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Tips & Tricks In Income Tax

Q-6. Calculate Income Tax in 6 easy Steps !

  1. Take the total income from all sources.

  2. Deduct Tax Free Income or Income excluded from Tax.

  3. Arrive at Gross Total Income after allowing any deductions from carried over loss/depreciation.

  4. Reduce all eligible deductions u/s 24 & 80C to 80U.

  5. Calculate the Income Tax using the current rates of IT.

  6. To this, add Surcharges if applicable and then add 2% as Education Cess on the net Income Tax.


Q-7. Arrears of Salary - their Tax Implication in Income Tax Act. !

Salary in arrears / advance, received in lump sum, is liable to tax in the year of receipt. Relief can be obtained for salary arrears u/s 89(1) of the Income Tax Act.

Method of Calculation to obtain relief

a)         Calculate the tax on total income of the previous year in which additional salary was received.

b)  Calculate the Tax on total income as reduced by additional salary of the previous year.

c)  From the amount arrived at...

     (a) deduct the amount arrived at

     (b) to arrive at tax on additional salary received.

d)  Ascertain the previous years to which the additional salary relates. Add the amount of additional salary to the total income of such years.

e)  Calculate the Tax on total income as increased by the relevant additional salary in respect of each of such previous years.

f)   Calculate the tax on the total income without the additional salary of each of the said previous years.

g)  From amount obtained at ...

     (a) deduct the amount arrived at

     (b) to calculate aggregate tax on additional salary.

h)  The relief is the difference of (c) and (g)

Q-8. Is Audit of Accounts compulsory for Business ?

For Businessmen  :   When Gross Turnover exceeds Rs. 40 lakhs.

For Retail Traders :    When the Turnover is less than Rs.40 Lakhs & Net Profit declared is less than 5% of the  Turnover.

Professionals        :      When Gross Receipts exceed Rs. 10 lakhs.

Civil Contractors   :      When Net Profit declared is less than 8% as per section 44(AD)

Transport Owners :    When declared deemed income is less than the amount specified u/s 44(AE)

Q-9. Which Professionals & Businessman have to maintain Books of Accounts ?

A.The following PROFESSIONALS whose Gross Receipt from their profession exceeds Rs. 1,50,000 p.a. ( in any of the 3 immediate preceding previous years) have to maintain the books of account :             

(1)  Legal

(2)  Medical

(3)  Interior Decorator

(4)  Technical Consultancy

(5)  Film Artist

(6)  Engineering

(7)  Accountancy

(8)  Acting as an Authorised Representative before any Tribunal.

B. Every BUSINESSMAN whose income from Business exceeds Rs.1,20,000 p.a. or Gross Receipt/Turnover exceeds Rs.10,00,000 p.a. in any of the 3 immediate preceding previous years will have to maintain books of accounts as per the Act.

W.e.f. 4-2-2002 Books of Accounts & other documents are to be preserved for a period of 6 years from the end of the relevent Assessment Year.

Q-10. What is e-Payment ? What are the Procedure for Paying Tax Online. ?

e-Payment of tax facility is for making tax payment through net banking facility or through internet by using credit/debit cards.

 * Assessees required to get their accounts audited u/s 44AB & all co’s are mandatorily required to make e — payment of tax.

Procedure for Paying Tax Online

* Log on www.incometaxindia.govin and click on ‘Pay TAXES ON LINE’ or go to and click on the icon e — payment: Pay taxes online.

* A screen displaying names of the banks which have e—payment facility will appear. Click ‘Please Click Here’ at the end of list.

* Select relevant following challan:

* Challan No./ITNS 280 payment of Income tax & Corporation Tax.

* Challan No./ITNS 282 payment of Securities Transaction, Hotel Receipts, Wealth, Expenditure /Other direct taxes.

* Relevant challan will appear on the screen. In case of payment of Tax by co.’s click code (0020) and in case of non- corporate assesses click code (0021). Enter the following data:

(1) PAN

(2) Name & address of the Tax Payer with PIN code.

(3) Assessment Year.

(4) Type of payment

* Select the bank name from the list.

* Click on ‘PROCEED’ button. A confirmation screen will appear displaying the Contents entered along with the ‘Name’ as appearing in the database of IT Department with respect to the PAN entered.

* Log on to net banking site of the bank with the User ID and Transaction Password provided by the bank. The particulars entered will be again displayed.

* Enter the amount of tax to be paid with exact details of income tax, surcharge, Interest, penalty, education cess etc
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