HUF can’t adjust the basic exemption limit.

For eg. The income of a resident individual excluding long term capital gains is ₹ 1,00,000. Capital gains amount to ₹ 6,50,000. The basic exemption limit is Rs. 2,50,000. The remaining exemption limit after adjusting other income is ₹ 1,50,000 (2,50,000-1,00,000). This amount can be adjusted from capital gains. Only the remaining capital gains of ₹ 5,00,000 (6,50,000-1,50,000) will be taxable.

 

Exemption of capital gains tax

There are major three sections which provide for exemption of capital gains- section 54, 54F and 54EC. Let us understand each one separately-

 

  • Exemption under section 54:

This section provides for exemption of long term capital gains on sale of house property to an Individual or HUF. The exemption will be available to you if you purchase another house property within a period of one year before or two years after the date on which the transfer took place or construct within a period of three years after the date of transfer one residential house in India.

The amount can be deposited in account under capital gain scheme before the filing of income tax return of the year. If it is not deposited and not utilized for purchase or construction before the filing of the income tax return, then capital gains won’t be exempt. Also, the property purchased or constructed shall not be transferred upto three years from date of purchase or construction. Also note that only the amount of capital gains need to be invested, not the entire sales consideration, in order to claim exemption.

 

  • Exemption under section 54F:

This section provides for exemption of long term capital gains on sale of capital asset other than house property to an individual or HUF. The exemption will be available to you if you purchase within a period of one year before or two years after the date on which the transfer took place or construct within a period of three years after the date of transfer one residential house in India.

Net sales consideration has to be deposited and not capital gains. Let us take an example. Mr. A sells his commercial building for ₹ 40,00,000 and the long term capital gain work out to be ₹ 8,00,000. Suppose he purchases a residential property of ₹ 30,00,000. Now the exemption shall be restricted to ₹ 6,00,000 (8,00,000 x 30,00,000/40,00,000). The remaining ₹ 2,00,000 of long term capital gains shall be taxable.

The amount can be deposited in account under capital gain scheme before the filing of income tax return of the year. If it is not deposited and not utilized for purchase or construction before the filing of the income tax return, then capital gains won’t be exempt.

One more point that one should remember while claiming exemption under this section is that one should not own more than one residential house property on the date of transfer of asset.

 

  • Exemption under section 54EC

This section provides for exemption of long term capital gains on sale of any capital asset. In order to claim this exemption you need to invest the amount of capital gains in specified bonds within six months of the date of transfer. Please note that the amount of exemption under this section is restricted to ₹ 50 lakhs i.e  the total investment in the bonds for a particular transfer shall not exceed rs. 50 lakhs in the year in which transfer took place and the next financial year (Earlier there was a loophole and people used to take exemption of ₹ 1 crore by taking advantage of the provisions, which is not possible now).

 

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Tax on perquisites – How is benefits from your employment taxed?

 

In this article we are going to discuss everything about perquisites. What is meant by perquisite? What is its taxability? We will be discussing all these aspects in a step by step manner.

First of all let us understand the meaning of perquisite. Perquisites, also known as perks, are the benefits that are provided to an employee in addition to salary by the employer. But, watch out! These perquisites may be taxable in your hands as part of salary. Let us look at the common perquisites and their taxability.

Rent free accommodation

When rent free accommodation is received by your from your employer the taxation depends on whether accommodation is owned by employer or has been taken on rent.

1. Accommodation owned by employer

 

Population of city Value of perquisite
Exceeds 25 lakhs 15% of salary
10 lakhs to 25 lakhs 10% of salary
Less than 10 lakhs 7.5% of salary

 

2. Accommodation rented by employer: Lease amount paid Or 15% of salary, whichever is lower; 

3. Hotel accommodation: Actual amount paid Or 24% of salary, whichever is lower (permitted only upto 15 days)

Any amount that is paid by the employer to the employee would be reduced from the above mentioned amounts to reach at the value of perquisite.

When your employer provides you furnished accommodation, then the value will be increased by 10% of cost of furniture, or the hire charges in case furniture is hired. If you have paid any amount towards furniture, that will be reduced from the value.

Motor car

Let us understand the valuation of perquisite due to car provided to you by your employer, under different situations:

1. If car is owned by your employer and you have been given the car for use

 

Situation Engine capacity <1.6 litre Engine capacity >1.6 litre
Car used by employee for office purpose only No value No value
Car used by employee for personal purpose and running expenses are met by employer or reimbursed Actual expense incurred including amount paid to driver less amount recovered from employee. Actual expense incurred including amount paid to driver less amount recovered from employee.
Car used by employee for personal as well as official use
Running expenses met or reimbursed by employer ₹ 1,800 p.m. (plus ₹ 900 p.m. in case driver is provided) ₹ 2,400 p.m. (plus ₹ 900 p.m. in case driver is provided)
Running expenses met or reimbursed by employee ₹ 600 p.m. (plus ₹ 900 p.m. in case driver is provided) ₹,900 p.m. (plus ₹ 900 p.m. in case driver is provided)

 

2. Car owned by employee and running expenses are met or reimbursed by employer:

 

Situation Engine capacity < 1.6 Litre Engine Capacity > 1.6 Litre
Car used by employee for office purpose only No value No value
Car used by employee for personal as well as official use Actual expense – amount recovered from employee Actual expense – amount recovered from employee

 

Services and facilities

Interest free or concessional loans

It is a common practice by organizations to provide loans at concessional rates or to provide interest free loans to their employees. In such a case the value of perquisite shall be the difference in rates at which loan which is provided and the prescribed rate (It is the rate charged by State Bank of India on the first day of relevant previous year on the maximum monthly outstanding balance).

However, loans up to ₹ 25,000/- or loans provided for medical treatment of specified diseases will not be considered.

Travel expenses 

If the expenses of travel, tour and accommodation of your holidays are borne by your employer, then the value of perquisite shall be the actual amount incurred by employer.

Use of asset

If any movable asset (other than laptop or computer) is provided to you by your employer for use by you or your family, the value of perquisite shall be 10% of per annum of cost of the asset ( rent charges in case it is leased) less any amount that is recovered from you.

Transfer of asset

If any movable asset belonging to employer is transferred to you, the value shall be the actual cost of the asset as reduced by 10% for of such cost for each completed year of use by the employer as further reduced by any amount which is recovered from you. (The rate shall be 50% in case of computers and electronics and 20% in case of motor cars)

Gift from employer

Received gift from employer? In such a case it shall amount to perquisite and the value shall be the amount of the gift. 

Medical treatment

When any expense is incurred or any amount is reimbursed for medical treatment of employee of his family member in excess of ₹ 15,000/-, the amount in excess of ₹ 15,000/- shall be treated as perquisite. In case the medical expense relates to specified diseases, no perquisite shall arise.

Securities or sweat equity shares

If any securities or sweat equity shares have been allotted to the employee by the employer, then the value of perquisite shall be the value of such security or share being average of opening and closing price of the share on the recognized stock exchange.

 

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Detailed guide to file ITR Form 3 – applicable for AY 2017-18 (FY 2016-17)

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The Income Tax Department has released ITR Form-3 which is relevant for Assessment Year 2017-18 (Financial Year 2016-17).

The last date to file the return of income is 31st July 2017 when tax audit is not required to be done (In case of tax audit is required to be done, the due date is 30th September).

Let us have a look on who is eligible to use this return form and what is the procedure to use this form.

 

Who can use this form?

This form can be used by those Individuals or HUFs who have income from proprietary business or profession.

 

How to file the return?

  • Electronically: The return can be filed electronically by using either the digital signature or electronic verification code.
  • Manually: If a person does not wish to file the return electronically he can file the return in physically by submitting the acknowledgment of return filed electronically. The acknowledgment has to be signed and posted to CPC Bengaluru.

 

Note: A person who is liable for tax audit has to compulsorily file his return electronically.

 

Content of the form and guide to fill each part

PART-A- General

You have to fill the basic details in this part including section under which return is filed. Also, a person is required to mention whether he is liable to maintain books of accounts as per section 44AA and whether he is liable for tax audit under section 44AAB. If a person is liable for tax audits, audit details like name and membership no of auditor, date of audit report etc. have to be mentioned.

 

Part A- Nature of business

Select the nature of business from the drop down menu and mention the trade name.

 

Part A- Balance sheet and profit and loss account

Balance sheet as on 31st March 2017 and profit and loss for the financial year 2016-17  has to be filed in the format provided in the return in case you were required to maintain accounts of the business or profession during the year.

In case you were not required to maintain books of accounts then fill the information in “no accounts case’ section as bellows:

Part A- OI (other information) and QD (quantitative details)

It is optional to fill these details (OI and QD) if you were not liable for tax audit under section 44AB. When you were liable for tax audit, these details are compulsorily to be filled and the details that are mentioned here shall match with the same details in the tax audit report.

In Quantitative details stock details have to be given by a trading or a manufacturing concern. Purchases are to be shown exclusive of taxes. If it is not possible to segregate the tax amount then the tax amount may be included.

 

Schedule S: Salary

If you were employed by more than one employer during the year, provide the details for both the employments. You can use Form 16 to fill the salary details in the schedule.

 

Schedule HP: Income form house property

  • When a person owns only one house property which is self-occupied and interest deduction is to be claimed then this schedule has to be used.
  • If house is owned by more than one person, detail of co-owners has to be provided, being the name, PAN and % share in property of the co-owner. The total annual value of the property has to be provided. The share of assessee will be calculated automatically based on % if his share in property that is mentioned by him.
  • If there is more than one house property, details of all properties need to be filled. Also note than not more than one house property can be shown as self-occupied.
  • For self-occupied house, the limit of interest deduction is restricted to ₹ 2,00,000/-

ITR 3_1_Mytaxreturns.in

ITR 3_2_Mytaxreturns.in

 

Schedule BP: Income from business or profession

The computation of income under this head will start from the net profit shown in Part A- P&L. Any item of allowance of disallowance under the Income Tax Act is taken into consideration here. Profit from non-speculative business, speculative business and specified business under section 35AD will all be taken here. Set-off of business losses will be specified in item ‘E’ of the schedule. Losses from speculative business or specified business are not allowable to be set off with normal business profits.

 

Schedule-DPM, Schedule DOA, Schedule DEP and Schedule DCG

Schedule DPM shows the depreciation on plant and machinery while schedule DOA shows depreciation on other assets. Schedule DEP is a summary of depreciation charged on all assets. If any short term capital is deemed as calculated in the schedules DPM or DOA it has to be shown in schedule DCG (Deemed capital gains).

 

Schedule ESR (Deduction under section 35, 35CCC, 33CCD)

Any amount that is allowed under section 35 on scientific research has to be entered here. Remember that depreciation can’t be claimed on assets on which deduction is taken. Details of deduction under section 35CCC and 33CCD are also to be mentioned here.

 

Schedule CG: Capital Gains

  • In Part ‘A’, details of short term capital gains has to be mentioned. In Part ‘B’ details of long term capital gains has to be mentioned. Capital gains from various assets have been segregated separately in the form. The cost of acquisition, cost of improvement and indexed cost have to be mentioned taking into account the indexation rates. For non-residents some specific columns are also there.
  • Details of exemptions under section 54/54EC/54B etc. have to be provided based on which exemption is claimed.
  • For non-residents who wish to claim benefit of DTAA, have to mention the details of DTAA like the name of the country, article of DTAA, tax residency certificate, amount of gains not taxable in India as per DTAA.
  • Item E provides for set-off of current capital losses. Please note that short term capital loss can be set-off from short term as well as long term gains while long term losses can be set-off only from long term gains.
  • Also, details of capital gains received within due dates of paying advance tax are to be mentioned. This is to calculate interest for late payment of advance tax on capital gains.

 

Schedule OS: Income from other sources

  • The amount of dividend (other than exempt) and interest have to be mentioned in item 1a and 1b.
  • In item 1c rent received from machinery, plant etc. has to be mentioned.
  • In item 1d, other incomes being lottery income, cash credits, unexplained investments, undisclosed incomes have to be mentioned. These are chargeable at the highest rate of 30%.
  • For deduction under section 57, details of expenses have to be mentioned.

 

Schedule CYLA: Set-off of current year losses

Here, the set-off of losses from various heads of income will be done as per the applicable provisions automatically. Example, the loss of business can be set-off from any income other than salary.

Any loss which could not be set-off entirely will be carried forward to next year as per the applicable provisions. Also, the current income remaining after set-off will be reflected under this schedule.

 

Schedule BFLA: Details of income after set-off of losses from previous years

After the losses of current year have been set-off, the losses of previous years which are brought forward to this year are set-off against the current year income as per the applicable provisions. In column 5, current year income after set-off of losses is reflected.

 

Schedule CFL: Carry forward of losses to future years

In this schedule, the summary of losses carried forward from earlier years, their set-off from the current year and any loss which is still left for carry is provided for each assessment year.

 

Schedule UD: Unabsorbed depreciation

In this Schedule, the details of brought forward unabsorbed depreciation and brought forward unabsorbed capital expenditure of scientific research under section 35 for each assessment year, depreciation and allowance for capital expenditure of scientific research under section 35  set-off against the current year’s income and the balance unabsorbed depreciation and unabsorbed capital expenditure of scientific research to be carried forward to the next assessment year are mentioned.

 

Schedule ICDS: Effect of Income Computation and Disclosure Standards on profits

Deviation from each ICDS that has an effect on profit is to be filled in column(iii) of the said Schedule.

 

Schedule AMT: Alternate Minimum Tax

The assessee is required to fill the details of computation of AMT payable under section 115JC (special provisions for payment of tax by certain persons other than a company). The tax liability under the section shall be 18.5 percent of the adjusted total income computed under the said section.

 

Schedule AMTC: AMT Credit

Credit for AMT paid in excess of normal tax liability, is allowed to be set-off against the normal tax liability of current assessment year. The amount of credit is restricted to normal tax liability for the current assessment year exceeding the AMT liability for the current assessment year.

 

Schedule SPI: Income of specified persons includible in your income

Details of income of specified persons being spouse, minor child etc. as per the clubbing provisions have to be provided (name and PAN of person, relationship, nature and amount of income). For the income of minor child, a deduction of ₹ 1,500 is available per child.

 

Schedule SI: Income chargeable to tax at special rates

Mention the income included in Schedule-CG and Schedule-OS which is chargeable to tax at special rates. Such income will be taken from the appropriate columns in schedule BFLA/CYLA or schedule OS as indicated.

 

Schedule IF: Information of firms in which you are partner

Mention the name of the firm, PAN of the firm, % of profit sharing, amount of profit share and capital balance as on 31st March.

 

Schedule EI: Exempt income

In this schedule, incomes which are exempt from tax have to be mentioned. Example: dividend in excess of ₹ 10 lakhs.

 

Schedule PTI: Pass through income

Income received from business trust or investment fund has to be mentioned.

The name and PAN of trust or fund has to be mentioned along with the amount of income various heads. This allocation of income will be as per the form provided by the trust or fund. TDS, if deducted has to be filed.

 

Schedule FSI: Income from outside India and relief of tax

The income which is received from outside India (already included in total income) has to be mentioned. Country code has to be selected from the drop down menu. TIN of assessee in the other country has to be mentioned. In its absence, passport number has to be mentioned. Relief of tax will be calculated based on the tax paid outside India and tax payable on such income in India.

 

Schedule TR: Summary of tax relief for taxes paid outside India

Based on the previous schedule, summary of tax relief will be made here.

 

Schedule FA: Foreign assets and income from sources outside India

  • To be filled by resident assessee.
  • Mention the details of foreign bank accounts, financial interest in any entity, details of immovable property or other assets located outside India.
  • Also include details of any account located outside India in which you have signing authority, details of trusts created outside India in which you are settlor, beneficiary or trustee.
  • This schedule is to be filled in all cases where the resident assessee is a beneficial owner, beneficiary or legal owner.

 

Schedule AL: Schedule of assets and liabilities

  • To be filled when total income exceeds ₹ 50 lakhs.
  • Details of mentioned assets need to be disclosed at their cost. In case asset was gifted, the cost of asset in hands of previous owner shall be considered.

How to verify the return?

  1. One can send the signed copy of ITR to CPC Bengaluru physically within 120 days of filing return.
  2. Verification can also be done online by following ways-
  • Aadhaar OPT
  • Net banking
  • EVC code
  • Digital signature
  1. Go to View Returns/ Forms- Click here to view returns pending for verification- e-verify
  2. The options mentioned above will be displayed above and return can be verified.

 

Read points to take care while sending ITR-V to the income tax department.

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Detailed guide to file ITR Form 2 – applicable for AY 2017-18 (FY 2016-17)

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Mytaxreturns automatically decides which ITR Form should be applicable for you and files your return to the Income Tax Department.

It just takes 4 simples steps and 5 minutes!

 

The Income Tax Department has released a new Income Tax Return (ITR) Form-2 which is relevant for Assessment Year 2017-18 (Financial Year 2016-17).

The last date to file the return of income for individuals is 31st July 2017. Now let us have a look on who is eligible to use this return form and what is the procedure to use this form.

 

Who can use ITR Form 2?

  • Individuals and HUFs,
  • Who are not entitled to use ITR Form-1 (Eg. When loss is to be carried forward)
  • And those who receive salary, bonus, commission, interest or remuneration from a partnership firm, which shall form part of ‘Profits or gains from business or profession’.

 

Note: Please note that a person whose income includes income from business or profession from proprietorship is not entitled to use this form.

 

How to file Form ITR-2?

  • Electronically: The return can be filed electronically by using either the digital signature or electronic verification code.
  • Manually: If a person does not wish to file the return electronically he can file the return in physically by submitting the acknowledgment of return filed electronically. The acknowledgment has to be signed and posted to CPC Bengaluru.

 

When are you required to file an income tax return?

When the total income of Huf or individual before taking the deductions under Chapter VI-A (under section 80C, 80D etc.) exceeds the maximum amount not chargeable to tax (i.e. ₹ 2,50,000 in case of individual below the age of 60 years), then he is required to file the return.

 

Contents of Form ITR-2 and detailed guide to fill each part

PART-A: General

You have to fill the basic details in this part including Aadhaar number and the section under which return is filed. Provide the correct address and the email for any communications.

 

Schedule S: Salary

If you were employed by more than one employer during the year, provide the details for both the employments. You can use Form 16 to fill the salary details in the schedule.

 

Schedule HP: Income from house property

  • When a person owns only one house property which is self-occupied and interest deduction is to be claimed then this schedule has to be used.
  • If house is owned by more than one person, detail of co-owners has to be provided, being the name, PAN and % share in property of the co-owner. The total annual value of the property has to be provided. The share of assessee will be calculated automatically based on % if his share in property that is mentioned by him.
  • If there is more than one house property, details of all properties need to be filled. Also note than not more than one house property can be shown as self-occupied.
  • For self-occupied house, the limit of interest deduction is restricted to ₹ 2,00,000/

 

Schedule IF: Information of firms in which you are partner

The following information will be required to be filed in respect of partnership firm:ITR 2_1_Mytaxreturns.in

Schedule BP: Income from firms

Detail of any salary, bonus, interest or commission received by you from the firms in which you are a partner is to be mentioned along with the PAN of the firm. Expenses related to such income have to be mentioned too.

 

Schedule CG: Capital Gains

  • In Part ‘A’, details of short term capital gains has to be mentioned. In Part ‘B’ details of long term capital gains has to be mentioned. Capital gains from various assets have been segregated separately in the form. The cost of acquisition, cost of improvement and indexed cost have to be mentioned taking into account the indexation rates. For non-residents some specific columns are also there.
  • Details of exemptions under section 54/54EC/54B etc. have to be provided based on which exemption is claimed.
  • For non-residents who wish to claim benefit of DTAA, have to mention the details of DTAA like the name of the country, article of DTAA, tax residency certificate, amount of gains not taxable in India as per DTAA.
  • Item E provides for set-off of current capital losses. Please note that short term capital loss can be set-off from short term as well as long term gains while long term losses can be set-off only from long term gains.
  • Also, details of capital gains received within due dates of paying advance tax are to be mentioned. This is to calculate interest for late payment of advance tax on capital gains.

 

Schedule OS: Income from other sources

  • The amount of dividend (other than exempt) and interest have to be mentioned in item 1a and 1b.
  • In item 1c rent received from machinery, plant etc. has to be mentioned.
  • In item 1d, other incomes being lottery income, cash credits, unexplained investments, undisclosed incomes have to be mentioned. These are chargeable at the highest rate of 30%.
  • For deduction under section 57, details of expenses have to be mentioned.

 

Schedule CYLA: Set-off of current year losses

Here, the set-off of losses from various heads of income will be done as per the applicable provisions automatically. Example, the loss of business can be set-off from any income other than salary.

Any loss which could not be set-off entirely will be carried forward to next year as per the applicable provisions. Also, the current income remaining after set-off will be reflected under this schedule.

 

Schedule BFLA: Details of income after set-off of losses from previous years

After the losses of current year have been set-off, the losses of previous years which are brought forward to this year are set-off against the current year income as per the applicable provisions. In column 3, current year income after set-off of losses is reflected.

 

Schedule CFL: Carry forward of losses to future years

In this schedule, the summary of losses carried forward from earlier years, their set-off from the current year and any loss which is still left for carry is provided for each assessment year.

 

Schedule VI-A: Deductions under Chapter VI-A

The details of payments made for deductions under various sections are to be mentioned. For the maximum amount of deduction that can be taken under a particular section Income tax Act will have to be considered.

 

Schedule 80G: Deduction for donations under section 80G

Details of donations like the name, address and name of donee along with the amount of donation has to be mentioned. Deduction will be available as per the qualifying limits or upto the extent mentioned in the Act.

 

Schedule SPI: Income of specified persons includible in your income

Details of income of specified persons being spouse, minor child etc. as per the clubbing provisions have to be provided (name and PAN of person, relationship, nature and amount of income). For the income of minor child, a deduction of ₹ 1,500 is available per child.

 

Schedule SI: Income chargeable to tax at special rates

Mention the income included in Schedule-CG and Schedule-OS which is chargeable to tax at special rates. Such income will be taken from the appropriate columns in schedule BFLA/CYLA or schedule OS as indicated.

 

Schedule EI: Exempt income

In this schedule, incomes which are exempt from tax have to be mentioned. Example: dividend in excess of ₹ 10 lakhs.

 

Schedule PTI: Pass through income

Income received from business trust or investment fund has to be mentioned.

The name and PAN of trust or fund has to be mentioned along with the amount of income various heads. This allocation of income will be as per the form provided by the trust or fund. TDS, if deducted has to be filed.

 

Schedule FSI: Income from outside India and relief of tax

The income which is received from outside India (already included in total income) has to be mentioned. Country code has to be selected from the drop down menu. TIN of assessee in the other country has to be mentioned. In its absence, passport number has to be mentioned. Relief of tax will be calculated based on the tax paid outside India and tax payable on such income in India.

 

Schedule TR: Summary of tax relief for taxes paid outside India

Based on the previous schedule, summary of tax relief will be made here.

 

Schedule FA: Foreign assets and income from sources outside India

  • To be filled by resident assessee.
  • Mention the details of foreign bank accounts, financial interest in any entity, details of immovable property or other assets located outside India.
  • Also include details of any account located outside India in which you have signing authority, details of trusts created outside India in which you are settlor, beneficiary or trustee.
  • This schedule is to be filled in all cases where the resident assessee is a beneficial owner, beneficiary or legal owner.

 

Schedule AL: Schedule of assets and liabilities

  • To be filled when total income exceeds ₹ 50 lakhs.
  • Details of following assets need to be disclosed at their cost. In case asset was gifted, the cost of asset in hands of previous owner shall be considered.

ITR 2_2_Mytaxreturns.in

 

How to verify the return?

  1. One can send the signed copy of ITR to CPC Bengaluru physically within 120 days of filing return.
  2. Verification can also be done online by following ways-
  • Aadhaar OPT
  • Net banking
  • EVC code
  • Digital signature
  1. Go to View Returns/ Forms- Click here to view returns pending for verification- e-verify
  2. The options mentioned above will be displayed above and return can be verified.

 

Read points to take care while sending ITR-V to the income tax department.

Did you know, Mytaxreturns has made filing ITRs very simple. It just takes 4 steps and 5 minutes. Click here to start efiling. 

Detailed guide to file ITR Form 4 (Sugam) – applicable for AY 2017-18 (FY 2016-17)

Did you know?

Mytaxreturns automatically decides which ITR Form should be applicable for you and files your return to the Income Tax Department.

It just takes 4 simples steps and 5 minutes!

What is ITR-4 (Sugam)?

CBDT in its press release dated March 31, 2017 notified ITR Form 1 and ITR Form 4 for 2017-18. This form is for those resident individuals/ HUF/ partnership firms who have opted for presumptive income for their income from business and profession under section 44AD, 44AE, 44ADA under Income Tax Act.

The due date for filing the return is July 31, 2017. We have discussed everything about filing the ITR Form 4 Sugam in this guide.

Who is eligible to use ITR-4?

The following persons are eligible to use ITR-4 Sugam for FY 2016-17:

ITR 4 Sahaj_Mytaxreturns

Who is not eligible to use ITR-4 for filing their return?

If the income of a person includes the following, such person shall not be eligible to use this form:

  • Income from more than one house property
  • Lottery or horse race income, dividend in excess of ₹10 Lakhs, unexplained/ unaccounted incomes under section 115BBE
  • Capital gains (Short term/ long term)
  • Agricultural income > ₹5,000/-
  • Income from speculative business , agency business, commission or brokerage
  • If such person is availing double taxation relief for income earned outside India
  • Resident person having any income from source outside India or having asset located outside India or signing authority of any account located outside India

What is presumptive business income and how is it computed?

Under the Income-tax Act, certain forms of businesses are subject to presumptive income tax. Which means that the income of such person from such business would be assumed at a particular % for tax purposes. Now let us understand the various conditions and rates under the income tax act for presumptive income:

  • Section 44AD

For persons carrying out business (other than persons earning income from commission/ brokerage, agency business and business of plying, hiring or leasing of goods carriage) having a total turnover in the financial year upto ₹ 2 crores.

The income shall be deemed to 8% of total turnover. It shall be 6% of receipts for those receipts which have been received in digital mode before the due date of filing return.

  • Section 44ADA

For persons carrying out profession having gross receipts in the financial year which does not exceed ₹ 50 Lakhs.

The income shall be deemed to be 50% of the gross receipts.

  • Section 44AE

For person who owns not more than ten goods carriage at any time during the financial year and who carries out the business of plying, hiring or leasing goods carriage.

The income shall be deemed to be ₹ 7,500/- for per month or part thereof for each goods carriage.

Presumptive income provisions are optional. If a person shows less income then such person would be required to get tax audit done and also maintain the accounts. For eg. If business receipts are ₹50 lakhs, then income shall be 6% i.e. ₹ 3 lakhs. If a person shows income less than 3 lakhs he shall maintain books of accounts and get tax audit done.

How to file ITR-4 Sugam?

ITR form is required to be filed electronically on the income tax website (www.incometaxindiaefiling.gov.in). The option to file the form in paper form is available to following two persons-

  • Individual of the age 80 years or more
  • Individual whose income doesn’t exceed ₹ 5 lakhs and who has not claimed any refund in the return.

What are the contents of ITR-4 Form?

  • Part A- Personal information
  • Part B- Gross Total Income
  • Part C- Deductions and Total Income
  • Part D- Tax computation and tax status
  • Verification, Nature of business/ profession
  • Schedule BP
  • Schedule AL (Remember that it is applicable only when total income exceed ₹50 lakhs)
  • Schedule IT- Details of advance tax and self assessment
  • Schedule TCS, TDS

How to fill ITR-4 online?

Taxpayers can following the below steps to file their ITR-4 online, themself:

  1. Visit the homepage of income tax site (www.incometaxindiaefiling.gov.in)
  2. Login with your login details (PAN, password and date of birth)
  3. Go to E-file Option then “Prepare and Submit Online ITR”ITR 4 Sugam_2
  4. Select AY as 2017-18 and ITR-4 and then submit
  5. The ITR-4 form will be displayed on the screen. The detailed filing process is discussed in below.

How to fill ITR-4 Form? Part by part explanation

Part A-Personal Information

  • Fill the PAN details like PAN number, name, date of birth. (in case of online filing these details will be auto filled)
  • Fill Aadhaar Number. It is mandatory to fill the same.
  • Fill mobile number, email address and communication address (PIN code is mandatory).
  • Fill residential status- Resident or non-resident. Also mention whether you are individual, firm or HUF?
  • Tick the relevant box if you belong to Govt, PSU or others
  • Fill the status of return in the column- return filed, whether the return is filed before the due date of 31st June of after the due date, revised, filed in response to notices?
  • Tick the relevant box if governed by Portuguese Civil Code. If yes then only your share of income will be mentioned in the schedules.

 

Part B-Gross Total Income 

  • In column B1, you should fill the amount from schedule BP, of the income from business and profession.
  • In other columns of Part B, you have to mention other incomes like salary, house property and other income. (Loss from house property can’t be carried forward with this form)

 

Part C-Deductions and taxable total income

Let us have a look on major deductions available to Individuals/ HUF under Income Tax Act. If you have any other types of deductions, you can mention the same in this part of the form.

ITR 4 Sahaj_3 Mytaxreturns

Deduction under section 80D is available for self, spouse and dependent children upto ₹ 25,000, additional ₹ 25,000/- is available for parents. In case of senior citizens the limit is ₹ 30,000/-. In case of very senior citizen (80 yrs and above) the deduction is available on actual medical expenses upto ₹ 30,000/- when no medical policy has been undertaken. ₹ 5000/- is available for preventive health checkup (like health tests) the deduction of which is included in the mentioned ₹ 25,000/30,000. Read our detailed guide on deduction for medical insurance.

Part D- Computation of tax payable

Some of the important things regarding computation of tax are as follows:

  • Rebate of ₹ 5,000 or tax amount whichever is less is available to Individuals/ HUF only when total income doesn’t exceed ₹ 5 Lakhs.
  • Surcharge will be levied on the amount of income tax as follows:

    For Ind/HUF: 15% when income> 1 cr

    For Firm: 12%  when income > 1cr

  •  Education cess @ 2% and Secondary and higher education cess @ 1% is applicable on the amount of income tax plus surcharge
  • Relief for arrears or advance salary received during year will be available.
  • Credit of taxes paid (in the form of TDS/ advance tax) will be allowed.

     

     

Verification

Complete the verification by filling your details and mention the date and place.

 

Nature of business or profession

You have to select the correct category of nature of business/ profession from the drop down menu and give the name and description of business/ profession.

Schedule-BP

  • Here you will have to mention your gross receipts from business/ profession under section 44AD, 44ADA, 44AE so as to reach at the amount of income as per the provisions explained above in this article.
  • Also, some financial particulars will have to be filled as shown below in the figure:ITR 4 Sugam_4 Mytaxreturns
  • Mention the amount of exempt income.
  • In the last column, you will have to provide details of all bank accounts held in India other than dormant accounts.

Schedule AL

  • This has to be filed only when the total income exceeds ₹ 50 lakhs.
  • Details of movable as well as immovable property will have to be filled along with the amount of their cost. The details of only those movables have to be given which are shown below-ITR 4 Sugam_5 Mytaxreturns
  • In addition to above, any investment held in any firm/AOP will have to be disclosed in third column.
  • At last, any amount of liability incurred for the above assets and investments will have to be mentioned.

 

Schedule IT- Details of advance tax and self-assessment tax paid

Enter the challan details of the advance tax and self-assessment tax paid. Ensure that no tax is payable when you submit and file the return otherwise it will be considered as a defective return.

Schedule TDS- Details of TDS

Enter the details of tax deducted by employer as per Form 16 for salary income and tax deducted on other incomes as per Form 16A.

Note: If tax is deducted on any income which relates to next year, such portion of tax can be carried forward to the next year. In the column amount of TDS claimed this year exclude such part which relates to next year and it will be carried forward.

 

Schedule TCS

Here the amount of TCS collected on your behalf will be mentioned as per form 27D and credit will be available for the same.

How to verify the return?

  1. One can send the signed copy of ITR to CPC Bengaluru physically within 120 days of filing return.
  2. Verification can also be done online by following ways-
  • Aadhaar OPT
  • Net banking
  • EVC code
  • Digital signature
  1. Go to View Returns/ Forms- Click here to view returns pending for verification- e-verify
  2. The options mentioned above will be displayed above and return can be verified.

 

Read points to take care while sending ITR-V to the income tax department.

Did you know, Mytaxreturns has made filing ITRs very simple. It just takes 4 steps and 5 minutes. Click here to start efiling. 

Guide to file new ITR Form 1 Sahaj – applicable for AY 2017-18 (FY 2016-17)

Did you know?

Mytaxreturns automatically decides which ITR Form should be applicable for you and files your return to the Income Tax Department.

It just takes 4 simples steps and 5 minutes!

What is ITR-1 Sahaj?

CBDT in its press release dated 31st March 2017 notified ITR Form 1 and ITR Form 4 for 2017-18. The form is a simple one page form to enable the individual taxpayers to file their income tax returns without any complications. The due date for filing the return is 31st July, 2017. The detailed process is discussed below about filing the ITR Form 1 Sahaj.

 

Should I use ITR-1 Sahaj to file my ITR?

The new Form ITR-1 Sahaj is applicable to any individual having income from the following sources:

ITR 1 Sahaj_1_Mytaxreturns

 

Who is not eligible to file the ITR using ITR-1 Sahaj Form?

Any individual whose total income during Assessment Year 2017-18 exceeds ₹ 50 Lakhs is not allowed to use this income tax return filing form. Also if the income of the individual includes any of the following sources of income, such individual shall not be eligible to use this form.

ITR 1 Sahaj_1_Mytaxreturns_1

 

How to file Form ITR-1 Sahaj?

ITR -1 Sahaj for Financial Year 2016-17 is required to be filed electronically on the income tax website (www.incometaxindiaefiling.gov.in). The option to file the form in paper form (ie manually) is also available to following two persons-

  1. Individual of the age 80 years or more
  1. Individual whose income doesn’t exceed ₹ 5 lakhs and who has not claimed any refund in the return.

 

What are the contents of ITR Form-1 Sahaj?

ITR 1 Sahaj_1_Mytaxreturns_2

 

How to fill ITR-1 Sahaj online?

    • Visit the homepage of income tax site (www.incometaxindiaefiling.gov.in)
    • Login with your login details (PAN, password and date of birth)
    • Go to E-file-Prepare and Submit Online ITR

 

ITR 1 Sahaj_1_Mytaxreturns_3

  • Select AY as 2017-18 and ITR Form as ITR-1 and then click on the submit button.
  • The ITR-1 form will be displayed on the screen
  • The process of filing the information in the ITR Form is discussed in detail below 
     

    Detailed information for filing ITR-1 Sahaj Form online.

    Part A-Personal Information

    1. Fill the PAN details like PAN number, name, Date of birth. (In case of online filing these details will be auto filled)
    2. Fill Aadhar Number. It is mandatory to provide the same starting Financial Year 2016-17.
    3. Fill mobile number, email address and communication address (PIN code is mandatory).
    4. Fill residential status- Resident or non-resident.
    5. Tick the relevant box if you belong to Govt, PSU or others
    6. Fill the status of return in the column- return filed, whether the return is filed before the due date of 31st June of after the due date, revised, filed in response to notices?
    7. Tick the relevant box if governed by Portuguese Civil Code. If yes then only your share of income will be mentioned in the schedules.

     

    Part B-Gross Total Income

    1. In column B1 mention the amount of salary/ pension from Form 16 issued to you, in respect of all the employers in case you were working with more than one employer during the year.
    2. In column B2 mention the rental income from house property. In case of loss, write the figure in negative (which may arise due to interest deduction). If the loss is not set against all the other incomes and is intended to be carried forward ITR-1 CANNOT be used.
    3. In column B3 mention the income from other sources. (ITR-1 Sahaj can’t be used if you have incurred a loss during the year)

     

    Part C-Deductions and taxable total income

    Some of the major deductions under Income Tax Act are covered below-

    ITR 1 Sahaj_1_Mytaxreturns_4

 

Deduction under section 80D is available for self, spouse and dependent children upto ₹ 25,000, additional ₹ 25,000/- is available for parents. In case of senior citizens (ie 60 years and above but below 80 years) the limit is ₹ 30,000/-. In case of very senior citizen (80 years and above) the deduction is available on actual medical expenses up to ₹ 30,000/- when no medical policy has been undertaken. ₹ 5000/- is available for preventive health checkup (like health tests) the deduction of which is included in the mentioned ₹ 25,000/30,000. Click here to read our detailed Guide on Section 80D Deductions.
 

Part D- Computation of tax payable

ITR 1 Sahaj_1_Mytaxreturns_6

 

Part E-Other Information

ITR 1 Sahaj_1_Mytaxreturns_5

In this detail of all bank accounts held by the person in India at any time during the year is required to be given (excluding dormant accounts)

 

Schedule IT- Details of advance tax and self-assessment tax paid

Enter the challan details of the advance tax and self-assessment tax paid. Ensure that no tax is payable when you submit and file the return otherwise it will be a defective return.

 

Schedule TDS- Details of TDS

Enter the details of tax deducted by employer as per Form 16 for salary income and tax deducted on other incomes as per Form 16A.

 

Note: If tax is deducted on any income which relates to next year, such portion of tax can be carried forward to the next year. In the column amount of TDS claimed this year exclude such part which relates to next year and it will be carried forward.

 

Verification

Complete the verification by filling your details and mention the date and place.

 

How to verify ITR Form ?

  1. One can send the signed copy of ITR V to CPC Bengaluru physically within 120 days of filing return. 
  2. Verification can also be done online by following ways-
  • Aadhar OPT
  • Net banking
  • EVC code
  1. Go to View Returns/ Forms- Click here to view returns pending for verification- e-verify
  2. The options mentioned above will be displayed above and return can be verified.

 

Click here to read our detailed Guide on Things to take care while sending ITR-V

Did you know, Mytaxreturns has made filing ITRs very simple. It just takes 4 steps and 5 minutes. Click here to start efiling. 

How should you pay income tax?

 

The Government of India levies income tax on all income other than agricultural income (subject to certain provisions of the Income Tax Act, 1961).  Income tax is levied on each person (who is subject to tax) based on various provisions of the Income Tax Act, 1961.  The Government of India has several mechanisms through which it collects income tax from taxpayers.  The methods can be summarised as follows:

  • Advance Tax
  • Self-Assessment Tax
  • Tax Deducted at Source (TDS)
  • Tax Collected at Source (TCS)

Advance tax: “Pay as you earn”

Advance tax means income tax should be paid in advance instead of a lump sum payment at year end. Under this scheme, every assessee is required to pay tax in the financial year, preceding the assessment year, on an estimated basis. Advance tax receipts help the government to get a constant flow of income throughout the year so that expenses can be incurred conveniently.

Who should pay Advance Tax?

  • If your total tax liability is 10,000 or more in a financial year you have to pay advance tax.
  • Advance tax applies to all tax payers: salaried, freelancers, or businessmen.
  • Senior citizens, who are 60 years or older, and do not run a business, are exempt from paying advance tax.
  • If you are a salaried employee, you need not pay advance tax as your employer deducts tax at source (TDS). Advance tax is applicable when an individual has sources of income other than his salary.
  • Advance tax is payable by a salaried person on their income from sources other than salary. For instance, if an assessee earns income via capital gains on shares, interest on fixed deposits, winnings from lottery or races, capital gains on house property besides his regular business/salaried income then after adjusting for expenses or losses he needs to pay advance tax.

How should you pay Advance Tax?

Due Date Advance Tax Instalment Amount
15th June At least 15% of Tax on total income for the year.
15th September At least 45% of Tax on total income for the year less advance tax already paid.
15th December At least 75% of Tax on total income for the year less advance tax already paid.
15th March 100% of Tax on total income for the year less advance tax already paid.

Any default in payment of advance tax attracts interest under section 234B and any deferment of advance tax attracts interest under section 234C.

How to pay income tax?

To deposit Advance Tax, Self Assessment tax and Regular Assessment Tax an individual has to use challan ITNS-280. It can be paid both through internet (online or e-payment) and at designated branches of banks empaneled with the Income Tax Department (offline)

How is interest calculated on advance tax?

  • If Advance Tax is not paid in full for installments falling due on 15th June, 15th September and 15th December, interest at the rate of 1% on the short amount for 3 months is to be payable u/s 234 C.
  • If Advance Tax is not paid in full for installments falling due on 15th March, interest at the rate of 1% on the short amount for 1 month is to be paid. If the payment of the last instalment in March is delayed by even a day, interest is to be paid on the entire instalment amount.
  • If you do not pay advance tax at all or if the aggregate paid by March 31 is less than 90 per cent of the total tax payable, you will have to pay an interest of 1 per cent per month on the deficit amount from April 1 of the following year till the date you file your return u/s 234 B.
  • If tax is paid after due date for filing of return, an interest of 1 per cent per month is payable on the deficit amount from the due date of filing of return till the date of payment of deficit u/s 234 A.

Self Assessment tax

As the name suggests, self assessment tax is the tax which is computed by the taxpayer on his own and the deposited with the Government.  Assessees  are required to calculate their final liability after deducting TDS and advance tax paid during the year. This final liability is known as self assessment tax, and has to be deposited with the Government, before filing the income tax return.

Calculation of self-assessment tax is explained below:

Particulars Amount
Compute tax payable on total income as per Income tax slab rates                                                A
(+) Interest under section 234A/ 234B/ 234C                                                                                               B
(-) Relief under section 90/90A/91 C
(-)MAT Credit under section 115JAA D
(-) TDS/TCS E
(-) Advance tax F
Self-assessment tax to be paid A+B-C-D-E-F


The self assessment tax to be paid shall be accompanied by Challan No. / ITNS 280. It can be paid online or at any of the authorised banks.

Tax deducted at source

Tax Deducted at Source (TDS), is an indirect way of tax collection by Indian tax authorities. TDS is collected as a means to keep a stable revenue source for the government throughout the year, while desisting people from avoiding taxes.

TDS is based on the principle of ‘pay as and when you earn’.  Tax is deducted when making payments through cash, credit or cheque, which is then deposited with the central agencies.

What is TDS?

  • The concept of TDS requires the person on whom responsibility has been cast,  to deduct tax at the appropriate rates, from payments of specific nature which are being made to a specified recipient.
  • The deducted sum is required to be deposited to the credit of the Central Government. The recipient from whose income tax has been deducted at source gets the credit of the amount deducted, in his personal assessment on the basis of the certificate issued by the deductor.
  • TDS is calculated and levied on the basis of a threshold limit, which is the maximum level of income after which TDS will be deducted from your future income/payments.

Due Dates for TDS:

Due date for Deposit of TDS:

TDS has to be deposited to the credit of Central Government, by 7th of the following month except for the tax deducted in the month of March, which can be deposited upto 30th April.

Due date for filing of TDS Return:

 Quarterly returns have to be furnished within 30 days after the end of every quarter i.e 31st July, 31st Oct, 31st Jan and 31st May (for Quarter 4).

Penalty:  Non –payment of TDS attracts penal interest under various provisions of Income Tax act, 1961.

Tax collected at source

This tax is similar to TDS, except that it is levied on the sale of specific items as listed in Sec 206C of the Income tax act, 1961.

The seller collects tax form the buyer, at specified rates and has to deposit the amount to credit of Central Government, on 7th of the following months, except for the tax collected in the month of March, which can be deposited upto 30th April.

The buyer from whom the Tax has been collected, gets credit of the amount in his personal assessment on the basis of certificate issued by the tax collector.

Liked our post? Mytaxreturns with its Expert assistance can help you plan your taxes better. Write to us with your questions at support@mytaxreturns.in

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Difference between Form 16 and Form 16A?

 

Under the income tax law, whenever any person deducts TDS while making payment to another person, the deductor is required to issue a certificate evidencing the tax deducted at source.
 

Form 16 is a TDS certificate for salary payments while Form 16A is a certificate issued for all forms of payment (other than salary) for which TDS is deducted.
 

For example, every bank issues Form 16A when TDS is deducted by them on interest payments against fixed deposits held by a person. Similarly, a freelance professional will be issued a Form 16A if the clients have deduction tax on payment made to such freelance professional. Form 16A is also issued for TDS deductions on various other forms of payment such as commission payment, rent payment etc.
 

This certificate also has details of name and address of deductor/deductee, PAN/TAN details, and details of TDS deducted and deposited. The nature of income on which TDS is deducted is also specified in Form 16A.

See below to identify whether your Form is 16 or 16A.

 

Form 16 vs 16A_how to identify
Continue reading “Difference between Form 16 and Form 16A?”

What is Form 16?

 

If you are a salaried employee, you must be aware that at the end of each year your Employer issues you a document titled as “Form 16”.

In brief, Form 16 is a document that an employer issues to the employee when the employer deducts TDS on salary payments. This is because, when an employer deducts TDS on salaries, the income tax act requires that a certificate be issued by the employer stating the amount of tax deducted and deposited.

Form 16 is issued once in a year, on or before 15th June of the next year immediately following the financial year in which tax is deducted by such employer.
 

We have provided below a step by step explanation of what Form 16 contains and what you should be aware of:

 

Form 16 is amongst the most important documents required to file an income tax return in India for salaried individuals. It is divided into two parts, namely, part A and part B.
 

Part A contains the following:

 

  • Name and address of employer
  • Permanent Account Number (PAN) and TDS Account Number (TAN) of your Employer
  • PAN of the employee (should be your PAN)
  • Summary of tax deducted and deposited during the relevant year
  • Period of employment
  • Unique certificate number
  • Signature of your employer

 

Part B contains the following:

 

  • Details of salary paid and the components of salary (such as Basic, HRA, Special Allowance etc)
  • Allowances (under section 10), which includes your conveyance allowance, HRA etc. – this would be shown as a deduction from your salary
  • Deductions claimed by you (under chapter VIA) which includes deductions such payment for life insurance premium, investment in fixed deposits under section 80C and medical insurance premium paid under section 80D, or any other deduction claimed by you.
  • Calculation of tax as per applicable slab rates
  • Rebate under section 89

 

Part B is issued by the employer along with Part A. If a person has held more than one jobs in a given year, there will be more than one Form 16 for the employee (as each employer would issue one Form 16 for the period of employment served by such employee).
 

Let us have a look at what Form 16 (Part A) looks like.

 

Form 16 - Mytaxreturns

 

Form 16 - Mytaxreturns
 

 

Let us have a look at what Form 16 (Part B) looks like.

Form 16 - Mytaxreturns
 

Form 16 - Mytaxreturns
 

It is important to note that Form 16 is issued only when TDS is deducted by an employer. In case no TDS is deducted by the employer, he may not issue a Form 16. It is also possible that the employer has failed to deduct TDS from your salary due to any unavoidable reasons.

You must note that your are required to file the Income Tax return irrespective of whether the employer issues Form 16 or not. [/vc_column_text][/vc_column][/vc_row]

Liked our post? Mytaxreturns with its Expert assistance can help you plan your taxes better. Write to us with your questions at support@mytaxreturns.in 

Points to take care while sending your ITR-V to the Income Tax Department

 

If you are filing the income tax return, you must be aware that once you file your income tax return online, an acknowledgement is generated (called as ITR-V), which is required to be signed and sent to the income tax department to the following address:

Income Tax Department – CPC, Post Bag No – 1, Electronic City Post Office, Bengaluru – 560100, Karnataka

Recently, several taxpayers have received notice from the Income tax department for non-filing of ITR, even after they have filed their returns. The prime reason for such notice has been due to rejection of ITR by the income tax department. Generally, the income tax department rejects the ITRs because taxpayers do not send their ITR-Vs in proper manner.

 

In this post, we have provided points to take care while sending your ITR-V to the income tax department.

 

  • Use Ink Jet /Laser printer to print the ITR-V Form, do not use Dot Matrix printer.
  • Make sure that your ITR-V Form is printed only in black ink (and not in any other colour).
  • Make sure that the printout is clear and not light or faded. This happens when your printer is short of ink.
  • Do not use any watermarks on ITR-V. The watermark of “Income tax Department” is automatically printed on the ITR-V.
  • The signed ITR-V which you send to the income tax department is the original copy and not duplicate or photocopy.
  • Form ITR-V has a bar code, make sure that the signatures are not written on the bar code.
  • Take the printout only on an A4 size white paper.
  • Do not write anything on the reverse side of ITR-V
  • Do not staple ITR-V.
  • Do not print anything on the back-side of the ITR-V.
  • Do not submit any annexures, covering letter, documents, and explanations along with ITRV.
  • The ITR-V form is required to be sent only by Ordinary or Speed Post.

 

Not sure what to do? Mytaxreturns with its Expert assistance can help you respond to the notice from the Income tax department