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Income From Salray

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Income from Salary Components of Salary Basic Salary Your basic salary is a fixed part of your paycheck and is used to calculate other parts of your salary. For example, your HRA is a percentage of your basic salary, decided by the company. Your PF is also deducted at 12% of your basic salary. The basic salary usually makes up a big part of your total pay. Dearness Allowances (DA) DA is a percentage of your basic salary that changes with inflation rates. It is usually paid by the government to employees in government departments and public sector companies. House Rent Allowances (HRA) Salaried individuals living in rented houses or apartments can claim House Rent Allowance (HRA) to reduce their taxes. HRA can be partially or fully tax-exempt. The income tax laws provide a method to calculate the exempt amount of HRA. Note: – If you don’t live on rent your HRA will be fully taxable. You can read more about how to claim HRA exemption Conveyance Allowances Conveyance Allowance, also known as Transport Allowance, helps cover your travel costs from home to work. Up to Rs 1,600 per month or Rs 19,200 per year is tax-free. Starting in 2018, the conveyance allowances (Rs 19,200) and medical allowance (Rs 15,000) was replaced by a standard deduction of Rs 40,000. Leave Travel Allowances (LTA) Salaried employees can get a tax exemption for a trip within India under LTA. The exemption covers only the shortest distance of the trip. You can claim this allowance for trips taken with your spouse, children, and parents, but not with other relatives. The exemption is based on the actual expenses, so you need to take the trip and spend the money to claim it. Submit the bills to your employer to get this exemption. You can read more about how to claim LTA exemption Employee Contribution to Provident Fund (PF) The Provident Fund (PF) is a social security program by the Government of India. Every month, both the employer and employee each contribute 12% of the employee’s basic salary to the employee’s pension and provident fund. The current EPF interest rate, as stated in the Union Budget 2023, remains at 8.10%. However, the TDS rate for taxable EPF withdrawals has been reduced from 30% to 20% for those without a PAN. This retirement benefit is mandatory for companies with more than 20 employees, as required by the EPF Act of 1952. The PF system helps employees save for retirement by regularly setting aside a portion of their salary. The guaranteed interest on PF contributions makes it a reliable investment. Additionally, the tax benefits on both the contributions and withdrawals (after certain conditions) provide significant savings for employees. Overall, the PF scheme is an essential part of financial planning for salaried individuals in India. Professional Tax Professional tax is a tax that state governments charge, similar to how the central government charges income tax. The most a state can charge for professional tax is Rs 2,500. Employers usually deduct this tax from your salary and pay it to the state government. When you file your income tax return, you can deduct the amount of professional tax from your salary income. Standard Deduction The Standard Deduction was brought back in the 2018 budget, replacing conveyance and medical allowances. Employees can now deduct a flat Rs. 50,000 (previously Rs. 40,000 before the 2019 budget) from their total income, which lowers their tax bill. In the recent Union Budget for 2023-24, a Rs. 50,000 standard deduction was added to the new tax regime. Before this, it was only available in the old tax regime. All components are taxable and some are subject

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TDS rates for AY 25-26

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Understanding TDS: Tax Deducted at Source TDS, or Tax Deducted at Source, is a mechanism used by tax authorities to ensure the collection of income tax at the source of income itself. This system requires payers to withhold a portion of certain payments, such as salaries, rent, interest, commission, or contractor fees, and remit it directly to the government. For instance, as a small business owner, when you pay salaries to your employees, you deduct a specific percentage of tax from their salaries before disbursing the payment. This deducted amount is then paid to the government on behalf of your employees. Similarly, if you rent out property, you deduct TDS from the rent amount before paying it to the landlord. The main goal of TDS is to ensure timely tax collection as income is earned, rather than waiting until the end of the financial year for individuals to file their tax returns. This helps in efficient tax collection and reduces the chances of tax evasion. TDS Rate Chart for FY 2024-25 (AY 2025-26) Section Nature of Payment Threshold TDS Rate (with PAN) TDS Rate (without PAN) 194C Payments to Contractors and Subcontractors, Advertising Single payment > Rs. 30,000 or Aggregate > Rs. 1,00,000 1% (Individual/HUF) 2% (Others) 5% (Individual/HUF) 20% (Others) 194-I (a) Rent on Land, Building, Furniture & Fittings Rs. 2,40,000 per annum 10% 20% 194-I (b) Rent on Plant & Machinery Rs. 2,40,000 per annum 2% 20% 194J Professional/Technical Fees Rs. 30,000 10% 20% 194H Commission/Brokerage (other than lottery) Rs. 15,000 5% 20% 194Q Payments for the purchase of goods Rs. 50,00,000 0.1% 5% 192 Salary As per income tax slabs Slab Rates Slab Rates 192A Premature withdrawal of PF Rs. 50,000 10% 20% (Usually higher) 193 Interest on Securities Bonds – 10,000 Other Securities – No Limit 10% 20% 194 Dividends Rs. 5000 10% 20% 194A Interest (other than on securities) Rs. 40,000 Rs. 50,000 for senior citizens Rs. 5,000 from friends/relatives 10% 20% 194B Winnings from lottery, games, etc. Rs. 10,000 30% 30% 194BA Income from online games Nil 30% 30% 194BB Winnings from horse races Rs. 10,000 30% 30% 194D Insurance Commission Rs. 20,000 Individuals – 5% Companies – 10% 20% 194E Payment to non-resident sportsmen/sports association No threshold 20% 20% 194EE Payments in respect of deposits under NSS Rs. 2500 10% 20% 194F Payment for the repurchase of the unit by Unit Trust of India (UTI) or a Mutual Fund No threshold 20% 20% 194G Commission/brokerage on lotteries Rs. 15,000 5% 20% 194IA Sale of Immovable Property Rs. 50,00,000 1% 20% 194IB Rent payment that is made by an individual or HUF not covered under payment 194I (No Business/No Audit Cases) 50,000 per month 5% 20% 194IC Payment under Joint Development Agreements (JDA) to Individual/HUF No threshold 10% 20% 194K Payment of dividends by mutual Funds Rs. 5000 10% 20% 194LA Compensation on acquisition of certain immovable property Rs. 2,50,000 10% 20% 194M Certain payments by Individuals/HUF where they are not liable to deduct TDS under Sections 194C, 194H, and 194J Rs. 50,00,000 5% 20% 194N In case cash withdrawal over a certain amount takes place from the bank ITR Filers – Rs. 1 Crore ITR Non-Filers – Rs. 20,00,000 2% 20% 194-O Amount paid for the sale of products/services by e-commerce service providers via their digital platform Rs. 5,00,000 1% 5% 194R Benefits/perquisites from business or profession Rs. 20,000 10% 20% 194S Payment for transfer of Virtual Digital Assets Rs. 10,000 (specified person) Rs. 50,000 (others) 1% 1% Note – Above chart covers most popular TDS rates for domestic transactions. For detailed list, kindly download TDS rate PDF attached below Attached – TDS & TCS rate chart AY 24-25

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Tax Audit and its Due Date

1 Comment / Income tax blogs / Devendra chourey

Applicability of Tax Audit Professionals: > Professionals like doctors, lawyers, architects, chartered accountants, etc., whose gross receipts from the profession exceed ₹50 lakh in the previous financial year. > When cash transactions constitute no more than 5% of the total gross payments, the turnover threshold for mandatory tax audit is elevated to Rs. 75 Lacks. Businesses:- > Any person carrying on business whose total sales, turnover, or gross receipts in the previous financial year exceeds ₹1 crore. For professionals, the threshold is ₹50 lakh. > If cash transactions are up to 5% of total gross payments, the threshold limit of turnover for a tax audit is increased to Rs.10 crore. Presumptive Taxation Scheme: > Taxpayers opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE are also subject to tax audit if their income exceeds the threshold limits and they claim income lower than the deemed profits and gains computed under these sections . Due date of Tax Audit The due date for tax audit is generally set to be 1 month before the due date of filing the income tax return. For most taxpayers, the due date for filing income tax returns is September 30th of the assessment year subject any extensions done by CBDT.

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Income Tax Forms: 5, 6 &7

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ITR-5 ITR-5 is for: Firms LLPs(Limited Liability Partnerships) AOPs (Associations of Persons) BOIs (Bodies of Individuals) Artificial Juridical Persons (AJPs) Estates of deceased individuals Estates of insolvent individuals Business trusts Investment funds ITR-6 For Companies other than companies claiming exemption under section 11 (Income from property held for charitable or religious purposes), this return has to be filed electronically only. ITR-7 For individuals and companies required to submit returns under specific sections: Section 139(4A): Individuals or entities receiving income from property held under trust or other legal obligation, wholly or partly for charitable or religious purposes, must file this return. Section 139(4B): Political parties must file this return if their total income exceeds the maximum amount not chargeable to income tax, without considering section 139A provisions. Section 139(4C): This return applies to: Scientific research associations News agencies Associations or institutions under section 10(23A) Institutions under section 10(23B) Funds, universities, educational institutions, hospitals, or medical institutions. Section 139(4D): Universities, colleges, or institutions not required to file returns under other provisions must file this return. Section 139(4E): Business trusts not required to file returns under other provisions must file this return. Section 139(4F): Investment funds as per section 115UB, not required to file returns under other provisions, must file this return. Selecting appropriate Income tax form is tedious process . If you face difficulty in selecting appropriate Income tax form , feel free to contact us

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Income Tax Forms

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You must file an income tax return (ITR) in India if your gross total income exceeds the basic exemption limit for your age group: Age Group Basic Exemption Limit Below 60 years: Rs 2.5 lakh ₹ 2.5 lakh 60 to 80 years ₹ 3.0 lakh Above 80 years ₹ 5.0 lakh Even if your income is below these limits, you must still file a tax return if any of the following conditions apply to you: You deposited more than Rs 1 crore in one or more current bank accounts. You deposited more than Rs 50 lakh in one or more savings bank accounts You spent over Rs 2 lakh on foreign travel for yourself or someone else. Your electricity bill exceeded Rs 1 lakh during the previous year. Your tax deducted at source (TDS) or tax collected at source (TCS) was more than Rs 25,000 (or Rs 50,000 if you are a senior citizen). Your business had a total turnover of more than Rs 60 lakh in the previous year. Your professional income was more than Rs 10 lakh in the previous year. Which ITR You Need to File? The following information will help you find out which type of income tax return is applicable to you for FY 2023-24. ITR-1 or SAHAJ This Return Form is for individual residents whose total income for the AY 2024-25 includes: Income from salary/pension Income from one house property (excluding cases with loss brought forward from previous years) Income from other sources (excluding winnings from lottery and racehorses) Agricultural income up to Rs 5000 Who can not use the ITR-1 Form Total income exceeding Rs 50 lakh Agricultural income exceeding Rs 5000 Taxable capital gains Income from business or profession Income from more than one house property Director in a company Investments in unlisted equity shares during the financial year Owning assets or having financial interests outside India, including signing authority in any foreign account Resident not ordinarily resident (RNOR) and non-resident Foreign income Tax deducted under Section 194N Deferred tax payment or deduction on ESOP Any brought forward loss or loss to be carried forward under any income head ITR-2 ITR-2 is for individuals or Hindu Undivided Families (HUFs) whose total income for the AY 2024-25 includes: Income from salary/pension Income from house property Income from other sources (including lottery winnings and racehorse income) Being a director in a company Investments in unlisted equity shares during the financial year Resident not ordinarily resident (RNOR) and non-resident Income from capital gains Any foreign income Agricultural income over Rs 5,000 Owning assets or having financial interests outside India, including signing authority in any foreign account Tax deducted under Section 194N Deferred tax payment or deduction on ESOP Any brought forward loss or loss to be carried forward under any income head If you need to include the income of another person (like a spouse or child) with your income, you can use this form if their income falls into any of the categories above. There is no upper limit on total income; it can exceed Rs 50 lakh. ITR-3 The current ITR-3 Form is for individuals or Hindu Undivided Families (HUFs) with income from a proprietary business or profession. Running a business or profession that requires maintaining and/or auditing books of accounts Being a director in a company Investments in unlisted equity shares during the financial year Income from house property, salary/pension, and other sources Income as a partner in a firm ITR-4 or Sugam The current ITR-4 Form is for individuals, Hindu Undivided Families (HUFs), and partnership firms (except LLPs) who are residents and have the following types of income: Business income under the presumptive income scheme (sections 44AD or 44AE) Professional income under the presumptive income scheme (section 44ADA) Income from salary or pension up to Rs 50 lakh Income from one house property up to Rs 50 lakh (excluding any brought forward loss or loss to be carried forward) Income from other sources up to Rs 50 lakh (excluding income from lottery and racehorses) Freelancers earning from the above sources can also use this scheme if their gross receipts do not exceed Rs 50 lakh. The presumptive income scheme (sections 44AD, 44AE, and 44ADA) allows income to be calculated based on a percentage of gross receipts/turnover or ownership of commercial vehicles. If business turnover exceeds Rs 2 crore, you must file ITR-3. Who can not file ITR-4 Form? Total Income exceeds Rs 2 crore Income from more than one house property Owning foreign assets Signing authority in any foreign account Income from any foreign source Director in a company Investments in unlisted equity shares during the financial year Resident not ordinarily resident (RNOR) and non-resident Foreign income Assessable for another person’s income where tax is deducted from that person’s income Deferred tax payment/deduction on ESOP Any brought forward loss or loss to be carried forward under any income head Selecting appropriate Income tax form is tedious process . If you face difficulty in selecting appropriate Income tax form , feel free to contact us

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Guide to file ITR 1

Leave a Comment / Income tax blogs / Devendra chourey

A P P L I C A B L I T Y Resident individuals (not for HUFs, firms, or companies). Individuals with income up to ₹50 lakh. Sources of Income: Salary or pension. One house property (excluding cases where loss is brought forward from previous years). Other sources (excluding winnings from lottery and income from racehorses). Agricultural income up to ₹5,000. Log In: Visit the Income Tax e-Filing portal and log in. Select ITR-1: Choose the relevant assessment year (AY 2024-25), select ITR-1, and choose ‘Prepare and Submit Online’. Fill Personal Details: Verify pre-filled personal information. Income Details: Enter details of salary, house property, and other sources of income. Enter deductions under Chapter VI-A such as 80C (lic premium, tuition fees, Investment in EPF, PPF ,etc) 80D (medical Insurance premia,etc), etc Tax Calculation: Calculate the tax payable or refundable. Submit and Verify: Submit the form and choose a verification method (e.g., Aadhaar OTP, EVC, or sending ITR-V to CPC). E-Verify: E-Verification: Using Aadhaar OTP, Net Banking, EVC (Electronic Verification Code), etc. Physical Verification: Send a signed copy of ITR-V to the Centralized Processing Center (CPC) in Bengaluru within 30 days of filing the return. F I L I N G P R O C E S S

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Everything about ITR 3

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All About ITR 3 ITR-3 is used by individuals and Hindu Undivided Families (HUFs) who have income from profits and gains of business or profession. It also includes individuals and HUFs who have income from the following sources: Carrying on a business or profession. Income from house property. Income from salary/pension. Income from other sources. Income from capital gains. Income from foreign assets Here’s a detailed guide on filing ITR-3 for Assessment Year 2024-25: Who Should File ITR-3? Individuals and HUFs having income from profits and gains of business or profession. Individuals and HUFs having income as a partner in a firm. Individuals and HUFs having income from house property, salary/pension, other sources, and capital gains. Income Sources Covered: Income from Business or Profession Profits or gains from a business or profession carried on by the taxpayer. Income from House Property. Rental income from more than one house property. Income from Salary/Pension: Salary or pension received by the taxpayer. Income from Other Sources: Interest, dividends, lottery winnings, etc. Income from Capital Gains: Short-term and long-term capital gains. Income from Foreign Assets: Income from any foreign asset or foreign income. Key Sections and Details in ITR-3 Part A – General Information: Personal details such as name, PAN, Aadhaar number, contact details, and filing status. Part B – Gross Total Income: Details of income from salary, house property, capital gains, business or profession, and other sources. Part C – Deductions and Taxable Total Income: Deductions under Chapter VI-A (like Section 80C, 80D, etc.) and computation of taxable income. Part D – Computation of Tax Payable: Calculation of tax payable on the total income, including interest and fee. Part E – Other Information: Details of tax payments such as advance tax, self-assessment tax, and TDS. Schedules: Various schedules like Schedule BP (Income from Business or Profession), Schedule CG (Capital Gains), Schedule HP (Income from House Property), and others to provide detailed income and deduction information. Step-by-Step Guide to Filing ITR-3 Log In: Visit the official Income Tax e-Filing portal: https://eportal.incometax.gov.in/ Log in using your User ID (PAN), password, and Captcha code. Go to ITR Filing Section: Click on the ‘e-File’ tab and select ‘Income Tax Return’. Select ITR-3: Choose the relevant assessment year and select ITR-3. Choose ‘Prepare and Submit Online’. Fill in the Form: Part A – General Information: Verify and update personal information. Part B – Gross Total Income: Enter details of income from various sources. Part C – Deductions and Taxable Total Income: Enter deduction details. Part D – Computation of Tax Payable: Calculate the tax payable. Part E – Other Information: Enter details of tax payments. Schedules: Fill in the relevant schedules with detailed information. Validate and Calculate: Click on ‘Validate’ to check for errors. Click on ‘Calculate Tax’ to compute your tax liability or refund. Submit and Verify: Submit the form and choose the verification method: Aadhaar OTP Electronic Verification Code (EVC) Digital Signature Certificate (DSC) Sending a physical signed copy of ITR-V to CPC, Bengaluru E-Verify: Complete the e-verification process using one of the available methods or send the signed ITR-V to CPC within 30 days of filing. Important Points Accuracy: Ensure all details and figures are accurate to avoid discrepancies and potential notices from the Income Tax Department. Documentation: Keep all relevant documents like Form 16, Form 26AS, bank statements, and proof of deductions handy for reference and future scrutiny. Schedules: Carefully fill in all applicable schedules to accurately report your income and deductions. Conclusion Filing ITR-3 can be complex due to the various income sources and detailed information required. However, following the steps outlined above and ensuring accurate and complete information can help you file your return correctly for the Assessment Year 2024-25. If needed, feel free to let us know especially if you have multiple income sources or complex financial transactions.

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