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CHAPTER 1
1. INTRODUCTION
Financial services are that economic services which presuming by the financial industry. It
has a big scope for the businesses that direct money, bank insurance company, credit card,
stock brokerages, individual managers and investment fund.
Every person who is occupied in financial activities needs financial services, our
organization M/s. Rai Tax Consultants provides all the financial services to Individuals,
Companies, etc. to make them understand all financial feature of the market. This report is
connected to financial services provided by our organization i.e. ITR filing, GST, KYC of
directors, etc.
This report is all about the financial services presuming by our organization to their clients
including Individuals, Companies etc, and help them to file their ITR, file their GST returns
of current Financial Year, KYC of directors.
1.1 Background
Income tax
Tax collected by the central Government for each financial year on the total taxable income
of an assesses earned in the previous year is called income tax.
“According to Income tax act 1961 sec. 2 (7) A person liable to pay any tax or any other
sum of money under this act is known assesses”
“Any person who is an assesses and whose total income cross the exempted limit shall be
liable to pay income tax at the rate” authorized by the IT department, “such income tax shall
be paid on the total income of that financial year”. There are different rates in different slabs
for different age group people in Income Tax.
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Income Tax Return
“Income Tax Return, it is a statement of income & tax”, which is fit out by an assesses to the
IT department in authorized form. Every year different Income Tax Return form are issued
by Income Tax Department for different assesses for different sources.
Income Tax Return is a form where a taxpayer declare his total income or tax liability in the
front of income tax department. There are various type of ITR Form like as ITR1, ITR2,
ITR3, ITR4, ITR5, ITR6 etc., for different taxpayer according to their source of income. In
simple word, if a assesses file ITR it means he declare his income willingly to the
government. ITR filing is also help full for taking bank loan, at the time of purchase house
property, business establishment, etc. But when you file late return the penalty of Rs. 5,000
are imposed and you are also not allowed for taking advantage of carry forward losses.
GST
“Goods and Service Tax is a value added tax which charged on the goods and services sold
for the domestic consumption. It is paid by the consumers, but it is collected by the
government from the business selling the goods and services. GST is the good source of
revenue for the government”.
“In India GST replaced many indirect taxes. On 29 March 2017, the Goods and Service Act”
was passed by the Parliament. But the Act came effect on “1st July 2017. Goods and Service
Tax Law in India is a multi stage, comprehensive, destination- based tax that is levied on
every value addition”.
In simple word, “GST is a indirect tax” which has replaced many indirect tax law like as
VAT (value added tax) , etc. GST is one tax which apply entire India.
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1.2 Scope and objective
“In India, income tax is levied on the individual tax payers on the basis of different tax slab
where different tax rates have been prescribed by the Income Tax Department”.
Tax Slabs
Table No. 1.1 “Income tax slabs for Individual Tax Payers (Less Than 60 years old ) for
FY 2018- Part 1”
Income tax slab
Tax Rates
Health and Education cess
Income up to Rs.2,50,000
No tax
Income from Rs.2,50,001 – Rs.5,00,0000
5%
4%
Income from Rs.5,00,001 – Rs.10,00,000
20%
4%
Income more than Rs.10,00,0000
30%
4%
• “10% Surcharge is applicable when the total taxable income exceeds Rs.50 lakes up
to Rs. 1 corer”.
• 15% Surcharge is applicable when the total taxable income exceeds Rs.1 core.
Table No.1.2 “Income Tax Slabs for Senior Citizens (60 years Old or More but less than
80 years Old) for FY 2018-19 Part -2”
Income Tax Slab
Tax Rtes
Income upto Rs. 3,00,000
No tax
Income from Rs.3,00,001 – Rs.5,00,000
5%
Income from Rs.5,00,001- Rs.10,00,000
20%
Income more than Rs.10,00,000
30%
• 10% Surcharge is applicable when the total taxable income exceed Rs.50 Lakes up to
Rs.1 Core.
• 15% Surcharge is applicable when the total taxable income exceed Rs.1 Core.
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Table 1.3“Income tax slabs for Senior Citizens (80 years Old or More) 2018-19–Part 3”
Income Tax Slabs
Tax Rate
Health and Education Cess
Income up to Rs.5,00,000
No tax
Income fromRs.5,00,001 – 10,00,000
20%
4%
Income more than Rs.10,00,0000
30%
4%
• 10% Surcharge is applicable when “the total taxable income exceeds Rs.50 lakes up to Rs.1
Core”.
• 15% Surcharge is applicable , when the total taxable income exceed Rs. 1 core.
Table No.1.4 TYPES OF ITR
ITR forms for Individual
Nature of income
ITR1
(Sahaj
)
ITR
2
ITR
3
ITR
4
Income form salary/pension
✓
✓
✓
✓
Income from one house property ( excluding losses)
✓
✓
✓
✓
Loss or income from more than one house property
✓
✓
Agriculture income exceeding Rs.5000
✓
✓
Total income exceeding Rs.50 lakes
✓
✓
✓
Dividend income exceeding Rs.10 lakes taxable u/s
115BDA
✓
✓
Unexplained credit or unexplained investment
taxable at 60% u/s.68,69,69A, etc)
✓
✓
Income from other sources( other than winnings
from lottery and race horse or losses under thes
head)
✓
✓
✓
✓
Income from other sources (including winnings from
✓
✓
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lottery and race horses)
Capital gain /losses
✓
✓
Share of profit of partner from a partnership firm
✓
✓
Income from business or profession(other than
presumptive business)
✓
Income from foreign sources or foreign assets or
having Signing authority in any account outside
India
✓
✓
Table No.1.5 Summarized Table Showing Applicability of ITR forms for taxpayers
other than individual tax payers:
Other Assessee
ITR 5
ITR 6
ITR 7
Firm (including limited liability partnership firm)
✓
AOP(Association of Persons)
✓
BOI(Body of Individuals)
✓
Companies other than companies claiming exemption under
Sec.11
✓
Income Heads under ITR
In India, “Income are classified under the following heads:-
Heads of Income
1. Salaries
2. House Property
3. Profit and Gain of Business or Profession
4. Capital Gain
5. Other Sources”.
There is only one tax on the income calculated under various head, but there different rules
and method to calculate tax under each head of income.
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There are five heads of income:
1.Income from Salary
“Salary is the remuneration which paid by the employer to his employee for the
services rendered for a certain time”. This income is taxable under income tax.
If there is no relation between “employer and employee, the income” shall not be
liable under this head.
In simple case ITR-1 has to go.
2. “Income from House Property
Income earned from house property is the income which earned from house property in the
form of rent. In case if the property is not rented out, the tax should be calculated on the
expected rent”.
“Tax calculated under this head is not only include letting out house property but also include
commercial property”. It also include various deduction like as standard deduction,
Municipal taxes or deduction from interest on home loan etc
In case 1 house property ITR-1 has go but in case of two or more than two house property
ITR-2 is gone.
Calculation: “Annual rent receipt
( Less) 30% standard deduction
Net taxable rental income
(Less) interest paid during the previous financial year
Income/ Loss from House property”.
Table No.1.6 “Computation of Income/ Loss from let out property”.
Computation of Income/Loss from Let Out Property
Have you got the Possession of the Property? (Without
possession you cannot claim the benefit)
Yes
Tenant Name
Address of the Let Out House Property
Pan No. of the Tenant (Optional)
COMPUTATION OF LOSS/ INCOME FROM HOUSE PROPERTY ( LET
OUT)
Annual Rent Received (01/04/2018 to 31/03/2019)
0
Less: Municipal Tax paid during the financial year