Tax Calculation 2017-18.docx

Calculation of Income Tax for the financial Year 2018-19 (Assessment Year 2018-19)

Sl No. A

Section Gross Salary

Details

Amount XXX

Less

10(13A)

XXX

B C D E

Less l Add Less

16(iii)

Exemption in Respect of HRA Professional Tax Income Other Sources Interest on Housing Loan Standard Deduction

F

Less

G H

Less Less

I

Less

J

Less

K

Less

L M N

Less Less Less

O

Add

P

Add

24

Total Income 80C, 80CCC, 80 Savings/Investments CCD(1), 80 CCD(1B) - Additional Rs. 50000) 80 CCG Equity Investment 50% (80 D) Medical Insurance, Max. Rs. 25000 (80DD) Medical treatment for handicapped dependent Rs. 75000 or Rs. 125000 80DDB Medical treatment for Diseases, Rs. 40000, Rs. 60000 and Rs. 80000 for ordinary citizen, Sr. Citozen and Very Sr Citizen 80E Interest on education Loan (For a max. period of 8 years) 80 EE Housing loan Interest 80G Donations-50% 80U 80U – Physically Disabled Rs. 75000 or Rs. 125000 80TTA - Interest on Savings bank Allowed. (Max. Deduction allowed Rs. 10000) Jeevan Suraksha/Jeevan Akshay Total Taxable Income

XXX XXX XXX XXX

XXX

XXX XXX XXX

XXX

XXX

XXX XXX XXX XXX

XXX XXX

What would be the role of GST Council? A GST Council would be constituted comprising the Union Finance Minister (who will be the Chairman of the Council), the Minister of State (Revenue) and the State Finance/Taxation Ministers to make recommendations to the Union and the States on (i) the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which may be subsumed under GST; (ii) the goods and services that may be subjected to or exempted from the GST; (iii) the date on which the GST shall be levied on petroleum crude, high speed diesel, motor sprit (commonly known as petrol), natural gas and aviation turbine fuel; (iv) model GST laws, principles of levy, apportionment of IGST and the principles that govern the place of supply; (v) the threshold limit of turnover below which the goods and services may be exempted from GST; (vi) the rates including floor rates with bands of GST; (vii) any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster; (viii) special provision with respect to the North- East States, J&K, Himachal Pradesh and Uttarakhand; and (ix) any other matter relating to the GST, as the Council may decide.

What is GSTN and its role in the GST regime? GSTN stands for Goods and Service Tax Network (GSTN). A Special Purpose Vehicle called the GSTN has been set up to cater to the needs of GST. The GSTN shall provide a shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders for implementation of GST. The functions of the GSTN would, inter alia, include:     

facilitating registration; forwarding the returns to Central and State authorities; computation and settlement of IGST; matching of tax payment details with banking network; providing various MIS reports to the Central and the State Governments based on the tax payer return information;  providing analysis of tax payers’ profile; and  running the matching engine for matching, reversal and reclaim of input tax credit. The GSTN is developing a common GST portal and applications for registration, payment, return and MIS/ reports. The GSTN would also be integrating the common GST portal with the existing tax administration IT systems and would be building interfaces for tax payers. Further, the GSTN is developing backend modules like assessment, audit, refund, appeal etc. for 19 States and UTs (Model II States). The CBEC and Model I States (15 States) are themselves developing their GST back-end systems. Integration of GST front-end system with back-end systems will have to be completed and tested well in advance for making the transition smooth.

Which of the existing taxes are proposed to be subsumed under GST? GST is set to replace various taxes as mentioned below: The GST Council shall make recommendations to the Union and States on the taxes, Taxes currently levied and State taxes that would be collected by the Centre: subsumed under the GST a. Central Excise duty

a. State VAT

b. Duties of Excise (Medicinal and Toilet Preparations)

b. Central Sales Tax

c. Additional Duties of Excise (Goods of Special Importance)

d. Entry Tax (all forms)

d. Additional Duties of Excise (Textiles and Textile Products) e. Additional Duties of Customs (commonly known as CVD) f. Special Additional Duty of Customs (SAD) g. Service Tax h. Central Surcharges and Cesses so far as they relate to supply of goods and services

c. Luxury Tax

e. Entertainment and Amusement Tax (except when levied by the local bodies) f. Taxes on advertisements g. Purchase Tax h. Taxes on lotteries, betting and gambling i. State Surcharges and Cesses so far as they relate to supply of goods and services

cesses and surcharges levied by the Centre, the States and the local bodies which may be subsumed in the GST.

What are the taxes that GST replaces? The GST replaces numerous different indirect taxes such as: 1. Central Excise Duty 2. Service Tax 3. Countervailing Duty 4. Special Countervailing Duty 5. Value Added Tax (VAT) 6. Central Sales Tax (CST) 7. Octroi 8. Entertainment Tax 9. Entry Tax 10. Purchase Tax 11. Luxury Tax 12. Advertisement taxes 13. Taxes applicable on lotteries

What are the consequences a deductor would face if he fails to deduct TDS or after deducting the same fails to deposit it to the Government’s account? A deductor would face the following consequences if he fails to deduct TDS or after deducting the same fails to deposit it to the credit of Central Government’s account:a) Disallowance of expenditure As per section 40(a)(i) of the Income-tax Act, any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return. However, if tax is deducted or deposited in subsequent year, as the case may be, the expenditure shall be allowed as deduction in that year. Similarly, as per section 40(a)(ia), any sum payable to a resident, which is subject to deduction of tax at source, would attract 30% disallowance if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return. However, where in respect of any such sum, tax is deducted or deposited in subsequent year, as the case may be, the expenditure so disallowed shall be allowed as deduction in that year. As per Section 58(1A) (as amended with effect from the assessment year 2018-19), the provisions of section 40(a)(ia)and 40(a)(iia) shall also apply in computing the income chargeable under the head “Income from other sources”.

b) Levy of interest As per section 201 of the Income-tax Act, if a deductor fails to deduct tax at source or after the deducting the same fails to deposit it to the Government’s account then he shall be deemed to be an assessee-in-default and liable to pay simple interest as follows:(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. c) Levy of Penalty Penalty of an amount equal to tax not deducted or paid could be imposed under section 271C.

Tax Deducted at Source (TDS) TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department. The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deductee. It is the deductor’s responsibility to deduct TDS before making the payment and deposit the same with the government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is linked to the PAN of the deductor and deductee. TDS is deducted on the following types of payments:      

Salaries Interest payments by banks Commission payments Rent payments Consultation fees Professional fees

However, individuals are not required to deduct TDS when they make rent payments or pay fees to professionals like lawyers and doctors. TDS is one kind of advance tax. It is tax that is to be deposited with the government periodically and the onus of the doing the same on time lies with the deductor. For the deductee, the deducted TDS can be claimed in the form of a tax refund after they file their income tax return. What is TDS return? A deductor has to deposit the deducted TDS to the government and the details of the same have to be filed in the form of a TDS return. A TDS return has to be filed quarterly. Different types of TDS deductions have to be filed using different TDS return forms.

Advance tax Payment Advance tax means income tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. These payments have to be made in installments as per due dates provided by the income tax department. Salaried,freelancers and businesses– If your total tax liability is Rs 10,000 or more in a financial year you have to pay advance tax. Advance tax applies to all tax payers, salaried, freelancers, and businesses. Senior citizens, who are 60 years or older, and do not run a business, are exempt from paying advance tax. Presumptive Businesses– Taxpayers who opt for presumptive scheme where business income is assumed at 8% of turnover of less than ₹2 crore are exempt from advance tax for FY2017-18. Presumptive income for Businesses for FY 2016-17 – Starting financial year taxpayers who opt for presumptive scheme have to pay whole amount of their advance tax in one installment on or before 15th March. If they pay all of their tax dues by 31st March that is also ok. Starting FY 2016-17. businesses with turnover of Rs 2 crores or less can opt for this scheme. Presumptive income for Professionals for FY 2016-17– Starting FY 2016-17, this scheme has been extended to professionals such as doctors, lawyers, architects etc if their gross receipts are 50 lakhs or less(Section 44ADA). Such taxpayers have to pay advance tax as per quarterly installments. Due Dates for payment of Advance Tax FY 2017-18 & FY 2016-17 For both individual and corporate taxpayers Due Date On or before 15th June

Advance Tax Payable 15% of advance tax

On or before 15th September 45% of advance tax On or before 15th December 75% of advance tax On or before 15th March

100% of advance tax