Income Tax Services


Comprise taxation on income earned in a financial year a part of which is taxable as per rates prescribed for that year. With the financial year running from 1 April to 31 March of following year, broadly taxpayers are classified as residents or non-residents where the individual taxpayers can be classified as 'residents but not ordinary residents'.

Residential Status

An individual is considered resident in India if he is in India in tax year for:

·         182 days or more

·         60 days or more where the period of 60 days stands changed to 182 days or more for – Indian citizens/persons of Indian origins on visit to India

·         For citizens of India leaving India for employment abroad as members of crew of Indian ship during tax year

A resident is "not ordinarily resident" in India in any tax year if he:

·         Has been "non-resident" in India in nine out of 10 previous years preceding that year

·         Has during previous seven years, preceding that year been in India for total period of 729 days/less

HEADS OF INCOME

Income is categorized under five broad heads/classes where the taxable component of income is ascertained as per the rules for particular head/class of income followed by aggregation for determining total taxable income. These include:

Salaries – Received against services rendered and include wages, pension, fees, commission and taxable value of perquisites.

Income from house properties that comprise income that arises from use of residential/commercial properties. Here, only two prescribed deductions are permitted while computing income.

Profits and Gains from Business/Profession that covers income earned from business/profession that is net of permissible deductions, against revenue earned.

Capital Gains that covers gains which arise from transfer of capital assets and the period of holding determining classification of asset, which then determines manner of taxation. The gains comprise short-term assets and long-term capital assets.

Income from Other Sources that are residuary head/class of income covering any income not specifically dealt with under other heads.

RULES GOVERNING FOREIGN NATIONALS –

For foreign nationals, Indian tax law provides exemption of income earned subject to prescribed conditions. This is based on conditions like –

·         Individual's stay in India does not exceed 90 days

·         Payment made is not deducted in computing income of employer

·         Remuneration received by person employed on foreign ship provided his stay in India not exceeding 90 days

·         Remuneration of foreign diplomats, consular staff, trade officials and their staff and family

·         Income of employee/consultant of government approved foreign charitable institutions

Tax Rates For Individuals For Financial Year 2017-18 (Assessment Year 2018-19) Is As Per Follows:

Income Range

Very senior Citizen(who is
80 years or above at any
time during previous year)
(a)

Senior Citizen(who is 60 years
or above but below 80 years
at any time during previous year)
(b)

General Category & non Resident
Other than (a) & (b)

UptoRs. 2,50,000

Nil

Nil

Nil

Rs. 2,50,001 to Rs. 3,00,000

Nil

Nil

5%

Rs. 3,00,001 to Rs 5,00,000

Nil

5%

5%

Rs. 5,00,001 to Rs 10,00,000

20%

20%

20%

Above Rs. 10,00,000

30%

30%

30%

*For FY 2017-18, the Finance Minister has provided a maximum Rebate of Rs. 2,500under Section 87A who are a RESIDENT INDIVIDUAL & Total Income Less Deductions (under Section 80) is equal to or less than Rs 3,50,000. If both the above conditions are satisfied, rebate of Rs 2,500 will be available under Section 87A. The rebate is limited to Rs 2,500. Which means if the total tax payable is lower than Rs 2,500, such lower amount of tax will be the rebate under section 87A. This rebate is applied on total tax before adding Education Cess(3%). This rebate is also available to Senior Citizens who are 60 years old but less than 80 years old.
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh but up to Rs.1 crore and 15% of income tax, where the total income exceeds Rs.1 crore.

COMPANIES

Domestic Company - Turnover uptoRs. 50 crores

·         Income Tax: 25% of taxable income

·         Surcharge:
At the rate of 7% of such income tax, provided that the taxable income exceeds Rs. 1 crore.
At the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores.

·         Education Cess: 3% of the total of Income Tax and Surcharge.

Domestic Company - Turnover exceeding Rs. 50 crores

·         Income Tax: 30% of taxable income

·         Surcharge:
At the rate of 7% of such income tax, provided that the taxable income exceeds Rs. 1 crore.
At the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores.

·         Education Cess: 3% of the total of Income Tax and Surcharge

Firms Foreign Company

·         Income Tax: 40% of total income

·         Surcharge:
At the rate of 2% of such income tax, provided that the taxable income exceeds Rs. 1 crore
At the rate of 5% of such income tax, provided that the taxable income exceeds Rs. 10 crores

·         Education Cess: of 3% of total of Income-tax and surcharge

Kinds of Taxes

·         Annual Tax which is levied on income earned in a financial year and is based as per the rates declared in annual budget. With rates varying with each budget, the tax is payable in advance by way of quarterly installments during financial year.

·         Minimum Alternate Tax (MAT) is tax levied @ 18.5% of book profit. Here, the surcharge is at the rate of 7% of such income tax provided that the taxable income exceeds Rs. 1 crore and at the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 croresFurther, the Education Cess is @ 3% of total Income-tax and Surcharge.

Firm

Partnership Firms and LLPs (Limited Liability Partnerships) are to be taxed at the rate of 30%.

·         Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.

·         Education Cess of 3% of total of Income-tax and surcharge

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