Income Tax Ready Reckoner

Income Tax Calculator

Here is the quick guide to calculate your income tax calculations.

This tool is to be used to enable public to have a quick and easy way to do tax calculations. It is advised that, for filing of income tax returns, the exact calculation may be made as per the provisions contained in the relevant Acts, Rules etc.
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Income Tax Calculator – Assessment Years 2010-11 to 2016-17

Income Tax department to use email for issuing notices

In welcome news for taxpayers, the IT department has decided to launch a new system of issuing email notices to which an assessee can respond electronically, obviating the need for a physical interface with the taxman which often led to complaints about harassment.

The Central Board of Direct Taxes, the apex policy-making body of the IT department, is working on a strategy to create the required processes and capacity in this regard.

“We have been thinking how can we make life easier for taxpayers especially for those who are in the middle and the slightly higher tax bracket. So, now we are thinking of allowing that when a notice is issued in an assessment or scrutiny case, the taxpayer can send the department an e-response.

“We are trying to resolve some security issues in this regard now after which it could be implemented,” CBDT Chairperson Anita Kapur told PTI in an interview.

Explaining the procedure, Kapur said if a taxpayer provides the department with a bonafide email address in his Income Tax Return (ITR), the Board will be able to send him an e-notice and not a paper document dispatched through post for which he usually has to travel and meet the Assessing Officer (AO).

“The taxpayer can respond through the email and if we have some more queries we give you another notice by the electronic medium so that both the AO and the taxpayer remain in an e-environment and, may be, during the final hearing when the AO wants to close the matter, the taxpayer can come once to the tax office,” the CBDT chief said.

She said the purpose of introducing the system was to reduce the interface between the taxpayer and the AO.

“The taxpayer can send documents over email, scan them, upload them and it’s over,” she added.

“It (scrutiny session) should be over and should not go beyond that. This is the way we are trying to address the issues of compliance and limiting the interface between the taxman and the taxpayer. This will be a sea change in our tax administration,” Kapur said.

Tax experts say the initiative will also ensure privacy of a taxpayers’ communication with his AO and the tax department.

The CBDT chief said she was aware of instances where the taxpayers complained about the AO raising numerous queries upon meeting the assessees despite their earlier order sheets having mention of only a few queries.

“This (sending emails) is one way of giving both the taxpayer and the AO a good opportunity to solve their things without any problem. It has also been mentioned in our earlier instructions to the field that the questionnaire sent to the taxpayer in scrutiny cases should be focused and specific so that the person knows what is he being enquired about.

“We are trying to do this for a medium-level taxpayer and others,” Kapur said, adding she hopes this would bring down taxpayers’ complaints.

The CBDT chief said the number of cases landing for scrutiny had gone down over the years following introduction of technology in the administration of taxes.

“The overall percentage of cases brought under scrutiny across the country in a financial year is less than one per cent. The entire system is handled electronically and there is no human intervention. I can assure taxpayers that there is no personal role of a tax official in deciding who can be scrutinised or who cannot be,” she said.

Kapur added that as part of measures to further check instances of harassment of taxpayers, the CBDT has recently asked its field offices to not undertake any “fishing or roving inquiries”.

“We are also saying to our officers that when you select a case for scrutiny you should say that this is the reason that we have selected your case.

“We are asking our officers that if we are selecting a case for scrutiny on a third-party information (through banks, credit card agencies) just limit your inquiry to those issues which have been flagged and based on which your case have been selected for scrutiny. No fishing inquiries (should be undertaken),” she said.

 

Corporate tax exemptions phase-out may end MAT

The Minimum Alternate Tax (MAT) could be phased out after some years, if and when all corporate tax exemptions and deductions are phased out.

This could take at least seven or eight years. If it happens, experts agree, it would reduce tax litigation.

A finance ministry official said MAT might become redundant in seven years or more and could be removed. “For now, it will remain in the Income Tax Act, even if it does not affect people. If there are no substantial deductions that reduce the income to below 18.5 per cent, MAT will not be applicable. In seven to 10 years, as MAT becomes redundant, it will be removed,” he said.

MAT THROUGH THE YEARS
  • 1987-88: Rajiv Gandhi introduces Section 115J in I-T Act to tax zero tax companies at at least 15% of book profits
  • 1990-91: Madhu Dhandvate Abolishes it
  • 1996-97: P Chidambaram re-introduces section 115 JA. MAT rate at 12.5% of total book profit.
  • 2000-01: Yashwant Sinha amends and makes  it 115 JB. Rate at 7.5%. Continues even today. Simplifies rules
  • 2006-07: 7.5%, but long capital gains taken into account to compute book profit
  • 2009-10: 10%
  • 2010-11: 15%
  • 2011-12: 18%
  • 2012-13: 18.5%
  • 2013-14: 18.5%
  • 2014-15: 18.5%
  • 2015-16: 18.5%


The government is also looking at setting a sunset date for most open-ended tax concession schemes, alongside a five percentage point reduction in the corporate tax rate in four years. The rate is 30 per cent, but is close to 23 per cent, on account of a large number of exemptions and deductions. The revenue forgone in 2012-13 on account of deductions in this regard was Rs 68,000 crore.

In the next financial year, the corporate tax rate might be around 29 per cent, after a cut, part of a plan to align Indian taxation levels to global standards. “As the government progressively reduces the rate to 25 per cent and phases out exemptions and deductions, the need for MAT goes away. It will simplify a lot of things,” said Sudhir Kapadia, national tax leader, EY.

The finance ministry will issue a discussion paper on phasing out the exemptions and deductions. It is likely to announce the road map in the Budget.

MAT is levied at 18.5 per cent and was meant for large companies that showed book profits but took advantage of legal provisions to avoid paying corporate tax, via dividend payments and other legal deductions to stated income. As of now, 38 corporate tax deductions apply to industry, including benefits for units set up in Special Economic Zones (SEZs), the northeast states, hilly states and so on. Besides, tax incentives are offered for expenditure on scientific research, funding charitable trusts and institutions and the like. Deductions are also offered to sectors such as power, telecommunications, and infrastructure.

“As the corporate tax rate is reduced to 25 per cent, MAT will also not make sense, as the two rates anyway come close,” said  Rajesh H Gandhi, partner, Deloitte Haskin and Sells.

Rahul Garg, leader, direct taxes, PwC, said the government should look at replacing corporate tax with MAT. The effective corporate tax was 23.4 per cent, he explained, while that of MAT was close to 22 per cent. “If the government simply increases the MAT rate by one percentage point, collections will go up. With this, the government could get rid of all disputes,” he said.

SEZs lost sheen after then finance minister Pranab Mukherjee in 2011-12 imposed MAT on the book profits of these developers and units inside one.

That and a dividend distribution tax of 10 per cent made these  enclaves unattractive. Only 192 of the 388 notified SEZs are operational, meaning at least one functional export unit. There are 588 approved SEZs.

Exports from SEZs fell 7.6 per cent in 2014-15. The department of commerce has been pressing the finance ministry for the withdrawal of MAT but the latter has not obliged. The Budget for 2015-16 has  exempted foreign portfolio investment from MAT and the government has also accepted the A P Shah panel recommendation to do away with past cases of MAT on foreign institutional investors. A change to the law is on its way, while tax officials have been instructed not to pursue notices, issued against foreign instituional investors. However, applicability of MAT on foreign companies without permanent establishment remains. A case relating to this involving Castleton Investments is pending in the Supreme Court.

Income Tax E-Filing Process – At a glance

Steps for Income Tax E-Filing:

 

 

  1. Select appropriate type of Return Form – ITR and download appropriate Return Form from https://incometaxindiaefiling.gov.in/
  2. Fill your particulars of name, address. PAN Number, date of incorporation (date of birth, in case of individuals), sources of income and the amounts and other details in the ITR return offline and generate a XML file
  3. Register and create a user id/password. User id is always your PAN number.
  4. Login and click on relevant form on left panel and select “Submit Return”
  5. Browse to select XML file and click on “Upload” button
  6. On successful upload, acknowledgement details would be displayed. Click on “Print” to generate printout of acknowledgement/ITR-V Form.
  7. In case the return is digitally signed, on generation of “Acknowledgement” the Return Filing process gets completed. You may take a printout of the Acknowledgement for your records.
  8. Incase the return is not digitally signed, on successful uploading of e-Return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form. The tax payer has to fill-up the verification part and verify the same.
  9. The e-verification can be done using Aadhar number or through online banking. A duly verified ITR-V form should be submitted with the local Income Tax Office within 15 days of filing electronically. This completes the Return filing process for non-digitally signed Returns.
  10. For any assistance in filing the paper copy of the return please contact the Public Relations Officer of the local Income Tax Office.