Quick Income Tax Basics & FAQs

Government of India imposes Income Tax on anyone who earns income in India. Income tax is levied on the basis of Income Tax Act passed by the Parliament of India in 1961. Every year income tax rates, education cess, surcharges, deductions, exemptions etc. are revised or adjusted by the Finance Minister of India part of new finance budget.

Any Individual or group of Individual or artificial bodies (AOB) who have earned income are required to pay Income tax on it. The IT Act recognizes the earners of income under eight categories.

1. Individuals
2. Hindu Undivided Family [HUF]
3. Association of Persons [AOP]
4. Body of individuals [BOI]
5. Firms
6. Companies
7. Local Authority
8. Artificial Juridical Person

Any person whether they are resident or non-resident, whose income in India exceeds Rs. 2,50,000 during financial year ending 31st March is required to file their income tax return in India.

The Income tax Act applies to all persons (resident or non-resident) who earn income in India in a given financial year. An individual stays in India for 182 days or more in a financial year is treated as resident in that financial year regardless of his citizenship. An Individual who stay in India for less than 182 days is treated as non-resident. Check more @ NRI Tax Help Center for latest.

Before filing taxes, one need to aware of the procedure of filing. Below is a list of steps in filing the taxes with EZTax.in It's as simple as

1. Collect the documents - For the most, you need Form-16, and other applicable.
2. Sign In - Once Signed in, select the Financial events. EZTax will build optimal the questionnaire.
3. Import / Fill - Upload Form-16, Form 26AS & Fill the questionnaires.
4. Review / Revise - Review to your satisfaction and Revise if needed.
5. Pay - Prepare for Free and choose Free to Paid plans. Check the IT Filing Service Plans & Pricing.
6. Audit Check & e-File - For peace of mind, go thru alerts, recommendations from EZ Audit Checker. File!

The due date for filing income tax return for individuals is July 31st.

In case you haven’t filed your return before Jul 31st (or Last date for that year. Eg. Nov 30th is the new last date to eFile your Return for AY 2020-21 due to COVID-19), you still can file your return with EZTax through self-service or assisted service but filed as belated return before the Jul 31st of the next year.

Briefly, belated returns may attract few penalties / restrictions.

1. Penalties under Sections 234F.
2. Interest on due amount of Tax under Sections 234A.
3. Revision of a belated return is not allowed.
4. Tax Refund without any interest from IT Department.
5. Restriction in not allowing losses to set-off against future income.

While there are genuine cases where one may need to file their taxes late, one should understand the how Income Tax Department may treat such return ? Belated return is a tax return submitted after the due date Jul 31st but before next year's Jul 31st. Briefly, belated returns may attract few penalties / restrictions.

1. Penalties under Sections 234F.
2. Interest on due amount of Tax under Sections 234A.
3. Revision of a belated return is not allowed.
4. Tax Refund without any interest from IT Department.
5. Restriction in not allowing losses to set-off against future income.
6. Cannot Switch between Old and New &Tax Regimes.

Example: The Taxpayer cannot opt for Old tax regime if he is filing the return post July 31 for AY 2024-25

Income earned during twelve months between 1st April to 31st March of an year, commonly called as Financial Year (FY), is taken into account for purposes of calculating Income Tax. Income earned in the financial year is assessed (evaluated, calculated) in the next Financial year which is called as the Assessment Year (AY). A person files his return during an Assessment Year for the income earned in the Financial Year.

For example, income earned in Financial Year (FY) 2019-20 to be filed during the Assessment year (AY) is 2020-21.

The word Income has a very broad and inclusive meaning. In case of a salaried person, all that is received from an employer in cash, kind or as a facility is considered as income. For a businessman, his net profits will constitute income. Income may also flow from investments in the form of Interest, Dividend, and Commission etc. Under the Act, all incomes earned by persons are classified under 5 income heads, such as:

1. Income from Salary: Income can be charged under this head only if there is an employer-employee relationship between the payer and payee. Salary includes basic salary or wages, any annuity, gratuity, advance of salary, leave encashment, commission, perquisites in lieu of or in addition to salary and retirement benefits. The aggregate of the above incomes, after exemptions available, is known as Gross Salary and this is charged under the head income from salary.
2. Income from House property: Any residential or commercial property that you own will be taxed. Even if your piece of real estate is not let out, it will be considered earning rental income and you will need to pay tax on it. If you have home loan then interest part of it would also be considered as negative income from House property..
3. Income from Business or Profession: Income earned through your profession or business is charged under the head ‘profits and gains of business or profession.’ The income chargeable to tax is the difference between the credits received on running the business and expenses incurred.
4. Income from capital gains: Any profit or gain arising from transfer of capital asset held as investments(such as house, jewellery, are chargeable to tax under the head capital gains. The gain can be on account or short- and long-term gains.
5. Income from other sources: Any income that does not fall under any of the four heads of income above is taxed under the head income from other sources. Example is interest income from bank deposits, winning from lottery, any sum of money exceeding Rs 50,000 received from a person (other than from relative, on marriage, under a will or inheritance).

Yes, as long as the business loss is declared part of the previous year’s tax return and the return filed before the due date of income tax filing.

Gross Total Income (GTI, in short), is the aggregate taxable income under the different heads of income such as income from salary, income from house property, income from profits or gains of business, capital gains, and income from other sources. i.e., the total income computed in accordance with the provisions of the IT Act before making any deductions under Sec 80 C to 80 U.

PAN is a ten-digit unique alphanumeric number issued by the Income-tax Department. PAN is issued in the form of a laminated plastic card (commonly known as PAN card).

As per section 203A of the Income-tax Act, 1961, every person who deducts or collects tax at source has to apply for the allotment of TAN. Section 203A also makes it mandatory to quote TAN in following documents:

1. TDS statements i.e. return.
2. TCS statements i.e. return.
3. Annual Information Return.
4. Challans for payment of TDS/TCS.
5. TDS/TCS certificates.
6. Other documents as may be prescribed.

TAN is allotted by the Income-tax Department on the basis of the application submitted online at NSDL-TIN website or offline to TIN-FC managed by NSDL. NSDL will intimate TAN to the applicant at the address specified in the application

There are two modes for applying for TAN:

1. Online mode and
2. Offline mode

They are as follows:

OFFLINE: An application for allotment of TAN is to be filed in Form 49B in duplicate and submitted to any TIN-FC. Addresses of TIN-FCs are available at NSDL-TIN website (https://www.tin-nsdl.com). In case of an applicant, being a company which has not been registered under the Companies Act, 2013, the application for allotment of Tax Deduction Account Number may be made in Form No. INC-7 specified under sub-section (1) of section 7 of the said Act for incorporation of the company.

ONLINE: Online application for TAN can be made from the website of NSDL-TIN website.

Income tax is charged on total income earned by an Assessee during the previous year, but at the rate applicable to the assessment year. It shall be determined on the basis of the residential status of the Assessee. Sec.6 of the act divides the Assessee into 3 categories.

1. Resident
2. Resident but Non-Resident (ROR)
3. Resident but Not Ordinary Resident (RNOR)

There is basic and additional condition for determining the residential status of different assessee.

Basic condition:

1. If he has been India in that previous year for a period or periods amounting in all to 182 days or more.
2. if he has been India for a period or periods amounting in all to 365 days or more, during the 4 years preceding the relevant previous year and has been in India for a period or periods amounting in all to 60 days or more in that previous year.

Additional conditions:

1. An individual who has been in India at least 2 out of 10 previous years preceding the relevant previous year.
2. The individual has been India for at least 730 days in all during the 7 previous year preceding the relevant previous year.
   1. Resident but ordinary resident Persons who are resident in India is popularly known as ordinary resident. An individual, to become an ordinary resident in India in any previous year should also satisfy the two additional conditions along with basic conditions.
   2. Resident but Not ordinarily resident individual If an individual fulfills any one of the basic conditions (specified in the case of resident) but doesn’t satisfy both additional conditions, he becomes a ‘not ordinary resident’.
   3. Non-resident individual As per section 2(30) of the income tax act, if an assessee doesn’t fulfill any of the two basic conditions or tests will be treated as non-resident assessee during the relevant previous year.

While it depends on the nature of income you received, there are few must have information / documents and other good to have documents.

Must have:

1. PAN Number.
2. Bank Account Information.
3. For a salaried employee, Salary related information or Form-16.

Good to have:

1. Home loan statement / information.
2. Investment details such as LIC, PPF, NSC etc.
3. Interest income from your savings account.
4. House Rent Information.

For some, the below may be required:

1. Capital Gains statement.
2. Other sources of Income details.
3. Deduction related documents.