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What is income tax process in India?
Income tax has to be paid by the individuals and others who earn income and the income can be from the following:Income from salariesInterest income from savings deposit - all accounts includedInterest income from term depositsIncome from rent on account of properties leased outany other professional incomeprofit from the businessincome through pensionsAs at present, the income during the period from 1st April, 2021 to 31st March, 2021 will be considered and this is called financial yearFor the income earned from the abovementioned categories (illustrative and not exhaustive) tax has to be calculated and should be remitted before 31st March, 2021 and such tax payment is known as advance tax.Advance tax means tax paid during the financial yearIn case of any short fall in payment of tax, the same can be paid after 31st March, 2021 and this payment is known as self assessment tax. However, this late payment attracts interest as per rules.Once income tax had been paid fully for the financial year, 2021 to 2021. income tax returns are to be filed before 31st July, 2017.It means the tax returns for the financial year 2016–2021 has to be submitted during the period from 1st April, 2021 to 31st March, 2021 and this is known as assessment yearAs such financial year is 1st April, 2021 to 31st March, 2017(Tax payments should be completed)Assessment year is 1st April, 2021 to 31st March, 2018(Tax returns to be filed)Tax calculation - sample:Income:Income from salaries: 500000.00Savings interest - 12000Fixed deposit interest - 24000 - TDS deducted by the bank; 2400Deductions:Income tax deducted and paid by the employer: 12000Investments:Life insurance premium paid: 15000Tuition fees for children - college going - 45000Tax saving mutual fund - 50000Calculation of tax:Total income = 500000 + 12021 + 24000 = 536000Less rebate interest on savings deposit - 10000 (maximum)Balance amount: 536000–10000 = 526000Less investments in tax savings instruments - 15000 + 45000 + 50000 = 110000 (Maximum permitted - 150000)Balance income = 526000 - 110000 = 416000Less basic exemption - 250000 (upto the age of 60 years)T axable income = 416000 - 250000 = 166000Income tax at 10 percent for first 250000 = 16600 (10 percent of 166000)Education cess at 3 percent of 16600 = 498Total tax payable = 17098 (16600 + 498)Less TDS deducted and paid = ( 12021 + 2400) = 14400Balance tax payable = 17098 less 14400 = 2698.00
When will be the due date of the first tax return for a C corporation if its fiscal year ends on June 30, but its date of incorporation is May 11?
I believe it would be due September 15. For the first year, you file a short-year return for May 11-June 30th.From the instructions for Form 1120:Generally, a corporation must file its income tax return by the 15th day of the 4th month after the end of its tax year. A new corporation filing a short-period return must generally file by the 15th day of the 4th month after the short period ends. A corporation that has dissolved must generally file by the 15th day of the 4th month after the date it dissolved.However, a corporation with a fiscal tax year ending June 30 must file by the 15th day of the 3rd month after the end of its tax year. A corporation with a short tax year ending anytime in June will be treated as if the short year ended on June 30, and must file by the 15th day of the 3rd month after the end of its tax year.*Disclaimer: I am just providing some general information. Please consult a tax professional about your personal situation.
When can we file for the IT March 2018?
Last date for filing Income Tax Return for Financial Year 2017–18 (Assessment Year 2018–19) is 31st July, 2021 for all persons except companies, non-companies whose books are required to be audited and working partner of a firm whose accounts are required to be audited.30th September, 2021 is the last date for filing the Income Tax Return for Financial Year 2017–18 (Assessment Year 2018–19) for the above three exceptions.It is to be further noted:This is Income Tax Return for the Financial Year 2017-18 and is applicable for income earned from 1st April, 2021 to 31st March, 2018.Assessment year is the year in which we assess income, pay taxes and file tax return for the previous year or the financial year.A tax return filed after the due date of that year is considered belated return.There are penalties (271F) and interests (234 A/B/C) levied on the income tax that was due. Also, certain losses like those from business and profession and short-term capital loss may not be allowed to be carried forward.Hope it helps.Nikhil Lunia
What is penalty under section 234A, 234B, 234C under income tax act?
Each and every product we use or service we consume comes with an expiry date or due date. Income Tax returns are not an exception to this. On one side Income tax is always an important aspect in the growth model of an economy, but on the negative side, tax liability is felt as a burden on tax payer. How worse it would be to a tax payer if an extra burden is added to the tax liability? Sounds unjustified! But it’s true; if you haven’t submitted the income tax returns within due date or paid tax within the prescribed time-limit; extra burden comes in your way along with tax liability. It all happens in the form of ‘INTEREST‡ which is collected as a penalty and it accumulates till the default continues. Don’t be too worried and be thankful to the Income tax department, because the interest here is a simple interest and not compound interest or other kind.Under Income tax Act 1961, interests are levied on different kinds of defaults. Most important and frequent among them is Section 234A, 234B and 234C which deals with delay in filing income tax returns and delay in payment of advance tax. The individual provisions of these sections are discussed below:***SECTION 234 A ‡ Default in filing return***It is mandatory to file your income tax returns within the due date. Due date for individuals is 31 July of every year. However, one must note that the due date is extended till August 31 for the Assessment Year 2015-16. Consequence of not submitting your IT returns within due date is Penalty.Here, Penalty for the delay is in the form of interest @ 1% per month on the total tax liability. Important note is that any fraction of a month is treated as a full month. Interest under section 234A is levied from the period commencing on the date immediately following the due date of filing the return of income and ending on the date of furnishing the return of income, or in case where no return has been furnished, on the date of completion of the assessment under section 144.Interest under section 234A is levied on the amount of tax as determined under section 143(1) and where regular assessment is made, the tax on total income as determined under such regular assessment as reduced by advance tax, tax deducted/collected at source, relief claimed under various sections like sections 90/90A/91 and tax credit claimed under section 115JAA/115JD. Also note that interest under Section 234A is not payable if you don’t have any remaining liability to pay. Interest would not be payable in a case where tax has been deposited within due date of filing of income tax return and return is filed after due date.***SECTION 234 B ‡ Default in paying advance tax***Interest under section 234B is levied when the taxpayer has defaulted in advance tax payment; or where the advance tax paid by the taxpayer is less than 90% of the assessed tax. So, what is advance tax?Advance tax is the tax paid in installments by the tax payer where the total tax liability exceeds Rs. 10,000/- in any financial year. The interest is chargeable at a rate of 1% per month till the remaining tax liability is paid. If the Income tax department extends the due date for filing returns, you get benefit under section 234A but you cannot get benefit under section 234B and 234C, since these sections deals with Advance tax. Interest under section 234B is levied on the amount of unpaid advance tax. If there is a shortfall in payment of advance tax, then interest is levied on the amount by which advance tax is short paid. Interest under section 234B is levied from the first day of the assessment year, i.e., from 1st April till the date of determination of income under section 143(1) or when a regular assessment is made, then till the date of such a regular assessment.***SECTION 234C ‡ Default in payment of advance tax on due date***Non-payment or short payment of advance tax is covered u/s 234B, whereas 234C covers situations of installments not paid within the due date. 234C levies interest @ 1% per month for delay in payment of installments of advance tax.Advance tax is paid on the following dates of a financial year: On or Before In case of a Corporate Taxpayer In case of a Non-Corporate Taxpayer15th June         Up to 15% of advance tax payable             NIL15th September Up to 45% of advance tax payable Up to 30% of advance tax payable15th December Up to 75% of advance tax payable Up to 60% of advance tax payable15th March      Up to 100% of advance tax payable     Up to 100% of advance tax payable For corporate assessee, interest under section 234C is levied @ 1% for a period of 3 months on the differential amount (Advance tax to be paid less actual advance tax paid) for the first three installments and 1% for 1 month, in case of shortfall in payment of last installment.In case of non-corporate assessee, interest under section 234C is levied @ 1% for a period of 3 months on the differential amount (Advance tax to be paid less actual advance tax paid) for first two installments and 1% for 1 month in case of shortfall in payment of last installment.*No interest will be levied in case of any shortfall in payment of advance tax due on the returned income if:*1. There is undereor failure to ethe capital gain amount or income such as winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.2. The assessee has paid the whole tax payable amount in respect of such income on the due date of payment of advance tax or if no installment is due then such tax is paid before the end of the financial year.Apart from the above sections, there are other sections as well such as 234D (http://www.incometaxindia.gov.in...) which deals with excess refund. Here the assessee shall be liable to pay simple interest at the rate of 0.5% (http://www.incometaxindia.gov.in...) on the whole or the excess amount so refunded, for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. Section 220(2) deals with delay in payment of amount specified in notice of demand. Here, a simple interest of 1% per month is calculated on the amount specified in the notice of demand and the due date is the date mentioned in the notice. Be Aware of the Due Dates and file your returns and pay taxes in time which reduces the unwanted liability. You can claim many benefits if you have filed your IT return on time (Sweet 16 Benefits of filing Income Tax Return this season!). So go ahead and file your income tax returns with File Income Tax Return Online, IT Return Service,Income Tax Efiling, India| FinMart Your 360° Online Financial Supermarket, FinMart Online Financial Services, One Stop Solution for All Financial Needs (File Income Tax Return Online, IT Return Service,Income Tax Efiling, India| FinMart.com)  (File Income Tax Return Online, IT Return Service,Income Tax Efiling, India| FinMart.com)
How do I calculate the income tax on share trading?
Dilwar (example) had invested a major part of his savings in the stock market. However, he was confused about the tax treatment of the profit arising from equity investment. First you need to know that there is no tax exemption on direct equity investment. (Investment in ELSS mutual funds offer tax exemption under 80C). So, our entire focus is on the various tax that is applicable in the PROFIT from equity investment. In this article, we are focusing on applicable tax on share trading and how one can optimize it.Suppose you have purchased a share at Rs 100 and sold it at Rs 110. There is 10% profit from the transaction. However from this 10% (Rs. 10) an investor has to pay STT, brokerage charge, exchange charge, service charge as well as capital gain tax. Besides capital gain tax all are fixed. To minimize capital gain tax one need to understand how such tax on share trading works:Income Tax on share trading –Income tax on share trading depends on whether you are showing it as “Capital gain” or “Business Income”.Capital gain: If you are trading in stock market as an investor (mostly involved in delivery based trading), the gains from trading can be classified as:Long term capital gain: ‡ If equity shares are sold after 12 months holding then such gain is subject to tax exemption. However, the security must be traded an Indian stock exchange on which STT has been paid. Exemption on long-term capital gain tax is not applicable if the shares are sold on the exchange outside India. Long term capital loss from equity shares is a dead loss ‡ it can neither be adjusted nor carried forward.Short term capital gain: If equity shares are sold within 12 months from the date of purchase, then the short term capital gain tax of 15% is applicable irrespective of the personal tax slab (10%, 20% etc). If investor’s other income excluding short-term capital gain is less than basic exemption limit then he can take benefit of such shortfall in basic exemption limit. Any short-term capital loss from equity trading can be set off against any short-term capital gains. The important points to note here is that long-term capital gain arising on shares sold directly to a friend without routing it through Indian stock exchange are not exempted from tax as STT is not paid on such shares.Business income: If you are trading in the stock market frequently (mostly non-delivery trade), returns from it can be classified as follows:Speculative Business income: Profit from intraday trading is categorized under speculative business income. Tax treatment is similar to your Business income tax. It is taxed as per the tax slab you fall in while losses can be offset only against speculative gains. Non-speculative Business income: Income from trading futures & options on recognized exchanges (equity, commodity, & currency) is categorized under non-speculative business income. Tax on share trading in such cases is similar to your business income tax. The profits on F/O trading is taxed as per the tax slab you fall in whereas losses on such F/O trading can be set off against business profit.So, the important point is whether to classify income from share trading under “capital gain” or “business income”. In general, if you are mostly involved in delivery based trading with very few non-delivery based trading then it is better to classify the income under “Capital Gain” head. (Consult with your chartered accountant before finalizing the IT return)Taxation on DividendA company shares a part of its profit with the shareholders in the form of dividend. Dividend in the hand of investor is tax-free. The company has already paid Dividend Distribution Tax. So effectively 15% tax has been already paid by the company on the investor’s behalf. Therefore such dividend is tax-free in the hands of the investor.How to optimize post tax returns:-Tax on share trading can be reduced considerably by following certain Tax saving methods –Trading as business income: –If you consider your trading gain as “business income” then you have to pay tax as per your Tax slab. The benefit is you can deduct your trading related expenses from the gain. Suppose you made a profit of Rs 1,00,000 from equity trading and you fall into 20% tax bracket so you need to pay 20% of 1,00,000 as tax. However, this tax outgo can be reduced by showing related expenses or by adjusting loss from share trading. Expenses on internet bill, telephone bill, newspaper/magazine purchase, computer charge, brokerage etc can be adjusted with your trading profit. For example, consider your internet+telephone bill as 24,000 (full year), Computer depreciation charge as 10,000, newspaper and magazine charge as 6,000, brokerage and related expense is 4,000. So, total trading related expense comes as (24,000+10,000+6,000+4,000) = 44,000. From the trading profit of 1,00,000 (1Lac) you can deduct 44,000 as expenses and thus net business profit comes at only 56,000. So, instead of paying tax on 1 Lac your taxable income stands at only 56,000.Capital gain as investment income:-If you don’t want to classify your trading activity as “business” then you need to pay only short term capital gain tax at 15%. This can be offset against only against short-term capital loss. Long term capital loss is a dead loss it can’t be adjusted or carried forward as long term capital gain is exempt from Tax. An Investor can save tax on its short term capital gain by realizing losses existing in the portfolio.Suppose, you have Short term capital gain of Rs10,000. This means you have to pay 15% of 10000 i.e, Rs 1500 as tax. At the same time you have stocks (purchased within 1 year) in your portfolio those are showing loss of Rs. 5,000. You are confident that over long run those stock will turn profitable. However to lower tax outgo you can sell and repurchase the same stock at the same rate after 2 days (As delivery takes T+2 days). So, your net profit stands at (10,000 ‡ 5,000) = 5,000. Thus you have to pay tax of just Rs 750 (15% of 5,000) instead of Rs 1,500. In this process, you can continue holding the stock having good long-term prospects and also save tax.Thus investors should clearly understand various tax on share trading to reap maximum benefits from the investment. As by varying your holding period, classifying income as “capital gain” or “business income” and by taking advantages of tax optimization measures you can reduce your tax liabilities considerably.Important Note: ‡ Consult with your chartered accountant before implementing any of the above measures. All income sources must be considered before classification of income from equity investment. Approach to your CA for an in-depth look at your overall financial statement before finalizing IT return.
What tax form will a newly incorporated start-up need to file with no revenue or payroll?
As a corporation, you need to file Form 1120 (U.S. Corporation Income Tax Return) on an annual basis regardless of whether you have revenues or employees. From the Form 1120 instructions:Unless exempt under section 501, all domestic corporations (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income. Domestic corporations must file Form 1120, unless they are required, or elect to file a special return.When 1120 is due is based on your corporation's tax year:Generally, a corporation must file its income tax return by the 15th day of the 3rd month after the end of its tax year. A new corporation filing a short-period return must generally file by the 15th day of the 3rd month after the short period ends. A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved.Because you don't have any employees, you don't need to file Form 941 (or state equivalents) unless you have already filed Form 941 previously.You can find the full instructions to form 1120 here:http://www.irs.gov/pub/irs-pdf/i...
Do I need to declare capital losses in my ITR in India?
At the time of calculating your Capital Gains if the sale receipts from a Capital Asset are less than cost of acquisition (whether indexed or not) and expenses on transfer; instead of a Capital Gain you incur a Capital Loss. Current year lossesBoth short term capital loss and long term capital loss must be reported in your tax return.If you have sold equity shares and have incurred a short term loss, although you have no tax liability it’s important you report this loss in your return. While calculating your final tax liability this loss can be adjusted against other capital gains. Since this capital loss can be set off against capital gains, it reduces your total taxable income. Do note that short term capital loss can be set off against long term or short term gain, however long term losses can only be set off against long term gains. Also, any long term loss on equity shares or equity funds is a dead loss and cannot be set off or carried forward.Any loss which is left after adjusting can be carried be carried forward and adjusted against capital gains in future years.On ClearTax, you don’t need to worry about adding them for carry forward ‡ any unadjusted losses if they are eligible to be carried forward they are picked up in the ‘loss summary‡ tab automatically within ClearTax.Previous year lossesIf you have unadjusted losses from previous years, do remember to add them while filing your return in the current year. To understand how to add previous year losses in your tax return ‡ click here. Do note that for the IT Department there is no way to know carry forward of your losses unless you have added them into your return each year.
I get my salary with 10 % deducted at source. Should I file for returns? How the returns work?
Thanks for A2Ayes!you have to file a it return to income tax departmentand the amount deducted as T.D.S. is shown there if your total income tax is less than your deduction than you get credit of surplus and if the tax deducted is short than the actual income tac than you have to pay excess amount there.And other benifits areComing back to the benefits which you cannot overlook!E-filing of income tax return in India is not an effortless task.Filing of income tax return of past years is also possible.It creates a strong financial background as filing income tax return online creates financial credibility of the assessee thereby assisting him for easy fund procurements.You can save money literally; as non filing of returns attracts a penalty with minimum Rs. 5,000 and interest under section 234A.Luxury of reducing taxable income in forth coming years by the option of carrying forward losses on various heads of income.Easier refund claims.No threat from the income tax department in form of scrutiny notices or search and raids.Submitting income tax returns of past three years even if it is a NIL return to banks or financial institutions for smooth processing of Loans like housing, education, vehicle etc.Foreign travel is possible only through VISA and VISA is possible only through submission of IT returns as one of the documents.Quick registration of immovable properties in some of cities of India.It is a standard proof of income of a person which establishes record with the tax department.IT return can be filed even after the due date as a belated return.You can use the amount donated as deductions which are tax friendly, thereby reducing your taxable income.You can even claim the amount of LIC premiums paid as deduction and reduce the tax liability.Who knew that even tuition fees paid of children can act as a tax saving tool? Generally people are unaware that deduction of tuition fees paid for two children is available u/s 80C of the income tax act 1961.All your income is legal and white money now, thus making you a responsible citizen and contributing in Swachh (Clean) Bharat (India) Abhyaan(Campaign) in true sense.for more details visit http://www.finmart.com/blog/swee...
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