ABOUT INCOME TAX ACT 1961

The Income-tax Act, 1961 is come in force 1961 whole of India and it is charging statute of Income Tax in India . It provides for levy, administration, collection and recovery of Income Tax. There is separate ministry of Income Tax Act 1961 called Central Board of Direct Tax (CBDT) under Ministry of Finance. Amendments, notification, clarification, circulars etc passed through Parliament of India.

INCOME TAX RETURN (ITR) FILING

As per Income Tax Act 1961, every person who is Individual, Company, Partnership Firm, LLP, HUF, AOI/BOI, Society, NGOs required to file their Income Tax Return every year if their income exceeds basic limit. ITR is file in the income tax portal by online or offline. Income Tax Department notified the ITR form for various person who required to file ITR as per status, for example in case of individual ITR 1 to 4 notified to Individual only.
There are 5 heads of income under the Income Tax Act which is a follow

• Income from salary.
• Profits and gains from business and profession.
• Income from house property.
• Income from capital gains.
• Income from other sources such as dividend, interest on deposits, royalty income, winning on lottery, etc.

The Central Government notified the ITR forms which is applicable for Individual, Company, Partnership etc are as below :

S.no.	Particulars	Applicability
1	ITR-1 (also called as Sahaj)	This form is to be filed by Resident Individuals having total income upto Rs. 50 Lacs in previous year(Financial Year) from following Source of Income:- 1. Salary 2. One house property 3. Other sources excluding winning from lotteries and income from horse races 4. Agricultural income upto Rs. 5,000
2	ITR-2	To be filed by Individuals and HUFs who are not eligible to file form ITR-1 and don’t have income from profits and gains from business or profession. 1. Salary exceeds 50Lacs 2. More than one house property 3. Income from winning from lotteries and income from horse races 4. Agricultural income exceeds Rs. 5,000 5. Non Resident of India
3	ITR-3	To be filed by Individuals and HUFs having income from profits and gains from profits and gains from business or profession. In this form is filled mostly for Tax Audit of Individuals.
4	ITR-4 (also called as Sugam)	As a name mentioned Sugam it is simplified form for filing Business and Profession Income for Individual and Partneship only which income is computed under section 44AD, 44ADA or 44AE.
5	ITR-5	ITR 5 Form is meant for firms, LLPs, AOPs (Association of persons) and BOIs (Body of Individuals), Artificial Juridical Person (AJP), co-operative society, Estate of deceased, Estate of insolvent, Business trust and investment fund, subject to some conditions.
6	ITR-6	ITR 6 is a tax return form for all the companies whether domestic companies or foreign company which are not claiming the exemption u/s 11(Income from property held for charitable or religious purposes).
7	ITR-7	ITR 7 Form is meant for all the Charitable /Religious trust u/s 139 (4A), Political party u/s 139 (4B), Scientific research institutions u/s 139 (4C), University or Colleges or Institutions or Khadi and Village industries u/s 139 (4D) which are requiring the exemptions.

PREVIOUS YEAR

For Income Tax Act 1961, the previous year is defined as the financial year which immediately precedes the assessment year. In case the source of income is new or the business set up is new, the previous year for that entity will start from the date of setting up of that business or profession or from the date when the source of income of this new existence starts and ends in the said financial year.

BASIC LIMIT OF INCOME TAX RETURN

The basic exemption limit depends on the income tax regime you choose. Under the old income tax regime, the basic tax exemption limit stands at ₹ 2.5 lakh for taxpayers below 60 years of age. For people between 60 and 80 years of age, the basic exemption limit is fixed at ₹ 3 lakh. For people above 80 years of age, the exemption limit stands at ₹ 5 lakh.

TAX AUDIT SECTION 44AD

Under Section 44AD of presumptive taxation , small taxpayers with less than 2 crore of turnover are not required to maintain books of accounts and their profits are presumed to be 8% of their turnover. For availing benefit under this scheme, profits where income is credited digitally or through the bank will be considered as 6% as against 8% for cash receipts.

Section 44AD was introduced to give relief to the small taxpayers from maintaining books of accounts who have turnover less than Rs 2 crores ( amended to 5 crores subject to minimum criteria of digital transaction in budget 2020). Under the presumptive income scheme, the taxpayer is allowed to presume the minimum profits at prescribed rate of the total turnover and is relieved to get the books of accounts audited.

Section 44AD is a presumptive taxation scheme , income will be calculated on the basis of 8% of the turnover( 6% in case of digital receipts and payments) and the taxpayer has a relief for not maintaining the books of account . For example Mr. Uday is having a bookshop with turnover of Rs 70 lakh for the previous year. He wishes to opt for presumptive taxation under 44AD , under this section his income will be computed at 8% of the turnover Rs 5.6 Lakh. Annual presumptive tax will be calculated as per slab on Rs. 5.6 lakh.

PENALTY FOR LATE FILING INCOME TAX RETURN

• The taxpayer will not be able to claim any interest on the delay in a refund for the period of delay in filing income tax returns.
• Taxpayers who file income tax returns after the due date will not be eligible to rectify the income tax return filed, in case of any errors.
• Some income tax deductions under Chapter VI-A of the Act will not be allowed if the taxpayer files late return.
• The taxpayer will not be able to set off losses incurred (other than house property loss).