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GUIDE
2018-19
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Foreword
Income tax is the unfortunate reality of income. If given a choice, most of us wouldn’t want to pay tax on the
income we earn. But we should, because the income tax we pay is an important source of revenue for the
government. As citizens of India, we are also consumers of the country’s public infrastructure and facilities.
When we want these facilities and infrastructure to improve, it is also our duty and responsibility to contribute
towards building and maintaining it. Paying income tax and filing income tax returns is one way of doing that.
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GUIDE
2018-19
Index
4. GST
4.1 What Is It?
4.2 Various Benefit
4.3 How Will It Help Consumers?
5. FAQs
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Topic 1:
ALL YOU NEED TO KNOW
GUIDE ABOUT INCOME TAX
2018-19
There are two types of income tax - direct tax and the
newly launched Goods and Services Tax (GST) which
subsumed all other indirect taxes such as VAT, service
tax, excise etc.
Income tax collected by government is not only used for various government schemes but also
acts as a fiscal stabilizer that aid in distributing wealth evenly among the population.
According to the Income Tax Act of India, income from the following sources is considered
taxable:
If you are planning to go abroad for higher studies or are about to take up a job outside of
India, you’ll need at least three years’ filed income tax returns to show as proof of income.
People processing your visa application may request for this financial information to evaluate
your financial health, which in return shows that you can support yourself on your own in their
country.
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Topic 1:
ALL YOU NEED TO KNOW
GUIDE ABOUT INCOME TAX
2018-19
Winnings from lotteries, crossword puzzles, races including horse races, card game and other game of
any sort, gambling or betting of any form is classified as income from other sources
Interest received on compensation or on enhanced compensation is taxed under the head “Income from
other sources”
Gifts received by an individual or HUF (which are chargeable to tax) are also taxed under this head
The following types of income can be classified as Income from Other Sources, if it is not taxed
under the head “Profits and gains of business or profession”:
Apart from funding the activities of the government, taxes also act as a fiscal stabilizer that
aid in distributing wealth evenly among the population. Furthermore, taxes are instrumental in
cushioning the effects of economic cycles. The payment of Income Tax in India is made according
to the provisions made under the Income Tax Act.
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Topic 1:
ALL YOU NEED TO KNOW
GUIDE ABOUT INCOME TAX
2018-19
According to the Indian Income Tax laws, income from the following sources is deemed taxable:
The sum of income from all the sources above is calculated according to the provisions of Income
Tax Act. The tax rates in India vary according to the earnings of an individual and are referred to
as Income Tax slabs. These Income Tax rates are revised every year during the budget.
Income tax is calculated on an annual basis. It is levied on the income earned in the previous
year which is also known as the Assessment Year. In the eyes of the law, the Financial Year begins
on the 1st of April in a given year and ends on the 31st of March of the following year.
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Topic 1:
ALL YOU NEED TO KNOW
GUIDE ABOUT INCOME TAX
2018-19
Use the following pointers to plan your tax-saving for the year:
This way, you can figure out how much you need to invest to save taxes. It is best to begin
investing in the first quarter of the financial year so that you can spread the investments over
the year. Doing this won’t burden you at the end of the year and will also allow you to make
informed investment decisions.
Individuals & Hindu Undivided Families (HUF) not having income from
ITR 2
business or profession
*ITR-7: The ITR-7 income tax form is to be filed by individuals or companies that are required to submit their returns under the
following sections:
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Topic 1:
ALL YOU NEED TO KNOW
GUIDE ABOUT INCOME TAX
2018-19
Under this section, returns can be filed Under this section, returns are to be filed
by those individuals who receive income by political parties provided their total
from any property that is held for charity income earned is above the non-taxable
or religion in the form of a trust or legal limit
obligation
Under this section, returns are to be filed Under this section, returns are to be filed
by the following entities: by entities such as colleges, universities
or any other such institution wherein
• Any institution or association
mentioned under Section 10(23A) income returns, or loss are not required
• Any association involved with to be provided in accordance with other
scientific research provisions outlined in this section.
• Any institution mentioned in
Section 10(23B)
• Any news agency
• Any fund, medical institution or
educational institution
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Topic 3:
KEY HIGHLIGHTS FROM
GUIDE UNION BUDGET 2018-19
2018-19
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Topic 3:
KEY HIGHLIGHTS FROM
GUIDE UNION BUDGET 2018-19
2018-19
Topic 3:
KEY HIGHLIGHTS FROM
GUIDE UNION BUDGET 2018-19
2018-19
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Topic 3:
KEY HIGHLIGHTS FROM
GUIDE UNION BUDGET 2018-19
2018-19
Following are the tax slabs applicable from April 1,2018. No changes have been made in the old tax slabs. However, a standard
deduction of Rs. 40,000 has been introduced in lieu of medical allowance and transport allowance.
* Rs. 3 lakh to Rs. 5 lakh in case of 60 to 80 years Gross tax (a+b+c) 3,55,500 3,000
Standard dedection is not applicable to income Health-and-education cess (e) 4% of (d) 14,220 20
from profession
Total tax to be paid (d+e) 3,69,720 520
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Topic 3:
KEY HIGHLIGHTS FROM
GUIDE UNION BUDGET 2018-19
2018-19
Income tax slabs 2018-19- for Senior citizens (Aged 60 years but less than 80 years)
Income Tax Slab(Rs.) Tax % Education Cess Surcharge
0 to 300000 NIL NIL NIL
300001 to 350000 5%* 4% NIL
300001 to 500000 5% 4% NIL
500000 to 1000000 20% 4% NIL
1000001 to 5000000 30% 4% NIL
5000001 to 10000000 30% 4% 10%
10000001 & Above 30% 4% 15%
*Rebate of Rs.2500 can be claimed by individuals earning between Rs 2.5 lakh and Rs 3.5 lakh u/s87A
Income tax slabs 2018-19 - for Very Senior citizens (Above 80 years)
Income Tax Slab(Rs.) Tax % Education Cess Surcharge
0 to 500000 NIL NIL NIL
500001 to 1000000 20% 4% NIL
1000001 to 5000000 30% 4% NIL
5000001 to 10000000 30% 4% 10%
10000001 & Above 30% 4% 15%
Surcharge: If the total income exceeds Rs 50 Lakhs but below Rs 1 crore, a surcharge of 10% will be levied. 15% surcharge on income tax if the
total income is over and above Rs. 1 cr.
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These taxes are broadly classified into two types: Direct Tax and Indirect Tax
Direct Tax – Direct Tax is imposed on the Income of an individual. The amount of Tax payable
varies on the income earned by the individual from various sources such as salary, house rent
income etc. So, the more you earn, the more tax you pay to the Government which essentially
means the rich pay more tax in comparison to the poor.
Indirect Tax – Indirect tax is not imposed directly on income of individuals. Instead, it is imposed
on goods and services which in turn increase the cost (MRP) of Goods and Services. Unlike direct
tax, indirect tax should be borne by the end customer, rich and poor alike., There are many
indirect taxes. Some of these are levied by the Central Government whereas some are levied by
the State Government making the indirect tax system an extremely complicated system.
GST has been introduced to replace multiple indirect taxes levied by State and Central Governments
to simplify the indirect tax system.
GST has replaced almost 17 of the existing state and central indirect taxes (more to come) such
as central excise duty, additional customs duty, VAT, entertainment tax, service tax etc.
It is called as Goods and Services Tax because it is applicable on the supply of both Goods and
Services.
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the current CST and state entry taxes on inter-state movement. These warehouses were forced to
operate below their capacity, giving room to increased operating costs.
Under GST, however, these restrictions on inter-state movement of goods have been lessened.
• Input tax credit: The mechanism of input credit under GST is one of the most important
features of GST. This means that at the time of paying tax on output, manufacturers or service
providers, for example, can reduce their tax payable by the amount they have already paid
on inputs. For example, if a manufacturer’s total tax on output comes to Rs. 5,000 while
tax paid on input (purchases) is Rs. 3,000, the manufacturer needs to deposit only Rs.2,000
(Rs.5,000 - Rs.3,000) as tax, thus reducing the overall incidence of tax on final product.
Average tax burden on companies is likely to come down which is expected to reduce prices
and lower prices mean more consumption
• But input credit is available to the recipient (the manufacturer in this case) only if details
provided by the supplier in its return matches with those claimed by the recipient. Thus, it
encourages suppliers of goods and services to become GST-complaint. So, GST helps in
checking evasion of taxes
• In the current regime, tax rates vary from state to state. So, companies often choose
warehouses for their inventory based on tax considerations. Under GST, the country will move
to ‘One Nation, One Tax’ regime, giving companies freedom to set up their own warehouses
to optimize cost and improve customer service
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• Also, transportation costs could also fall due to reduction in long and winding queues
at border check-points and other entry points within and between the states. This will reduce
operational costs and will benefit companies. According to a World Bank report, corporates
can save up to 40 per cent of their logistic costs incurred at check-posts and toll plazas
• Analysts say that GST will usher in a more stable tax regime. “The real value of GST will
be in tax governance, where a system plagued with a plethora of discretionary, ad-hoc taxes
will move toward a ruled-based, transparent and stable tax regime,” said domestic brokerage
Motilal Oswal in a note. Under GST, the Centre and the states will jointly administer and
decide the taxes
• GST could also boost exports by making Indian goods competitive in global markets. Exports
will be treated as zero rated supplies which means no tax will be payable on exports of goods
or services. However, exporters can claim input tax credit
• For manufacturers or service providers, GST will help in ease of doing business. GST will bring
in a simpler tax regime with fewer exemptions, reduce multiplicity of taxes, reduce compliance
costs - no multiple record keeping for a variety of taxes, usher in simplified and automated
procedures for various processes such as registration, returns, refunds and tax payments. All
interaction needs to be through the common GSTN portal - so less public interface between
the taxpayer and the tax administration
• However, there could be short-term challenges for business. The transition to GST could
disrupt the working capital cycle of businesses in the initial phase due to “input credit lock-
up” in initial months, according to ratings agency India Ratings. Moreover, service tax rates
are likely to increase to 18 per cent as against 15 per cent
• Goods and Services Tax is seen boosting India’s GDP or gross domestic product growth
by 1.5-2 per cent over the long term. GST will deliver significant benefits by improved taxation
efficiency and ease of doing business, and will convert India into one common market,
Finance Minister Arun Jaitley has said.
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Why do I need to file tax return if my company deducts tax at source (TDS) and pays it
to the government?
A) Although tax is deducted at source (TDS), and you’re not liable to any more tax to the government,
it is compulsory to file returns if your income exceeds the basic exemption limit. Tax returns act as
a declaration to the government that you have derived income only from the source revealed by
you, and no other. It’s like getting a No Objection Certificate (NOC) from the library when you
leave college, even if you never stepped into the library, to reveal to the authorities that you have no
pending books to return.
What are the benefits of obtaining a Permanent Account Number [PAN] and PAN Card?
A Permanent Account Number has been made compulsory for every transaction with the Income-
tax Department. It is also mandatory for numerous other financial transactions such as opening
of bank accounts, in bank account, deposit of cash in bank account, opening of DEMAT account,
transaction of immovable properties, dealing in securities, etc. A PAN card is a valuable means of
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photo identification accepted by all Government and non-Government institutions in the country.
Is rental income from sub-letting chargeable to tax under the head “Income from house property”?
Rental income in the hands of owner is charged to tax under the head “Income from house property”.
Rental income of a person other than the owner cannot be charged to tax under the head “Income
from house property”. Hence, rental income received by a tenant from sub-letting cannot be charged
to tax under the head “Income from house property”. Such income is taxable under the head “Income
from other sources” or profits and gains from business or profession.
Even if no taxes have been deducted from salary, is there any need for my employer
to issue Form-16 to me?
Form-16 is a certificate of TDS. In your case it will not apply. However, your employer can issue a
salary statement.
If my income is taxed in India as well as abroad, can I claim any sort of relief because
of double taxation?
Yes, you can claim relief in respect of income which is charged to tax both in India as well as abroad.
Relief is either granted as per the provisions of double taxation avoidance agreement entered into
with that country (if any) by the Government of India or by allowing relief as per section 91 of the Act
in respect of tax paid in the foreign country.
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