What is Income Tax?
Tax is a pivotal arm for the good governance of a state or nation.
There are different types of taxes and they can all be categorized into two main groups i.e Direct tax and Indirect Tax.
Income tax due dates
A popular example in this regard would be the GST or the VAT.
Like all taxes, accrues from Income Tax also constitute a good portion of the country/state treasury. In addition to these Income Tax also acts as a fiscal deficit stabilizer as well as minimizing the impact of Global Economic Cycles.
Types of Income Tax
Income Tax is further subdivided into many categories but there are three main categories of income tax based on the category of the payee and time of payment.
- 1. TDS (Tax Deducted at Source)
- 2. Advance Tax
- 3. Self-Assessment Tax
1. Tax Deducted at Source (TDS)
TDS, as it is commonly known as Tax Deducted at Source. The tax is paid by a third person/corporation who/which happens to be the source of income for the taxpayer if the payment exceeds certain threshold limits at the rate prescribed by the government of India.
The other person/corporation must, however, abide by the prevalent IT laws. TDS is an ideal mechanism for the government to ensure timely Income Tax payment as well as curb tax evasion.
2. Advance Tax
Also referred to as the ‘pay as you earn Scheme’ in contrast to the scheduled annual tax payment tax procedures, Advance Tax is paid on a Presumptive basis.
Taxpayers, Businesses, Salaried Individuals, and freelancers with tax liabilities during the current financial year are greater than Rs 10,000 needed to pay advance tax in four instalments throughout the financial year in which they earn income.
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Advance Taxes of Income Tax for FY 2022-23 (AY 2023-24)
Payment of Advance Tax: Self-employed and businessmen
|Due Date||Pay Advance Tax|
|On or Before 15th September||30%|
|On or Before 15th December||60%|
|On or Before 15th March||100%|
Latest official Update in Income Tax:
- “Extension of due date for furnishing return of income for the Assessment Year 2022-23- reg”, Read more
- “The income tax department has extended the due date for filing of various tax reports of audit for FY 2021-22 from 30th September 2022 to 7th October 2022 for certain categories of assesses”. Circular No. 19/2022 dated 30.09.2022
- The CBDT has extended the last date for updating UDINs for all the IT forms at the e-filing portal till 30th April 2022. Read more
- The CBDT department enabled can easily download reports for filing tax audit reports in the assessment year 2021-2022 Taxpayers. The CBDT department enabled utility on the new ITR version 2.0 website for Forms 3CA-CD & 3CB-CD. Read PDF
- “The Income-tax department again extended the due date for linking PAN with Aadhaar and penalty proceeding from 30th September to 31st March 2022.” Read more
- “The central government has issued the press release for relaxation of TDS provisions u/s 194A under the Income-tax act.” Read more
- “Income Tax Department conducts searches in Mumbai and other regions” Read Press Release
- ”Meeting of BRICS Heads of Tax Authorities and Experts on Tax Matters held virtually under Chairship of India” Read Press Release
- “CBIC issues Income Tax 29th amendment rules 2021.” Check PDF
- “The Income-tax department issued the press release related carry forward of losses in the shareholding case due to disinvestment.” Read Press Release
Payment of Advance Tax: Companies
|Due Date||Pay Advance Tax|
|On or Before 15th June||15%|
|On or Before 15th September||45%|
|On or Before 15th December||75%|
|On or Before 15th March||100%|
Note: The Assessee who are covered under 44AD and 44ADA (i.e. Presumptive Income) are also required to pay Advance Tax on or before 15th March of the previous year. However, any tax paid till 31st March will be treated as Advance Tax.
3. Self-Assessment Tax
This is the balance or remaining tax paid by an individual or taxpayer after taking into account the TDS and Advance Tax.
What is meant by Assessment year and Financial Year?
Financial Year is the current working year in which an individual or corporation earns income. The Assessment Year is, on the other hand, the succeeding year in which an evaluation of the previous year’s income has to be made.
Assessment Year involves:
- Income Evaluation.
- Paying Taxes on the evaluated income as per the rate(progressive) and time ( regular or periodical or on occasional) notified by the IT Department.
- For FY 2019-20, the AY is 2020–21.
- The due Date for filing Income Tax Returns for F.Y. 2019-20(A.Y. 2020-21) by the assessee whose accounts are not required to be audited is 31st July 2020.
- The due date for filing Income Tax Returns for F.Y. 2019-20 (A.Y. 2020-21) by assessees whose accounts are required to be audited is 30th September 2020.
- The due date for all the categories of assesses in UTs of J&K and Ladakh who are required to file ITR and accounts not required to be audited is 31st July 2020 while for those whose accounts are required to be audited is 30th September 2020.
Income Tax Returns (ITR)
ITR are forms that are mandatorily filled by individuals whose annual income is greater than a pre-set threshold limit set by the Finance Department.
These forms provide the details of an individual’s gross income from various sources and the tax paid by the individual taxpayer on the gross income. It also provides the details of refund claims by the assesses as per the rules set by the Finance and IT Department.
In simple terms, ITR forms are taxpayers’ statements detailing/her earnings Salary, interest, dividends, capital gains, or other profits, the total tax paid on earnings, and the appropriate refunds to be repaid to him/her by the Government.
As per the Central Board of Direct Taxes, individual taxpayers need to file only 6 of the 9 ITR Forms.
The remaining three forms are to be filed by companies and firms alone:
Also known as the Sahaj Form, ITR-1 has to be filed by individual taxpayers alone. ITR-1 is filed by taxpayers having income up to Rs 50,00,000 from the below-mentioned sources:-
- If the source of Income is Salary or Pension.
- If the source of income is from one housing property(the case where losses of previous years are carried forward are not included in this ITR).
- Individuals with income sources like fixed Deposits, Investments, Shares etc
- ITR-1 can not be filed if the taxpayer is a joint owner in House Property.
- Individuals whose net agriculture income is less than Rs 5,000.
- If the clubbed income of the minor or wife is shown, then ITR-1 can be filed only in case of their source of income as mentioned in the above points.
- ITR 1 cannot be used by residents having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India.
- where TDS has been deducted u/s 194N or
- if income tax is deferred on ESOP
This form was introduced during the assessment year 2015-16 for use by Hindu Undivided Family (HUF) or any individual. The following individuals/taxpayers can file ITR-2 Form.
- Those individuals who are not eligible to file ITR-1 and
- Those taxpayers have no income under the head of “profits or gains of business or profession”.
ITR 3 Form is for use by a Hindu Undivided Family or an individual
- Who claims income under the head “profits or gains of business or profession”
- Who works as a partner in a firm.
- claims income under the head “profits or gains of business or profession”.
- Who has a presumptive income of greater than Rs 50,00,000
Also known as Sugam, ITR 4 Form is for use by HUF/ individual / Partnership Firms whose total income consists of:-
- Business income evaluated in reference to special provisions mentioned in section 44AD and section 44AE of the Act for computation of business income; or
- Professional income evaluated in reference to special provisions of sections 44ADA; or
- ITR-4 can not be filed if the taxpayer is a joint owner of the House Property.
- Salary/ Pension; or
- Income from One House Property (excluding cases where a loss is brought forward from previous years); or
- Income from other sources (excluding windfalls like lotteries or horse racing)
ITR-5 is for firms, LLPs, AOPs (Association of persons) and BOIs (Body of Individuals). Further, it is also meant for an artificial juridical person referred to in section 2(31)(vii), cooperative society and local authority.
ITR 6 can be used by companies not claiming exemption on income from property held for charitable or religious purposes under section 11.
ITR 7 Form can be used by persons as well as companies which are required to furnish returns under:
- section 139(4A) or
- section 139(4B) or
- section 139(4C) or
- section 139(4D) or
- section 139(4E) or
- section 139(4F).
Income Tax Return Due Dates for FY 2022-23 (AY 2023-24)
The income tax due dates for the FY 2022-23 (AY 2023-24) for all the categories of taxpayers are specified below:
Particulars AY 2023-24
|Individuals, HUF, BOI, AOP (Income Tax Return by Assesse whose Books of Account are not required to be audited)||31st July 2023|
|Filing ITR Due Date for (Assessee who are required to furnish report under sec 92E)||30th November 2023|
|Due date of filing the Income Tax Return by businesses whose Books of Account are required to be audit||31st October 2023|
|Due Dates for Tax Audit Report (3CA-3CD/3CB-3CD) (“filing of Tax Audit Report for all categories of assessees whose account are required to be audited”)||The date one month prior to the due date for furnishing the return of income under sub-section (1) of section 139|
|The due date of furnishing of belated/revised Return of Income for the AY 2022-23, under sub-section||31st December 2023|
The Interim Budget for FY 2019-20 has introduced full tax rebates under section 87A for individuals earning net taxable income up to Rs 5Lakh which means that the maximum rebate allowed under section 87A is 12,500. However, if the individual earns more than Rs 5 Lakh as net taxable income then no rebate will be allowed.
-> Late Fee
Late filing of tax returns for the financial year 2022-23 was notified to taxpayers by the income tax department, which imposed a penalty of Rs 5000. In the case of incomes below Rs 5 lakh, the penalty will not exceed Rs 1000.
|Late Income Tax Filing Fee Details|
|E-Filing Date||Total Income Rs 5,00,000||Total income more than Rs 5,00,000|
|Before 31st July 2022(Non-audit) and 7th November 2022 (Audit cases)||Rs 0||Rs 0|
|After 31st July 2022 (Non-audit) and 7th November 2022 (Audit Cases)||Rs 1000||Rs 5000|
|After 31st December 2022||Rs 1000||Rs 10000|
-> Limit In Donations
Previously, cash donations of up to Rs. 10,000 was permitted in terms of deduction.
-> Section 194-IB For HUF and Individuals Paying Rent Exceeding Rs 50,000 a Month
HUF and Individuals who pay Rs. 50,000 and more in rent per month, 5% TDS will be deducted on such rent amount.
Government charges 4% Health and Education Cess on the direct income tax liability of individuals
-> Income from Salaries
From the salaried income, a standard deduction at a fixed price of Rs. 50,000 for reimbursement and Transport of various medical spendings will be permitted. This deduction is also exercisable to Pensioners who presently do not obtain those benefits.
Moreover, the medical reimbursement advantages in hospitalization cases will be available along with the standard deduction as mentioned above.