LIVE PROJECT

E-Filing of Returns
An Overview of the Process
Of e-Filing of Returns

A Project Report submitted in partial fulfillment of the requirement for

Master in Business Administration (M.B.A)

SUBMITTED BY

PRASHANT JADHAV

Under the guidance of

Mr.Ashwin Gawande. Mr. SUNIL JADHAV

Location Head. Manager- Marketing &Sales.
The NIS Academy. Value Plus Consultancy.

The NIS Academy

Mumbai-400072

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 ACKNOWELEDGEMENT

One of the pleasant aspects of preparing a project report is the opportunity to

thank to those who have contributed to make the project completion
possible.

I am extremely thankful to Mr.Sunil jadhav & Mr.Ashwin Gawande.

whose active interest in the project and insights helped us formulate,
redefine and implement our approach towards the project.

I am also thankful to all those seen and unseen hands & heads, which have
been of direct or indirect, help in the completion of this project.

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 CERTIFICATE

This is to certify that Prashant Shivaji Jadhav has successfully completed the

project work as partial fulfillment of the requirement for Master in Business

Administration. (M.B.A.)

Name and Signature of Project Guide

Place:________________
Date: _________________

_________________________________

Signature of the Location Head of

THE NIS ACADEMY

Gundecha Onclave, 4th Floor,
Kherani Road, Sakinaka,
Andheri (East), Mumbai-400072.

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EXECUTIVE SUMMARY

I, Prashant Jadhav have done my project in VALUE PLUS

CONSULTANCY. This is a leading company in providing financial service.
The main objective of my project was about e-Filing of Returns. The
project contains a detailed study of income tax and e-filing. I am very
privilege to work in this company. It was a great exposure to learn about
income tax return and online transaction etc.

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 INDEX

Sr. No. Particulars Pg. No.

1. INTRODUCTION
OBJECTIVE,MISSION & POLICIES 6

2. COMPANY PROFILE 7

3. BASIC INFORMATION ABOUT TAX 10

4. TAXABLE HEAD OF INCOME TAX 16

TAX BENIFITES - DEDUCTIONS, REBATES

5. & DONATIONS 23

6. INCOME TAX E-FILING 33

7. TYPES OF E-FILING 35

9. PROCESS OF E-FILING 38

10. FREQUENTLY ASKED QUESTION 47

11. SUMMARY & CONCLUSION 59

12. BIBLOGRPHY 60

INTRODUCTION:
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OBJECTIVE:

To find the market potential and market penetration of financial

product offerings in Mumbai and local area nearby them.

To collect the real time information about preference level of

customers and give the best solution

To expand the market penetration on financial service

To provide pricing strategy of competitors to fight cut throat

competition.

To increase the product awareness of Value Plus Consultancy as single

window shop for investment solutions.

MISSION:

To create long term value by empowering individual investors through

superior financial services supported by culture based on highest level of
teamwork, efficiency and integrity.

VISION:

To provide best value for money to investors through innovative

products.
Trading/Investments Strategies
State of the art technology and personalized service.

CUSTOMER PROMISE:

They are passionate about their customers' success and promise to deliver
exceptional service with every meeting, interaction and dealing. They strive
to offer simple, straightforward, friendly and trustworthy service.

COMPANY PROFILE:
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 VALUE PLUS CONSULTANCY

GIVE MIDAS TOUCH TO YOUR INVESTMENTS

IT IS A PART OF EMPIRE GROUP OF COMPANIES

VALUE PLUS is solely & wholly dedicated for investors. VALUE

PLUS is an investment supermarket offering Life Insurance, Mediclaim,
Vehicle Insurance, Property Insurance, Postal Schemes, and More than 600
Mutual Fund Schemes and Fixed Deposits of quality companies, RBI Relief
Bonds, Debentures and Shares. It is engaged in providing financial planning
of investor as per their needs and technology based services to investors to
effectively manage their portfolio.

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VALUE PLUS Today:

o One of the largest distributors of Mutual Funds in Mumbai.

o Having over 2000 satisfied customers.

What we offer:

o Complete Financial Planning & Investments solution

o True client-focused, need-based investment advisory services
o Top quality products for managing investments
o Quality services and support to clients

Our Philosophy:

o We believe in long-term wealth creation for our clients.

o We believe in Asset Allocation principle for wealth creation.
o We are not guided by the short-term profit making, timing markets,
etc we do not believe in them.
o We believe that mutual funds, as an investment product, can be
effectively used to successfully meet
the different needs of different clients.
o Provide clients with solutions that truly meet their needs and have
high quality products and services,
better that anyone else can provide.

What makes us different?

o Our Philosophy and the way we carry it.

o Very strong domain knowledge of mutual funds with very strong
focus on it.
o Our technology is the probably the best in the industry.
o The Products and the Contents are very comprehensive, well-
structured and of high quality.
o The scope and the depth is probably unmatched by any other
Distributor or Bank.

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 o In-house Research Team to study and analyse schemes, markets,
economy, events etc.
o Money World Customer Care - A dedicated department for
effective and quick resolving of queries and
requests.
o Team of Qualified & well trained people

BASIC INFORMATION ABOUT TAX

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 Taxes in India are of two types, Direct Tax and Indirect Tax.

Direct Tax, like income tax, wealth tax, etc. are those whose burden
falls directly on the taxpayer.
The burden of indirect taxes, like service tax, VAT, etc. can be passed
on to a third party.

Income Tax is all income other than agricultural income levied and collected
by the central government and shared with the states.

According to Income Tax Act 1961, every person, who is an assessee and
whose total income exceeds the maximum exemption limit, shall be
chargeable to the income tax at the rate or rates prescribed in the finance act.
Such income tax shall be paid on the total income of the previous year in the
relevant assessment year.

The total income of an individual is determined on the basis of his

residential status in India.

INCOME TAX RETURN

Income Tax Return" is a term which is often used when we talk about
income tax. It is a way by which we pay this tax. When total annual
income of a person, including all sources, is more than maximum
unchangeable limitation ( At present it is Rs. 1,50,000/-) then that
person is liable to pay income tax.
According to Income Tax Act 1961, every person, who is an assesse
and whose total income exceeds the maximum exemption limit, shall
be chargeable to the income tax at the rate or rates prescribed in the
finance act.

Residence Rules

An individual is treated as resident in a year if present in India

10
 I. for 182 days during the year or

II. for 60 days during the year and 365 days during the preceding four
years. Individuals fulfilling neither of these conditions are
nonresidents. (The rules are slightly more liberal for Indian citizens
residing abroad or leaving India for employment abroad.)

A resident who was not present in India for 730 days during the preceding
seven years or who was nonresident in nine out of ten preceding yeas I
treated as not ordinarily resident. In effect, a newcomer to India remains not
ordinarily resident.

For tax purposes, an individual may be resident, nonresident or not

ordinarily resident.

Non-Residents and Non-Resident Indians

Residents are on worldwide income. Nonresidents are taxed only on income

that is received in India or arises or is deemed to arise in India. A person not
ordinarily resident is taxed like a nonresident but is also liable to tax on
income accruing abroad if it is from a business controlled in or a profession
set up in India.

Capital gains on transfer of assets acquired in foreign exchange is not

taxable in certain cases.

Non-resident Indians are not required to file a tax return if their income
consists of only interest and dividends, provided taxes due on such income
are deducted at source.

It is possible for non-resident Indians to avail of these special provisions

even after becoming residents by following certain procedures laid down by
the Income Tax act.

Taxability of individuals is summarized in the table below

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Status Indian Income Foreign Income
Resident and ordinarily resident Taxable Taxable
Resident but not ordinary resident Taxable Not Taxable
Non-Resident Taxable Not Taxable

Know how of Income Tax

Income tax is levied on the 'total income' of the assessee.

Income of the 'previous year' is taxed in the 'assessment year.'
Income is classified into and computed under five categories called
'heads of income.'
The basic scheme of income tax is the principle 'pay as you earn.'
One must pay his taxes in advance and by the due dates, in the
prescribed percentages.
Deferment in the payment of advance tax would result in the payment
of interest.

The income tax basic scheme is explained in brief as:

Income tax is levied on the 'total income' of the assessable entity
which is computed under the provisions of the Act.
The income which are pertaining to the 'previous year' is taxed, but in
the 'assessment year.'
Income tax is charged at the rates being fixed by the for the year by
the annual Finance Act. But the liability to pay the tax is based on the
principle 'pay as you earn.'

Also check Taxable Heads of Income for the definition of salary, wages,
pension, allowance, etc.

Pay as you Earn

A person is not allowed to wait until 31 March to pay his/her taxes. The

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Income Tax Act has the provision of 'pay as you earn.' This do not pinch a
tax payer at the end of the year making a lump sum payment. Such payments

PERSONAL TAX RATES

For individuals, HUF, Association of Persons (AOP) and Body of

individuals (BOI):

For the Assessment Year 2009-10

Taxable income slab (Rs.) Rate (%)

Up to 1,60,000
Up to 1,90,000 (for women) NIL
Up to 2,40,000 (for resident individual of 65 years or above)
1,60,001 3,00,000 10
3,00,001 5,00,000 20
5,00,001 upwards 30*
*A surcharge of 10 per cent of the total tax liability is applicable where the
total income exceeds Rs 1,000,000.
Note : -
Education cuss is applicable @ 3 per cent on income tax, inclusive of
surcharge if there is any.
A marginal relief may be provided to ensure that the additional IT
payable, including surcharge, on excess of income over Rs 1,000,000
is limited to an amount by which the income is more than this
mentioned amount.
Agricultural income is exempt from income-tax.

TDS (Tax deducted at source)

This tax is deducted at the source of income, by the employer or the payer
and paid to the government. It includes salary, interest, commission and
contract fees, rent, professional fees, etc. This type of deduction is popularly

13
known as TDS. Such tax is subject to certain limits and certain conditions.
For example if the earning up on fixed deposit is Rs. 5,000 in a bank, TDS at
10% and education cues at 2% i.e. a total of 10.2% will be deducted at the
time of credit or at the time of payment, whichever is earlier.

In case of senior citizen, if he/she estimates that the tax on the income is nil,
Form No.15H duly filled and signed is to be submitted in duplicate to the
bank. So, no TDS will be deducted. If the total income is less than the
threshold limit, Form No.15G is to be submitted to the payer to prevent TDS
from such interest.

TCS (Tax collected at source)

Unlike tax deducted at source, TCS is collected by a seller of certain
specified goods at the specified rates on the purchase of the goods and it is
remitted to the treasury on behalf of the buyer. In the same way, a person
granting a lease or license in a parking lot, toll-plaza, etc. collects the taxes
at the specified rates as tax paid on behalf of the lessee.

Advance Tax
Advance Tax is paid by the income earner during the previous year. The
computing of the liability of advance tax is done by estimating the 'total
income' for the year, calculating the surcharge and taking into consideration
the rebate that will be available. The advance tax is required to be paid in
three installments.

Schedule of Advance Tax:

On or before 15
A Not less than 30% of advance tax.
September
On or before 15 Not less than 60% of advance tax as reduced
B
December by amount paid earlier.
On of before 15 Full advance tax as reduced by the amount or
C
March amounts if any, paid in earlier installments.

If the assessee does not pays the advance tax as described above, an interest
of 1% is charged per month for 3 months for the deferment of advance tax
installment. If the total amount of advance tax is not paid on or before 15
March, an interest of 1% is charged for one month.
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Further, if the total advance tax paid is less than 90% of the advance tax
payable, the interest at 1% per month is charged for the shortfall in the
advance tax paid for the period commencing from 1 April of the assessment
year and ending on the date of payment or assessment, whichever is earlier.

Income Tax Rates Across the World

Country Personal Income Tax Rate
Australia 0% - 48.5%
Canada 16% - 29%
Estonia 24% - 24%
Denmark 44% - 63%
Hong Kong 0% - 33%
India 0% - 33%
Israel 10% - 49%
Malaysia 0% - 29%
Mexico 3% - 32%
Russia 13% - 13%
Singapore 0% - 22%
UK 0% - 40%
US 10% -35%

TAXABLE HEAD OF INCOME TAX

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The total income of a person is divided into five heads, viz., taxable.

1. Income from Salary

2. Income from House Property
3. Income from profits and gains of Business or Profession
4. Income from Capital Gains
5. Income from Other sources

Salary Income:-
In certain cases, an employee can claim both HRA (house rent
allowances) as well as interest on housing loan.

House property Income :-

if interest paid for property given on rent is less than taxable
rent (after standard deduction -30%). Such loss can be set off against income
from other heads including income from salary.

Income from capital gain:-

surplus from derivative contracts is non- speculation.
Archaeological collection, Drawings, Painting, Sculptures, Any other work
of Art. Thus, now any surplus received from sale of these articles would be
liable to tax under the head capital gain.

Business income :-
Any type of income received from business

Income from other sources:-

Dividend, Commission, lotteries, crossword puzzles, races
including horse races, card games, any sort or from gambling or betting

Individual Heads of Income

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Income from Salary

All income received as salary under Employer-Employee relationship is

taxed under this head. Employers must withhold tax compulsorily, if income
exceeds minimum exemption limit, as Tax Deducted at Source (TDS), and
provide their employees with a Form 16 which shows the tax deductions
and net paid income. In addition, the Form 16 will contain any other
deductions provided from salary such as:

1. Medical reimbursement: Up to Rs. 15,000 per year is tax free if

supported by bills. (Company pays Fringe Benefit Tax on this amount)
2. Conveyance allowance: Up to Rs. 800 per month (Rs. 9,600 per year)
is tax free if provided as conveyance allowance. No bills are required
for this amount.
3. Professional taxes: Most states tax employment on a per-professional
basis, usually a scabbed amount based on gross income. Such taxes
paid are deductible from income tax.
4. House rent allowance: the least of the following is available as
deduction
1. actual HRA received
2. 50%/40%(metro/non-metro) of 'salary'
3. rent paid minus 10% of 'salary'. Salary for this purpose is
basic+DA forming part+commission on sale on fixed rate.

Income from salary is net of all the above deductions.

Income From House property

Income from House property is computed by taking what is called Annual

Value. The annual value (in the case of a let out property) is the maximum of
the following:

Rent received
Municipal Valuation
Fair Rent (as determined by the I-T department)

If a house is not let out and not self-occupied, annual value is assumed to
have accrued to the owner. Annual value in case of a self occupied house is
to be taken as NIL. (However if there is more than one self occupied house
then the annual value of the other house/s is taxable.) From this, deduct

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Municipal Tax paid and you get the Net Annual Value. From this Net Annual
Value, deduct :

30% of Net value as repair cost (This is a mandatory deduction)

Interest paid or payable on a housing loan against this house

In the case of a self occupied house interest paid or payable is subject to a

maximum limit of Rs,1,50,000 (if loan is taken on or after 1 April 1999) and
Rs.30,000 (if the loan is taken before 1 April 1999). For all non self-
occupied homes, all interest is deductible, with no upper limits.

The balance is added to taxable income.

Income from Business or Profession

o carry forward of losses

An example .. An architect works out of home and co-ordinates work for his
clients. All the following expenses would be deductible from his
professional fees.

he uses a computer,
he travels to sites in his car,
he has a peon to help him collect payments
He has a maid who comes in daily
part of the society maintenance bills
entertainment expenses incurred..
books and magazines for his professional practice.

The income referred to in section 28, i.e, the incomes chargeable as "Income
from Business or Profession" shall be computed in accordance with the
provisions contained in sections 30 to 43D.

The computation of income under the head "Profits and Gains of Business or
Profession" depends on the particulars and information available.

Income from Capital Gains

Transfer of capital assets results in capital gains. A Capital asset is defined

under section 2(14) of the I.T. Act, 1961 as property of any kind held by an

18
assessee such as real estate, equity shares, bonds, jewellery, paintings, art
etc. but does not include some items like any stock-in-trade for businesses
and personal effects. Transfer has been defined under section 2(47) to
include sale, exchange, relinquishment of asset, extinguishment of rights in
an asset, etc. Certain transactions are not regarded as 'Transfer' under section
47.

For tax purposes, there are two types of capital assets: Long term and short
term. Long term asset are held by a person for three years except in case of
shares or mutual funds which becomes long term just after one year of
holding. Sale of such long term assets gives rise to long term capital gains.
There are different scheme of taxation of long term capital gains. These are:

1. As per Section 10(38) of Income Tax Act, 1961 long term capital
gains on shares or securities or mutual funds on which Securities
Transaction Tax (STT) has been deducted and paid, no tax is payable.
STT has been applied on all stock market transactions since October
2004 but does not apply to off-market transactions and company
buybacks; therefore, the higher capital gains taxes will apply to such
transactions where STT is not paid.
2. In case of other shares and securities, person has an option to either
index costs to inflation and pay 20% of indexed gains, or pay 10% of
non indexed gains. The indexation rates are released by the I-T
department each year.
3. In case of all other long term capital gains, indexation benefit is
available and tax rate is 20%.

All capital gains that are not long term are short term capital gains, which
are taxed as such:

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 Under section 111A, for shares or mutual funds where STT is paid,
tax rate is 10% From Asst Yr 2005-06 as per Finance Act 2004. For
Asst Yr 2009-10 the tax rate is 15%.
In all other cases, it is part of gross total income and normal tax rate is
applicable.

For companies abroad, the tax liability is 20% of such gains suitably indexed
(since STT is not paid).

Income from Other Sources

This is a residual head, under this head income which does not meet criteria
to go to other heads is taxed. Also there are also some specific incomes
which are to be taxed under this head.

1. Income by way of Dividends

2. Income from horse races
3. Income from winning of lotteries
4. Income from winning bull races
5. Any amount received from key man insurance policy.
6. Any sort or from gambling or betting
7. Income from commission
8. Income from crossword puzzles
9. Income from card games

Income Exempt from Tax

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Sections 10,10A, 10AA, 10B, 10BA, and 13A deal with income which does
not form part of an assessee's total income. While section 10 provides a list
of income absolutely exempt from tax, sections 10A, 10AA, 10B, 10BA,
and 13A deal with specific exemptions available to newly established
industrial undertakings in free trade zones, and political parties. These
exemptions are provided from social, political, Constitutional
considerations, for avoiding double taxation, on the basis of casual and non-
recurring nature ,on the basis of non-residents and non-citizens status, on the
basis of Certain specific securities, bonds, certificates, funds and the like, on
the basis of Education, science, research, achievements, rewards, sports,
charity, on the basis of certain types of bodies, funds and institutions,
Subsidies to promote business, and international, economic, and other
considerations. Sikkim is the only state of India where citizens do not pay
income tax. Residents of Sikkim are eligible for this exemption but
excluding the non-Sikkimese spouse of a Sikkimese.

Agricultural Income [Section 10(1)] Eligible Assesses :- All assesses

Exempt income :- Agricultural income Other points :- Agricultural income
means as it is defined in Section 2(1A) In case of individual, HUF, AOP,
BOI, unregistered firms and artificial juridical persons, agricultural income
is to be aggregated for the purpose of determining the rate of tax on Non-
Agricultural income and they would get tax rebate or relief.

Dividends

Dividend income (as referred u/s 115-O of the I.Tax Act) paid by Companies
and Mutual Funds are exempt from tax. A 15% dividend distribution tax and
surcharge of 3% is paid by companies before distribution. Equity mutual
funds (with more than 65% of assets invested in equities) do not pay a
dividend distribution tax, though other funds do. Liquid and Money Market
funds pay 25% dividend distribution tax.01123

Other Exempt Income

The Indian Income tax act specifically exempts certain income from tax:

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 Money received from an Insurance company as proceeds of an
insurance policy (by way of an insurance claim, or by maturity) is
generally exempt. However there are three types of payments under
life insurance policy that are not tax free . These are :

any sum received under sub-section (3) of section 80DD or sub-

section (3) of section 80DDA - this refers to specific policies
for disabled dependants; or
any sum received under a Keyman insurance policy; or
any sum received under policies issued on or after 1 April 2003
where premium paid is greater than 1/5th the sum assured

Maturity proceeds of a Public Provident Fund (PPF) account.

Tax Benefits - Deductions, Rebates & Donations

Rebates

Section 80C
22
INSERT (AY 2008-09)
Senior Citizens Savings Scheme 2004 and the Post Office Time Deposit Account
added to the basket of saving instruments under Section 80C of the Income Tax Act.

Section 80L used to allow deduction of interest earned on, say, a National
Savings Certificate or a bank deposit up to a limit of Rs 12,000. But now all
these are gone .In their place has come Section 80C -- "u/s 80CCC, & u/s
80CCD", as the Finance Bill puts it. Thus, the new Section 80C of the
Income Tax Act proposed in Union Budget gives you a bigger tax break than
what the current regime offers.
Deduction in respect of Life Insurance Premium, Contribution to
Provident Fund, etc.
Rs 1 lakh can be invested under this section without any individual
sub-limits except in the case of Rs 10,000 in pension funds.
Sections 88, 80L, 80CCC and 80CCD is clubbed in.

INSERT (AY 2007-08)

It is proposed to insert clause (xxi) in sub-section (2) of this section in order to
provide that the investment in a term deposit for a fixed period of not less than five
years with any scheduled bank shall be eligible for a deduction under this section.

Schemes eligible for Section 80C benefits

PPF
ELSS - Mutual Funds
NSC
KVP

Life Insurance
Senior Citizen Saving Scheme 2004
Post Office Time Deposit Account

Note : - Section 80CCC is for deduction in respect of contribution to certain

Pension Funds. Section 80L is for deductions in respect to Interest on certain

23
Securities, Dividends, etc

Sections abolished from Union Budget 2005-06

88 (Rebate on Life Insurance Premium, Contribution to Provident
Fund)
80L (Deductions in respect to Interest on certain Securities,
Dividends, etc.)
Note :-
Rebate of Rs 5,000 for women and Rs 20,000 for senior citizens have
been wiped off.

The key features of the new provision

Exemption available to all taxpayers irrespective of income bracket
-earlier Section 88 did not provide benefit to those having income
exceeding Rs 500,000.
No exemption/adjustment for interest income
All saving modes/options under Section 88 covered and also 80CCC
and 80CCD covered.

Following benefits will continue irrespective of changes

Interest paid on housing loan for self-occupied house property.
Medical insurance premium. (Additional deduction of Rs 15000 u/s
80D to an individual paying medical insurance premium for his/her
parent(s)
Specified expenditure on disabled dependant.
Expenses for medical treatment for self or dependant or member of an
HUF.
Deduction in respect of interest on loans for pursuing higher studies -
Section 80E.
Deduction to person with disability.

Section 10(33)
Dividends from mutual funds are fully exempt from income tax under
Section 10(33). Equity funds (schemes that invest 50 per cent of their funds
in equity) are also exempt from dividend tax. This means that unlike
companies, they do not have to pay tax at the rate of 10.2 per cent on the
dividend that they distribute.

24
INSERT (AY 2008-09)
Coir Board included in Section 10(29A) and exempted from income tax.

Section 88
Upto 31 March 2005, rebates were available on the tax payable under three
sections.

According to the section, 30 per cent or 20 per cent or 15 per cent of the
amount invested in certain schemes (schemes referred in Section 80C) was
available as a rebate on the tax payable.
30 per cent of the amount invested was available as rebate only if the
salary income of the individual was less than Rs. 1 lakh and if it
constituted 90 per cent or more of the assessee's gross total income.
20 per cent of the amount invested was available as rebate if the gross
total income of the individual was less than Rs 1.5 lakh and the case
did not fall under the above mentioned case.
If gross total income was more than Rs. 1.5 lakh but less than Rs 5
lakh of the individual, a rebate of 15 per cent of the amount invested
was available.
If gross total income was more than Rs 5 lakh of the individual, then
there is no rebate.

Section 88B

INSERT (AY 2008-09)

A new sub-section (11C) in Section 80-IB to grant a five year tax holiday to
encourage hospitals to be set up anywhere in India, except certain specified
urban agglomerations, and especially in tier-2 and tier-3 towns in order to serve
the rural hinterland. This window will be open for the period April 1, 2008 to
March 31, 2013, during which the hospital must commence operations.

Under this section, an individual resident in India and above the age of 65
years was allowed to a maximum rebate of Rs. 20,000 on the tax payable.

Section 88C
Under this section a lady resident in India, aged below 65 years, was allowed
a maximum rebate on the tax payable of Rs 5,000.

25
Section 89 (1)
This is available to an employee when he receives salary in advance or in
arrear or when in one financial year, he receives salary of more than 12
months or receives 'profits in lieu of salary' W.e.f. 1.6.89, relief u/s 89(1) can
be granted at the time of TDS by employees of all companies co-operative
societies, universities or institutions as well as govt./public sector
undertakings. The relief should be claimed by the employee in Form No.
10E and should be worked out as explained in Rule 21A of the Income Tax
Rules.

Deductions

Section 80CCC

Look for INSERT for AY 2008-09

Any individual who makes a contribution for any annuity plan of the Life
Insurance Corporation of India or any other insurer is eligible for a
deduction of the amount paid or Rs. 10,000, whichever is less. When an
individual or his nominee receives any amount under the following
circumstances it will be taxed as the income of the individual or his
nominee, in the year of withdrawal or the year in which the pension is
received:
On the surrender of the annuity plan or

26
 As pension received from the annuity plan.

INSERT (AY 2007-08)

The limit of investment is proposed to increase from Rs 10,000 to Rs 1,00,000
subject to overall cap of Rs 1,00,000 provided under section 80CCE.

Section 80CCD

The deduction for contributions to a pension scheme of the Central

Government is available only to those individual who have been employed
by the central government on or after 1st January 2004, and will be allowed
for any amount deposited in such a pension scheme. But, in this case,
deduction of more than 10 per cent of the employee's salary shall not be
allowed.

The contributions to the fund are also made

by the Central Government. Deduction will
be available for any contribution which is made by the Central Government
or 10 per cent of the employee's salary, whichever is less.

When the individual or his nominee receives any amount out of the scheme
which meets the following descriptions, it shall be taxed in the hands of the
recipient.
On closure/ opting out of the pension scheme; or
As pension received from the annuity plan.

The term 'salary' here includes Dearness Allowance (if considered for
retirement benefits), but it excludes other allowances and perquisites.

The aggregate deduction under the Sections 80C, 80CCC and 80CCD
cannot exceed Rs 1 lakh as whole.

Section 80D

INSERT (AY 2008-09)

Additional deduction of Rs 15,000 under Section 80D is allowed to an individual
who pays medical insurance premium for his/ her parent or parents.

27
Any Premium which is paid for medical insurance that has been taken on the
health of the assessee, his spouse, dependent parents or dependent children,
is allowed as a deduction, subject to a ceiling of Rs 10,000.

Where any premium is paid for medical insurance for a senior citizen, an
enhanced deduction of Rs 15,000 is allowed. The deduction is available only
if the premium is paid by cheque.

INSERT (AY 2007-08)

Under section 80D, the deduction has been increased to Rs 15,000
and for senior citizen it is now Rs 20,000.

Section 80DD
Deduction under this section is available to an individual who:
Incurs any expenditure for the medical treatment, training and
rehabilitation of a disabled dependant; or
Deposits any amount in schemes like Life Insurance Corporation for
the maintenance of a disabled dependant. An annuity or a lump sum
amount is paid to the dependant or to a nominee for the benefit of the
dependant in the event of the death of the individual depositing the
money, from the said scheme,

A deduction of Rs 50,000 is available. Where the depandant is with a severe

disability, a deduction of Rs 1,00,000 is allowed. (As per AY 2009-10)

If the death of the dependant occurs before that of the assessee, the amount
in the scheme is returned to the individual and is taxable in his hands in the
year that it is received.

An individual should furnish a copy of the issued certificate by the medical

board constituted either by the Central government or a state government in
the prescribed form, along with the return of income of the year for which
the deduction is claimed.

The term 'dependent' here refers to the spouse, children, parents and siblings
of the assessee who are dependant on him for maintenance and who
themselves haven't claimed a deduction for the disability in computing their
total incomes.

28
This deduction is also available to Hindu Undivided Families (HUF).

Section 80DDB
An individual, resident in India spending any amount for the medical
treatment of specified diseases affecting him or his spouse, children, parents,
brothers and sisters and who are dependant on him, will be eligible for a
deduction of the amount actually spent or Rs 40,000, whichever is less.

Note:- For the complete list of disease specified, refer to Rule 11DD of the
Income Tax Rules.

For any amount spent on the treatment of a dependent senior citizen an

individual is eligible for a deduction of the amount spent or Rs 60,000,
whichever is less is available.

The individual should furnish a certificate in Form 10-I with the return of
income issued by a specialist working in a government hospital.

If any amount of medical expenditure is borne by the employer or is

reimbursed under an insurance scheme, the eligibility of the deduction is the
reduction to that extent. This deduction is also available to Hindu Undivided
Families (HUF).

Section 80E
INSERT (AY 2009-10)
Deduction under section 80E of the Income-tax Act allowed in respect of interest on
loans taken for pursuing higher education in specified fields of study to be extended
to cover all fields of study, including vocational studies, pursued after completion of
schooling.

Under this section, deduction is available for payment of interest on a loan

taken for higher education from any financial institution or an approved
charitable institution. The loan should be taken for either pursuing a full-
time graduate or post-graduate course in engineering, medicine or
management, or a post-graduate course in applied science or pure science.

The deduction is available for the first year when the interest is paid and for
the subsequent seven years. Up to March 2005, deduction was available for

29
the repayment of principal and interest aggregating to Rs 40,000 a year.

Section 80U
It is deduction in the case of a person with a disability. An individual who is
suffering from a permanent disability or mental retardation as specified in
the persons with disabilities (Equal Opportunities, Protection of Rights and
Full Participation) Act, 1995 or the National Trust for Welfare of Persons
with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
Act, 1999, shall be allowed a deduction of Rs 50,000. In case of severe
disability it is Rs. 75,000.

The assessee should furnish a certificate from a medical board constituted by

either the Central or the State Government, along with the return of income
for the year for which the deduction is claimed.

Donations

Section 80G

For the Assessment Year 2009-10

Donations to electoral trusts to be allowed as a 100 percent deduction in the

computation of the income of the donor.

For the Assessment Year 2006-07

Under this section deduction is made in respect of donations to certain

funds, charitable institutions, etc. Deduction is not available for donations
given in kind.

The deduction is available only for the entity to which donations is made is
an approved charitable institution by the government. A receipt of the
institute, in evidence made, should be attached to the return of income.

Section 80GG
30
Under this section a non-salaried person or a salaried person, if, not getting
house rent allowance, he/she can claim to the deduction for the rent he pays
for a residential accommodation. The deduction available is least of the
following:
Rent paid in excess of 10 per cent of total income.
25 per cent of total income.
Rs 2,000 per month.

The total income of the individual is computed after reducing the amount
deductible under other sections, receipts exempt from tax, and long-term &
short-term capital gains taxable at concessional rates.

The deduction is not available if the assessee or his spouse or minor child
owns the accommodation in which he stays or works, or carries on his
business or profession. Deduction is even not allowned, if the assessee owns
a house in any other place, and the concession in respect of self-occupied
house is claimed by him.

Section 80GGA
An individual, who is not engaged in any business or profession, is eligible
for a deduction of the amount donated to certain institutions engaged in
scientific research, rural development, etc.

Section 80GGC
It is the deduction in respect of contributions given by any person to political
parties. An individual shall be allowed to a deduction of any amount
contributed by him to a political party.

31
INCOME TAX E-FILING

E-filing of Tax Returns

The process of electronically filing Income tax returns through the

internet is known as e-Filing.
It is mandatory for Companies and Firms requiring statutory audit u/s
44AB to submit the Income tax returns electronically for AY 2009-10.
Any Company/Firm requiring statutory audit u/s 44AB return
submitted without a e-Filing receipt will not be accepted.
e-filing is possible with or without digital signature.

The Income Tax Department is keen to encourage efiling of IT returns by all

taxpayers in view of the following benefits to taxpayers.

Anywhere-Anytime Filing
No long queues
No Personnel Interface
Quick Processing
Accurate data in return

32
Paid taxes, made your tax saving investments... now get geared up for filing
income tax returns as the month of July is on the horizon and the time has
come when one is supposed to file IT returns.

In the year 2007 the Income Tax Department of India took many initiatives
such as training TRPS, launching saral forms in a new avatar and so on for
making tax filing convenient and handy for the citizens.

In this e-age when ICT is successfully intervening in so many fields and

providing services from online banking to online news, online mutual fund
investments to online buying and selling, the Income Tax Department of
India launched the Electronic Filing of income tax returns.

Yes, using the e-filing process one can file in tax returns just within a few
clicks at any time of the day and that too without any hassles. Using this
technology all you have to do is fill the form and submit it, online or offline.

MORE ABOUT THE E-FILING PROCESS WORK

The e-filing process is really easy and takes a very little time and all you
have to do is fill up your tax return form online provided and the other
required information about income, expenditure and savings. Filing tax
returns online is the easiest and the simplest method and all one needs is to
log on and follow the simple instructions.

For e- filing process one needs to have a software application that generates
the income tax form, which is available at the Income Tax Department
website.

Benefits of e-Filing:

One of the foremost benefits of electronic filing is the facility of anywhere /

anytime filing, and one can just file returns anytime of the day or night.
Other than this, online tax returns are processed much faster than paper
returns and the tax is worked out automatically as the payee completes the

33
form. With this the payee also gets the acknowledgement slip immediately.
Also online filing is a safe and secure mode.

TYPES OF E-FILING
There are three ways to file returns electronically.

34
 Option 1: Use digital signature, in which case no further action is
required.

Option 2: File without digital signature, in which case ITR-V form is

to be filed with the department. This is a single page receipt cum
verification form.

Option 3: File through an e-return intermediary who would do eFiling

and also assist the Assessee file the ITR -V Form.

35
36
Documents required for e-filing

Form No. 16 (for Tax deducted by employers)

Form No. 16A

Account statements of bank accounts

Property details

Sale and purchase of investments / assets

Details of tax payments made

PAN card photo copy

Birth date

TAN number

Bank A/c no

Bank details MICR code, Type of A/c.

37
PROCESS OF E-FILING

38
12 Step Process for Filing Tax Returns
Whether you wish to go in for the quick e-filing process or manually file
your income tax returns, here is a helpful guide to assist you in completing
and submitting this vital document by yourself.

1) Go to the website http://www.incometaxindia.gov.in/

2) Click the link eFile Income Tax Return at the top left corner of the
home page

3) Select the Correct Form - There are two income tax forms for salaried
individuals. ITR-1 is for those who derive their income from salary, pension
or interest while ITR-2 is for income from capital gains, house property and
other sources. Those who wish to submit their tax returns manually may
download the pdf forms - External website that opens in a new window from

39
here. These forms need to be printed, filled by hand and signed before
submitting to your local income tax office.

For Individuals, HUF (Hindu Undivided Families)

Select appropriate Income Tax ITR-1 ITR-2 ITR-3
Return (ITR) Preparation
Individual Individual Individual
Software

& HUF & HUF

1 Income from

Salary/Pension
2 Income from Other
Sources (only Interest
income or Family
Pension)

3 Income/Loss from

Other Sources
4 Income/Loss from

House Property
5 Capital Gains/Loss on
sale of
investments/property

6 Partner in a partnership

Firm
7 Income from
Proprietary
Business/Profession

Select appropriate type of Return Form ITR 1 to ITR 8

40
For Association of Persons (AoP), Body of Individuals (BoI), Local Authority, Companies,
Trusts, Fringe Benefit Tax (FBT) Return
Select appropriate Income Tax ITR-5 ITR-6 ITR-7 ITR-8
Return (ITR) Preparation
Software Firms, Companies Trusts Only
AoP, FBT
BoI,
LA
1 Income/Loss from

Other Sources
2 Income/Loss from
House Property

3 Capital Gains/Loss on
sale of
investments/property
4 Income/Loss from
Business

5 Fringe Benefit Tax

ITR-7 will not be available for e-Filing

WHO CAN USE WHICH FORM

ITR-1

This Form can be used by an individual whose total income during the
previous year i.e., financial year 2008-09 includes income chargeable to

41
income-tax under the head salaries or income in the nature of family
pension as defined in the Explanation to clause (iia) of section 57 but does
not include any other income except income by way of interest chargeable to
income-tax under the head income from other sources. There should not
be any exempt income other than agriculture income and interest income. It
may please be noted that a person who is entitled to use this form shall not
use Form ITR-2. Further, a person in whose income the income of other
person like his/ her spouse, minor child, etc. is to be clubbed is also not
entitled to use this form.

ITR-2

This Form can be used by an individual or a Hindu Undivided family whose

total income does not include any income chargeable to income-tax under
he head Profits or gains of business or profession. It may please be noted
that a person who is entitled to use Form ITR-1 shall not use this form.
Further, a person who is partner in a firm is required to use Form ITR-3. In
case a partner in the firm does not have any income from the firm by way of
interest, salary, etc. and has only exempt income by way of share in the
profit of the firm shall not use Form ITR-2.

ITR-3

This Form can be used a person being an individual or a Hindu Undivided

family who is a partner in a firm and where income chargeable to income-
tax under the head Profits or gains of business or profession does not
include any income except the income by way of any interest, salary, bonus,
commission or remuneration, by whatever name called, due to, or received
by him from such firm. In case a partner in the firm does not have any
income from the firm by way of interest, salary, etc. and has only exempt
income by way of share in the profit of the firm shall use this form only and
not Form ITR-2.
ITR-4

This Form can be used by a person being an individual or a Hindu

Undivided family who is carrying out a proprietary business or profession.

42
ITR-5

This Form can be used a person being a firm, AOP, BOI, artificial juridical
person referred to in section 2(31)(vii), cooperative society and local
authority. However, a person who is required to file the return of income
under section 139(4)(a) or 139(4)(a) or 139(4)(b) or 139(4)(c) or 139(4)(d)
shall not use this form.

ITR-6

This Form can be used by a company, other than a company claiming

exemption under section 11

ITR-7

This Form can be used by persons including companies who are required to
furnish return under section 139(4A) or under section 139(4B) or under
section 139(4C) or under section 139(4D).

ITR-8

This Form is applicable in case of a person who is not required to furnish the
return of income but is required to furnish the return of fringe benefits

4) Use of Return Preparation Software - Those citizens who wish to avail

the e-filing system need to download the Return Preparation Software -
External website that opens in a new window for each ITR form. This

43
software is an excel file that requires one to type in personal details as well
as financial information from TDS certificates, bank statements, deductions
made and interest statements.

5) Generating an XML file - After keying in the details, check once for
accuracy. After you are satisfied, click the 'Generate' button to create your
tax return in XML format. This format helps in sharing of structured data
across different information systems. Save this XML file on your computer.

6) Register - The next step requires you to Register at the Income Tax
website - External website that opens in a new window. Your registered
Permanent Account Number (PAN card) has to be entered as your username.

7) Login - After registering, enter your user id and password to login. Click
on the relevant form on the left panel and select 'Submit Return'.

8) Upload XML - Browse to select the XML file, which you had generated
and saved in Step 3. Click on the 'Upload' button to upload the file.

9) Acknowledgement - After the file is successfully uploaded,

acknowledgement details or the ITR-V Form will be displayed. Take a
printout of this acknowledgement for your records.

44
10) Digital Signature - If your income tax return was digitally signed, then
no further paperwork or visit to the income tax office is needed. Here is
some information about how to get a digital signature - External website that
opens in a new window.

Instructions for filling up FORM ITR-V

1. Rule 12(3)(iii) of the Income-tax Rules, 1962 provides that any assessee
can file a return of income electronically without the use of a digital
signature. In such cases only an acknowledgement needs to be filed with the
Department physically by the assessee.
2. Once a return of income is filed electronically on successful transmission
of the data, Form ITR-V duly filled shall be generated by the Income-tax
Departments server to the assessee. This ITR-V will also contain the
acknowledgement number of electronic transmission and the date of the
transmission as an evidence of filing for the benefit of the assessee. Please

45
down load a copy of such duly filled Form and verify under your signature
in the space provided. In case the return was prepared by a Tax Return
Preparer (TRP), the particulars of TRP be also filled and this verification
form be countersigned by the TRP.
3. This acknowledgement in Form ITR-V duly signed by the assessee needs
to be filed physically (in duplicate) with the concerned Assessing Officer.
One copy of this acknowledgement would be returned back to the assessee
for his record.
4. The codes for the form number and the status of the assessee shall be
generated electronically by the Departments server.

11) Verification - If your return is not digitally signed, then you need to
print and fill up the verification part of the acknowledgement cum
verification form (ITR-V). This has to be signed and submitted to the local
Income Tax Office within 15 days to complete the e-filing process.

12) Additional Assistance - In case you require any more help in filing the
paper copy of the return, please contact the Public Relations Officer at your
local Income Tax Office. One may also phone the Aayakar Sampark Kendra
(ASK) call centre at 124-2438000 or email at ask@incometaxindia.gov.in.

46
 Frequently Asked Questions
1 Who is liable to file the income-tax return ?
2 What is the assessment year ?
3 What are the due dates for filing of income tax returns where primary source of
income & 'salary' ?
4 Which is the prescribed form for filing of income tax returns for assesses having
income from salary ?
5 What are various heads of income ?
6 How to pay the tax under the income tax act ?
7 What are the rates of income tax?
8 How is the penal interest calculated?
9
How is interest calculated for late or non-furnishing of return ?
10
If the tax payer fails to pay 90% tax plus applicable interest(s), then how is
interest for short payment of such advance-tax calculated?
11 How is interest for deferment of advance-tax calculated?
12
What are the important points to remember while filing the income tax return?
13
Why is father's name even in the case of married lady accesses to be given in the
verification portion of the return?
14 Who can verify and sign the income-tax return?
15 If the return is not signed by the proper person or if it is unsigned, what is the
legal implication?
16 Where to file the income tax return?
17 Where to deliver the income-tax return?

Who is liable to file the income-tax return?

When the total income from all sources of income of any person exceeds the
maximum amount which is not chargeable to income-tax in any previous
year ending on 31st March then that person is liable to file the Income Tax
Return.

Section 139(1) of the Income-tax Act has been amended w.e.f. AY 97-98
with a view to bring larger number of persons in the tax net. In order to
increase the tax-base now any person who satisfies any one of the six
conditions viz. is owner of a vehicle, or, occupies specified floor area of an

47
immovable property or incurs expenditure for himself or any other person on
foreign-travel or subscribes to a telephone or Credit Card or is a Club
member, then he is required to file a return.

For an individual the maximum limit of income which is not chargeable to

tax, for Assessment Years 2001-02 and 2002-2003 is Rs. 50,000 respectively.

Besides such persons, any other person who is to claim a refund, or carry
forward losses (for example loss under the head 'Income from property') or
who seeks any other benefit (for example, a deduction income of a blind
individual) may also file the Income-Tax Return. It is important to note that
from the Assessment Year 1993-94 onwards, the return of income has to be
compulsorily filed if the income of an individual exceeds the basic
exemption limit.

What is the assessment year?

Assessment year is the period of 12 months succeeding the relevant previous

year (i.e. the accounting year) ending on 31 st march. for example, a. y.
2002-2003 is for the period of twelve months starting from 1-4-2001 and
ending with 31-3-2002.

What are the due dates for filing of income tax returns where primary
source of income & salary?

In the case of an assesses earning income from Salary primarily, the due date
for filing the Income Tax return is 30th June of the assessment year. For
example, the due date for A.Y. 2002-2003 would be 30 th June 2002.

Which is the prescribed form for filing of Income Tax returns for
assesses having Income from salary?

The assesses enjoying salary income, and whose total income does not
include income under the head 'Profits and Gains of Business or Professional
has to file his income-tax Return in Form No. 3. He can also file the Return
48
in Form No. 2A if his net taxable income is Rs.2.0 lakhs or less and if
following conditions are satisfied :-

a) There is no income from business or profession;

b) There is no brought forward or carried forward loss/allowance under

any head of income except from house property.

Accesses fulfilling the above conditions, have the option , of using even the
existing Form No. 3 in place of Form No. 2A. They can also file their
returns in 'Salary'form. 5

What are various heads of income?

the various heads of income are:

a) Salaries;

b) Income from House Property;

c) Profits & Gains of Business or Profession;

d) Capital Gains, and

e) Income from other sources.

While computing income from the above mentioned different heads, the
procedure is:-

First, the taxable income from each source is to be computed under each
head of income by allowing deductions, and then they are aggregated. For
example, in the case of an assesses deriving income from salary, house
property, and Interest income from Fixed Deposit in a Bank, firstly, the
taxable income under the head 'salaries', then 'Income from House Property,
and lastly the taxable income under the head 'Income from other sources' for
Bank interest etc. will be computed.

Thereafter, all the three incomes under the three heads would be aggregated.

49
From this amount, certain eligible deductions would then be deducted to
arrive at the net taxable income on which tax is chargeable.

How to pay the Tax under the Income Tax Act?

The employer or his representative making payment to an assesses earning

income from 'salary' is under obligation to deduct, certain amount of 'tax,
from such payment(s) made during the financial year. Such deduction from
the payment is called 'Tax Deducted at Source' i.e. TDS. The person making
this TDS is obliged to pay such tax to Central Government within the
prescribed time limits.

This payment of TDS to the Central Government is treated as payment of tax

on behalf of the assesses.

The assesses may furnish to his employer particulars of his income under
any head other than "salary", and of any tax deducted at source thereon in
the prescribed Form No. 12C. The employer shall take such other income
and tax, if any, deducted at source from such income, into account for the
purpose of computing the TDS from his salary income. However, this
aggregation is not permitted in case such income under any other head
(except loss from house-property) is a loss. This loss (except loss from
house-property) is not permissible to be adjusted by the person paying salary
but can be claimed as deduction at the time of filing of return and a refund
sought.

In order to remove any difficulty in obtaining such refund, the assesses may
make an application in Form No. 13 to his Assessing Officer, and, if the
Assessing Officer is satisfied that the total income of the tax payer justifies a
lower rate of deduction or no deduction at all he may then issue an
appropriate certificate to that effect which should be taken into account by
the person making the payment of salary while deducting tax at Source.

In case the assessesdoes not wish to furnish particulars of his income under
other heads to his employer then he has to estimate his total taxable income
under the different heads of income during the previous year, and pay tax
thereon during the financial year itself, (after excluding the tax deductible at

50
source), by the due dates specified under the Income-tax Act. These
payments are called "Advance Tax Payments".

The due dates and the percentage of installment of Advance Tax for
individuals are mentioned herein below :-

Due date of Installments Amount Payable

1st on or 15th September. Amount not less than

before 30% of such advance tax

2nd on or 15th December. Amount not less than

before 60% of such advance tax

3rd on or 15th March. Entire balance amount of

before such advance tax.

However, the liability for payment of advance tax arises only where the
amount of such tax payable by the assesses during that year is Rs.5,000 or
more.

Also, any amount paid by way of Advance Tax on or before the 31st March
of that year, is treated as Advance Tax Paid during that Financial Year.

After the return is prepared, and the net taxable income finally determined, it
may so happen that, after taking into account the amount of TDS and
Advance Tax, if any, already deducted/paid still some tax or interest
(payable for delay in furnishing the return or delay in payment of advance
tax) remains to be paid.

This amount should be paid as 'self-assessment tax 1' before furnishing the r
eturn.

It is, therefore, important to note that before furnishing the return, the
assessee has to pay the entire .tax and interest, if payable, and the proof of
such payment of taxes has to be attached with the return.

It is also to be noted that 'tax' includes applicable Interest' chargeable under

various provisions of the LTV, Act, 1961.

51
What are the rates of income tax?

In the case of an individual, the rates of Income tax for A.Y. 2001-2002 and
A.Y. 2002-2003 are given herein below

1. Persons in this slab would be required to pay twelve percent surcharge on

the total income-tax payable after rebate under Chapter VIII-A.

2. Persons in this slab would be required to pay two percent surcharge on

the total income-tax payable after rebate under Chapter VIII-A.

3. Persons in this slab would be required to pay seventeen percent surcharge

on the total income-tax payable after rebate under Chapter VIII-A.

4. Persons in this slab would be required to pay two percent surcharge on

the total income-tax payable after rebate under Chapter VIII-A.

No surcharge would be payable by persons having incomes of Rs.60,000 or

below. Marginal relief is provided to ensure that the additional amount of
income-tax payable, including surcharge, on the excess of income over
Rs.60,000 is limited to the amount by which the income is more than
Rs.60,000 .

However, the amount of Income-tax computed in accordance with the above

table would be first reduced by the amount of rebate of Income Tax
calculated under Chapter VIII-A of the Income Tax Act (for example: rebate
on payment of LIC, Provident Fund etc.). Thereafter, Union surcharge will
be calculated and charged.

How is the penal interest calculated?

52
Where the assessee has defaulted in timely furnishing of his return of
income or where he has to pay advance tax, then penal interest is chargeable
for Non/Late filing of return or Non-payment/short payment/deferment in
payment of such advance tax.

How is interest calculated for late or non-furnishing of return?

INTEREST U/8. 234-A FOR LATE OR NON-FURNISHING OF INCOME

TAX RETURN

For defaults in furnishing 'Return of income': Simple interest @ 1.25% for

every month or part of a month from the due date of filing of the return to
the date of furnishing of the return. The interest is calculated on the amount
of the tax on the total assessed income as determined under subsection (1) of
section 143 or on regular assessment u/s 143(3) as reduced by the Advance
Tax, if any, paid and any tax deducted or collected at source.

If the tax payer fails to pay 90% tax plus applicable interest(s), then
how is interest for short payment of suuch advance-tax calculated?

INTEREST U/S. 234-B FOR SHORT PAYMENT OF ADVANCE

TAX

Shortfall in payment of Simple interest @ 1.25% for month or part

Advance tax of more there of is chargeable w. e. f. 1st April of
than 10% the Assessment Year to the date of
determination of income u/s. 143(1) or
regular assessment u/s 143(3) on the
assessed tax.

"Assessed tax" means the tax on the total

income determined under subsection (1) of
section 143 or on regular assessment u/s
143(3), a reduced by the amount of tax
deducted or collected at source.

53
How is interest for deferment of advance-tax calculated ?

INTEREST U/8. 234-C FOR DEFERMENT OF ADVANCE TAX

1. If no advance tax is paid or the Simple interest @ 1.25%p,m. is

advance tax paid in 1 st chargeable on the amount of
instalment on or before 15 th shortfall for a period of 3 months
September is less than 30% of
the tax payable on threturned
income as reduced by taxes
deducted at source

2. If no advance tax is paid or if Simple interest @1.25% p.m. is

the advance tax paid in 2nd chargeable on The amount of
instalment on or before 15th shortfall For a period of 3 months
December is less than 60%
inclusive of 1 st instalment of
the tax payable on the returned
income as reduced by taxes
deduced at source

3. If the advance tax paid on Simple interest @ 1.25% on the

the current income on or amount of the short fall from The
before the 15 th day of March is tax due on the returned income.
less than the tax due on the
returned income

However, no interest is leviable if the short-fall in payment of advance-tax is

on account of under estimation of the amount of capital gains or any income
from winnings from lotteries, crossword puzzles, races, and other games
including an entertainment program on television or electronic mode, in
which peole compete to win prizes etc., and the assesses has paid the tax on

54
such income as part of the remaining instalment of advance tax which are
due or if no instalment is due, by 31st March, of the Financial Year.

What are the important points to remember while filing the income tax
return?

Income Tax Return is a legal document and it should be filled in by the

assessee with due care and caution. There should be no corrections or
overwriting and it should be properly signed and verified by the person who
is authorised to do so under the provisions of I.T. Act, The following
important points may be taken care of while filling up the Income Tax
Return:-

a) Name & Address :-

The name and address must be written in block letters and while filling up
the same in the cages meant for the same, one cage may be left blank after
each word. As the Income-tax Returns are to be generally filed on the basis
of territorial jurisdiction, any mistake in the address may dislocate the return
which will cause undue delay in finalisation of the assessment.

b) Assessment Year:

The Assessment Year is to be correctly filled in as the Financial Year

succeeding the year for which the income is accounted.

c) Revised Return :

Proper particulars of the original return are to be mentioned in case the I.T.
return is a revised return.

d) P.A.N/GIR Number :

The assessee's PAN/GIR Number should be correctly filled so that the return
reaches the concerned Assessing Officer.

e) Status :

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Correct code numbers of the assessee's status i.e. individual, H.U.F., Firm,
Company, B.O.I., A.O.P. etc. and residential status i.e. Resident in x India or
Not Ordinarily Resident in India ( complete details of stay in India ought to
be attached) must be filled in as per the Notes attached to the Income Tax
Return.

f) Evidence(s) for Pre-paid Taxes :

The original T.D.S. certificates and challans for payments of advance tax and
self assessment tax should be attached to the I.T. return and proper details
are to be furnished under the head Statement of Taxes. These documents
may be listed under the head: List of Documents/Statements attached.

g) Document(s)/Annexure(s) Attached :

The other document(s)/Annexure(s) may be properly listed under the head

List of Document(s)/Statement(s) attached and the total number of
documents must be properly filled in the relevant column of the
Acknowledgement Form.

h) Income Claimed Exempt :

The particulars of income which is not included under any head of income
and claimed as exempt from tax must be mentioned in the relevant part of
the I.T. Return under the head 'Income Claimed Exempt',

i) Verification :

The verification must be signed by the authorised person and other

particulars viz. Name, Father's Name (not husband's name), Assessment
Year, Capacity, Place and Date should be correctly filled therein. Please note
that any person making a false statement is liable to be prosecuted under
Section 277 of the Income-Tax Act.

Why is Father's name even in the case of married lady assessees to be

given in the verification portion of the return?

This is required for proper identification, as in the PAN Forms, the

requirement is to fill up the father's name, to ensure a PAN for life.

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Who can verify and sign the income-tax return?

The individual filing his Income Tax return has to sign the return. In case the
individual is mentally incapable, then the return may be signed by his
Guardian or by any other person competent to sign on his behalf.

In case the individual is absent from India or because of any other reason he
is not able to sign and verify his return of income, then any person duly
empowered by him through valid Power of Attorney may sign on his behalf.
In such case, a certified copy of the Power of Attorney must accompany the
return.

If the return is not signed by the proper person or if it is unsigned, what

is the legal implication?

It is then an invalid return.

Where to file the income tax return?

An existing assessee must file his Income Tax return with the Assessing
Officer who had previously assessed him or with the Assessing Officer
where his case stands transferred.

Normally, there are separate wards for the assessees earning income from
salary. These wards/circles, have been assigned separate jurisdiction for
separate classes of assessees, like assessees deriving salary income from
Government or from- private employers. Similarly, the assessees deriving
Income less than Rs.10 lacs may be assessed in a 'Ward' whereas the
assessees deriving income above Rs.10 lacs may be assessed in a 'Circle 1 .

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A new assessee should file his Income-tax Return with the Assessing Officer
having territorial jurisdiction over the area where he resides, or the
Assessing Officer having special jurisdiction over the specific assessee or
class of assessees or class of income.

In case of any doubt, the I.T.O. (Public Relations) or the I.T.O.

(Headquarters) may be contacted to know the jurisdiction for filing the
Income-Tax Return.

Where to deliver the Income-Tax return?

The Income-Tax Return may be delivered either at the Dak Receipt Counter
in the Range/Ward/Circle having jurisdiction over the assessee or the return
may be sent through registered post.

When the return is delivered at the Dak Counter, the official manning the
counter returns one copy of the acknowledgement form attached with the
return after signing, stamping, and numbering it. The date of filing the return
is also prominently displayed on the acknowledgement handed over to the
assessee.

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SUMMARY AND CONCLUSION

SUMMARY OF LEARNINGS EXPERIENCE

To get initial success in this field is very difficult. Although the business
generation becomes easier with time as we serve more people who then get
added up in the loyal clientage. Thus time and service are two most factors
to get in this field.
Also the corporate remains a very important segment which gets business
in bulk but retail cannot be ignored which makes your business ticking.
Customer remains in the pivotal position.

CONCLUSION:
Under the umbrella of my project, we the participants of this project were
glad to understand the design and pattern of income tax e-filing online. My
experience with the various customers of the various companies was totally
different and gave us an edge adding to my knowledge.

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BIBLIOGRAPHY:

Websites:
www.incometaxindiaefiling.gov.in
www.valueplus.njfundz.com
www.incometaxindia.gov.in
www.legalserviceindia.com
www.finance.indiamart.com

Reference books:
1. BASIC PRINCIPLES OF INCOME TAX LOWS
2. HOW TO SAVE YOUR TAX
3. BASIC INCOME TAX TIPS

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