What is Income Tax?
It is a tax levied by the Government of India on the income of every person. The provisions governing the Income-tax Law are given in the Income-tax Act, 1961.
What is the Financial Year for Income Tax Purposes?
The Financial Year under the Income-tax Law is the period starting from 1st April and ending on 31st March of next calendar year.
What are the various forms of collection of Income?
Taxes are collected by the Government through various means;
- Advance Tax
- Self Assessment Tax
- Tax on Regular Assessment
- Taxes deducted at source [TDS]
- Taxes collected at source [TCS]
- Attachments etc.
What are the different heads under which Income Tax is levied?
Income-tax Act has classified the income of a taxpayer under five different heads of income, viz.:
- Income from house property
- Profits and gains of business or profession
- Capital gains
- Income from other sources
What is the basic exemption limit for Income Tax?
For the financial year 2017-18;
- For Individual, HUF, AOP, and BOI- Rs. 2,50,000
- Individuals in the age group of 60-80 years- Rs. 3,00,000
- Individuals of 80 years and above- Rs. 5,00,000.
For other categories of persons such as co-operative societies, firms, companies and local authorities- no basic exemption limit exists and, hence, they have to pay taxes on their entire income chargeable to tax.
Does India provide Double Taxation Relief?
Yes, one 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.
What are the books of account prescribed under Income Tax Laws to be maintained?
For companies the books of account are prescribed under the Companies Act. Other persons are expected to keep and maintain such book of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of the Act.
Further, the Institute of Chartered Accountants of India has prescribed various Accounting Standards and Guidelines that are required to be followed by the business entities.
What is PAN?
PAN stands for Permanent Account Number. 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).
Given below is an illustrative PAN:
What are the benefits of taking PAN?
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, availing of institutional financial credits, purchase of high-end consumer items, foreign travel, the transaction of immovable properties, dealing in securities, etc. A PAN card is a valuable means of photo identification accepted by all Government and non-Government institutions in the country.
The author is a Mumbai based, Practicing Chartered Accountant and can also be reached at firstname.lastname@example.org
Disclaimer- This write up is only for awareness purpose and professional opinion may be required in specific cases depending upon the particular facts.