Advance tax

Advance tax means income tax paid in advance instead of lump sum payment at the year end. These payment have to be made in installment as per due dates provided by the income tax Act.

Advance Tax payment U/s 208:-

• Section 208 of income tax deals in advance tax payment. Any person having estimated tax liability of Rs. 10000/- or more in a year is required to pay tax in advance. This payment of tax made in advance and in installment.

Who should remit advance tax payment: 

• Any person (individual/HUF/Company/trust/LLP/ Partnership firm) whose income tax liability for the year exceeds Rs. 10000/- will be required to remit advance tax in four installment.
• Except Senior Citizen , who are 60 years or older, and do not run a business, are exempt from paying advance tax.
• Presumptive Scheme-Taxpayer, who opt for presumptive scheme U/s 44AD or U/s 44ADA  paying whole amount of advance tax in one installment.

Due dates for Payment of Advance tax U/s 211-

                          All the assessee, other then the assessee opt presumptive scheme, who are liable to pay advance tax in four installment during each financial year and the due date and amount of such installment shall be specified in the table below-

For taxpayer, who have opted Presumptive taxation scheme:-

 Note:-

1. Non Payment of advance tax will result in levy of interest U/s 234B and 234C of Income tax, Act 1961.
2. Advance tax payment is made using Challan 280.

Tax benefit on housing loan Interest and Principle

Tax benefit on housing loan Principle :-

1. Deduction available U/s 80C :

•  Under Sec. 80C of income tax Act, Maximum deduction allowed of Rs. 150,000/- in which Principle re-paid of housing loan included. 
• In other words, housing loan principle amount is the part of Sec. 80C like other deduction i.e. Life insurance, Investment in PPF, EPF, Sukanya samridhi account, tuition fees or etc.

Tax benefit on housing loan interest Sec. 24 :-

1. If House property self occupied by owner :-

• Assessee can claim deduction upto Rs. 200,000/- on interest on housing loan. if the owner or his family reside in the house property.
• Condition for claiming the deduction of Rs. 2 Lac.  

                               a. The home loan must be taken for purchase or construct a new property.

                               b. The loan must be taken after 1st April 1999.

                               c. The purchase or construction must be completed within 3 years from the end of the financial year in which loan was taken.

• If assessee fails to meet any of the above condition then deduction on interest limited to Rs. 30,000/-
• Deduction on home loan interest cannot be claimed when the house is under construction. It can be claimed only after the construction is finished. The period from borrowing money until construction of the house is completed is called pre-construction period. Interest paid during this time can be claimed as a tax deduction in five equal installments starting from the year in which the construction of the property is completed. 

2. If House property rented out :-

• Assessee can claim entire interest on the home loan allowed as deduction.

3. Deduction U/s 80EE :-

• Deduction of Rs. 50,000/- is available to individual assessee on housing loan interest, those are first time home buyers.
• For Complete information read "https://goo.gl/3Umzm1"

Section 80EE: Deduction on Housing loan interest

Sec. 80EE allows tax benefit to first time home buyer. Income tax deduction can be claimed on interest on home loan towards your first house property.

Eligible Assessee: Individual (resident or non-resident, both)

Eligible amount: Interest payable on loan taken from Financial Institution or housing finance co.
                                          or
                               Rs. 50,000/-                     Whichever is Lower

Relative Condition: 

• The loan has been sanctioned by the financial institution or housing finance company between 01.04.2016 to 31.03.2017.
• The amount of loan sanctioned does not exceed Rs. 35 Lakh
• The Purchase price of house does not exceed Rs. 50 Lakh
• The assessee does not own any residential property on the date of sanction of loan.

Important Point:

• This deduction is available for first time home buyer or assessee purchase his first house.
• This deduction is over and above the Rs. 2 Lakh in Sec. 24 of the income tax Act. 
• Deduction is available even if property under construction. Deduction is also available even if assessee has not received the possession or even if registry not taken in his name.
• Double deduction of same amount of interest, under any other provision of the Act, for any A.Y. is not permitted.

Illustration :

Mr. A has purchased his first house on 01.06.2016. cost of the house was Rs. 35 Lakh. He has borrowed the loan of Rs. 23 lakh on 25.05.2016 from state bank of India. During the P.Y. 2016-17, he paid the interest of Rs. 2,40,000/-. He used the house as his own residence.

Answer: -  Now for A.Y. 2017-18, deduction U/s  shall be Rs. 2 Lakh and deduction U/s 80EE shall be Rs. 40,000/-.

Section 80GG - Deduction in respects of rent paid

Eligible assessee:- 
                                Individual who is either self-employed or in the employment, but not receiving HRA or not provided any rent free accommodation.

Deduction under this Section as follows:-
Least of the following shall be allowed as deduction-

1. Rs. 5000/- P.M.
2. 25% of the total income; or
3. Rent paid - 10% of total income before allowing deduction U/s 80GG.

Relative conditions: Deduction under this section shall not be available to an assessee in any case where any residential accommodation is owned by the assessee self or by his spouse or minor child or HUF.

Assessee has to file a declaration of expenditure in form 10BA to claim the deduction.

Section 44ADA - Computing profit & gains of Profession on presumptive basis

Sec. 44ADA- A new section inserted  by finance act,2016. In this Sec. -

       -   An assessee being a resident in India,
       -   engaged in a Profession referred to in Sec. 44AA(1),
       -   whose total gross receipt do not exceeds fifty lakh rupees,
       -   the rate of computation of income is 50% of the total gross receipts,
       -   or the rate higher than the aforesaid (50%) rate
       -   shall be deemed to be the profit and gain of such profession to tax under the head PGBP.

Important Point : -

• No deduction allowed Under section 30 to 38.
• No required to maintain books of accounts U/s 44AA.
• No required to get tax audit U/s 44AB.
• Not required to deposit advance tax in installment, Whole amount pay on or before 15th March

Profession referred to in Sec. 44AA(1):- A person resident in India engaged in following profession can take advantage of presumptive taxation scheme:-

• Legal
• Medical
• Engineering and architectural
• Accountancy 
• Technical consultancy
• Interior decoration
• Any other profession as notified by CBDT

Section 44AD - Computing Profit & gains of Business on presumptive basis

First we read two important explanation :-

      1.  "Eligible assessee" means -

• an individual, HUF or a Partnership firm, who is a resident, but does not include a LLP firm and;
• Who has not claim deduction under any of section 10AA or deduction U/s 80IA-80RRB.

      2. "Eligible Business" means -

• Any business except the business of plying, hiring or leasing goods carriages referred to Sec. 44AE  and;
• Whose total turnover or gross receipt does not exceed two Crore rupees.

Sec. 44AD(1) :- 

• If an eligible assessee carried on eligible business willing to opt presumptive basis scheme, the rate of computation of income is 8% of total turnover or gross receipts of such business;
• or a rate higher then the aforesaid rate (i.e 8%) claimed to have been earned by the eligible assessee;
• shall be deemed to be the income under the head "Profit and gain of business".

Important Points-

        1. This provision shall not apply to- 

• A person carrying on profession as referred in Sec. 44AA;
• A person earning income in the nature of commission or brokerage; or
• A person carrying on any agency business.

      2. If an assessee declares income as per Sec. 44AD(1)-

• Deduction U/s 30 to 38 are not allowed;
• Not required to maintain books of account as per Sec. 44AA;
• Not required to get tax audit U/s 44AB.
• Assessee don't have to pay advance tax in installment, but assessee have to pay 100% advance tax on 15th March of that particular F.Y.

     3. An additional condition has been added, If assessee opting for the presumptive scheme-

• File presumptive scheme for at least 5 years in continuation
• If assessee decide to show and file profits as regular business before the end of these 5 years, you will lose presumptive taxation for the subsequent 5 years.  

       

Sec. 80D: Deduction in respect of Medical Insurance Premium

Eligibility of Tax benefit of Sec. 80D: -
You can avail the deduction, if you have paid any premium on medical policy U/s 80D taken for-

• Self,
• Spouse,
• Dependent Children,
• Parents.

Amount of Deduction:

In case of an individual, amount paid in respect of Medical insurance, Preventive health checkup and Central Govt. Health Scheme for person described below, shall avail deduction, Subject to Limit given below: -

• For Self, spouse and dependent children: Rs. 25000/- ( Rs.30000/-* if person is a senior citizen** for A.Y. 2018-2019..).
• For parents of the assessee: (Additional) of Rs. 25000/- (Rs.30000/-* if person is a senior citizen** for A.Y. 2018-2019).

In case of HUF, amount paid in respect of Medical Insurance, Preventive health checkup and CGHS for any member of family, shall avail deduction, subject to limit:-

• Premium up to Rs. 25000/- (Rs. 30000/-* if any member insured is a senior citizen for A.Y. 2018-2019)

Deduction in respect of Medical Expenditure: -

For A.Y. 2018-2019, If the taxpayer or any of his family member is of 80 years or more and health insurance premium is not paid, a deduction of medical expenses up to Rs.30,000/- can be claimed. From A.Y. 2019-20 this deduction has been increased to Rs.50,000/- and is also available to a person of 60 years or more

Mode of Payments:

Payment should be made by any mode other then cash (however, payment for preventive health checkup can be made in cash.)

NOTE: 

* Rs. 30000/- increased to Rs. 50000/- for A.Y. 2019-2020

** Senior Citizen: Any resident individual of the aged 60 yrs. or above.

*** Deduction for Preventive health checkup shall not exceeds in aggregate of Rs. 5000/-

Standard Deduction for Salaried Individual under Section-16(ia) from A.Y. 2019-2020

From Budget 2018, introduced a Standard deduction of Rs. 40000/- for salaried employee from A.Y. 2019-2020
This will be in lieu of existing transport allowances and Medical expenses reimbursement.

Let us understand this with a small example:

Particulars	Until AY 2018-19	From AY 2019-20
Gross Salary (in Rs.)	5,00, 000	5,00,000
(-) Transport Allowance	19,200	Not Applicable
(-) Medical Allowance	15,000	Not Applicable
(-) Standard Deduction	Not Applicable	40,000
Net Salary	4,65,800	4,60,000

For Taxpayers Receiving Pension:

In a recent clarification issued by the income tax department, if a taxpayer has received pension from the former employer, it is taxable under the head ‘Salaries’. Therefore, the taxpayer shall be entitled to claim a standard deduction of Rs. 40,000 or the amount of pension whichever is less.

NPS Tax Benefit- Sec. 80CCD(1), 80CCD(1B) and 80CCD(2)

In this section, where an assessee investment or deposited in National Pension Scheme (NPS), he shall be allowed deduction, subject to this provision as be described below-

NPS tax benefit under Sec. 80CCD(1)-

1. An individual contribution to NPS, 1. for self Employed 20% of Gross total Income, 2. For employees 10% of Salary. 
2. Maximum deduction is Rs. 1,50,000/- according to Sec.80CCE- the aggregate deduction of Sec. 80C+80CCC+80CCD(1) does not exceed Rs. 150000/-
3.  Salary Means Basic Salary + DA. (Not include any other allowance and perquisite)
4. Here Employee contribution in NPS is like to be Employee contribution in PF.

NPS tax benefit under Sec. 80CCD(1B)-

1. Additional deduction of Rs.50000/- allowed to an individual assessee, for self deposited in NPS
2. Both self employed and employees avail this deduction.

NPS tax benefit under Sec. 80CCD(2)-

1. The contribution made by employer is treated as salary of the employee. Employee shall get deduction for this amount U/s 80CCD to the extent of 10% of the salary.  
2. Limit of deduction for Employer contribution is- 1. Amount contributed by employer or 2.  10% of  of Salary. Whichever is lower.
3. This is additional deduction which will not form the part of Sec.80C limit.

Deduction on interest for Senior citizens U/s - 80TTB from A.Y. 2019-2020

Sec. 80TTB newly inserted vide Budget 2018 wherein, provide deduction of Rs. 50000/-on interest income. This deduction is available to senior citizens from A.Y. 2019-2020.

This deduction is allowed on interest earned by a senior citizen includes any interest income on deposit with banking company or banking institution to which Banking regulation Act,1949 applies -

• From saving account with a bank, co-operative bank and post office
• From Fixed deposit ,Recurring deposit(RD) and time deposit.

How to avail deduction :- 

1. Maximum deduction of Rs. 50000/- or,
2. Interest earned during the year from specified avobe.

                              Whichever is Lower

Note:- 

1.  Here deduction u/s 80 TTA is not allowed, when assessee get deduction U/s 80TTB.
2.  No deduction shall be allowed under this section, where interest earned by any deposit with firm,body of individual, association of person. Eg. Interest earned from Partner capital.

Deduction on Interest U/s- 80TTA

Sec. 80 TTA provide a deduction of Rs. 10000/-on interest income. This deduction is available to an individual and HUF for A.Y. 2018-19 and onward

This deduction is allowed on interest earned-

• From a saving account with a bank.
• From a saving account with a post office
• From a saving account with a co-operative Bank.

Note:- This deduction is NOT allowed on interest earned on Fixed deposit, recurring deposit(RD) and any other time deposit.

How to avail deduction: - 

1. Maximum deduction of Rs. 10000/- or,
2. Interest earned during the year as specified above.

                     Whichever is lower

Income tax slab rate for A.Y. 2018-2019

For Individual (Male or Female both below age of 60 Year.), HUF,AOP,BOI and Non resident Indian.

Income below 2,50,000	Nil
Income Exceeds 2,50,000 but up to 5,00,000	5 per cent of the amount by which total income exceeds Rs. 2,50,000
Income Exceeds Rs. 5,00,000 but up to 10,00,000	Rs. 12,500 plus 20 percent of the amount by which income exceeds Rs. 5,00,000
Income Exceed Rs. 10,00,000	Rs. 1,12,500 plus 30 percent of the amount by which income exceeds Rs. 10,00,000

For Individual Senior citizens (individual Who is age of 60 Year. or more but less then 80Year.)
 

Income below 3,00,000	Nil
Income Exceeds 3,00,000 but up to 5,00,000	5 per cent of the amount by which total income exceeds Rs. 3,00,000
Income Exceeds Rs. 5,00,000 but up to 10,00,000	Rs. 10,000 plus 20 percent of the amount by which income exceeds Rs. 5,00,000
Income Exceed Rs. 10,00,000	Rs. 1,10,000 plus 30 percent of the amount by which income exceeds Rs. 10,00,000

For Individual Super Senior Citizen  (individual who is age of 80 year. or more)

Income below 5,00,000	Nil
Income Exceeds Rs. 5,00,000 but up to 10,00,000	20 percent of the amount by which income exceeds Rs. 5,00,000
Income Exceed Rs. 10,00,000	Rs. 1,00,000 plus 30 percent of the amount by which income exceeds Rs. 10,00,000

Note:-  1. Education Cess 3% of income tax + surcharge for A.Y. 2018-2019. (4% for A.Y. 2019-2020)
2. Tax rebate of Rs. 2500 Under section 87A of income tax Act, 1961 only for individual having total income upto Rs. 3,50,000. (This rebate not for HUF)
3. Surcharge: 1. 10% of tax where total income exceed of Rs. 50 lakh.
                             2. 15% of tax where total income exceed of Rs. 1 Crore.


Tax rate for Partnership Firm:

• A Partnership firm (including LLP) is taxable at 30%

Plus: 

• Surcharge: 12% of tax where total income exceeds 1 Crore.
• Education Cess:  3% of income tax + surcharge

Penalty on late filing of Income tax return

From Assessment year 2018-2019 assesee have to pay late fees under section 234F, if assessee does not furnish the ITR on time. The taxpayer shall now be required to pay late filing fees U/s 234F.

Now be described Section 234F of Income tax Act, 1961: -

• If an assessee fails to file return on time prescribed  U/s 139, he shall pay, by way of fees, a sum of,-

1. rupee five thousand (Rs. 5000/-) if the return is not filed on or before 31st Dec. of A.Y.;
2. rupee ten thousand (Rs. 10000/-) if return filed after 31st Dec. of A.Y.

• If total income of person does not exceeds Five Lakh rupees (Rs.5,00,000/-) then late filing fees shall not exceeds one thousand rupees (Rs. 1000/-).

Changes in New ITR Forms for A.Y. 2018-2019

•  New ITR Forms requires detailed calculation of Income from Salary. The assessee may get these information from Form-16 issued by the employer.

•  Non resident assessee shall not be able to filed the ITR-1. A Non resident assessee will have to choose other form ITR-2 or ITR-3 to file the return of Income tax for A.Y. 2018-2019

• For A.Y. 2018-219 an individual or an HUF, who is a partner in a firm shall be required to file his ITR in form ITR-3. (Last Year they have option to file ITR-2)

• New ITR form allow non-resident to furnish details of any one foreign Bank A/c for the purpose of Income tax Refund. ( In Previous years we have option only for Indian bank to received Income tax Refund)

• A very good change done by income tax department in ITR-4. That is, those assessee file ITR-4 requires to provide the aggregate turnover reported by him in GST return. If any difference is found in turnover reported in GST return and ITR, presumptive taxpayers can expect a notice from deptt. to explain the mismatch in turnover. 

• In New ITR-4 more reporting will be required. In the form details of 14 financial particulars of business seeks from assessee as given below

Here Sundry creditors, Inventories, sundry debtors and Cash in hand are mandatory filed and all other are required if available.