Heads of Income
Income-tax is a composite tax on all incomes received by, or accruing or arising to, a tax-payer during a previous year. For computing the taxable income, incomes from various sources are computed under five different heads of income. If there are two or more sources of income falling under a head of income, the income is computed separately for each source and then aggregated under that head. The various head of income are [Sec.14]
1. Salary including allowances, value of perquisites, profits in lieu of salary and pension. [Sec. 15 to 17]
2. Income from House Property-whether residential or commercial, let out Or self-occupied. [Sec. 22 to 27]
3. Profits and Gains of Business or Profession. [Sec. 28 to 44D]
4. Capital Gains [Sec.45 to 55A]
5. Income from other sources including bank interest, interest on securities, lotteries, crossword puzzles, etc. [Sec. 56 to 59]
Computation of Gross Total Income
It is the aggregate of incomes under various heads of Income calculated after set-off of unabsorbed depreciation/loss, carried forward from earlier years.
Set Off and Carry Forward
Set off means adjustment of certain losses against the incomes under other sources/heads. Carry-forward implies carrying forward of certain losses for set off in subsequent years.
Sections 32, 32A, 35 and 70 to 80, provides for set off and carry forward of certain losses/allowances.
Total/Taxable income is computed after deducting permissible deductions under Chapter VI-A, i.e. sections 80A to 80U from the Gross Total income. Where the gross total income of the assessee includes long-term capital gains, then no deduction shall be allowed against such long-term capital gains.
Agricultural income is exempt from income tax. However, the net agricultural income is taken into account for determining the rates of Income Tax on other urban income liable for tax. Thereafter, relief in tax is allowed on such income.
Income Tax Rates
As per the rates specified in the Budgets of the respective years.
Rebates and Reliefs:
(i) Relief on Agricultural income
(ii) Rebate on share from an association of Persons. [Sec. 86]
(iii) Rebate on investments in life insurance premia, provident fund, construction or purchase of house, Jeevan Dhara/Jeevan Akshay, NSS or Equity Linked Saving Schemes of UTI and specified Mutual Funds etc. [Sec. 88]
(iv) Rebate in case of individual assesses of sixty-five years and above. [Sec.88B]
(v) Relief on salary paid in advance/arrears, etc. [Sec. 89(1)]
SAMMAN- for all tax payers
A new scheme called ‘Samman’ for tax payers has been introduced, to demonstrate the society’s recognition of their important contribution to the national cause. The scheme envisages to grant Samman Cards under three categories-businessmen, professionals and salary-earners for—
(i) Individual tax payers under each category having a declared income of
Rs.20 lacs or more in four out of five immediately preceding years, at
the national level.
(ii) Individual tax-payer under each category who has declared highest
income for the immediately preceding year at the regional level.
(iii) Top tax-payer in the country, under each category shall be honoured
with ‘Aayakar Ratna’.
Persons on whom penalty for concealment has been imposed, or search has been conducted or those who have defaulted in timely submission of returns or
Those who have not obtained or applied PAN, shall not be eligible for Samman.
Sammanees shall be entitled to following incentives-
(a) Income Tax Clearance Certificate for registration of properties/obtaining
Contracts/going abroad, for a period of three years.
(b) No scrutiny for a period of three years.
(c) All applications for rectification of mistakes, appeal effect, etc., should be
Disposed of wthin 15 days on a priority basis.
(d) Sammanees will represent tax payes on the Tax Advisory Committees.
Every person having taxable income or whose total sales, turnover or gross receipts exceeds Rs. 5,00,000 during an accounting year, is required to obtain Permanent Account Number (PAN) once for ever by making an application in Form 49A, in duplicate, before 31st May of the assessment year. In case the total sales, turnover or gross receipt is likely to exceed Rs.5,00,000 or in case of a trust in receipt of income from property held for charitable or religious purposes and liable to file return of income u/s 139(4A),the application for allotment of PAN should be made before the end of the accounting year. It is compulsory to apply for PAN, in above cases even though the tax payable is nil. Besides, all existing assessees who have not been allotted a Permanent Account Number under the new 10-digit alpha-numeric series, are also required to apply for Permanent Account Number under the new series to the concerned Assessing Officer.
Persons, who are not already assessees, shall also be required to obtain PAN, in case they intend to enter into specified transactions. Once the PAN under new series is allotted, the assessee need not apply for a new PAN, in case he is transferred to any other place.