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BLOG on Income Tax Management for - AY 2022-23 & 2023-24

13.  Tax Planning under One Roof

Income tax is payable by different persons mentioned in Section 2 (31) of the Income Tax Act, 1961. Generally speaking, only the following categories of persons are liable to pay income tax:

(1)     Individual;

(2)     Hindu Undivided Family [HUF);

[3]     Company

[4]     Firm;

(5)    Any other Association of Persons (ADP) or a Body of Individuals (BOI], whether incorporated or not,

[6)     Local Authority and

(7)     Every artificial juridical person, e.g. an idol, deity, etc.

Income tax is payable on your income. Now, a person may have different types of incomes from different sources, and different business. However, you don’t have to file a separate income tax return for each different source of income. Only, a single income tax return is to be filed by a person and in this income tax return she/he has to show all the different incomes arising to him or her in one financial year from all the various sources.

The Income Tax Act, 1961 -has divided the incomes of tax payers under various heads of income. The income, under each--head has therefore, to be shown separately under separate columns. The following is the check list of various heads of income under the Income Tax Law:

1. Salaries                                                             Sections 15 to 17

2. Income from house property                               Sections 22 to 27

3. Profits and gains of business or profession        Sections 28 to 44 D


4. Capital gains                                                     Sections 45 to 55

5. Income from other sources                                Sections 56 to 59

Thus, the income arising to an individual from all the different sources as mentioned above has to be shown in one single income tax return to be filed by him, The liability to income tax arises for a male individual or Hindu Undivided Family when the net taxable income from all the above mentioned heads of income exceeds
` 2,00,000 in one financial year from the F.Y. 2012-2013. For example, if a person has, say property income of ` 1,60,000, he is also a proprietor of a small retail shop wherefrom he gets income of ` 50,000 then his total income under different heads of income taken together would be ` 1,60,000 + ` 50,000 = ` 2,10,000. He will now be called upon to make payment of income tax on this figure of ` 2,10,000, i.e. 10% on ` 10,000= ` 1,000.

There are innumerable incomes under the Income Tax Law which are exempted from the purview of tax. These incomes are, appropriately known as exempted incomes. For example, interest income from Relief Bonds as also as income from agriculture are some items of exempted incomes. There are other exempted incomes as well.

The incomes which are not exempted under the Income Tax Law are known as taxable incomes. Income tax is payable on taxable income, technically called “Total Income”. Generally speaking, capital receipts are exempted from the purview of being taxed as income. Likewise, no income tax is payable on gifts received from stipulated relatives.

Income tax is calculated on the net taxable income of an assessee. Taxable income would mean all incomes under different heads of the assessee, after the various permissible deductions which are under various provisions of the Income Tax Law. Only then the net taxable income (known as “Total Income”) of the assessee. For F.Y. 20 12-2013, relevant to the A.Y. 2013-2014, the income tax payable is Nil for individuals and HUF having taxable income up to
` 2,00,000, and that for senior citizens it is ` 2,50,000 the A.Y. 2013-20 14. For very senior citizens (80 years and above) the basic income-tax exemption limit will be ` 5,00,000. The rate of income tax for an individual is just 10% on all incomes between ` 2,00,000 and up to ` 5,00,000. The income tax rate rises to 20% on incomes between ` 5,00,000 and ` 10,00,000 and further increases to 30% income in excess of ` 10,00,000 for the A.Y. 2013-2014. In addition, an education cess of 2% of the tax and a secondary and higher education cess @ 1% of the tax is also payable. The rate of income tax on the Hindu Undivided Family is exactly the same as that for a male individual. However, for partnership firms as well as corporate tax payers there is no initial exemption limit and the income tax payable is @ 30%, pIus an education cess @ 2%, and a secondary and higher education cess of 1% of the income tax payable.

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