Q1. What is income tax?

Tax paid on income you earned during a year is called income tax. Income can be earned from the following sources which are also called income under different heads:-

• Rent House property
• Business and Profession
• Capital gain – Profit on sale of assets
• Income from another source – Interest, lottery, winnings etc. which does not fall in the above category

Q2. What is an income tax return?

Once you have calculated your tax on income then you have to file the detail of the same to the government in form of a tax return i.e. Income tax return.

Q3. When do I have to file an income tax return?

For different types of individuals different due dates are mentioned:

• For Businesses not subject to audit – 7/31/2022
• For Businesses subject to audit and their partners – 10/31/2022

Q4. Who has to file an income tax return?

Following are a few of the conditions for the person who has to file an income tax return:

• If income is liable for income tax
• If there is any income from foreign assets.
• If foreign tour expenses in a year are more than 2 lakhs.
• If the electricity bill in a year is more than 1 lakhs
• If there is more than 1 crore in current accounts.
• If any TDS is deducted and you want a refund for the same.
• If there are losses and you won’t carry forwards the same
• Company
• LLP
• Partnership firm
• Trust
• AOP, BOI

Q5. What is the penalty for not filing ITR or not depositing tax?

There are two parts of the penalty in case of late filing of income tax return:

• When you have paid all due taxes but are only late in filing an income tax return to the government.
  • Total income below 5 Lakhs than 1000/-
  • Total income above 5 lakhs than 5000/- or 10,000/-
• When you have not paid due taxes on your income then the interest of 1% of the due tax amount per month or part of the month will be payable.
• If the Income-tax officer finds out that you have underreported (wrongly calculated any income or hide any revenue) the income then a 50% penalty will be charged on the due tax amount
• If the Income-tax officer finds out that you have misreported(false and inaccurate reporting by misrepresentation ) the income then a 200% penalty will be charged on the due tax amount.

Q6. How do I calculate income for business and profession?

For calculating income from business and profession follow the below steps:

• Calculate total revenue (sale after adjusting any return)
• Deduct all cost of goods sold (costing of raw material and any expenditure made for sale) – Gross profit will arise.
• Deduct any expenses in relevance to business which is allowed under deduction e.g. interest, overhead, salary, Depreciation etc.
• Calculate net profit and reduce any deduction allowed on the same.
• Reduce any interest on capital and remuneration allowed by income tax.
• Calculate tax on net profit after the above calculation.
• Add surcharge and cess on the tax calculated.
• Reduce Tax payable by any advance tax, TDS, TCS deducted or deposited.
• File ITR after furnishing detail of tax paid.

Q7. What are tax rates for businesses?

Tax rates and slabs depend on the type of assessee:-

• For Sole proprietorship –
  • Income from the business is added to individual total income and the tax slab as per individual is calculated for the same.
• For Partnership firm –
  • A surcharge of 12% if income exceeds 1 crore.
  • Cess of 4%.
• For LLP –
  • 30% flat tax is charged.
  • A surcharge of 12% if income exceeds 1 crore.
  • Cess of 4%.
• For Domestic Company – 
  • If a company is not taking benefit of any scheme
    • Turnover less than 400 Crore – 25%
    • Turnover more than 400 Crore – 30%
  • Surcharge
    • If income is more than 1 Crore – 7%
    • If income is more than 10 Crore – 12%
  • Cess of 4%

• • If a company is taking benefit of the different schemes provided

	Benefit under section
Details	115BA	11%BAA	115BAB
Tax rate	25%	22%	15%
Surcharge	7% (income > 1 Cr) 12% (Income > 10 Cr)	10%	10%
Cess	4%	4%	4%
Type of business	Certain Domestic company	All Domestic company	New Manufacturing company
Date of selecting the scheme	At the time of filing the return and before the due date in form 10 IB	At the time of filing the return and before the due date	At the time of filing the return and before the due date
Can opt-out further from the scheme	No	No	No
MAT Provision	Applicable	Not Applicable	Not Applicable
MAT Credit	Can be used	Can not be used	NA
Date of commencement of business	After 01-03-2016	Not specific	established after 1 Oct 2019 Business start before 31st March 2024
Deduction not allowed	10AA, 32AC, 32AD, 33AB, 33ABA, 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB), 35AC, 35AD, 35CCC, 35CCD, section 80H to 80TT (except 80JJAA)	10AA or 32(1)(iia) or 32AD or 33AB or 33ABA or 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB) or 35AD or 35CCC or 35CCD or section 80H to 80TT (except 80JJAA)	10AA or 32(1)(iia) or 32AD or 33AB or 33ABA or 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB) or 35AD or 35CCC or 35CCD or section 80H to 80TT (Except 80JJAA and 80M)
Carried forward losses	Can not carry forward If losses due to the above deduction	Can not carry forward If losses due to the above deduction	NA
Other condition			New company 1> Should be in manufacturing or producing including research or distribution of such article. 2> should not be established by splitting, merging, Reconstructing or taking over any old company. 3> Should not have previously used plant and machinery or hotel or convention centre.

• Foreign Company –
  • 40% Flat Tax on income

  • Surcharge
    If income is more than 1 Crore	2% of tax
    If income is more than 10 Crore	5% of tax

  • Cess of 4%

Q8. What is Surcharge?

For charging extra tax on high earning person or company there is an additional charge on tax which is from 2% to 12%. This is calculated on the tax amount, not the total income.

Q9. What is advance tax?

We file ITR after 4 – 6 months of ending any year and deposit tax while filling the return. But you start earning one the first month of the year so Government has established a system as per you pay taxes as you earn.

• Estimate your earnings for the year
• Pay tax quarterly on calculated income
• Adjust next quarter tax according to changes if any
• and pay 100% of tax before 31s march of the year

Q10. When do I have to pay advance tax?

Due date	Corporate taxpayer	For presumptive taxpayer
15-Jun	15% of tax liability	0
15-Sep	45% of tax liability	0
15-Dec	75% of tax liability	0
15-Mar	100% of tax liability	100% of tax liability

Q11. What are the conditions for advance tax?

If your estimated tax liability is more than 10,000/- then you have to pay advance tax.

Q12. What happens if I do not pay advance tax?

If not paying advance tax or discrepancy in tax paid and actual tax payable is due to the following reasons then there is no interest or penalty:

• Capital gain
• Speculative income e.g. lottery
• 90% tax paid of actual liability
• A senior citizen who does not have income from business and profession

Q13. What is the penalty for not paying advance tax?

If you do not pay advance tax then 1% interest per month or part of the month will be charged from the day of discrepancy till payment is made.

Q14. What is the difference between the process of tax calculated in the case of an individual or business and profession? Following are major differences between the tax process of individuals and businesses:

• Type of deduction allowed – In the case of individual government give deduction to promote specific habit and investment in the individual but in the case of business, the deduction is allowed on the basis of expenses required to earn income.
• Requirement for maintaining books and accounts – Only required to maintain basic details of in case of individual and in case of businesses there are lots of requirement as per turnover or type of business structure.
• Businesses can not have salaried income but individuals can have salaried income.
• There are more rules and restrictions in the case of businesses for following rules and regulations but in the case of individuals, there are fewer rules.