Q.1 What are the benefits of filing my return of
income?
Ans. Filing of return is your constitutional duty
and earns for you the dignity of consciously contributing to the development
of the nation. This apart, your IT returns validate your credit worthiness
before financial institutions and make it possible for you to access many
financial benefits such as bank credits etc.
Q.2 Are all receipts considered as income?
Ans. No. Receipts can be classified into two kinds.
A) Revenue receipt B) Capital receipt. The general rule under the Income tax
Act is that, all revenue receipt are taxable unless a receipt is
specifically exempted and all capital receipts are exempt from taxation
unless there is a provision to tax it. Gifts and loans etc are in the nature
of capital receipts not attracting tax.
Q.3 Is income tax levied on gifts received by a
person
Ans. Gift exceeding Rs 50,000 is taxable unless it
is received from
- any person who is a relative or
- on occasion of marriage or
- under will or by inheritance or
in contemplation of death of the payer
Q.4 I own shares of various Indian companies and
receive dividends. Is it taxable?
Ans. No. The dividend declared by Indian companies
is not taxable in the hands of the share holders because tax on distributed
profits have already been borne by the company.
Q.5 I am a religious preacher and earn money from
preaching. Do I have to pay tax and file return?
Ans. Yes.
Q.6 Can I claim deduction for my personal and
household expenditure in calculating my income or profit? Ans. No.
Ans. No.
Q.7 Most of my income is given away in charity and I
am left with just enough to meet my personal requirement. What will be
considered as my income?
Ans. What is done after the income is earned does
not determine its taxation. However charitable contribution to approved
institutions will give you the benefit of certain deductions from taxable
income.
Ans. At the moment individual, HUF, AOP, and BOI
having income below rupees one lakh need not pay any income tax. For other
categories [persons] such as co-operatives societies, firms, companies and
local authorities no such exempted limits exists, so they have to pay taxes
on their entire income. In cases of senior citizens aged above 65 years and
women the exempted limit for the financial year 2007-08 are rupees one lakh
ninety thousand and one lakh forty thousand respectively.
Q.9 I am an agriculturist. Is my income taxable?
Ans. Your agricultural income is not taxable per se.
However, if you have any other source of income like income from
investments, property etc, while calculating tax on them, your agricultural
income will be taken into account, so that you pay tax at a higher rate on
that other income.
Q.10 Do I have to maintain any records or proof of
earnings?
Ans. For every source of income you have to maintain
proof of earning and the records specified under the IT Act. In case, no
such records have been laid down, you should maintain reasonable level of
records with which you can support the claim of income
Q.11 I win a lottery or prize money in a competition.
Am I required to pay taxes on it?
Ans. Yes.
Q.12 How is advance tax calculated and paid?
Ans. It is paid in installments. The amount payable
is to be calculated in the following manner :
 |
| Status |
By 15th June |
By 15th Sept |
15th Dec |
15th March |
| Corporate |
15% |
45% |
75% |
100% |
| Non-Corporate |
Nil |
30% |
60% |
100% |
|
 |
The deposit of advance tax is made through challan by ticking the
relevant column.
Ans. The tax can be reduced by making investment in
approved schemes and also by making donations to approved charitable
institutions.
Q.14 How is a return filed electronically?
Ans. Companies and firms are compulsorily required
to file their return electronically, while for others it is still optional.
For electronic filing of return you have to log on to the Departmental
website http://www.incometaxindia.gov.in/ and upload the information of
income and taxes in the prescribed form. If you have digital signature the
same can be appended and there would be no need to file a paper return. In
case you do not have a digital signature you will be required to file a
paper return quoting the provisional acknowledgement number received on
completion of uploading.
Q.15 Am I required to keep a copy of the return filed
as proof and for how long?
Ans. Yes.Since legal proceedings under the income
tax act can be initiated up to six years prior to the current financial
year, you must maintain such documents at least for this period.
Q.16 What are the benefits of obtaining a Permanent
Account Number [PAN] and PAN Card?
Ans. A PAN number has been made compulsory for every
transaction with the Income Tax department. It is also mandatory for
numerous other financial transactions such as opening of bank accounts,
availing institutional financial credits, purchase of high-end consumer
item, foreign travel, transaction of immovable properties, dealing in
securities etc. A PAN card is a valuable means of photo identification
accepted by all government and non-government institutions in the country.
Q.17 Is it mandatory to file return of income after
getting PAN?
Ans. No. Return is to be filed only if you have
taxable income
Q.18 Can interest paid on hand loans taken from
friends and relatives be claimed as deduction while calculating house
property income?
Ans. Yes.
Q.19 I am a small time trader. Do I need to maintain
any accounts?
Ans. Any business or profession that has an annual
turnover/gross receipts exceeding rupees ten lakh and net profit of rupees
one lakh twenty thousand, must maintain such books of account and documents
from which its income can be reasonably ascertained by the department.
Q.20 Sale of what kind of assets attracts capital
gains?
Ans. All transfer of capital assets attracts capital
gains. Capital assets are those properties that have an enduring value and
they are not consumable.
Q.21 What is TDS?
Ans. TDS means Tax Deducted at Source. It is the
amount withheld from payments of various kinds such as salary, contract
payment, commission etc. This withheld amount can be adjusted against your
tax due.