Income Tax

TDS or Tax Deducted at Source is a way of collecting Income Tax by the Government of India. The TDS mechanism ensures the Government receives income tax from the assesse at the time of transaction – thereby minimizing tax default risk and ensuring timely collection of the tax. TDS or Tax Deduction at Source is a system where tax or TDS gets deducted and TDS payments happens online. The tax deduction is at the time of making some payments like rent, interest, commission etc. The person making such specified payments is responsible for deducting the TDS and making TDS payment and paying the balance amount to the person entitled to receive such payment. TDS Payment TDS is deducted by the person paying the income. Thus, the tax is deducted at the source of income itself. The tax deducted is then deposited by the payer of the income into the income tax department account on behalf of the payment recipient as TDS payment. The TDS payment is thus deemed to be payment of income tax by the recipient at the time of his assessment. TAN Registration TAN registration or Tax Deduction and Collection Account Number (TAN) is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. All those persons who are required to deduct tax at source or collect tax at source on behalf of Income Tax Department are required to obtain TAN. When TDS Deduction and TDS Payment is Required Salary and all other positive incomes under any head on income( Section 192 ) Interest on securities ( Section 193 ) Interest other than interest on securities( Section 194A ) Payments to contractors and sub-contractors( Section 194C ) Winnings from Lottery or crossword puzzles( Section 194B ) Winnings from horse races( Section 194BB ) Insurance Commission covering all payments for procuring Insurance business( Section 194D ) Any interest other than interest on securities payable to non-residents not being a company or to a foreign company(Section 195 ) Payment to non-resident sportsman including athlete or sports association/institution.In case of non-resident sportsman,payments in respect of advertisements as well as articles on any game/sports in India in newspapers,magazines,etc. is included( Section 194E ) Payment in respect of deposits under NSS[National Savings Scheme]( Section 194EE ) Payment on account of repurchase of Units by Mutual Fund or UTI( Section 194F ) Payment for Commission or brokerage( Section 194H ) Payment of rent( Section 194I ) Payment of fees for professional or technical services( Section 194J ) Commission to Stockist,distributors,buyers and sellers of Lottery tickets including remuneration or prize on such tickets(Section 194G ) Income from Units purchased in foreign currency or long-term capital gain arising from the transfer of such Units purchased in foreign currency ( Section196B ) Payment of any income to non-residents in respect of interest or dividend on bonds and shares( Section 196C )etc. Procedure for making online TDS Payment To make online TDS Payment, logon to the e-Tax Payment System and follow the steps below: Select the relevant challan online, as applicable Income Tax Challan No ITNS 280 Income Tax Challan No ITNS 281 Income Tax Challan No ITNS 282 Income Tax Challan No ITNS 283 Enter its PAN / TAN as applicable. There will be an online check on the validity of the PAN / TAN entered. If PAN/ TAN is valid the taxpayer will be allowed to fill up other challan details like accounting head under which payment is made, name and address of TAN and also select the bank through which payment is to be made, etc. On submission of data entered a confirmation screen will be displayed. If the taxpayer confirms the data entered in the challan, it will be directed to the net-banking site of the bank. The taxpayer will login to the net-banking site with the user id/ password provided by the bank for net-banking purpose and enter payment details at the bank site. On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment being made. Due Date for TDS Online Payment Non-government tax deductors can deposit TDS online for:  1 – Tax deducted for the months April to February – by the 7th of the following month  2 – Tax deducted in March – by the 30th of April  For example, if you deduct tax in July, the TDS amount can be deposited by the 7th of next month, i.e. by the 7th of August.  In case of tax deducted on purchase of immovable property, the time limit for TDS deposit is the 30th of the following month in which the property is purchased.  For example, if you purchase the property in June, TDS can be deposited by the 30th of July. How to check the status of online TDS Payments? The taxpayer can check the TDS deposit status online. To check the TDS deposit online, go to TIN-NSDL Oltas challan status Inquiry. There are two ways to search the challan status of TDS payment. 1 – CIN Based View On entering the challan details, such as the BSR code of collecting branch, challan date, challan serial number, and amount (optional), the taxpayer can view the following details: Challan serial number Date of deposit BSR code Major Head Code with description TAN/PAN Name of taxpayer Receipt date by TIN Amount confirmation, if it is entered (correct or not) 2 – TAN based view : By providing TAN and challan date range for a particular financial year, the taxpayer can view these details: CIN Major Head Code with description Minor Head Code Nature of Payment If the taxpayer enters the amount against a CIN, the system will confirm whether it matches the details of the amount reported by the bank. Advantages of Online TDS Payment You can pay taxes anytime and from your net-banking account.  2. The TDS amount gets transferred instantly through your account.  3. Online TDS payments to the income tax

Amounts gained in exchange for time off that an employee did not use are referred to as “leave encashment.” An employee has the option to cash in accrued leave during their retirement. It is completed either as part of maintaining service or after quitting a job. Every organization has a different leave encashment policy. Some employers cover the cost of unused absences during the next academic year. Some employers let employees roll over unused vacation days from one year to the next. Additionally, the employer provides for unused leaves at the time of departure. The amount allowed for leave encashment and the ITR Online Apply process depends on the kind of employment. What is Leave Encashment? Every salaried person, as per labour law, is entitled to a minimum number of paid leave every year. However, it is not necessary that an individual employee utilises all the leave he is entitled to in a year. In fact, most employers allow the employees an option of carrying forward such unutilised paid leaves.  This would invariably leave the employee with an accumulated unutilised leave balance at the time of retirement or resignation from the company, as the case may be. This compels the employer to compensate the unutilised paid leave of the employees. This concept is better known as leave encashment. The guidelines and the leave encashment policy vary from one firm to the next. Typically, some employers compensate for the time off taken, while others make adjustments the following year. However, the Factories Act, of 1948 mandates that unclaimed leaves and bonuses be paid by the 7th or 10th of the month following resignation. What are the types of leaves? The different types of leaves are mentioned in the leave policy of a company. The leave policies differ from company to company. Here are the types of leaves generally available for employees:  Casual leave: Casual leaves are available for 7 to 10 days. Employees may avail of these leaves for personal reasons. Encashment of this leave varies from one company to another.  Earned leave or privilege: An employee can avail of earned leaves with prior notice to the authority. These leaves become eligible for encashment after a specific period. This policy varies from one organisation to another.   Medical leaves: If employees cannot perform their duties towards the organisation due to health conditions, they must inform the employer of the leaves. The maximum limit of the number of medical leaves available differs from one firm to another.  Holiday leaves: Holiday leaves are granted by employees, and no salary is deducted for these leaves. The maximum number of holiday leaves differs from one company to another.  Maternity leaves: Maternity leaves are only available for female employees and can range from 12 to 26 weeks during pregnancy. An employee can ask for an extension, but no payment shall be made for that period. However, these leaves are not available for encashment.  Sabbaticals: Employees can take leaves for upskilling and expand their knowledge. They can enrol for a course, and for that period of time, the employer will reimburse those leaves.  The notion of Leave Encashment According to labor laws, every salaried individual is entitled to a minimum amount of paid leave each year. An employee does not always have to use up all of his or her annual leave entitlements. In reality, the majority of firms provide their staff the choice to roll over any unused paid time off. As a result, the individual would certainly have an unutilized leave balance when they retired or quit their job, as the case may be. This forces the business to reimburse the employees for any paid time off that goes unused. This idea is sometimes referred to as leave encashment. Requisites of Leave Encashment According to employment legislation, every salaried person is entitled to a minimum amount of paid leave each year. A worker does not have to use all of the paid time off that is available to him in a given year. Most employers provide their staff the choice to roll over any unused paid time off. This would often result in the employee having an overall balance of unused leave at the time of departure or retirement from the firm, as applicable. Additionally, this mandates the employer to pay back the employees’ unused paid time off. Benefits of Leave Encashment If money is collected for leave encashment while the employee is still working, it must be paid. If you leave a job owing to termination or resignation, the money collected based on leave encashment is receivable to you, regardless of whether you work in the public or private sector. According to income tax regulations, the value or sum received for leave encashment is treated as payroll income and is taxed equally at the specific tax slab rate that applies to the employee. The sum taken toward leave encashment at the time of retirement for government (state and central) representatives is exempt from tax. Consider the scenario where you receive Rs. 5 lacks as leave encashment after retirement. Your basic pay (basic + DA + commission) in the 10 months just before retirement was Rs 40,000 per month or a total of Rs 4 lakh. The best exemption you may get in this case is Rs 3 lakh (sanctioned limit). As a result, your income will be estimated and taxed at Rs 2 lakh (Rs 5 lakh – Rs 3 lakh). It is not necessary to pay for the return of leave encashment to a late employee’s legitimate heirs. Let’s say an employee has redeemed leave in one or more years and has taken advantage of any relevant exceptions. The amount of release requested in this case will be deducted from the 3 lakh rupee limit. Employees may be excluded from paying back the money they have accrued for cashing in their leave even if they resign or retire. The director of tax and administration indicated that the sum would be deducted from the amount of the exception that would be granted. How is

Section 50C is applicable only to land or building or both. Section 50C uses value adopted by the Stamp Valuation Authority (SVA) for the purpose of levying stamp duty on registration of properties, as guidance value to determine undervaluation of land or building if any in the sale agreement. As per section 50C, the calculation of capital gain of the sale of land or building or both is held as a capital asset. Further, this Section is not applicable in the case of land or building or both are held as stock. This present blog pays attention to ‘Section 50C of the Income Tax Act,1961’. Capital Gain Capital gains are income on the sale of any wealth in the hands of the seller. A capital asset includes various assets including real estate. So, any gain on the sale of land or building by the owner is taxable as a capital gain. Sale consideration reduced by the cost of acquisition (cost of acquisition for land or building held for more than 24 months) is taxable as a capital gain. As per the Income Tax Act, capital gains tax in India must not be paid in case of the individual inherits the property and there is no sale. Though, if the person who has inherited the property decides to sell it, the tax will have to be paid on the income that has been generated from the sale. These are some examples of capital assets jewellery, trademarks, patents, vehicles, machinery, leasehold rights, house property, buildings, and land. Section 50C of the Income Tax Act, 1961 Section 50C talks about the calculation of capital gain of the sale of land or building or both which is held as a capital asset. According to this section, the cost of sale consideration should not be less than the stamp duty cost which is assessed by the Stamp Valuation Authority. Nevertheless, a Marginal relief of 10% difference is allowed by the income tax department. Further, this Section is not applicable in the case of land or building or both are held as stock. In case of a sale, consideration received or claimed to be received by the seller on the sale of land or building or both is less than the cost adopted by stamp valuation authority, such cost adopted by SVA would become actual sale consideration received or increasing to the seller. Consequently, capital gain would be Valuation according to stamp valuation specialists reduced by the cost of acquisition. Calculation of Capital Gain under Section 50C of the Income Tax Act, 1961 The following table shows the way to calculate the Capital Gain under the section 50 C of the income tax act, of 1961: Particular amount The full value of consideration: Sale value or stamp duty value (Higher)     … Less: Expenditure about the transfer     … Net Consideration     … Less: Cost of Acquisition     … Less: Cost of Improvement     … Capital Gain/loss     …   But, where the Stamp duty value is a maximum of 110% of consideration, then those sale considerations shall be treated as Full Value of Consideration Conditions for Applicability under Section 50C It is held on capital asset There is a transfer of land or building or both Whether it is Long Term Capital Asset or Short Term Capital Asset The asset can be depreciable or non-depreciable. What is Stamp Duty? Stamp duty value means any value adopted by any authority of the Central or State Government for the determination of payment of stamp duty for the immovable property. Under section 50C​​, while calculating capital gain ascending on the transfer of land or building or both, if the actual sale consideration of such land and/or building is less than the stamp duty value, then the stamp duty value will be taken as the full value of consideration. Calculation of Stamp Duty under section 50C of the Income Tax Act, 1961 The stamp duty value is calculated by the Stamp Valuation Authority. Conversely, the stamp duty on the date of the agreement may be different from the stamp duty value on the date of registration. Following are the 2 possible scenarios in this case: Take the stamp duty value on the date of the agreement: Fully or partially of consideration has been known before the date of the agreement and; Payment should be made through account payee cheque/draft or as per prescribed electronic mode. Take stamp duty value on the date of registration Particulars Situation 1 Situation 2 Situation 3 Stamp duty value on the date of Agreement     … … … Stamp duty value on the date of Registration     … … … Payment of consideration     … … … Mode of payment     … … … Stamp Duty value for Section 50C     … … … There can be different honest reasons among the parties for having a transaction of sale of land or building for a consideration lower than the cost agreed by the Stamp Valuation Authority. Section 50C of the income tax Act provides protection only against variability in the cost of the property caused due to a considerable gap between different stages of the transaction of sale. Further, there have been many litigations in the past where the value of the asset on the date of agreement to sell and actual sale varies due to economic aspects such as demand and supply. What Happens If the Selling Price Is Lower Than the Value Adopted by SVA? While there can be varied genuine reasons between the parties for having transaction of sale of land or building for a consideration lower than the value adopted by SVA, Section 50C provides safeguard only against fluctuation in the value of property caused due to considerable gap between different stages of transaction of sale. To explain this further, there have been litigations in the past in cases where the value of the asset on the date of agreement to sell and actual sale differs

Income tax is a tax charged on the annual income earned by an individual. The amount of tax paid will depend on how much money you make as income over a financial year. Return Type Applicability ITR-1 ITR-1 form can be used by Individuals who have less than Rs.50 Lakhs of annual income earned by way of salary or pension and have one house property only. ITR-2 ITR-2 form must be filed by individuals who are NRIs, Directors of Companies, shareholders of private companies or having capital gains income, income from foreign sources, two or more house property, income of more than Rs.50 lakhs. ITR-3 ITR-3 form must be filed by individuals who are professionals or persons who are operating a proprietorship business in India. ITR-4 ITR-4 form can be filed by taxpayers enrolled under the presumptive taxation scheme. To be enrolled for the scheme, the taxpayer must have less than Rs.2 crores of business income or less than Rs.50 lakhs of professional income. ITR-5 ITR-5 form must be filed by partnership firms, LLPs, associations and body of individuals to report their income and computation of tax. ITR-6 ITR-6 form must be filed by companies registered in India. ITR-7 ITR-7 form must be filed by entities claiming exemption as charitable/religions trust, political parties, scientific research insitutions and colleges or universities. Its is mandatory for individuals, NRIs, partnership firms, LLPs, companies and Trust to file income tax returns each year. Individuals and NRIs are required to file income tax return, if their income exceeds Rs.2.5 lakhs per annum. Proprietorship firms and partnership firms are required income tax return – irrespective of amount of income or loss. All companies and LLPs are mandatorily required to file income tax return,  Who Should Pay Income Tax? It is mandatory to file ITR for individuals If the total Gross Income is over Rs.3,00,000 in a financial year (Including standard deduction). This limit exceeds Rs.3,00,000 for senior citizens and Rs.5,00,000 for super senior citizens. The entities listed below must pay taxes and file their income tax returns. Artificial Judicial Persons Corporate firms Association of Persons (AOPs) Hindu Undivided Families (HUFs) Companies Local Authorities Body of Individuals (BOIs) What are the Different Types of Income? Property Income – Renting a house is taxable under this type of income. Salary Income – Income earned as a salary or pension is also taxable under this type of income. Business or Professional Income – Profits generated by self-employed individuals, freelancers, businesses, or contractors, and income made by professionals like chartered accountants, life insurance agents, lawyers, and doctors who practice in their fields, including tuition teachers, are taxable under this type of tax. Capital Gain Income – Surplus income generated from the sale of capital assets like stocks, mutual funds, or real estate is taxable under this type of income. Income from Other Sources – Income earned as interest from savings bank account, fixed deposits, and lottery winning are considered as income from other sources. Penalty for Late Filing Income Tax Return Taxpayers who do not file their income tax return on time are subject to penalty and charged an interest on the late payment of income tax. Also, the penalty for late filing income tax return on time has been increased recently. The penalty for late filing income tax return is now as follows: Late Filing between 1st August and 31st December – Rs.5000 Late Filing After 31st December – Rs.10,000 Penalty if taxable income is less than Rs.5 lakhs – Rs.1000 Income Tax Return Due Date The due date for income tax return filing is 31st July of every year for individual taxpayers. The due date for income tax return filing for companies and taxpayer requiring tax audit is 30th September. Section 44AD of the Income Tax Act deals with tax audit under Income Tax Act. Business- In case of a business, tax audit would be required if the total sales turnover or gross receipts in the business exceeds Rs.1 crore in any previous year. Professional- In case of a profession or professional, tax audit would be required if gross receipts in the profession exceeds Rs.50 lakhs in any of the previous year. Presumptive Taxation Scheme- If a person is enrolled under the presumptive taxation scheme under section 44AD? and total sales or turnover is more than Rs. 2 crores, then tax audit would be required. Penalty for late filing income tax return has been increased to Rs.5000 for returns filed between 1st August and 31st December. Income Tax Deductions Section 80C Deduction-Income tax deduction of upto Rs.1.5 lakhs can be claimed on amount paid or deposited in PF, PPF, LIC premium paid, National Savings Certificate, ULIP, principal part of repayment of housing loan, tuition fees paid for children, term deposit in bank, deposit in Senior Citizen savings scheme and more. Section 80D Deduction-Section 80D deduction can be claimed by individuals and HUF for payments to medical insurance paid by cheque under GI scheme. Also fees of upto Rs.5000 paid for preventive health checkup can be claimed as income tax deduction under Section 80D. Section 80EE Deduction-Additional deduction under Section 80EE can be claimed on interest on housing loan paid through EMI by the assessee. The maximum deduction allowed under Section 80EE is Rs.1 lakh. The deduction can be availed on the first home loan, the amount of loan does not exceed Rs.35 lakhs and the property value does not exceed Rs.50 lakhs. Section 80E Deduction-Section 80E deduction can be claimed by individuals for repayment of interest on loan taken in respect of higher deduction. The amount of interest paid can be claimed as a deduction under Section 80E. The maximum period for which this deduction can be availed is 8 years starting from repayment of loan or till the entire loan is repaid, whichever is earlier. Section 80G Deduction-Section 80G deduction can be claimed on donations to certain funds, charitable institutes within the ceiling amount of 10% of the Gross Taxable Income. The amount of deduction available would depend on the exemption enjoyed by the fund.  FAQs When am I

The Tax Commissioner and any authorized employee is hereby authorized to examine the books, papers and records of any employers, or of any taxpayer or person subject to the tax, for the purpose of verifying the accuracy of any return made, or if no return was made, to ascertain the tax due. Every such employer, supposed employer, taxpayer or supposed taxpayer is hereby directed and required to furnish to the Tax Commission or duly authorized agent or employee, the means, facilities and opportunity for making such examination and investigation as are hereby authorized.For effective financial management, it is essential to understand the functioning, powers, and limitations of the powers of the tax authorities. This turns out to be all the more important in the light of the present scenario in India where there is uncertainty in the minds of the assessee as to the power that these authorities can exercise and where there have been several cases of misuse of these discretionary powers resulting in contravening the statutory provisions, which has acquired binding effect supersedes the authoritative pronouncement of the higher judiciary and disrupts the constitutionally mandated effect of the pronouncement of the Supreme Court under Article 141.It explains simply the various tax authorities established under the Income Tax Act, 1961(Act) the Central Board of Direct Taxes and its powers, the powers of other tax authorities of income, the jurisdiction of income tax authorities, and their persuasive analysis to enable a comprehensive understanding of the functioning of financial authorities for financial management. Commissioner of Income Tax The Chief Commissioner of Income Tax is generally appointed by the Indian Revenue Service and serves the government for 30 years.   A new designation is generated as a result of cadre reorganization. The Principal Chief Commissioner of Income Tax and the senior-most Chief Commissioners of Income Tax are elevated to this grade and are given greater duties in terms of personnel and financial objectives.  Special Secretary is their comparable rank at the Union Secretariat. Chief Commissioners are in charge of the department’s activities within an area, which normally overlaps with the territory of a state. Their numbers range from 16 to 3 depending on the location. The Central Board of Direct Taxes assigns Chief Commissioners financial objectives for collection, which are distributed among Income Tax Commissioners and continuously checked. Powers of the Commissioners of Income Tax Commissioners are appointed by the central government. They are generally appointed to head the income tax administration in a particular area. As the head of the administration, the Commissioner of Income Tax has certain administrative as well as judicial powers. The Commissioner may exercise the powers of an Assessing Officer. He has the power to transfer any case from one or more Assessing Officers to any other Assessing Officer. He may grant consent to the order passed by the Assessing Officer. Prior approval is required to reopen an assessment. Apart from many other powers mentioned in the Income Tax Act, of 1961, it also has the power to revise the order passed by the Assessing Officer. Meaning of Appeal Appeals lie before the CIT (A) against the appealable orders under Section 246A of the Act and the appellate proceedings before the CIT (A) and the powers of the CIT (A) are governed by Sections 250 and 251 of the Act respectively. Section 250 lays down the procedure for appeal before the Appellate Authority against the orders of the Assessing Officer. The Appellate Body has been named differently in the statute from time to time. Originally the Appellate Authority was described as Appellate Assistant Commissioner at the relevant time and now as Commissioner of Income Tax (Appeal).The first appeal against the order of the Assessing Officer is to the Commissioner (Appeals) and can be filed only by the assessee.An assessee or any deductor or any collector who has been aggrieved by orders (such as orders passed under sections 147, 144, 143(3), etc.) passed by any Income Tax Authority may file his first appeal to the Commissioner u/s 246A Income Tax Act, 1961. Form of Appeal and Limitation (Section 249 and Rules 45 and 46) Form: An appeal to the Commissioner (appeal) is made on Form 35. Method of submitting an appeal: By submitting the form electronically under a digital signature if the Income Tax Return is filed under a digital signature. By submitting the form electronically through an electronic verification code in a case not covered by sub-clause (a). If the assessee can submit a return in paper form, he can use both the submission options in paper form or electronically. Powers of the Commissioner (Appeals) The Central Government appoints the Commissioners of Income Tax (Appeals). It is an appellate body that has the following judicial powers: Power relating to discovery, production of evidence, etc. Ability to call information. Power to inspect Company Registers. Option to offset refunds against remaining tax payable. Authority to handle appeals. Power to impose a penalty. Let us have a look at them in a bit of detail- The legislature has conferred very wide powers on the Appellate Commissioner once an appeal is preferred by the assessee.  An appeal is only a new hearing or renewal of proceedings. In the absence of any statutory bar or limitation, the CIT (A) has the same powers, exercisable or in the same manner and to the same extent as the AO in the first instance.  The powers of CIT (A) are re-examination and once a writ is placed before CIT (A), its capabilities are not limited to examining only those aspects of the assessment complained of by the assessee, but its powers extend to the entire extent. The assessment is to be corrected by the AO not only about the matter raised by the assessee in appeal but also about any other matter he considered and determined during the assessment.  According to Section 250 (4) of the Income Tax Act, CIT (A) is authorized to carry out further investigations that it deems appropriate or to arrange further investigations by an income tax investigator

The TRACES Portal is a facilitation mechanism which can be used by taxpayers to ascertain the taxes withheld on their account as TDS or the self-assessment taxes paid. The website of TRACES (TDS Reconciliation Analysis and Correction Enabling System) has been set up by the TDS Centralized Processing Cell of the Income-tax Department. The purpose of TRACES is to facilitate the reconciliation and correction of TDS. It connects all the stakeholders associated with TDS administration and implementation and facilitates the taxpayers to view challan and statement status, submit refunds requests, download essential forms and files, and view annual tax credit statements. Most importantly, it enables the user to make online correction of the already filed TDS returns.  TRACES is the website for TDS reconciliation and correction enabling system. An undertaking of the Income Tax Department, the website enables easy filing of TDS/TCS correction statements by deductors. TDS deductors can register on TRACES and easily file online correction statements. For taxpayers, TRACES is useful in viewing and downloading their Form 26AS. Here is how you can login to your TRACES account. Features of the Portal The following are the salient features of the TRACES Portal: Dashboard (which provides a summary of the accounts of the respective user) Online registration of TAN Online filing of TDS statements Online correction of TDS statements Default Resolution Viewing of Form 26AS Downloading of Form 16/16A/Consolidated TDS File Correction of Form 26QB Refund functionality Grievance registration and resolution Facilities for Deductors The deductor of tax may: Register Admin User for a TAN Create sub-users (by Admin User) Download Justification Report and Form 16/16A View challan status View TDS/TCS credit for PAN View PAN Master for TAN View TDS Statement Status Manage User Profile Validate Certificates Make online corrections Declare the non-filing of Statements Submit TDS Refund requests Digitally download certificates meant for taxpayers Make online and offline TDS corrections Roles of Deductor Admin User – This option shall be applicable if a TAN is registered on TRACES for the first time. This role can be registered by surrendering the TAN to an Assessing Officer. Sub User – This option is a user category which is created by an admin user. A maximum of four sub-users can be created by the admin for a TAN. Integration of Components The website of TRACES integrates the following components: Tax Information Network (TIN) Automated TDS Challan Matching TDS Defaults Processing IVR/Call Centre Web Portal Facilities for Taxpayers View tax credit (Form 26AS) Download Form 26AS Download Form 16B Manage User Profile Verify TDS Certificate View or download the Aggregated TDS Compliances Report Facilities for PAO To understand the role of a PAO, it is necessary to briefly discuss the role of a Drawing and Disbursing Officer (DDO). A DDO is a person who is authorized to draw money for specific payments against an assignment account or letter of credit account opened in the taxpayer’s favour in a specific branch of an accredited bank. In respect of the taxes deducted by the DDO, the Pay and Accounts Office (PAO) needs to file Form 24G to an agency authorized by the Director-General of Income-tax (Systems) within ten days from the end of the month. A PAO could avail the following benefits from the TRACES Portal: First-time Registration Dashboard view (which provides a summary of details concerning the respective DDOs) Viewing of statement status for TAN mapped to the Account Office Identification Number (AIN) Registration Procedure for All Users Step 1 – The user may initiate the registration procedure by visiting the official TRACES portal. From the Home Page, the option ‘Register as New User’ must be opted for, following which the desired user type must be selected from the option ‘Types of User’. Step 2 – In the following page, the user will be prompted to enter the essential validation details. Step 3 – After furnishing the required details, the user has to click on the option ‘Create Account’, upon which a confirmation screen will be displayed. The details can now be confirmed and submitted. The registration procedure concludes with the confirmation of details. The user will receive an activation link in the registered mobile number and e-mail address, which can be used for TRACES login. Generation of TDS Compliance Report TDS Compliance Report serves its purpose in identifying defaults in all TANs associated with entity-level PAN. The taxpayer may generate this report in the manner as provided below: Step 1 – The taxpayer may initiate this procedure by logging into TRACES as a taxpayer. Step 2 – The option ‘Aggregate TDS Compliance’ tab shall be selected for this purpose. Step 3 – The user may choose from the following options: Default based Financial Year based Step 4 – Click on the option ‘Submit Request’. Step 5 – After placing the request, the respective Excel File could be downloaded from the ‘Requested Downloads’ section under the ‘Downloads’ menu. Request for Resolution Step 1 – Taxpayers desiring such resolution must first log in to TRACES as a taxpayer with the registered user ID and password. Step 2 – The ‘Request for Resolution’ tab must be selected. Step 3 – Now, the category for which the resolution request is to be made must be selected. Step 4 – Choose the assessment year pertaining to the query. Step 5 – The required details must be filled in and submitted. Step 6 – Upon submission, a Ticket number will be generated, which signals the successful submission of the request. Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance | Income Tax Audit | Nidhi Company Registration| LLP Registration | Accounting in India | NGO Registration | NGO Audit | ESG | BRSR | Private Security Agency | Udyam Registration | Trademark Registration | Copyright Registration | Patent Registration | Import Export Code | Forensic Accounting and Fraud Detection | Section 8 Company | Foreign Company | 80G and 12A Certificate | FCRA Registration |DGGI Cases | Scrutiny Cases

In case of individuals employed, salary or wages earned is considered to be the primary source of income. In businesses, the revenue received from the core business functions after paying all expenses or applicable taxes is the business income. To sum up, income is nothing but ones earning received during a period. Generally, all incomes are subjected to taxes in India. Money isn’t everything; however, it is a critical component in the life of an individual. Money helps us reach our life’s ambitions and supports – the things we care about most passionately – family, education, health care, charity, adventure, and pleasure — in addition to meeting our fundamental requirements. It enables us to get some of life’s intangibles, such as freedom or independence, the capacity to maximize our abilities and talents, the ability to choose our own path in life, and financial stability. The money an individual receives in reward for his or her labour, services, or investments or the money a corporation obtains through selling its goods and services is termed as Income What is Income and its Different Sources of Income? Meaning of Income he money which a person receives (individuals or businesses) on a daily, weekly, monthly, or annual basis in form of salary for rendering of services or in form of profits made out of any business activity is the income of the individual. Allowances and perquisites are of utmost value in both monetary and non-monetary terms. Unless specifically exempted, all income is subject to income tax. Definition of Income as per Income Tax Act, 1961 Income Tax Act, 1961 defines the Income under section 2(24). According to this section income includes the following heads: Salary  Profits and Gains from Business and Profession  Dividends  Voluntary contributions made by trusts, charitable institutions established wholly or partly for charitable or religious purposes  Perquisites  Special or Other Allowances  Any sum paid by the company to the assessee in the form of interest  Capital Gains  Income from Other Sources Characteristics of Income The following are the characteristics of Income: The person can acquire or generate Income on a daily, weekly, monthly, or yearly basis. The government can incorporate tax at Income’s receipt or accrual basis.  The Income tax law does not differentiate between legal and illegal income. Individual can receive Income on a temporary or permanent basis. Moreover, the Income received in a lump sum or in instalments will be subject to tax. Income, as defined by the Income Tax Act, 1961 comprises revenue and capital gains, as well as losses. Gifts of more than Rs. 50000 received throughout the financial year are considered income for individuals and HUFs. Sources of Income A person’s income might come from a variety of sources, which can be calculated under numerous income categories. The sources of income may be divided into five categories: – Salary income:Salary income is the payment that an individual receives for providing services under any contracts that he enters into. The contract should fall within the category of employment. House Property Rental Income: A house property may be anything that is belonging to the land; it might be your home, your office, a business, or even a structure. The Income Tax Department makes no distinction between your commercial establishment and your primary residence while verifying your income limits. Under this heading, all properties are subject to tax. For the purposes of income tax, an owner is a legal owner who has the ability to exercise all of the owner’s rights, which should not be exercised on someone else’s behalf. Income from Business and profession profits and gains: This income is the amount displayed on the taxpayer’s profit and loss account after subtracting the amount shown on the profit and loss account.This revenue includes both the amount, regardless of whether it is a loss or a profit. ‘Profit and gains’ refers to revenue that is in the positive, whereas ‘loss’ refers to income that is in the negative. All income, whether legal or criminal, is subject to tax under this heading. The money made by the businessperson in the preceding year is taxed. A business entity or individual must file their respective Income Tax Return on or before July 31st of the assessment year. Earning from Capital Gain: Any profit or gain by transferring capital assets kept for investment is subject to taxation under the heading of ‘Income from Capital Gain.’ The individual can use any of the Short-Term Capital Assets and Long-Term Capital Assets to generate the gain. You can only earn Capital Gain if the kind of asset transferred is a Capital Asset. In other words, if the asset is not a capital asset, it will not be subject to Capital Gain. Some instances include selling a house/flat, selling stocks, and so forth. Other Sources : Income that does not fit under any of the other categories will be classified as ‘Income from Other Sources.’ Examples include gifts, interest on savings or FDs, dividends, and so forth. FAQs Q: How is rental income taxed? Rental income is generally subject to income tax. The amount and taxation rules may vary by jurisdiction. Deductions for expenses related to the property may also apply. Q: What are the primary sources of income? The main sources of income include: Earned Income: Wages and salaries from employment. Business Income: Profits generated from a business or self-employment. Rental Income: Money received from renting out properties. Investment Income: Earnings from investments, such as dividends and interest. Other Income: Miscellaneous sources like alimony, royalties, and gifts. Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance | Income Tax Audit | Nidhi Company Registration| LLP Registration | Accounting in India | NGO Registration | NGO Audit | ESG | BRSR | Private Security Agency | Udyam Registration | Trademark Registration | Copyright Registration | Patent Registration | Import Export Code | Forensic

Any profit or gain that arises from the sale of a ‘capital asset’ is known ‘income from capital gains’. Such capital gains are taxable in the year in which the transfer of the capital asset takes place. This is called capital gains tax. There are two types of Capital Gains: short-term capital gains (STCG) and long-term capital gains(LTCG). What is Capital Gains Tax In India? Investment in a house property is one of the most sought out investments primarily because you get to own a house. While others may invest with the intention of earning a profit upon selling the property in the future. It is important to note that a house property is regarded as a capital asset for income tax purposes. Consequently, any gain or loss incurred from the sale of a house property may be subject to tax under the ‘Capital Gains’ head. Similarly, capital gains or losses may arise from sale of different types of capital assets.  Defining Capital Assets Land, building, house property, vehicles, patents, trademarks, leasehold rights, machinery, and jewellery are a few examples of capital assets. This includes having rights in or in relation to an Indian company. It also includes the rights of management or control or any other legal right. The following do not come under the category of capital asset: a. Any stock, consumables or raw material, held for the purpose of business or profession b. Personal goods such as clothes and furniture held for personal use c. Agricultural land in rural(*) India d. 6½% gold bonds (1977) or 7% gold bonds (1980) or National Defence gold bonds (1980) issued by the central government e. Special bearer bonds (1991) f. Gold deposit bond issued under the gold deposit scheme (1999) or deposit certificates issued under the Gold Monetisation Scheme, 2015 *Definition of rural area (effective from AY 2014-15) – Any area which is outside the jurisdiction of a municipality or cantonment board, having a population of 10,000 or more is considered a rural area. Also, it should not fall within a distance given below Distance(to be measured aerially) Population(as per the last census). 2 kms from local limit of municipality or cantonment board If the population of the municipality/cantonment board is more than 10,000 but not more than 1 lakh 6 kms from local limit of municipality or cantonment board If the population of the municipality/cantonment board is more than 1 lakh but not more than 10 lakh 8 kms from local limit of municipality or cantonment board If the population of the municipality/cantonment board is more than 10 lakh Types of Capital Assets 1. STCA ( Short-term capital asset ) An asset held for a period of 36 months or less is a short-term capital asset. The criteria is 24 months for immovable properties such as land, building and house property from FY 2017-18. For instance, if you sell house property after holding it for a period of 24 months, any income arising will be treated as a long-term capital gain, provided that property is sold after 31st March 2017. The reduced period of the aforementioned 24 months is not applicable to movable property such as jewellery, debt-oriented mutual funds etc. Some assets are considered short-term capital assets when these are held for 12 months or less. This rule is applicable if the date of transfer is after 10th July 2014 (irrespective of what the date of purchase is). These assets are: Equity or preference shares in a company listed on a recognized stock exchange in India Securities (like debentures, bonds, govt securities etc.) listed on a recognized stock exchange in India Units of UTI, whether quoted or not Units of equity oriented mutual fund, whether quoted or not Zero coupon bonds, whether quoted or not 2. LTCA ( Long-term capital asset ): An asset held for more than 36 months is a long-term capital asset. They will be classified as a long-term capital asset if held for more than 36 months as earlier. Capital assets such as land, building and house property shall be considered as long-term capital asset if the owner holds it for a period of 24 months or more (from FY 2017-18). Whereas, below-listed assets if held for a period of more than 12 months, shall be considered as long-term capital asset. Equity or preference shares in a company listed on a recognized stock exchange in India Securities (like debentures, bonds, govt securities etc.) listed on a recognized stock exchange in India Units of UTI, whether quoted or not Units of equity oriented mutual fund, whether quoted or not Zero coupon bonds, whether quoted or not Classification of Inherited Capital Asset In case an asset is acquired by gift, will, succession or inheritance, the period for which the asset was held by the previous owner is also included when determining whether it’s a short term or a long-term capital asset. In the case of bonus shares or rights shares, the period of holding is counted from the date of allotment of bonus shares or rights shares respectively. Tax Rates – Long-Term Capital Gains and Short-Term Capital Gains Tax Type Condition Applicable Tax Long-term capital gains tax (LTCG)  Sale of:– Equity shares– units of equity oriented mutual fund 10% over and above Rs 1 lakh   Others 20% Short-term capital gains tax (STCG) When Securities Transaction Tax (STT) is not applicable Normal slab rates When STT is applicable 15%. Tax on Equity and Debt Mutual Funds- Gains made on the sale of debt funds and equity funds are treated differently. Any fund that invests heavily in equities (more than 65% of their total portfolio) is called an equity fund. Funds On or before 1 April 2023 Effective 1 April 2023  Short-Term Gains Long-Term Gains Short-Term Gains Long-Term Gains Debt Funds At tax slab rates of the individual 10% without indexation or 20% with indexation whichever is lower At tax slab rates of the individual At tax slab rates of the individual Equity Funds 15% 10% over and above Rs 1 lakh without indexation 15% 10% over and above

Under Section 2 (31), ‘Person’ is an AOP or Association of Persons or BOI (Body of Individuals) or a Local Authority or an artificial judicial person, or not, that Person or Body or Authorities or a Legal Person, was established or merged for revenue, profit or gains. In this article, we will the definition of persons under Income Tax Act, 1961. Definition of Persons under Income Tax Act, 1961 In terms of section 2 (31) of the Income-tax Act a person includes:   Individuals  Partnership Firms  HUF  Company  An individual organization or body of persons whether incorporated or not. Local authorities  Any other legal person who is not subject to any of the above clauses  The assessee is the person responsible for paying any taxes and any other fees specified under the law. In the above section, it can be noted that man includes not only a natural person but also a person of the artificial judicial person. The types of people mentioned under the categories are described below. Individuals: Individuals refer to natural persons whether male or female or transgender, minor or major, resident or non-resident  A partnership firm is a contractual relationship between two or more; persons who have agreed to conduct business on behalf of all or any of them on behalf of all to share the profits made by the business. LLP is also considered to be a corporation under the Income-tax act of 1961. HUF: Hindu Undivided Family (HUF) is a family business covered by Hindu law rules that include all people in a lineage from the same family as Karta and members as coparceners. Jain and Sikh families are also considered HUF under this act. Company: A company is a legal entity established under the Companies Act, 2013 or any other previous act. Companies include Any Indian Company Foreign Company Parent, Partner or Subsidiary Legal Company Public Company, any other type of company,  An association or individual body: A group of people means a group of people united to achieve the same goal by operating the same principle. AOP members can be natural persons or judges.  Local authorities: Local authorities are a legally responsible organization of public services designed to provide services in a particular area. Every Assessee is a Person but every person is not an assessee It is very important. An assessee is a person who is responsible for paying taxes, either on his or her income or with others. But that does not mean that everyone should pay taxes. If you are an individual and your total income is below the income limit as per income tax, then you have no obligation to pay taxes. If your income is not available then you are not responsible for remittances and refunds. If so, you are not an assessee but he is a person. FAQs Q: How does the Income Tax Act, 1961 define the term “person”? The term “person” under the Income Tax Act, 1961, includes individuals, Hindu Undivided Families (HUFs), companies, firms, associations of persons (AOPs), body of individuals (BOIs), and any other entity capable of being taxed. Q: Are individuals the only entities considered as persons under the Income Tax Act? No, individuals are just one category of persons. The Act also recognizes other entities such as HUFs, companies, firms, AOPs, BOIs, etc., as persons for taxation purposes. Q: What is the significance of including HUFs in the definition of persons? Hindu Undivided Family (HUF) is a unique concept in Indian taxation where the family, as a unit, is considered a separate entity for tax purposes. HUFs have their own PAN (Permanent Account Number) and are subject to tax on their income. 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