Income Tax Returns (ITRs)

Income Tax Returns (ITRs)

Total 7 ITRs are notified by the Income Tax Department, which are applicable for different assessee and for their specified income.
  

One has to identify, which ITR form is suitable for filing his/her Income Tax Return. ITR may be different from previously filed return for the same person, if source/type of income is different from previous year.

ITR-1

Who can file ITR- 1?

Eligible assessee:  Resident Individual, excluding;

-an individual who is either a Director in a company or has invested in unlisted equity shares (ITR-2 or ITR-3 is applicable).

Type of Income:  Following type of income can be declared under ITR-1, popularly known as form ‘SAHAJ’.

• Salary or Pension.
• One House property, If income from more than one house property then ITR–1 is not applicable (and ITR-3 is applicable).
• Income from other sources, like interest from term deposit.
• If total income is upto Rs. 50 lakh (if more then Rs 50 lakh, then ITR-2 is applicable).
• If Agriculture income is less then Rs. 5000 (If Rs. 5000 or more than , ITR-2 is applicable).

Explained: What is Total Income?
        

Total Income is Gross Total Income (GTI) - applicable Deductions

Gross Total Income (GTI) = Income from all head of Income (viz. Salary, house property, business and profession, capital gain and other sources).

ITR-2

Who can file ITR- 2 ?

Eligible assessee: Individual and Hindu Undivided Family (HUF)

Type of Income:  Following type of income can be declared under ITR-2:

• If total income is more than Rs. 50 lakh.
• If income from Capital Gain.
• Any foreign income.
• Agriculture Income, if more than Rs. 5000.

    Simply said, ITR-2 is applicable for the Individuals and HUF, who is not eligible to file ITR-1 and who is not having any income under the head 'Profit or gains of business and profession'. 

   ITR-3

    Who can file ITR-3 : Individual and HUF

Type of Income:
  
1. Income from Business/Profession (except, where ITR- 4 is applicable)
2. Income from firm (as a partner)
3. Who is not eligible to file ITR -1 (SAHAJ), ITR-2 and ITR- 4 (SUGAM).


Individual or HUF having type 1, 2 and 3 (as above) income and also have income from Salary/ Pension/Income from Other Sources/Income From House property and Income from Capital gain, then also this form is applicable. 

ITR-4 (SUGAM)

Who can file ITR- 4: 

1. Resident Individual or Resident HUF,
2. A (Resident) firm (other than Limited Liability Partnership/LLP)
3. Total Income does not exceeds Rs. 50,00,000/-

Type of Income:
1. Income from business where income is computed on presumptive basis under:
   - Section 44AD (gross turnover is upto Rs. 2 crore)
   - Section 44AE ( income from goods carriage upto 10 vehicles)
2. Income from profession where income is computer on presumptive basis under:
   - Section 44ADA (gross receipts upto Rs. 50 lakh).

[These are certain provisions under Income Tax Act for small business and professionals, where they can declare income at specified rate/(or higher rate also) on gross turnover/ total receipts and pay tax accordingly].

Now, Who is not eligible for ITR- 4

- An individual who is either a Director in a company or,
- Has invested in unlisted equity shares.

ITR-5

Who is eligible to file ITR-5:

All, except:

- Individual,

- HUF,

- Company,

- Person filing ITR-7

For example: Firms, LLPs, AOPs (Association of persons) and BOIs (Body of Individuals), Artificial Juridical Person (AJP), Estate of deceased, Estate of insolvent, Business trust and investment fund etc.

ITR-6

Who is eligible:

Companies, who is not claiming exemption under section 11 of the Income Tax Act (ITR-7 is applicable).

[Section 11 pertains to relaxation regarding property held for charitable and religious purposes].

ITR-7

Who is eligible to file:

This return is applicable for persons and companies, who are required to file their IT return under following section of Income Tax Act:

- Section 139 (4A): Income from property held for charitable and religious purposes.

- Section 139 (4B) : Retuun for political parties.

- Section 139 (4C) : Association, new agency etc.

- Section 139 (4D) : University, institution etc.

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House purchaser: Do not forget to file Form 26QB

House purchaser: Do not forget to file Form 26QB

This article is for who purchase any property* (immovable viz, House) for more than or equal to Rs. 50 lakh.

Suppose,

-Mr A purchase a house (or any other immovable property) from Mr. B,

-Sale price is fixed as Rs. 50 Lakh (or more than 50 Lakh, say Rs. 2.50 crore),

-Mr. A will make the payment of Rs. 50 Lakh (or more than Rs. 50 Lakh, say Rs. 2.50 crore) to Mr. B,

- At the time of making the payment,

- Mr. A will deduct 1% of the sale amount (1% of Rs. 50 Lakh/2.50 crore, as per above example),

- Mr A can ask PAN of the Mr B,

- And will deposit this 1% (amount deducted) to Government through authorized Bank branches ( list :- https://www.tin-nsdl.com/authorized-banks.html)/or himself through online banking,

- Within 30 days from the month, in which deduction is made (or sale amount is paid to the seller),

- After this, Mr. A may issue form 16B (available for download at www.tdscpc.gov.in after payment) to Mr. B,

-Stating amount deducted and paid to the Government (for taking Tax Credit by Mr. B).

Here, the noting point is that liability to deduct 1% of the sale amount and pay to Government is of purchaser (Mr. A) and not the of the seller (Mr. B).

After the deduction Mr. A has to furnish the information online (in form 26QB) at site www.tin-nsdl.com

* Property excludes Rural Agriculture Land.

*Property includes any under construction property also.

Now suppose that house was in the joint names of Mr. B and Mrs C and Mr D and Mr. A purchased the house.

Then form 26QB has to be filed for each unique Buyer Seller transaction.

(Mr A ------Mr B)

(Mr A ----- Mrs C)

(Mr A -----Mr D)

Hence 3 form 26QB.

Mr. A and Mr. B purchased house from Mr. C and Mr. D (for Rs. 51 Lakh)

(Mr. A ---- Mr. C)

(Mr. B ---- Mr. C)

(Mr. A ----Mr. D)

(Mr. B ---- Mr. D)

Hence four form 26 QB have to be filed.

- If form 26QB not filed within 30 days, fee will be levied.

Step by Step Guide to file form 26QB:

Step 1

1. Log on to NSDL e-Gov -TIN website (www.tin-nsdl.com).

1. Click on the option “Furnish TDS on property”.

1. Select Form for Payment of TDS on purchase of Property.

Step 2:

After selecting the form you will be directed to the screen for entering certain information.

Example:-

a) Permanent Account Number (PAN) of Property Purchaser and Seller.

b) Address of the Purchaser, Seller as well as the Property being purchased

c) Financial/ Assessment Year will be populated on the basis of Date of Payment/Credit selected in the Form.

d) Major Head Code - To indicate the type of tax applicable viz; Tax on companies/Tax on other than companies

e) Value of Property

f) Date of agreement/booking

g) Amount Paid/credited (Transaction amount)

h) Rate of TDS

i) TDS Amount

j) Dates of payment/credit, deduction

k) Select the option for “Payment of taxes on Subsequent Date”It is important to ensure that PAN of Buyer and Seller are correctly mentioned in the form.

There is no online mechanism for subsequent rectification. Deductor will have to approach the Assessing Officer or CPC-TDS for rectification of errors.

Step 3

After entering all the above detail, click on PROCEED button. The system will check the validity of PAN. In case PAN is not available in the database of the Income Tax Department then you cannot proceed with the payment of tax.

If PAN is available then TIN system will display the contents you have entered along with the “Name” appearing in the ITD database with respect the PAN entered by you.

Step 4

You can now verify the details entered by you. In case you have made a mistake in data entry, click on "EDIT" to correct the same. If all the detail and name as per ITD is correct, click on "SUBMIT" button.

Nine digit alpha numeric ACK no. will be generated and you will be provided with an option to print an Acknowledgment slip.Please be informed that the name and status of PAN is as per the ITD PAN Master.

You are required to verify the name before making payment. In case any discrepancy is observed, please confirm the PAN entered by you. Any change required in the name displayed as per the PAN Master can be updated by filling up the relevant change request forms for PAN. If the name is correct, then click on "Confirm".

Step 5

With the printout of the Acknowledgment slip, you may visit any of the authorized Bank branches to make the payment of TDS subsequently. The Bank will make the payment through its net banking facility and provide you the Challan counterfoil as acknowledgment for payment of taxes.

Based on the information in the Acknowledgment slip, the bank will make the payment only through net-banking facility by visiting tin-nsdl.com and entering the acknowledgement number duly generated by TIN for the statement already filled by the buyer in respect of that transaction.

In case you desire to make the payment through e-tax payment (net banking account) subsequently, you may access the link “E-tax on subsequent date” on the TIN website. On entering the details as per the acknowledgment slip, you will be provided an option to submit to the bank wherein you have to select the Bank through which you desire to make the payment.

You will be taken to the net banking login screen wherein you can make the payment online.offline Form:https://onlineservices.tin.egov-nsdl.com/etaxnew/PopServletOffline

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I have made donation in PM Cares Fund in May 20, can I avail deduction in FY 19-20 Income Tax Return?

Donation (including donation made to PM Cares Fund) made by individual between April 01, 2020 To June 30, 2020 shall be eligible for 80G deduction in either FY 2019-20 OR FY 2020-21.Hence, individual may assess, what option is better to get maximum tax savings.

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5 Golden tips to increase your CIBIL Credit Score

5 Golden tips to increase your CIBIL Credit Score

First, understand - what is CIBIL & Credit Score.

TransUnion CIBIL Limited is Credit Information Company;
that takes information from Banks and Financial Institutions (FIs) on Monthly basis and;

prepares Credit Information Report (CIR),

Basis the CIR, a Credit Score is generated.

This Credit Score is called as CIBIL Score/ Credit Score.

What Credit Score shows?

Credit Score is 3 (three) digit score,
Range - 300 to 900

Higher, the BetterGreen zone shows welcome action/ comfort by Banks. Credit Score more than 750 are considered good for giving loan by Banks.

Now, How to increase CIBIL Score:1. Banks/ FIs provides data to CIBIL on monthly basis, hence, try to pay credit card dues/ interest payment before month end. This will shows dues from you as NIL and improve your score.2. Combination of Secured and Unsecured loans can improve your score for example, unsecured loan (Credit Card/ personal loans) for all needs is shows as negative for CIBIL purposes, unlike with Secured loans (Auto loan/ Home loan).3. Do not take new credit card/attractive interest loans too frequently.4. Whenever you are eligible for increase in credit limit, go for it. Its good for CIBIL.5. Note the following: - Salary Credit every month adds 2-5 point in Credit Score. - Secured loan repayment on time adds 10-15 point in Credit Score. - Cheque clearing adds 2-5 points in Credit Score. - Monthly 5 lakh- 10 Lakh value transaction adds 5-10 point in Credit Score. - Every time checking of Credit Score eats 2-4 point in Credit Score.And Finally, be cautious, be aware and be Informative.

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Birthday Rule for Senior Citizens and Very Senior Citizens under Income Tax Act.

Birthday Rule for Senior Citizens and Very Senior Citizens under Income Tax Act

Income upto Rs. 3,00,000/- is exempted under Income Tax Act for Resident Senior Citizens.

Similarly, Income upto Rs. 5,00,000/- is not taxable for Resident Very (Super) Senior Citizen.

Individual,who is of the age of 60 years or more, but less than 80 years at any time during the previous year/financial year is Senior Citizen.

In the same line, Individual, who is of the age of 80 years or more, at any time during the previous year/financial year is very/super Senior Citizen.

For example:

Suppose today is January 01, 2020), the previous year/ financial year is 2019-20 (assessment year will be 2020-21)[assessment year is always following the previous year].  If an individual's 60th birthday falls in any time during financial year 2019-20, his income upto Rs. 3,00,000/- is exempted from Income Tax.

Similarly, If any individual has celebrated his 80th birthday, any time during the previous year 2019-20, the income tax rate is relaxed rate (upto Rs. 5,00,000/-).

If 60th or 80th birthday falls on 1 April. what will happen?

because, from 1st April, one previous years/financial year ended and next previous year/financial year starts.  

For example:

In previous year/financial year 2019-20 (from 1st April 2019 to 31st March 2020).

Mr. A's birthday was in 2nd April 2019 - He is Senior Citizen for Income of previous year/financial year 2019-20.

(Rule - Individual,who is of the age of 60 years or more, but less than 80 years at any time during the previous year/financial year is Senior Citizen)

But, if Mr. A's birthday falls on 1st April 2020 - Should Mr. A is eligible for Senior Citizen's benefits in previous year 2019-20? (whereas previous year 2019-20 has ended on 31st March 2020 - and not on 1st April 2020)  

Income Tax Act provided clarification regarding attaining the age of 60/80 year, for individuals, whose birthday fall on 1st April every year.

A person born on 1st April would be considered to have attained a particular age on 31st March, the day previous the anniversary of his birthday. 

Hence, in the above case, Mr. A would be eligible for getting the benefits of Senior Citizen in the previous year 2019-20 itself.

Therefore, a resident individual whose 60th/80th birthday fall on 1st April 2020, would be treated as having attained the age of 60/80 years in the previous year 2019-20, and would be eligible for higher basic exemption limit of Income Tax of Rs. 3,00,000/- and Rs. 5,00,000/- respectively, in computing the tax liability for previous year/financial year 2019-20 (assessment year 2020-21).

@FinanceSikho

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Taxation of Gift

Taxation of Gift 

Gift and Income Tax in India

As a general rule, Gift exceeding Rs. 50,000/-  is taxable under - Income from other sources.

Now, what Income Tax Act says about the Gifts:-

- If you are an Individual OR Hindu Undivided Family (HUF);

- You have received any Gift (as explained below), during the previous year;
- Without any consideration;

- and if the aggregate value of such gift is more than Rs. 50,000/- (in previous year);

- The whole sum of money is chargeable to Tax.
(applicable on and after 01.10.2009)  

What can be the type of Gifts?

1. Money(may be in the form of cash, cheque, draft etc.)

2. Immovable properties (land, building or both)

3. Prescribed movable property viz. shares/securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art and bullion.

So, not other movable property, for example TV, AC, fridge are not coming under this provisions.

Aggregate or Individual Gifts

If one gift is not more than Rs.50,000/-  but if the aggregate value of all sums received during the one financial year exceed Rs. 50,000/- then the whole sum will be taxable. 

For example:If gift received in the form of cash of Rs. 49,000/- then it will not be taxable.

But If gift received in the form of cash is Rs. 51,000/- then the whole sum of money (Rs. 51,000/- will be taxable under Income from Other Sources).

What are the exception to this rule?

(Such exception is applicable to all type of Gifts prescribed above)

In the following cases, gifts received in excess of Rs. 50,000/- is not taxable:

-If received from any relative to an Individual and from any member of HUF to HUF,
(Who are 'relative')

  (i) spouse of the individual;

 (ii) brother or sister of the individual;

(iii) brother or sister of the spouse of the individual;

(iv) brother or sister of either of the parents of the individual;

 (v) any lineal ascendant or descendant of the individual;

(vi) any lineal ascendant or descendant of the spouse of the individual;

 (vii) spouse of the person referred to in clauses (ii) to (vi); 
Gift received from Friend is Taxable. 

- On the occasion of ONLY marriage of the Individual,
 It means gifts received on the occasion of Birthday, Anniversary, other functions are Taxable.

- Under a will/ by way of inheritance,

- in contemplation of death of the payer or donor 

 [gift of property made by its owner who expects to die shortly, the gift being motivated solely by the thought of his or her demise.]

- from a local authority, any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution.(Section 10 of Income Tax Act specifies such institutions,fund etc.)

- from an Individual by a trust created or established solely for the benefit of relative of the Individual.  (applicable if the property is received on or after 01 April, 2017).

In respect of immovable properties (being land, building or both)

If an Individual or HUF receives	any person receives
on or after 01.10.2009 but before 01.04.2017	After 01.04.2017
in any previous year
from any person or persons
any immovable property(being land or building or both)
without consideration, the stamp duty value of which exceeds Rs. 50,000 then the stamp duty value shall be chargeable to tax.
for a consideration, if stamp duty value exceeds the amount of consideration and the difference between stamp duty value and consideration is more than Rs. 50,000, then such difference is chargeable to tax. (applicable from A.Y 2014-15 to A.Y 2018-19).
for a consideration, if stamp duty value exceeds 105% of the amount of consideration and the difference between stamp duty value and consideration is more than Rs. 50,000, then such difference is chargeable to tax. (applicable from A.Y 2019-20)

But, here the limit of Rs. 50,000/- is for transaction wise and NOT THE AGGREGATE VALUE. If 2 properties were received in one financial year and stamp duty value of each property is not exceeding Rs. 50,000/- then nothing will be taxable. (the aggregate value can be more than Rs. 50,000/-).

Examples of movable property received as gift

Suppose, Mr. H received in FY 2019-20 shares of Rs. 25,000/- from his close friend and Jewellery of estimated value of Rs. 55,000/- (fair market value is Rs. 57,000/-), as gifts; Now what is taxable ?

(The fair market value will be taxable)- Rs. 82,000/- will be taxable in the hand of Mr. H in FY 2019-20.

Suppose, Mr. H received in FY 2019-20 drawings after paying a sum of Rs. 49,000/- to his close friend. The fair market value of the drawing is Rs. 52,000/- Now what is taxable ?
Nothing is chargeable to tax, being the difference between fair market value and consideration paid is not more than Rs. 50,000/-

Suppose, Mr. H received in FY 2019-20 furniture after paying a sum of Rs. 49,000/- to his close friend. The fair market value of the furniture brought is Rs. 1,00,000/- Now what is taxable ?

Noting will be taxable, as furniture is not the prescribed movable asset.


What will be the case if gift/money/movable assets is received by a non-resident?

for answer- Stay tuned....



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What is NIFTY 50 and How it is calculated?

What is NIFTY 50 and How it is calculated?

- National Stock Exchange Fifty (NIFTY 50).

- NIFTY 50 is an equity benchmark index which was introduced by National      Stock Exchange (NSE).

- NIFTY 50 index is 50 well diversified company’s stock that reflect the overall      market condition.  

Now the biggest question-Which stock is eligible for selection into NIFTY 50 index?

Eligibility:

-Minimum  6 months listing history (company comes out with an IPO, and fulfill normal eligibility criteria for the index for 3 month is also eligible).

-Company should allow trading in F&O segment.

-The stock should trade at an average impact cost of 0.50% or less during the last six month for 90% of the observations, for the basket size of Rs. 10 crore.

What is Impact Cost:

In mathematical terms Impact Cost is the percentage mark up observed while buying / selling the desired quantity of a stock with reference to its ideal price (best buy + best sell) / 2.

Example:

Suppose you want to buy 1500 shares and the available bids in the market are as under:

Buy qty	Buy price	Sell qty	Sell price
1000	98	1000	99
2000	97	1500	100
1000	96	1000	101

To buy 1500 shares

Ideal Price = 99+98/2 = 98.50

Actual Buy Price = [(1000*99)+(500*100)]/1500 = 99.33

Impact Cost = (99.33-98.80)/ 98.50 = 0.84%

Sector representation in NIFTY 50

FINANCIAL SERVICES	41.50
ENERGY	13.66
IT	13.17
CONSUMER GOODS	11.60
AUTOMOBILE	5.66
CONSTRUCTION	3.42
METALS	2.95
TELECOM	2.67
PHARMA	2.17
CEMENT & CEMENT PRODUCTS	1.63
FERTILISERS & PESTICIDES	0.59
SERVICES	0.58
MEDIA & ENTERTAINMENT	0.41

Top Stocks with weightage:

Company	Weight (%)
HDFC Bank Ltd.	10.73
Reliance Industries Ltd.	9.23
Housing Development Finance Corporation	8.42
ICICI Bank Ltd.	6.87
Infosys Ltd.	5.75
Kotak Mahindra Bank Ltd.	4.58
Tata Consultancy Services Ltd.	4.42
ITC Ltd.	4.15
Larsen & Toubro Ltd.	3.42
Axis Bank Ltd.	3.28

Portfolio Characteristics:

Methodology	Free Float Market Capitalization wherein the level of index reflects the free float market capitalisation of all stocks in Index.
No. of Constituents	50
Launch Date	April 22, 1996
Base Date	November 03, 1995, which marks the completion of one year of operations of NSE's Capital Market Segment.
Base Value	1000
Calculation Frequency	Real-Time Daily
Index Rebalancing	Semi-Annually, January 31 and July 31 of each year

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