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 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 ‘pay as you earn Scheme in ’ 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 are needed to pay advance tax in four installments throughout the financial year in which they earn income.
The taxpayers need to pay Advance Tax as per the following table:
Latest Extended Notification :–
- Due Date Income tax return for FY 2019-20 (AY 2020-21) – 31st January 2021 (Audit Required)
- Due Date Income tax return for FY 2019-20 (AY 2020-21) – 31st January 2021 (For international/specified/domestic transactions)
- Due Date Income tax return for FY 2019-20 (AY 2020-21) – 31st December 2020 (For Other taxpayers)
- The due date for furnishing audit reports of tax audit reports and international/specified/domestic transactions – 31st December 2020
- Due date for self assesment tax payment upto 1 lakh – 15th February 2021 (para 4(a) & para(b)
- The due date for self-assessment tax payment – 10th January 2021 (para 4(c)
- The due date for annual return section 44 CGST FY 2019-20 – 28th Feb 2021
- As per the section 234F of the Income Tax Act, 1961, the taxpayer must pay penalty for delay in filing of ITR.
Check out Due dates for tax assessment under Vivad se vishwas scheme, direct tax & Benami acts__
- Due Date Income tax return for FY 2019-20 (AY 2020-21) – 15th February 2021 (Audit Required)
- Due Date Income tax return for FY 2019-20 (AY 2020-21) – 15th February 2021 (For international/specified/domestic transactions)
- Due Date Income tax return for FY 2019-20 (AY 2020-21) – 10th January 2020 (For Other taxpayers)
- The due date for furnishing audit reports of tax audit reports and international/specified/domestic transactions – 15th January 2021
- Last date for vivad se Vishwas scheme declaration – 31st January 2021
- Last date for passing orders under vivad se Vishwas scheme – 31st January 2021
- The due date for passing issuance of notice under direct taxes & Benami acts – 31st march 2021
“On consideration of difficulties reported by the taxpayers in filing of Income Tax Returns(ITRs) & Audit reports for AY 2021-22 under the ITAct, 1961, CBDT further extends the due dates for filing of ITRs & Audit reports for AY 21-22. Circular No.17/2021 dated 09.09.2021 issued.” Click here for Press Release
Advance Taxes of Income Tax for FY 2020-21 (AY 2021-22)
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%|
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.
Latest Update:– Income Tax Changes Due to Covid19
- “CBDT issuesPress Release for return extension of due dates for filing Income-tax Returns Due dates”, Read Press Release
- “Order u/s 119 of the Income-tax Act, 1961 regarding extension of dates for filing of belated and revised ITRs for the A.Y. 2019-20″. Read Order
- “Government to infuse Rs 50,000 crores liquidity by reducing rates of TDS, for non-salaried specified payments made to residents, and rates of Tax Collection at Source for specified receipts, by 25% of the existing rates”
- “Among other measures, Due date of all income-tax return for FY 2019-20 will be extended from 31st July 2020 & 31st October 2020 to 30th November 2020 and Tax audit from 30th September 2020 to 31st October 2020”
- “The Period of ‘Vivad se Vishwas Scheme’ for making payment without an additional amount will be extended to 31st December 2020”
- “Extend the last date for income tax returns for (FY 18-19) from 31st March 2020 to 30th June 2020.” Note: CBDT department has revised the due date till 30th September 2020, Read Notification“
- (Non-Audit Cases)”Among other measures, Due date of all income-tax return for FY 2019-20 will be extended from 31st July 2020 & 31st October 2020 to 30th November 2020.”
- (Audit Cases)”The general due date for filing the Income Tax Return by Assess is 30th September 2020 but finance ministry has extended till 30th November 2020.”
- “Order u/s 119 of the Income-tax Act, 1961 regarding extension of dates for filing of belated and revised ITRs for the A.Y. 2019-20″.”Read Notification
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 an occasional) notified by the IT Department.
- For FY 2019-20, the AY is 2020–21.
- Due Date of filing of Income Tax Return for F.Y. 2019-20(A.Y. 2020-21) by assessee’s whose accounts are not required to be audited is 31st July 2020.
- Due date of filing of Income Tax Return for F.Y. 2019-20 (A.Y. 2020-21) by assessee’s whose accounts are required to be audited is 30th September 2020.
- 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 required to be audited is 30th September 2020.
Income Tax Returns (ITR)
ITR are forms that are mandatorily filled by individuals whose annual income 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 taxpayer’s having income up to Rs 50,00,000 from 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 is not eligible to file ITR-1 and
- Those taxpayer having no income under the head “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 work as a partner in a firm.
- claims income under the head “profits or gains of business or profession”.
- Who has presumptive income of greater than Rs 50,00,000
Also known as Sugam, ITR 4 Form is for use by HUF/ individual / Partnership Firm whose total income consist of :-
- Business income evaluated in reference with 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 taxpayer is a joint owner in 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 return 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 2020-21 (AY 2021-22)
The income tax due dates for the FY 2020-21 (AY 2021-22) for all the categories of taxpayers are specified below:
Particulars AY 2021-22
|Individuals, HUF, BOI, AOP (Income Tax Return by Assesse whose Books of Account are not required to be audited)||31st December 2021|
|Filing ITR Due Date for (Assessee who are required to furnish report under sec 92E)||28th February 2022|
|Due date of filing the Income Tax Return by businesses whose Books of Account are required to be audit||15th February 2022|
|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”)||15th January 2022|
|The due date of furnishing of belated/revised Return of Income for the AY 2021-22, under sub-section||31st March 2022|
The Interim Budget for F.Y. 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
If the taxpayer does not file income tax return before 31st July 2020 or 30th September 2020 or 30th November 2020 as the case may be then he/she has to pay a late filing fee under section 234F. This late fee is chargeable ahead of furnishing Income Tax return.
The income tax department notified the taxpayers for late filing of tax returns for A.Y. 2020-21, along with a penalty of INR 5000 (on filing the return after the due date but on or before 31st December) and INR 10,000 (on the filing of return after 31st December to 31st March). The taxpayer has to file the late filing of tax returns for A.Y. 2020-21 before 31st March anyhow. Also to note that the penalty is applicable even if the taxpayer files the returns before 31st March while there is no option to file the returns after 31st March 2020.However, if taxpayer’s total income does not exceed Rs 5 lakh, then the maximum penalty levied for delay will not exceed Rs 1000.
-> 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 case will be available along with the standard deduction as mentioned above.