Table of Contents
1. What are the five heads of income?
Different heads of income as per section 14 are,
- Income from Salary
- Income from house property
- Profits and gains of business or profession
- Capital gains
- Income from other sources
2. What are the means of collecting taxes by the Government?
Taxes are collected through the following means:
- Advance Tax
- Self-Assessment tax
- Taxes deducted at source
- Taxes collected at source
- Equalisation Levy
3. When should income tax be paid?
Income tax can be paid only after the completion of the previous year. However to enable continuous flow of income to the Government, Income tax Act has the provisions for payment of taxes before the completion of the year i.e., Advance tax payment. It is also known as pay as you earn concept.
4. How to compute Tax liability?
| Particulars | Amount |
|---|---|
| Income from Salary | XXX |
| Income from house property | XXX |
| Profits and gains of business or profession | XXX |
| Capital gains | XXX |
| Income from other sources | XXX |
| Gross Total Income | XXX |
| Less : Deductions under Chapter VI-A | XXX |
| Total Income (Taxable income) | XXX |
| Tax on total Income | XXX |
| Less: Rebate (section 87A) | XXX |
| Add: Surcharge | XXX |
| Tax liability after Rebate/ Surcharge | XXX |
| Add: Cess at 4% on tax after Rebate/ Surcharge | XXX |
| Total tax liability | XXX |
| Tax liability before rebate u/s 86, 89, 90, 90A, 91 | XXX |
| Less: Rebate u/s 86, 89, 90, 90A, 91 | XXX |
| Less: Tax deducted at source | XXX |
| Less: Advance tax | XXX |
| Tax payable/ refundable | XXX |
Gross total income is calculated after adjusting inter source losses, inter head losses, brought forward losses, unabsorbed depreciation, etc.,
Deductions cannot be claimed for personal expenses. Expenses can be claimed as deduction only if it is provided under the Income-tax Act.
4. Who can avail rebate under section 86, 89, 90, 90A, 91?
Persons eligible to avail rebate under
| Sections | Eligible Assessee |
|---|---|
| Section 86 | Members of AOP, BOI in respect of his shares of income in such AOP/ BOI. |
| Section 89 | Salaried employee in respect of sum received towards arrears, gratuity, etc. |
| Section 90, 90A, 91 | Tax payer in respect of double taxed income whose income is taxed in India as well as abroad. |
5. How to compute total income of the assessee opted for concessional tax regime?
The total income of assessee is computed without claiming specified exemptions or deductions, if the assessee opted for concessional tax regime under section 115BAA, 115BAB, 115BAC and 115BAD.
6. How do you round off total income and tax liability?
Total income shall be rounded off to the nearest multiple of ten. (Section 288A)
- Any paise forming part of rupee shall be ignored.
- Thereafter, if such amount is not a multiple of ten, then,
- If the last figure in that amount is equal to or greater than five, the amount shall be increased to the next higher amount which is a multiple of ten or,
- If the last figure is less than five, the amount shall be reduced to the next lower amount which is a multiple of ten.
As per 288B, income tax shall be rounded off to the nearest multiple of ten.
- Any part of a rupee consisting of paise shall be ignored.
- Thereafter, if such amount is not a multiple of ten, then,
- if the last figure in that amount is equal to or greater than five, the amount shall be increased to the next higher amount which is a multiple of ten or,
- if the last figure is than five, the amount shall be reduced to the next lower amount which is the multiple of ten.
7. To whom the provisions of Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) shall apply?
- The concept of Minimum Alternate Tax (MAT) applies to all corporate tax payers.
- The concept of Alternate Minimum Tax (AMT) applies to all non-corporate tax-payers.
8. What is tax rebate under section 87A?
- It is a rebate available only to a resident individual.
- Total income of such individual should not exceed INR 5,00,000/-
- Amount of rebate
- 100% of income tax (or)
- INR 12,500/-
(whichever is earlier)
9. What is the basic exemption limit for taxpayers below which there is no income tax liability?
Income below which there is no tax liability
Basic exemption limit is available only in case of an individual (resident or non-resident), HUF/AOP/BOI/AJP as mentioned below,
| Assessees | Exemption limit(INR) |
|---|---|
| Below 60 years of age | 2,50,000 |
| Above 60 years below 80 years of age (Senior citizen) | 3,00,000 |
| Above 80 years of age (Super senior citizen) | 5,00,000 |
10. What is income tax surcharge?
1. In case of individuals/HUF/AOP/BOI/artificial juridical person
2. In case of a domestic company
Note: Surcharge for companies opting for taxability under S.115BAA, S.115BAB – 10% irrespective of total income. 3. In case of a foreign company
4. In case of Firm, co-operative society and local authority where the total income of the tax payer exceeds INR 1 crore, surcharge will be levied at 12%. |