Rushi Gokani SIP PRoject

Chapter-1
Introduction
The project on INCOME TAX PLANNING IN INDIA WITH RESPECT TO

INDIVIDUALS is carried out in IFIANS CORPORATE SERVICE PVT LTD Warje,
Pune. The intension behind taking over this project with IFIANS CORPORATE SERVICE
PVT LTD was to primarily understand the concept of income tax in India along with its
forms and filling income tax returns.
The ideal subject related to related to my project was to understand and learn the provision
of taxes and filling of forms in detail according to the information provided by the clients
of the company and further assisting the clients by helping in filing the return and
providing various remedies as per the requirement varying from case to case related to
income tax.
Return which accrues or is expected to accrue regularly from definite sources. However
under the income tax Act 1961, even certain incomes which do not arise regularly are
treated as income for tax purpose. So income tax is an annual tax on income. The Indian
income tax Act stipulates that in respect to total income of the previous year of every
person, income tax shall be charged for the corresponding assessment year at the rates laid
down by the finance Act for that assessment year. Here a person may be an individual(P),
Firm(F), Hindu Undivided Family (HUF), a Company(C), Association of Person(AOP),
Body of Association(BOA), Local Body Authority(lBA), and every artificial juridical
person e.g., an idol or deity. Person can be termed as assesses also. Assesses means a
person by whom any tax or any other sum of money is payable under the act. Income
earned in a year is taxable in the next year, which is known as assessment year. The in
which the income is earned is known as previous year.
The income tax prescribes five hands of income. These head of income exhaust all
possible types of income that can accrue to or be received by the tax payer, and they are as
follows:
ABCDE-
Income Under The Head Salaries

Income From House Property
Profits And Gains of Business or Profession
Capital Gains
Income From Other Sources
There are certain income which are wholly exempt from income-tax e.g., agricultural
income. These incomes have to be excluded and will not form part of Gross Total Income.
Also, some incomes are partially exempt from income-tax e.g., House Rent Allowance,
Education Allowance. These incomes are excluded only to the extent of the limits specified
in the Act. The balance income over and above the prescribed exemption limits would
enter computation of total income and have to be classified under the relevant head of
income.
Income is to be computed in accordance with provisions governing a particular head of
income. Under each head of income, there is a charging section which defines the scope of
income chargeable under the head. There are deductions and allowances are prescribed
2
under the other heads of income. These deductions etc. Have to be considered before
arriving at the net income chargeable under each head.
In case of individuals, Income tax is levied on a slab system on the total income. The tax
system is progressive i.e., as the income increases, the applicable rate of tax increases.
Some tax payers in the higher income bracket have tendency to divert some portion of their
income to their spouse, minor child etc. To minimize their tax burden. In order to prevent
such tax avoidance, clubbing provisions have been incorporated in the Act, under which
income arising to certain person (like spouse, minor child, etc.) have to be included in the
income of the person who has diverted his income for the purpose of computing tax
liability.
An assesses may have different sources of income under the same head of income. He
might have profit from one source and loss from other. For instance, an assessee may have
profit from his textile business and loss from his printing business. This loss can set off
against the profits of textile business to arrive at the net income chargeable under the head
Profits and Gains of business or profession. Similarly, an assessee can have a loss under
one head of income, say, income from house property and profits under another head of
income, say, profits and gains of business or profession. There is provision in the income
tax Act, 1961 for allowing inter-head adjustment in a certain cases. Further, losses which
cannot be set off in the subsequent years as per the provisions contained in the Act. The
final figures of income or loss under each head of income, after allowing the deductions,
allowance and other adjustment, are then aggregated, after giving effect to the provisions
for clubbing of income and set-off and carry forward of losses, to arrive at the gross total
income.
By the income from these five head we get gross total income i.e., GTI and after this
deduction are available from chapter VI i.e., from section 80C to section 80Uafter this we
will be arriving at total income. The income in which Tax is charge according to the
prescribed rate of that particular year gives by the relevant Finance Act.
Income Tax Act, 1961 is the guiding baseline for all the content in this report and the tax
saving tips provided herein are a result of analysis of options available in the current
market. Every individual should know that tax planning in order to avail all the incentives
provided by the Government of India under different statures is legal.
Chapter-2
INDUSTRY PROFILE
2.1 INDUSTRY OVERVIEW

The Central Board of Direct Taxes (CBDT) is a part of department of revenue in the
ministry of Finance, Government of India. On one hand, CBDT provides essential inputs
for policy and planning of Direct taxes in India, at the same times it is also responsible for
administration of direct tax laws through the income Tax Department. The Central Board
of Direct Taxes is a statutory authority functioning under the central board of revenue Act,
1963. The officials of the board in their ex-officio capacity also function as a division of
the ministry dealing with matters relating to levy and collection of Direct Taxes.
2.1.1. ORGANIZATION AND FUNCTIONS

The Central Board of Direct Taxes is a statutory authority functioning under the Central
Board of Revenue Act, 1963. The officials of the Board in their ex-officio capacity also
function as a Division of the ministry dealing with matters relating to levy and collection
of direct taxes and formulation of policy concerning administrative reforms and changes
for the effective functioning of Income tax Department.
2.2 HISTORICAL BACKROUND OF C.B.D.T.

The Central Board of Revenue as the department apex body charged with the
administration of taxes came into existence as a result of the Central Board of Revenue
Act, 1924. Initially the Board was in charge of both direct and indirect taxes. However,
when the administration of taxes becomes too unwieldy for one Board to handle, the Board
was split up into two, namely the Central Board of Direct Taxes and Central Board of
Excise and Customs with effect from 1.1.1964. This bifurcation was brought about by
constitution of the two Boards u/s 3 of the Central Board of Revenue Act, 1963.
2.3. COMPOSITION AND FUNCTIONS OF C.B.D.T.
The Central Board of Direct Taxes consists of a Chairman and following five Members:1.
2.
3.
4.
5.
6.
7.
Chairman
Member (Income-Tax)
Member (Investigation)
Member (Audit and Judicial)
Member (Legislation)
Member (Personnel)
Member (Revenue and Audit)
The Chairman and Members of Central Board of Direct Taxes are assisted by joint
secretaries, Directors, Deputy Secretaries, Under Secretaries and Ministerial staff to carry
out their day-to-day functions. The CBDT monitors the functioning of field offices/field
formations which comprises of following:
Chief Commissioners/Commissioners of Income Tax
Director General (Inv.)/Directors of Income Tax (Inv.)
Director General (Exempt.)/Director of Income Income-Tax (Exemp.)
Director General (Foreign Tax)/Director of Income Tax(Foreign Tax)
Commissioners of Income-Tax (Appeals)
Commissioner of Income-Tax (Judicial)
Commissioner of Income-Tax (Computer Operations)
Commissioner of Income-Tax (Audit)
Commissioner of Income-Tax (CIB)
Commissioner of Income-Tax(Departmental Representative),

Tax Settlement Commission.
Commissioner of Income-Tax (Departmental Representative), Income Tax

Appellate Tribunal.
Income
To monitor the day-today functioning of field formations, the CBDT is assisted by

the following attached offices/Directorates:
1. Directorate of Income Tax (IT)
This directorate has two wings i.e,
A) Inspection-Board exercises efficient control and inspection of the work of
the Income Tax officers throughout the country.
B) Examination- Centralized Conduct of departmental examinations for
departmental promotions.
2. Directorate of Inspection (Audit)
Ensures expeditious disposal and settlement of receipt audit objections and also
review the work done in the different commissioner charges.
3. Directorate of inspection(Research, Statistics and Public Relation)
The main function of this directorate are research study on tax matters, printing
of all India revenue statistics, preparation of taxpayers Information series,
Departmental publications, Publicity, and public Relations.)
4. Directorate of Organizations and Management services

This Directorate has been assigned the job of administrative Planning,
Organizational Development, Management Information System and Work
Measurement.
5. Directorate of Inspection (Vigilance)
The main functions of this directorate are conducting departmental enquiries,
drafting of charge sheet, presenting the cases on behalf of the Department,
Preparing the enquiry reports against the charge officials extra and passing of
final orders.
6. Directorate of income Tax (Systems)
This directorate performs the functions of management system,
Computerization in the department and designing of uniform system of
computerization for Income tax Department.
7. Directorate of Income Tax (infrastructure)
This Directorate will assist CBDT in attending to infrastructure matters.
8. Director General (vigilance)/ Director of Income Tax (vigilance)
The main function of this Directorate are conducting departmental enquiries,
drafting of charge sheets, presenting the cases on behalf of the Department,
preparing the enquiry reports against charges official extra and passing of final
orders.
9. Director General of Income Tax (Training)
The National Academy of Direct Taxes, Nagpur is the premier training
institution in the country for the officers and the staff of the income tax
department. Its primary task is to impart inductions training to the directly
recruited India Revenue Service officers. The academy imparts training to the
officers and off staff of the income tax department in coordination with its 5
Regional Training Institutes located at Bangalore, Calcutta, HazariBagh,
Lucknow and Mumbai.
Chapter3
COMPANY PROFILE
Organization Profile:
IFIANS Corporate Services Pvt. Ltd.
ifians, a Company promoted by Mr. Pravin K. Nagpal in 1997 to assist people to ease
their tax filing and financial needs. Our aim is to provide professional services to our
clients at a reasonable cost using state of the art technology
Add. & Contacts: Off No A-6, POL Heights, Above Lodha Hospital, Warje, Pune
411052
Tel: 020 64705448 / 6448 Cell: 9822015448 Email: ifians@gmail.com
Director 1: Mr. Pravin K. Nagpal
Director 2: Mrs.Puneet P. Nagpal
Total Years of Work Experience: 20 years+.
Presently Involved with:
1. Filing of Income Tax Returns for 4500+ Salaried employees of various companies.
2. Accounting, Payroll, Filing of Income Tax Returns, Service Tax Returns for more than
20 Tax Audit Firms and Corporate (Pvt. Ltd Companies).
3. Registration - Proprietor, Partnership, Private Ltd and Limited Companies.
4. IRDA Approved Agent for LIC, ICICI Pru Life, and ICICI Lombard Gen.Ins. Co. Ltd.
5. Involved with Investment consultation i.e. mutual funds and company fixed deposits.
(In association with Axis Capital Ltd).
Support:
Front End: Mr. Pravin K. Nagpal
Back End: Mrs.Puneet P. Nagpal (LLB, MPM Symbiosys.)
Back End: Mr Manish Chikhale (MBA. CS (Final))
Also Associated with: Mr. Sunil Bhutada (F.C.A.)
Employee strength: Total Fifteen Employees. (Mostly qualified as MBA / CA or ICWA
(inter).
Proposed: Twenty by March 2017.
Technical and Office Set up:

1. Total Workspace: 1100 SQ ft.
2. Hardware: 12Computers with latest configuration.
3. Online UPS support with 6 hours backup.
4. Scanners and Printers: 2 Nos. of Laser Printers with Scanners (All in One), 1 Laser
Printer.
5. Broadband from Tikona. (IDEA 3G net setter and Docomo 3G for emergency).
6. Dedicated Lanline at Backend (020-64705448 / 6448) Mobile 8975969348.
7. Dedicated Mobile provided by us to each staff on location.
Our valuable clients: For Income Tax Returns (Salaried) Filing:
Associated with Tech Mahindra Ltd. Pune for the last 15+ years.
Associated with Amdocs Developement Centre (i) Pvt ltd. for last 7+ years.
Associated with Redknee Technologies Pvt. Ltd for the last 7 years.
Associated with Opus Software Ltd from AY 2015-16.
Our Payroll Clients:
Coming Soon with Payroll services.
Other clients for salary filings are: Infosys, TCS, Cognizant Technologies, IBM, PCMC,
IDEA
Cellular,
HSBC,
System
Plus,
Tata
Bluescope,
SBI
etc.
(We are not officially associated with these companies. We are getting the clients though
references and Goodwill for the past few years.
IFIANS POLICY:
1.
2.
3.
4.
5.
Data Confidentiality & Security.

Data maintenance for 7 years (Hard & Soft Copy) (as per IT Rules).
No Tele Callings to clients for product promotion. (except reminders as required).
Dedicated work with Low cost.
Instant reply to queries, instant availability of copy of returns in case lost by clients
and if required in for Visa etc. & availability of staff as required.
6. Round the year availability.
7. 2 Sundays (per month) open for client service.
8. Informative mails (once a month) e.g. Proposed Declaration, Advance Tax,
Amendment in Finance Act etc. subject to client approval.
9. Consultation for tax savings and investments (as requested).
10. I-CARD to be wear by each employee.
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Reference:
1. Mr. Pradeep Nigudkar [Sr. Manager (Fin) Tech Mahindra Ltd. Pune]
2. Mr. Prashant Amolik[ Admin Redknee India Pvt Ltd.]
3. Mr. Nandkumar Nair [Manager (Admin) Amdocs Dev. Cen.(I) Pvt Ltd.]
4. Mr. Sudhakar Shetty (Manager Finance Opus Software Pvt Ltd.]
About the Director Pravin K. Nagpal
Qual: B.Com, DTL(Diploma in Taxation Laws), C.A. (Final), CII (UK) Certified
Financial Advisor.
Completed 3 years of Articles Training under the guidance of Mr. YashwantV.Joshi (FCA,
Pune).
11
Chapter4
LITETARURE OVERVIEW
12
Individual Income tax is a subject matter of govt. If an individual want to assess his/her
income tax then he/she should have knowledge of individual income tax structure.
Individuals after calculating their total income for a particular financial year can assess
their income tax after deduction of saving and doing other adjustments. By doing so they
can plan in advance about their savings and income tax.
The tax system in India mainly, is a tier system which is based between the central
government, state government and local government organizations. India has a well
developed tax structure with clearly separated authority between central and state
governments and local bodies. Central government levies taxes on income, custom duties,
central excise and service tax. According to the constitution of India, the government has
to right the levy taxes on organizations and individuals. However, the constitution states
that on one has the right to levy taxes except the Authority of law or the parliament. The
main body, which is responsible for the collection of taxes , is the central board of Direct
taxes, which is a part of department of Revenue under the ministry of finance of the Indian
government. The CBDT functions as per the central board of revenue act, 1963. In last 1015 years, Indian taxation system has undergone wonderful reforms. The tax laws have been
simplified and the tax rates have been rationalized resulting in better compliance, ease of
tax payment ad better enforcement. Reference- IJCEM International Journal of
Computational Engineering & Management, Vol. 15 Issue 4, July 2012.
Overview of Income-Tax Law in India

Income-Tax is the most significant direct tax. The Income-Tax law in India
consists of the following components-The various instruments of law
containing the law relating
To income-tax are explained below:
Income-Tax Act, 1961: The levy of Income-Tax in India is governed by the
Income-Tax Act, 1961. This Act came into force on 1st April, 1962. The Act
contains 298 sections and XIV schedules. These undergo change every year
with additions and deletions brought about by the annual finance act passed by
parliament, In pursuance of the power given by the Income-Tax Act, 1961 rules
have been framed to facilitate proper administration of the Income-tax Act,
1961.
The Finance Act: Every year the finance minister of the government of India
presents the budget to the parliament. Part A of the budget speech contains the
proposed policies of the Government in fiscal areas. Part B of the budget speech
contains of detailed tax proposals. In order to implement the above proposals,
the finance bill is introduced in the parliament. Once the Finance bill is
13
approved by the parliament and gets the assent of the president, it becomes the
Finance Act.
Income Tax Rules: The administration of Direct taxes is looked after by the
central board of Direct Taxes (CBDT). The CBDT is empowered to make rules
for carrying out the purposes of the Act. For the proper administration of the
Income-tax Act, the CBDT frames rules from time to time. These rules are
collectively called Income-tax rules, 1962. It is important to keep in mind that
along with Income-tax Act, 1961, these rules should also be studied.
Circulars and Notifications: Circulars are issued by the CBDT from time to
time to deal with certain specific problems and to clarify doubts regarding the
scope and meaning of the provisions. These circulars are issued for the
guidance of the officers and/or assesses. The department is bound by the
circulars. While such circulars are not binding the assesses they can take
advantages of beneficial circulars.
Case Laws: The study of case laws is an important and unavoidable part of the
study of income-tax law. It is not possible for parliament to conceive and
provide for all possible issues that may arise in the implementation of any Act.
Hence the judiciary will hear to disputes between the assesses and the
department and give decisions on various issues. The supreme court is the Apex
court of the country and the law laid down by the supreme court is the law of
the land. The decisions given by various High courts will apply in the
respective states in which such High courts have jurisdiction.
Reference Book- The Institute Of Chartered Accountants Of India
Tax planning is one of most important aspects of personal finance. People often
fail to look at tax planning objectively and straight away start making
investments related to tax saving. Also they often tend to mix tax planning and
investment planning, which are totally different and are made with varying
objective.
Insurance for long has been the front runner whenever investment regarding tax
saving are considered. Life insurance is not an Investment option but a financial
tool, which protects from any unforeseen eventualities. Buying excessive
insurance however leads to holding unnecessary products.
Savings under section 80C can be broadly classified as investment based and
non-investment based.
Provident Fund(PF), Public Provident Fund(PPF), Employees Provident
Fund(EPF), National Savings Certificates(NSC), National Pension
System(NPS), Fixed Deposit(FD) and Equity Linked Savings Scheme (ELSS)
14
come are investment based savings; while principal repayment of home loan,
tuition fee are non-investment based.
Before making investments related to tax saving it is always important that the
individuals must analyse their risk appetite, and determine the percentage of
debt and equity exposure they are comfortable with. Then they can match
percentages of debt and equity while investing in the available tax saving
investments.
Since the risk appetite liquidity needs and current portfolio of every individual
are different, making investments based on just returns is not advisable.
Webpage:
http://profit.ndtv.com/news/your-money/article-tax-planning-tipsfor-different-age-groups-and-various-income-slabs-379080.
15
Chapter-5
Objective & Scope of the
Project
16
5.1 Objectives
1.
2.
3.
4.
5.
To study the overview of Income Tax in India

To study Various Heads of Income
To study the Deduction Available under chapter VI A
To study Tax Planning For Individuals
To understand implications of Revised Tax Norms for the A.Y. 16-17
5.2 Scope
This project studies the tax planning for individuals assessed to Income Tax.
The study relates to non-specific and generalized tax planning, eliminating the need
of sample/population analysis.
Basic methodology implemented in this study is subjected to various pros & cons,
and diverse insurance plans at different income levels of individual assesses.
This study may include comparative and analytical study of more than one tax
saving plans and instruments.
5.3 Limitation
This study covers individual income tax assesses only and does not hold good for
corporate taxpayers.
The tax rates, insurance plans, and premium are all subject to FY 2015-16 only.
Non-Taxable income cannot be planned.
17
Chapter-6
THEORETICAL
BACKGROUND
18
IMPORTANCE OF INCOME TAX ACT 1961

IMPORTANCE
The Taxation structure of the country can play a very important role in the working of our
economy. Some time back the emphasis was on higher rates of Tax and more incentives.
But recently, the emphasis has shifted to Decrease in rates of taxes and withdrawal of
incentives. While designing the Taxation structure it has to be seen that it is in conformity
with our economic and social objectives. It should not impair the incentives to personal
savings and investment flow and on the other hand it should not result into decrease in
revenue for the state.
In our present day economy structure income Tax plays a vital role as a source of Revenue
and a measure of removal economy disparity. Our Taxation structure provides for two
types of Taxes:
DIRECT TAXES
And
INDIRECT TAXES
Income Tax, wealth Tax and Gift Tax are Direct Taxes whereaaValue Added Tax(also
called as Sales Tax), Central Excise Duty and Customs are indirect Taxes.
HISTORY
The income Tax was introduced in India for the first time in 1860 by British rulers
following the munity of 1857. The period between 1860 and 1886 was a period of
experiments in the context of Income Tax. This period ended in 1886 when first Income
Tax Act came into existence. The pattern laid down in it for levying of Tax continues to
operate even to-day though in some changed form. In 1918, another Act-Income Tax Act,
1918 was passed but it was short lived and was replaced by Income Tax Act, 1992 and it
remained in existence and operation till 31st March, 1961.
PRESENT ACT
On the recommendation of Law commission & Direct Taxes Enquiry committee and in
consultation with Law Ministry a Bill was framed. This Bill was referred to a select
committee and finally passed in sept. 1961. This Act came into force from 1st. April 1962
in whole of the country. Income Tax Act, 1961 is a comprehensive act and consists of 298
sections. Sub- Sections running into thousands schedules, Rules, Sub-Rules, etc. And is
supported by other Acts and Rules. This Act has been amended by several amending Acts
since 1961. The annual finance Bills presented to Parliament along with Budget make farreaching amendments in this Act every year.
19
The Central government has been empowered by entry 82 of the Union List of schedule
VII of the constitution of India to levy tax on all income other than agricultural income
(subject to Section 10(1)). The Income Tax Law comprises The Income Tax Act 1961,
Income Tax Rules 1962, Notifications and Circulars issued by Central Board of Direct
Taxes (CBDT), Annual finance acts and judicial pronouncements by Supreme Court and
High Courts.
The government of India imposes an income tax on taxable income of all persons including
individuals, local authority and any other artificial judicial person. Levy of tax is separate
on each of the persons.The levy is governed by the Indian Income Tax Act, 1961. The
Indian Income Tax Department is governed by CBDT and is part of the Department of
Revenue under the Ministry of Finance, Government of India. Income Tax is a key source
of funds that the government uses to fund its activities and serve the public.
6.1 BASIC INFORMATION ABOUT TAXES IN INDIA:
Taxes in India are of two types, Direct Tax and Indirect Tax.
Direct tax like, income tax, wealth tax, etc. Is those whose burden
falls directly on the taxpayer.
The burden of indirect taxes like, service tax, VAT, etc. Can be
passed on to a third party.
Indirect taxes are all income other than agriculture income levied and collected by the
central government and shared with states.
According to Income Tax Act 1961, every person, who is an assesses and whose total
income exceeds the maximum exemption limit, shall be chargeable to the income tax at the
rate or rates prescribed in finance act. Such income tax shall be paid on the total income of
the previous year in the relevant assessment year.
The total income of an individual is determined on the basis of his residential status in
India.
6.2 INCOME TAX RETURN:
Income Tax return is term which is often used when we talk about
income tax. It is a way by which we pay income tax when total
annual income of a person, including all sources, is more than the
maximum unchangeable limitation (at present it is Rs. 2, 50,000/-)
than that person is liable to pay income tax.
The tax form or forms used to file Income taxes with the Internal
Revenue Service (IRS). Tax returns often are set up in a worksheet
format, where the income figures used to calculate the tax liability
are written into the documents themselves. Tax return must be field
every year for an individual or business that received income during
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the year, whether through regular income (wages), interest,

dividends, capital gains, or other profits.
A return of excess taxes paid during a given tax year: this is more
accurately known as a tax refund.
6.3 RESIDENTIAL STATUS:Residential status of a person is very important for the purpose of levy of income tax, as
income tax is levied based on the residential status of a taxpayer.
6.3.1 DETERMINATION OF THE RESIDENTIAL STATUS OF AN

INDIVIDUAL
The residential status of an individual is to be determined on the basis of period of stay of
the taxpayer in India and is computed separately for each year. If an individual satisfies
any one of the following conditions, he is said to be resident in India for the financial year.
The conditions are
He is in India for a period of 182 days or more in that financial year

OR
He is in India for 60 days or more during that financial year and has
been in India for 365 days or more during the 4 previous years
immediately proceeding the relevant financial year.
If any of the above condition is satisfied than that person is said to be the resident of India.
However if none of the condition is satisfied than that person is said to be the non-resident
Indian (NRI).
6.3.2 EXCEPTION TO RESIDENTIAL STATUS:There are two exceptions to the above rule of classification of residential status:1. In case of individual who is citizen of India and who leaves India in any
financial year for the employment outside India, the 2nd condition stated
above shall not be applicable and only the 1st condition of 182 days or more
would be applicable.
2. In case of an individual who is citizen of India or is a person of Indian
origin and who being outside India comes on a visit to India in any financial
year, the 2nd condition stated above shall not applicable and only the 1st
condition of 182 days or more would be applicable.
21
6.3.3 CLASSIFICATION OF ORDINARY RESIDENT & NON

ORDINARY RESIDENT:-
A person shall not be ordinary resident in India if he satisfies any one of the following
conditions:
Resident in India in at least 2 out of 10 years immediately preceding

the relevant previous year
OR
Presence of at least 730 days in India during the years immediately

proceeding the relevant previous year.
If the individual resident satisfies only one or none of the additional conditions, then he is
not ordinarily resident (In case the person is not an individual or an HUF, then the
residential status can only be either resident or non-resident).
6.3.4 NON RESIDENT AND NON RESIDENT IN INDIA:-
Resident is on worldwide income. Non residents are taxed only on Income that is received
in India or arises or is deemed to arise in India. A person not ordinarily resident in taxed
like non resident but is also liable to tax on income accruing abroad if it is from business
controlled or a profession set up in India.
Capital gain or transfer of assets acquired in foreign exchange is not taxable in certain
cases.
Non resident Indians are not required to file tax return if their income consists of only
interest and dividends, provided taxes on due income such income are deducted at source.
It is possible for non resident Indians to avail of these special provisions even after
becoming resident b y following certain procedures laid down by income tax Act.
22
TAXABILITY OF INDIVIDUALS IS SUMMERISED IN THE TABLE

BELOW:-
STATUS
INDIAN INCOME
Resident or ordinarily Taxable

resident
Resident
but
not Taxable
ordinarily resident
Non-Resident
Taxable
FOREIGN
INCOME
Taxable
Non-Taxable
Non-Taxable
INCOME TAX SLABS AND RATES FOR ASSESSMENT YEAR 201617
Individual Resident Aged< 60

Senior Citizen
Super Senior Citizen
Any NRI/HUF/AOP/BOI/AJP
Co-operative
Firm
Local authority
Domestic Company
Other Company
Individual resident aged below 60 years

(I.e. born on or after 1st April 1956)
23
Income Tax:
Income Slabs
Tax Rates
i.
Where the taxable income does not exceed Rs. NIL

2, 50,000/-.
ii.
Where the taxable income exceeds Rs. 2, 10% of amount by which the
50,000/- but does not exceed Rs. 5, 00,000/-.
taxable income exceed Rs. 2,
50,000/-.
Less: Tax credit u/s 87A-10% of
taxable income up to a maximum
of Rs. 2000/-
iii. Where the taxable Income exceeds Rs. 5, Rs. 25,000/- + 20% of the amount
by which the taxable income
exceeds Rs.5,00,000/iv
Where the taxable income exceeds Rs. 10, Rs.1, 25,000/- + 30% of the amount
00,000/-.
by which the taxable income
exceeds Rs.10, 00,000/-.
Senior Citizen(Individual resident who is of the age of 60 years or more but below the age
of 80 years i.e. born on or after 1st April 1936 but before 1st April 1956)
24
Income Tax:
Income Slabs
Tax Rates
i)

3, 00,000/-.
ii)
Where the taxable income exceeds RS. 3, 10% of the amount by which the
taxable income exceeds Rs. 3,
00,000/-.
Less: Tax credit u/s 87A-10% of
taxable income up to a maximum of
Rs. 2000/-.
iii)
Where the taxable income exceeds Rs. 5, Rs. 20,000/- + 20% of the amount by
00,000/- but does not exceed Rs. 10, 00,000/-. which the taxable income exceeds
Rs. 5, 00,000/-.
iv)
Where the taxable income exceeds Rs. 10, Rs. 20,000/- + 30% of the amount by
00,000/-.
which the taxable income exceeds
Rs. 10, 00,000/-.
Surcharge: 12% of the Income Tax, where taxable income is more than Rs. 1 crore.
(Marginal Relief in surcharge, if applicable)
Education cess: 3% of the total Income Tax and Surcharge.
Super senior citizen (Individual resident who is of the age of 80 years or more i.e. born
before 1st April 1936)
25
Income Tax:
Income Slabs
Tax Rates
i)

5, 00,000/-.
ii)
Where the taxable income exceeds RS. 5, 20% of the amount by which the
00,000/- but does not exceed Rs. 10, 00,000/-. taxable income exceeds Rs. 5,
00,000/-.
iii)
Where the taxable income exceeds Rs. 10, Rs. 1, 00,000/- + 30% of the amount
00,000/-.
by which the taxable income exceeds
Rs. 10, 00,000/-.
Any NRI or HUF or AOP or BOI or AJP

Income Tax:
Income Slabs
Tax Rates
i.
Where the taxable income does not exceed NIL

Rs. 2, 50,000/-.
ii.
Where the taxable income exceeds Rs. 2, 10% of amount by which the taxable
50,000/- but does not exceed Rs. 5, 00,000/-. income exceed Rs. 2, 50,000/-.
iii. Where the taxable Income exceeds Rs. 5, Rs. 25,000/- + 20% of the amount by
00,000/- but does not exceed Rs. 10, which the taxable income exceeds
00,000/-.
Rs.5,00,000/iv
Where the taxable income exceeds Rs. 10, Rs.1, 25,000/- + 30% of the amount
00,000/-.
by which the taxable income exceeds
Rs.10, 00,000/-.
26
Co-operative Society
Income Tax:
Income Slabs
Tax Rates
i)
Where the taxable income does not exceed Rs. 10% of the income.
10,000/-.
ii)
Where the taxable income exceeds RS. Rs. 1000/- + 20% of the income in
10,000/- but does not exceed Rs. 20,000/-.
excess Rs. 10, 000/-.
iii) Where the taxable income exceeds Rs. Rs. 3,000/- + 30% of the amount by
20,000/-.
which the taxable income exceeds

Rs. 20, 000/-.
Firm
Income Tax: 30% of taxable income.
Surcharge: 12% of the income tax, where taxable income is more than Rs. 1 crore.
Education cess: 3% of the the income tax and surcharge.
Local Authority
Surcharge: 10% of the income tax, where the taxable income is more than 1 crore.
Education cess: 3% of the total income tax and surcharge.
Domestic company
Surcharge: The amount of income tax as computed in accordance with above rates, and
after being reduced by the amount of tax rebate shall be increased by a surcharge
At the rate of 7% of such income tax, provided that the taxable income exceeds Rs.
1 crore
At the rate of 12% of such income tax, provided that the taxable income exceeds
Rs. 10 crores.
27
Education cess: 3% of the total of income tax and surcharge.
Company other than a domestic company

Income Tax:
@ 50% of on so much of the taxable income as consist of (a) royalties received

from government or an Indian concern pursuance of an agreement made by with
the government or the Indian concern after the 31st day of March, 1961 but before
the 1st day of April 1976; or (b) fees for rendering technical services received from
the government or an Indian concern in pursuance of an agreement made by with
the government or the Indian concern after the 29th day of February, 1964 but
before the 1st day of April, 1976, and where such agreement has, in either case,
been approved by the central government.
@ 40% of the balance
Surcharge:
The amount of income tax as computed in accordance with above rates, and after being
reduced by the amount of tax rebate shall be increased by the surcharge as under.
At rate 2% of such income tax, provided that the taxable income exceeds
Example
In case of Individual assessee (<60 years) having taxable income of Rs. 1, 00, 01,000/1.
2.
3.
4.
Income Tax
Surcharge@ 12% of Income tax
Income tax on income of Rs. 1 crore
Maximum surcharge payable
(Income over Rs. 1 crore less income
Tax on income over Rs. 1 crore)
5. Income Tax + Surcharge payable
6. Marginal Relief in Surcharge
28
Rs. 28,25,300
Rs. 3,39,036
Rs. 28,25,000
Rs. 700/- (1000-300)

Rs. 28,26,000
Rs. 3,38,336/(339036-700)
6.5
TOTAL INCOME:For the purpose of chargeability of Income-Tax and computation of total income,
the income tax act, 1961 classifies the earning under the following heads of income
Income from
Salaries
Income from
house
property
Income from
other sources
Income from
Business and
Profession
Capital Gains
Income from salary

Salary is the remuneration received by or accruing to an individual, periodically, for
services rendered as a result of an express or implied contract. The actual receipt of salary
in the previous year is not material as far as its taxability is concerned. The existence of
employer-employee relationship is the sine-qua-non for taxing particular receipt under the
head Salaries. All income received as salary under employer-employee relationship is
taxed under this head on due or receipt basis, whichever arises earlier. Employer must with
hold tax compulsorily (subject to section 192), if income exceeds minimum exemption
limit, as tax deducted at source ( TDS), and provide their employees with a form 16 which
shows the tax deduction and net paid income.
29
WHAT DOES SALARY INCLUDE

Income tax act gives and inclusive and not exhaustive definition of salaries include therein
1.
2.
3.
4.
5.
6.
Wages
Annuity
Gratuity
Fees, commission, perquisites or profits in lieu of salary
Advance of salary
Amount transferred from unrecognized provident fund to recognized provident
fund
7. Contribution of employer to a Recognized provident fund in excess of the
prescribed limit.
8. Leave Encashment
9. Compensation as a result of variation in service contract etc.
10. Contribution made by the central Government to the account of an employee under
notified pension scheme.
In addition, the form 16 contains one or more of the following deductions provided from
salary such as:
1. Medical Reimbursement: - Up to Rs. 15000/- per year tax free if supported by
bills.
2. Transport allowance: - Up to Rs. 800/- per month (Rs. 9600 per year) is tax free if
provided as transport allowance. No bills are required for this amount.
3. Conveyance Allowance:- Is tax exempt
4. Professional Taxes: - Most states prescribed tax employment on per-professional
basis, usually a slabbed amount based on gross income. Such taxes paid are
deductible from income tax.
5. House Rent Allowance: - The lease of the following is available as exemption.
a) Actual HRA Received
b) 50% for Metro Cities and 40% for Non-Metro Cities of Basic Salary
c) Rent paid minus 10% of basic salary, (Basicsalary for this purpose is basic
+ DA (dearness allowance) + forming part + commission on sale of fixed
Rate).
The exemption for HRA u/s 10 (13A) is the least of all the above three factors (a or b or c).
Perquisite and Exemptions u/s 10:The term Perquisite includes value of any benefit or amenity/value of any concession
provided by the employer to the employees. Perquisite Valuation does not include certain
medical benefits. Section 10exemption is available for the following perquisites:
1.
2.
3.
4.
Leave Travel Concession u/s 10(5)

Perquisites paid to Indian Citizens Employed Abroad u/s 10 (7)
Tax paid on behalf of any employee by the employer 10 (10cc)
Any sum received under Life Insurance Company.
30
Income from house property

Income from house property is computed by taking into account what is called Gross
Annual Value of the property. The annual value in case of a self occupied house is to be
taken as NIL. (However if there is more than one self occupied house then the annual value
of the other house is taxable.) From this, deduct Municipal Tax paid and you get the Net
Annual value. From this Net Annual Value, deduct:
30% of NET value as repair cost (this is mandatory deduction)

No other deduction available
Interest paid or payable on a housing loan against this house
In case of self occupied house interest paid or payable is subject to a maximum limit of Rs.
1, 50,000(if loan is taken on or after 1 April 1999 and construction is completed within 3
years) and Rs. 30,000(if the loan is before 1 April 1999), for 1 non self occupied homes, all
interest is deductible, with no upper limits. The balance is added to taxable income.
Income from business and profession
Income arising from profits and gains of any business or profession; income derived by a
Trade/ Professional/ similar Association by performing specific services for its members;
any benefits from business whether convertible into money or not, incentivise for
exporters; any salary, interest, bonus, commission or remuneration received by partner of a
firm; any amount received under a key man Insurance policy which also covers Bonus;
income from managing agency and speculative transaction; is taxable.
Income from capital Gains
Under section 2(14) of the I.T. Act, 1961, Capital asset is defined as property of any kind
held by an assesses such as real estate, equity shares, bonds, jewellery, paintings, art, etc.
But does not consist of items like stock-in-trade for businesses or for personal effects.
Capital Gains arise by transfer of such capital assets.
Long term and short term capital assets are considered for tax purposes. Long term assets
are those assets which are held by a person for three years except in case of shares or
mutual funds which becomes long term just after one year of holding. Sale of long term
assets give rise to long term capital gains which is taxable as below:
As per Section 10(38) of Income Tax Act, 1961 long term capital gains on shares/
securities/mutual funds on which securities transaction Tax (STT) has been
deducted and paid, no tax is payable. Higher capital gains taxes will apply only on
those transactions where STT is not paid.
For other shares & securities, person has an option to either index costs to
inflation and pay 20% of indexed gains, or pay 10% of non indexed gains.
For all other long term capital gains, indexation benefit is available and tax
rate is 20%.
31
Income from other sources

This is residual head; under this head income which does not meet criteria to go to other
heads is taxed. There are also some specific incomes which are to be always taxed under
this head.
1. Income by way of dividends.
2. Income from horse races/lotteries
3. Employees contribution towards staff welfare scheme / provident fund /
superannuation fund or any fund step up under the provisions of ESIC Act,
received from the employees by the employer
4. Interest on securities (debentures, government securities and bonds).
5. Any amount received from key man insurance policy including the sum allocated
by way of bonus on such policy
6. Gifts (subject to certain conditions and exemption).
7. Interest on compensation/ enhanced compensation.
8. Income from renting of other than house property.
9. Family pension received by family members after the death of the pensioner.
10.Income by way of interest on other than securities.
6.6
TAX EXEMPTIONS
According to income tax Act, 1961 there is a provision of exemptions in income tax. Tax
exemption induces reduction of the tax burden on a specific section of the society to
achieve some level of equilibrium among all. To encourage some economic activities
through the process of reduction of the tax burden on some organizations or individuals
involved in that activity is also another cause for tax exemptions.
Tax exemptions have the authority to bring about social and economic changes within the
society followed by unprecedented consequences. However, for such exemptions on tax
some conditions are mandatory to follow. Some of them are like
The age of the individual taxpayer

The public services performed by the individual taxpayers
The type of property owned by the individual
The geographic location of property
The net income of the individual paying the tax
The value of the taxable property
India tax exemptions are specified incomes on which a person can get exemptions. It
means that at the time of calculating annual income, this type of income will not come
under the purview of tax.
32
6.7
DEDUCTIONS UNDER CHAPTER VI A
The income tax Act provides that on determination of the gross total income of an assesses
after considering income from all the heads, certain deductions there from may be allowed.
These deductions detailed in chapter VI A of the income tax Act must be distinguished
from the exemptions provides in sections 10 of the Act. While the former are to be reduced
from the gross total income, the latter do not form part of the income at all. Deduction
from taxable income
Section 80c deduction:

This deduction is available to an individual or Hindu undivided family (HUF), the
maximum deduction under section 80c is Rs. 150000/-.
List of payments eligible for deduction under section 80c:A- Life Insurance Premium (not exceeding 20% of policy amount)
B- Contribution to SPF, RPF and PPF (EMPLOYEES) in case of PPF the maximum
contribution is Rs. 150000/-.
C- Subscription to National Saving Certificate VIII issue.
D- Contribution to Unit Link Insurance Plan or LIC Mutual Fund.
E- Tution fees paid at the time of admission to any educational institution in India for
full time education of any 2 children of an individual.
F- Principal portion of housing loan repaid.
G- Amount deposited in term deposit for a period of five year or more.
H- Amount deposited in five year time deposit scheme in post office.
Section 80CCC deduction:

Payments made to LIC or to any other approved insurer under an approved pension plan
are admissible for deduction under this section. Then pension plan policy should be for
individual himself out of his taxable income. The deduction is least of the amount paid or
Rs. 150000/-.
The total deduction available to an assesses under sections 80C, 80CCC & 80CCD is
restricted to Rs. 150000/- per annum. However, employers contribution to notified pension
scheme under section 80CCD is not a part of the limit of Rs. 150000/-.
33
Section 80D deduction:

Deduction is respect to premium paid for medic clam Insurance Policy. Deduction
available Insurance premium or Rs. 15000/- whichever is less. Rs. 20,000/- additional
deduction when policy is taken on life of a senior citizen (above 60 years) .
Section 80DD deduction:

Deduction in respect of maintenance including medical treatment of a dependent being a
person with disability. A fixed deduction of Rs. 75000/- is available in case the disability is
severe i.e., 80% or above the fixed deduction is raised to Rs. 125000/- in respective of the
actual expenditure.
Section 80DDB deduction:

Deduction in respect to medical treatment/ expenditure of the assesses himself or
dependent spouse, children parents and sisters of the individual. Amount of deduction;
actual expenditure on medical treatment or Rs. 40000/- whichever is lower Rs. 60000/- in
case of senior citizen.
Section 80E deduction:

In respect of payment of interest on loan taken for higher education purpose for assesses
own education or for the education of spouse, children, or any student for whom the
individual is the legal guardian.
Section 80G deduction:

Donation to certain funds, charitable institution etc. The various donations specified in Sec.
80G are eligible for deduction either up to 100% or 50% with or without restriction as
provided in Sec. 80G.
Section 80TTA deduction:

Interest on saving account up to Rs. 10,000/- earned as a interest from saving account in
bank, post office or a co-operative society can be claimed for deduction under this section.
This rebate is applicable for individuals and HUFs.
34
Section 80U deduction:

Disabled persons can get a flat deduction on Income Tax on producing their disability
certificate. If disability is severe Rs. 125000/- can be claimed else Rs. 75000/-. Severe here
mean disability 80% or more as per this section.
6.8
TAX PLANNING CONCEPT
Tax planning can be defined as an arrangement of ones financial and economic affairs by
taking complete legitimate benefit of all deduction, exemption, allowance and rebates so
that tax liability is reduces to minimum. Essential features of tax planning are as under
Its comprise arrangements by which tax laws are fully complied.

All legal obligation and transaction are met.
Transactions do not take the form of colourable devices.
There is no intension do the legal spirit behind the law.
Concepts:
Tax Evasion
Tax Evasion means not paying taxes as per the provisions of the law or minimizing tax by
illegitimate and hence illegal means. Tax 66 Evasion can be achieved by concealment of
income or inflation of expenses or classification of accounts or by conscious deliberate
violation of law.
Tax Evasion is an act executed knowingly wilfully, with the intent to deceive so that the
tax reported by the tax payer is less than the tax payable under the law.
Example: Mr. A, having rendered services to another person Mr. B, is entitled to receive a
sum of say Rs. 50,000/- from Mr. B. A tells B to pay him Rs. 50,000/- in cash and thus
does not account for it as his income. Mr. A has resorted to Tax Evasion.
Tax Avoidance:
Tax avoidance is the art of dodging tax without breaking the law, While remaining well
within the four corners of the law, a citizen so arranges his affairs that he walks out of the
clutches of the law and pays no tax or pays minimum tax. Tax avoidance is therefore legal
and frequently resorted to. In any tax avoidance exercise, the attempt is always to exploit a
loophole in the law. A transaction is artificially made to appear as falling squarely in the
35
loophole and thereby minimize the tax. In India, loopholes in the law, when detected by the
tax authorities, tend to be plugged by an amendment in the law, too often retrospectively.
Hence tax avoidance though legal, is not long lasting. It lasts till the law is amended.
Example: Mr. A having rendered service to another person Mr. B, is entitled to receive a
sum of say Rs. 50,000/- from Mr. B. Mr. As other income is Rs. 200000/-. Mr. A tells Mr.
B to pay cheque of Rs. 50,000/- in the name of Mr. C instead of in the name of Mr. A. Mr.
C deposits the cheque in his bank account and account for it as his income. But Mr. C has
no other income and therefore pays no tax on that income of Rs. 50,000/-. By diverting the
income to Mr. C, Mr. A has resorted to Tax Avoidance.
Tax Planning
Tax planning has been described as a refined form of tax avoidance and implies
arrangement of a persons financial affairs in such way that it reduces the tax liability. This
is achieved by taking full advantage of all the tax exemptions, deductions, concessions,
rebates, reliefs, allowances and other benefits granted by the tax laws so that the incidence
of tax is reduced. Exercise in tax planning is based on the law itself and is therefore legal
and permanent.
Example: Mr. A having other income of Rs. 200000/- receives income of Rs. 50,000/from Mr. B. Mr. A to save tax deposits Rs. 60,000/- in his PPF account and saves the tax of
Rs. 12,000/- and thereby pays no tax on income of Rs. 50,000/-.
Tax Management
Tax management is an expression which implies actual implementation of tax planning
ideas. While that tax planning is only an idea, a plan, a scheme, an arrangement, tax
management is the actual action, implementation, the reality, the final result.
Example: Action of Mr. A depositing Rs. 60,000/- in his PPF account and saving tax of
Rs. 12,000/- is tax management. Actual action on tax planning provision is tax
management.
36
Chapter-7
Research methodology
37
7.1
MEANING OF RESEARCH:-
Research is sincere, comprehensive, intellectual searching for facts and their significance
or inference with reference to the problem under study. Research is careful, systematic and
scientific investigation or inquiry for search of new facts in the branch of knowledge.
7.2
DEFINITION OF RESEARCH :-
Robert Ross- Research is essentially an investigation, a recording and analysis of

evidence for the purpose of gaining knowledge .
This
7.3
TYPES OF DATA RESOURCES:1. Primary Data:-
Primary sources are original sources from which the researcher directly collects data that
has not been previously collected. Primary data enable the researcher to get as close as
possible to what actually happened and is hands on. A primary sources reflects the
individual viewpoint of a participant or observer. Primary data are first-hand information
collected through various methods such as
Observation,
Personal interaction
E-mail
2. Secondary Data:This is sources containing data which have been collected and compiled for another
purpose. The secondary sources consists of readily compendia and already compiled
statistical statements and reports whose data may be used by researcher for their studies
e.g., census reports, annual reports and financial statement of companies. Secondary
sources consist of not only published records and reports, but also unpublished records.
7.4
SAMPLING:-
A process used in statistical analysis in which a predetermined number of observations will

be taken from a larger population is called sampling.
38
7.4.1 METHOD USED FOR THE PROJECT

For this project the researcher has used convenience sampling method, following is the
brief description of the same.
Convenience Sampling: convenience sampling is non probability sampling technique

where subjects are selected because of their convenient accessibility and proximity to the
researcher.
The subjects are selected just because they are easiest to recruit for the study and the
researcher did not consider selecting subjects that are representative of the entire
population.
In all forms of research, it would be ideal to test entire population, but in most cases, the
population is just too large that it is impossible to include every individual. This is the
reason why most researchers rely on sampling techniques like convenience sampling, the
most common of all sampling techniques. Many researchers prefer this sampling technique
because it is fast, inexpensive, easy and the subjects are readily available.
7.4.2 SAMPLING UNIT:
1. Population: - Population or Universe is meant that group of units which is being

satisfied for the purpose of investigation. Here population is salaried Individuals.
And population size is 100.
2. Sample Size: - Sample is the portion of the population which is examined with a
view to estimating the characteristics of the population. Here sampling is I.T.
Professionals, Government employees etc. and sample size is of5 individuals.
39
Chapter-8
Data Analysis and Interpretation
40
Name
Status
: Mr. AGRAWAL
: Individual
Asst Year
: 2016-2017
Gender
Address
: Male
: Pune-411051, MAHARASHTRA
Prev Year
PAN
E-mail
MobileN
o
ITR Form
: agrawal@gmail.com
: 92********
DOB
: **-**-1957
Filing Due Date : 31-Jul-2016
: ITR - 1 SAHAJ
Return Filed
: Original
Amount
(Rs)
Amount
(Rs)
: 2015-2016
: AOFLA2620A
STATEMENT OF TOTAL INCOME

SOURCES OF INCOME
1 INCOME FROM SALARIES
1.1 Salary From HIGH EXPLOSIVES FACTORY
(1) Salary - U/s 17(1)
Less:Exemption - U/s 10
Gross Salary
Less: Deduction U/s 16
Professional tax - 16 (iii)
Total Salary
(1.1)
Income From Salary
2 INCOME FROM OTHER SOURCES
2.1 Interest earned on deposits in saving account w ith
banks, co-operative societies and post office
1.SBI
:
:
:
1012802
1012802
19200
993602
:
:
:
2500
2500
991102
Amount
(Rs)
991102
96266
96266
Income from Other sources
96266
GROSS TOTAL INCOME

DEDUCTIONS U/c VI A
Description
80C- specified investments/savings
80C Total Amount
Total(80C+80CCC+80CCD(1))
80CCE -Qualifying Amount for Sec
80C+80CCC+80CCD(1)
80TTA -Deduction in respect of interest on deposits in
savings account.
Total Deductions
TOTAL INCOME
TOTAL INCOME(rounded off)
TAX ON TOTAL INCOME
INCOMES
1087368
Gross
Qualifying
366720
366720
150000
150000
150000
96266
10000
160000
927368
927370
:
:
:
INCOME
Normal Income & Tax

Total Tax
Add: Cess
TAX AND CESS
LESS : PREPAID TAXES
: TDS ON SALARY
: TDS OTHERS
Self Assessment Tax Payable
Balance Tax Payable / (Refund Due)
Deductable
927368
TAX
110474
110474
3314
113788
:
:
96037
9633
:
:
105670
8118
8118
Exempt Income
Nature + Section
A) Included in Computation
1) Exemption under the head Salary - U/s Sec 10
Total
Note: Due to data security, Name and other details of

the client is not provided.
41
Amount
19200
19200
Case 1:Mr. Agrawal has an annual income of Rs.991102 /- , and his age is 59 years. He
also has income from other source that is Interest from bank saving account, amounted
Rs.96266 /Further his investment in Section 80C is Rs.366720 /- from which only Rs.150000 /- is
qualifying amount as per the Income Tax Act.
Going forward he is getting a benefit of Rs.10000 /- under Section 80TTA (Saving
Account in SBI).
So after the income from salary and other source and after all deduction under (Chapter
VI A) his total income in the current year is Rs.927368 /His total tax generated on the above income is Rs.113788 /- , and his TDS on Salary which
is already deducted by the company is Rs.96037 /- and TDS on other source which is
deducted by bank is Rs.9633 /So after all computation Mr. Agrawal had to pay extra tax that is called Self
AssessmentTax of Rs.8118 /-
Recommendation My recommendation to Mr. Agrawal is that he should shift investment to other plans like
Mediclaim where he can get benefit of Rs.25000 /- so he can also get additional benefits in
other Section under VI A. which will reduce his Additional Tax Pay.
42
Name
Status
Gender
Address
:
:
:
:
Mr. DESHPANDE
Individual
Male
WARJE, Pune-411058, MAHARASHTRA
E-mail
MobileN
ITR Form
: DS@gmail.com
: 98********
: ITR - 2A
Asst Year
Prev Year
PAN
: 2016-2017
: 2015-2016
: AGEGS5706D
DOB
: **-**-1977
Filing Due Date : 31-Jul-2016
Return Filed
: Original
SOURCES OF INCOME
Amount
(Rs)

1.1 Salary From EATON TECHNOLOGIES PVT LTD
(1) Salary - U/s 17(1)
(1) conv-Other allowances
(2) CHILD-Other allowances
Gross Salary
Total Salary
(1.1)
Income From Salary
2 INCOME FROM HOUSE PROPERTY
Self Occupied Property
Gross Annual Value U/s.23(2)(a)
Less : Deduction U/s 24(b)
Interest on Borrowed Capital U/s.24(b)-(Amount
Paid Rs. 200000 )
Income From Self Occupied Property(2.1)
Let Out Property
2.2 Property Description - Let Out
Address :PUNE
MAHARASHTRA - 411058
Tenant Details
Name of Tenant(s) and PAN
NAVIN
Gross Annual Value (100% value)
Municipal Taxes Paid
Net Annual Value
Share on net annual value (100% value)
Ded U/s 24 -Standard Deduction U/s.24(a)
Interest on Borrowed Capital U/s.24(b)
Income From let out House Property ( 2.2 )
:
:
:
:
:
2121531
:
:
:
2500
18400
1200
NIL
200000

3.1 Interest on Others
1.Interest from Income tax - AY 15-16
Amount
(Rs)
2121531
19600
2101931
2500
2099431
2099431
:
:
:
:
:
:
:
:
Amount
(Rs)
-200000
120000
11003
108997
108997
32699
335986
-259688
-459688
4010
4010

GROSS TOTAL INCOME
DEDUCTIONS U/c VI A
Description
80C Total Amount
80C Qualifying Amount Limited to
80C+80CCC+80CCD(1)
80D -Medical Insurance Premium
80D- Total Amount
Total Deductions
TOTAL INCOME
TAX ON TOTAL INCOME
INCOMES
Normal Income & Tax - Refer Annexure No. -1
Total Tax
Add: Cess
TAX AND CESS
: TDS ON SALARY
4010
1643753
:
Gross
Qualifying
Deductable
:
3188809
:
3188809
252555
150000
150000
150000
:
8198
8198
158198
1485555
1485560
:
:
:
INCOME
1485555
TAX
270668
270668
8120
278788
:
:
277549
:
:
277549
1239
1239
Exempt Income
Nature + Section
Total
43
Amount
19600
19600
Case 2:Mr. Deshpande has an annual income of Rs.2099431 /- , and his age is 39 years.
He has a self-occupied house property on which a housing loan is going on and under
Section 24(b) he gets a benefit of Rs.200000 /- on interested on borrowed capital.
He also has rented house property from which he is generated income. Total rent received
in a year is Rs.108997 /- , he has a housing loan on the same property and he gets benefits
under Section 24(b) of Rs.335986 /- on interest on borrowed capital. As his rented income
is lower than what he pays on the interest he is getting the benefit of the difference from
his total income.
Further his investment in Section 80C is Rs.3188809 /- from which only Rs.150000 /- is
Going forward he is getting a benefit of Rs.8198 /- under Section 80D (Mediclaim Policy).
is already deducted by the company is Rs.277549 /So after all computation Mr. Agrawal had to pay extra tax that is called Self-Assessment
Tax of Rs.1239 /-
Recommendation My recommendation to Mr. Deshpande is that he has a huge investment under Section 80C
so he should shift his some of the investment in other plans, he can also invest in equity
market where he can get full tax benefits if his investment is more than one year.
Planning for his future, I would suggest investing in Pension Scheme so that it would help
him after retirement. This would allow him to get deduction under Section 80CCC.
44
Name
Gender
Address
WARD
E-mail
MobileNo
ITR Form
: Mr. Vas
: Male
: Pune-411048, MAHARASHTRA
: WARD 13(4), PUNE
: vas@gmail.com
: 98********
: ITR - 2A
SOURCES OF INCOME

1.1 Salary From India Ltd
(1) Salary - U/s 17(1)
Gross Salary
Total Salary
(1.1)
Income From Salary
Gross Annual Value U/s.23(2)(a)
Less : Deduction U/s 24(b)
Interest on Borrowed Capital U/s.24(b)-(Amount
Paid Rs. 22355 )
Let Out Property
2.2 Property Description - Let Out
Address :- ABC PUNE MAHARASHTRA - 411001
Tenant Details
Name of Tenant(s) and PAN
ABC
Gross Annual Value (100% value)
Municipal Taxes Paid
Net Annual Value
Share on net annual value (100% value)
Ded U/s 24 -Standard Deduction U/s.24(a)
Income From let out House Property ( 2.2 )
1.HDFC BANK
2.KARNATAKA BANK
GROSS TOTAL INCOME
DEDUCTIONS U/c VI A
Description
80C Total Amount
80C+80CCC+80CCD(1)
80D -Medical Insurance Premium
80D- Total Amount
savings account.
Total Deductions
TOTAL INCOME
TAX ON TOTAL INCOME
INCOMES
Normal Income & Tax - Refer Annexure No. -1
Total Tax
Add: Cess
TAX AND CESS
: TDS ON SALARY
Tax Before Interest
ADD : Interest
: Interest U/s 234 B
: Interest U/s 234 C
Asst Year
Prev Year
PAN
DOB
Filing Due Date
Res. Status
Amount
(Rs)
: 2016-2017
: 2015-2016
: AMWR3875E
: **-**-1969
: 31-Jul-2016
: Ordinarily Resident
Amount
(Rs)
:
:
:
2460680
2460680
19200
2441480
:
:
:
2500
2500
2438980
:
:
2438980
NIL
22355
:
:
:
:
:
:
:
Amount
(Rs)
-22355
90000
2788
87212
87212
26164
61048
38693
3164
684
3164
684
3848
2481521
:
Gross
Qualifying
Deductable
:
:
272211
272211
150000
150000
150000
26260
3848
25000
3848
:
:
178848
2302673
2302670
:
:
:
INCOME
2302673
TAX
515801
515801
15474
531275
:
:
512414
:
:
:
:
752
692
512414
18861
1444
20305
20305
Exempt Income
Nature + Section
Total
45

Amount
19200
19200
Case 3:Mr. Vas has an annual income of Rs.2438980 /- , and his age is 47 years.
He has a self-occupied house property on which a housing loan is going on and under
Section 24(b) he gets a benefit of Rs.22355 /- on interested on borrowed capital.
He also has rented house property from which he is generated income. Total rent received
in a year is Rs.87212 /- in which he get a standard deduction under Section 24(a) of
Rs.26164/- and the difference is added to his total income.
Going forward he is getting a benefit of Rs.25000 /- under Section 80D (Mediclaim
Policy).
is already deducted by the company is Rs.512414 /So after all computation Mr. Agrawal had to pay extra tax that is called Self-Assessment
Tax of Rs.20305 /-
Recommendation My recommendation to Mr. Vas is that he should also invest his part of income in other
source like Pension Plan, PPF, Donations so he can get some tax relief.
He should also invest in equity shares where maximum deduction is Rs.50000/- which
benefit him under section 80CCG.
46
Name
Address
WARD
E-mail
MobileNo
ITR Form
Anita
: ABC, xxxx, PUNE-411048, MAHARASHTRA
: WARD 13(4), PUNE
: XYZ@GMAIL.COM
: 98**********
: ITR - 2
SOURCES OF INCOME

1.1 Salary From India Ltd
(1) Salary - U/s 17(1)
(2) Perquisites - U/s 17(2)
Gross Salary
Total Salary
(1.1)
Income From Salary
2 INCOME FROM CAPITAL GAINS
2.1 Short Term Capital Gain - Securities
2.1.1 Equity Shares Listed (Through Stock exchange)
1. Sale Consideration ( Date of Transfer:15/03/2016)
(SHARES)
Net Sale Consideration-(A)
Acquisition Cost
Net Aquisition Cost-(B)
Balance (A - B)
Net STCG(111A)
2. Sale Consideration ( Date of Transfer:15/03/2016)
(INTRADAY)
Net Sale Consideration-(A)
Acquisition Cost
Net Aquisition Cost-(B)
Balance (A - B)
Net STCG(Other than 111A)
Total STCG(111A)
Total STCG(Other Than 111A)
2.2 Long Term Capital Gain - Exempted
Gross Capital Gain
INCOME FROM CAPITAL GAIN
1.ICICI BANK LTD
2.BANK OF MAHARAHTRA
3.IDBI BANK
Total
Less : BROUGHT FORWARD LOSSES SETOFF
GROSS TOTAL INCOME
DEDUCTIONS U/c VI A
Description
80C Total Amount
80C Qualifying Amount Limited to
80C+80CCC+80CCD(1)
savings account.
Total Deductions
TOTAL INCOME
TAX ON TOTAL INCOME
INCOMES
Normal Income & Tax
Total Tax
Add: Cess
TAX AND CESS
: TDS ON SALARY
: TDS OTHERS
Self Assessment Tax Payable/(Refund Due)
Loss Carried Forward
Exempt Income
Nature + Section
2) Long Term Capital Gain - U/s 10(38)
Total
47
Asst Year
PAN
DOB
Filing Due Date
Res. Status
Amount
(Rs)
:
:
:
:
800255
562214
:
:
:
2500
6096180
:
:
:
:
:
:
6096180
6123409
6123409
-27229
-27229
4969487
:
:
:
:
:
4969487
4911815
4911815
57672
57672
: 2016-2017
: AAAPM1234C
: XX-XX-1974
: 31-Jul-2016
: Ordinarily Resident
Amount
(Rs)
Amount
(Rs)
1362469
34200
1328269
2500
1325769
1325769
-27229
57672
18501
30443
18326
15396
11092
18326
15396
11092
44814
1401026
30443
1370583
:
Gross
Qualifying
Deductable
:
488413
:
488413
44814
221513
150000
150000
150000
10000
160000
1210583
1210580
:
:
:
INCOME
1210583
TAX
188174
188174
5645
193819
:
:
197480
1211
:
:
198691
(4872)
(4872)
136868
Amount
34200
18501
52701
Case 4:Mrs Anita has an annual income of Rs.1325769 /- , and her age is 42 years. He also
has income from other source that is Interest from bank saving account, amounted
Rs.44814 /She also has an income from Capital Gains :
1) Short Term Capital Gains :- Selling price of the total shares traded in current year is
Rs.6096180 /- , which were purchased at Rs.6123409/- , so she has generated loss
of Rs.27229 /2) Intraday :- Selling price of the total shares traded in the current year is
Rs.4969487/-, which were purchased at Rs.4911815 /-, so she generated profit of
Rs.57672 /The difference of this which is Rs.30443 /- will be added to her total income
Going forward he is getting a benefit of Rs.10000 /- under Section 80TTA (Saving
Account in SBI).
deducted by bank is Rs.9633 /So after all computation Mrs Anitawill get a refund of Rs.4872 /-
Recommendation My recommendation to Mrs Anita is that she has good investment planning but she should
also invest in some other plans to have more tax relief.
48
Name
: Mr. KULKARNI
Asst Ye ar
SOURCES OF INCOME

1.1 Salary From NALCO WATER INDIA LIMITED
(1) Salary - U/s 17(1)
Le ss:Exe mptio n - U/s 10
Gro ss Salary
Le ss: De ductio n U/s 16
Pro fe ssio nal tax - 16 (iii)
Total Salary
(1.1)
1.2 Salary From EPAM SYSTEMS INDIA PVT LTD
(1) Salary - U/s 17(1)
Le ss:Exe mptio n - U/s 10
(1) HRA-HRA allo wance Se c 10(13A)
(2) TRANSPORT-Othe r allo wance s
Gro ss Salary
Le ss: De ductio n U/s 16
Pro fe ssio nal tax - 16 (iii)
Total Salary
(1.2)
Income From Salary
Gro ss Annual Value U/s.23(2)(a)
Le ss : De ductio n U/s 24(b)
Inte re st o n Bo rro we d Capital U/s.24(b)-(Amo unt Paid
Rs. 10287 )
Income From Hous e Property
3 INCOME FROM CAPITAL GAINS
3.1 Long Term Capital Gain - Other than Securities (General)
3.1.1 Res idential Property
1. Sale Co nside ratio n ( Date o f Transfe r:30/04/2015)
(SALE OF FLAT)
Sale value U/s 50c
Full Value o f Co nside ratio n
Ne t Sale Co nside ratio n-(A)
Acquisitio n Co st( 2011-2012)
Inde xe d Acquisitio n Co st
(2011-2012)-(Rs. 2283660*1081/785)
To tal Inde xe d Acquisitio n Co st
Balance -(A-B)
Ne t LTCG
Total LTCG Other than Securities (General)
INCOME FROM CAPITAL GAIN
4.1 Interes t earned on depos its in s aving account w ith
banks , co-operative s ocieties and pos t office
1.SBI
2.HDFC
3.CITI
4.MANORAMA
Income from Other s ources
Unadjus ted Current Year los s Carried Forw ard:
1. Lo ss unde r LTCG
Amount
(Rs )
107154
107154
1806
105348
:
:
400
400
104948
:
:
:
:
:
1076767
1076767
:
:
:
2300
NIL
10287
81297
17394
Amount
(Rs )
98691
978076
2300
975776
1080724
:
:
-10287
-10287
2640000
:
:
:
:
2636250
2640000
2640000
2283660
:
:
:
:
3144760
3144760
-504760
-504760
-504760
24825
10278
2421
242
24825
10278
2421
242
37766
504760
504760
80D
49
Amount
(Rs )
:
:
:
GROSS TOTAL INCOME

DEDUCTIONS U/c VI A
Des cription
80Cspe cifie d inve stme nts/savings
80C To tal Amo unt
80CCE -Qualifying Amount for Sec 80C+80CCC+80CCD(1)
-Me dical Insurance Pre mium
80D- Total Amount
80G
-Do natio ns to Spe cifie d funds / Institutio ns
1. Any asso ciatio n o r institutio n/Charitable Trust with 80G
( VYAKTI VIKAS KENDRA INDIA)
80G-Total
80TTA -De ductio n in re spe ct o f inte re st o n de po sits in savings
Total Deductions
TOTAL INCOME
TOTAL INCOME(ro unde d o ff)
TAX ON TOTAL INCOME
INCOMES
No rmal Inco me & Tax
To tal Tax
Add: Ce ss
TAX AND CESS
: TDS ON SALARY
Tax Before Interes t
ADD : Interes t
: Inte re st U/s 234 B
: Inte re st U/s 234 C
Se lf Asse ssme nt Tax Payable
Lo ss Carrie d Fo rward
Exempt Income
Nature + Section
1) Exe mptio n unde r the he ad Salary - U/s Se c 10
Total
: 2016-2017
1108203
Gros s
Qualifying
Deductable
:
:
155761
155761
150000
150000
150000
2692
2692
9000
4500
9000
37766
4500
10000
167192
941011
941010
:
:
:
INCOME
941011
TAX
113202
113202
3396
116598
:
:
102319
:
:
:
426
523
102319
14279
949
15228
15228
504760
Amount
100497
100497
Case 5:Mr. Kulkarni has an annual income of Rs.1080724 /- . He has switched his
company in this year i.e. he was working with two employer in the FY 2015-16
His Salary slips as follows:Company 1. Gross Salary = Rs.104948 /Company 2. Gross Salary = Rs.975776 /Total Salary = Rs.1080724 /-
He has generated a loss on Capital Gains (Sale of Property). The selling value of the flat
was Rs.2640000 /-, which was purchased in FY 2011-2012 at Rs.2283660 /-, generating a
loss of Rs.504760 /- which will be carried forward.
He also has income from other source which bank interest which is Rs.37766/Further his investment in Section 80C is Rs.155761 /- from which only Rs.150000 /- is
His investment in Mediclaim Policy is Rs.2692 /He has also done donation in VYAKTI VIKAS KENDRA INDIA of Rs.9000 /Going forward he is getting a benefit of Rs.10000 /- under Section 80TTA (Saving
Account in SBI).
deducted by bank is Rs.9633 /So after all computation Mr. Agrawal had to pay extra tax that is called Self Assessment
Tax of Rs.15228 /-
Recommendation My recommendation to Mr. Kulkarni is that due to his switch of company in the middle of
the year, which has lead to extra tax should be avoided.
50
Chapter-9
Findings
51
It has been observed those individuals:
Are not aware of the income tax concepts.

Do not avail benefit of section 80C, 80CCC and 80CCD in full, i.e. the total
deduction they can get under is sections is Rs. 150000/- but individuals fail to
investment properly. ( case 1 or Mr. XYZ)
Need to plan for retirement, this was found missing in case 2 of Ms. AAA
They do not have knowledge about how to claim deduction under section 80C to
80U. Like many failed to claim deduction under section 80D. ( In case 3 of Mr.
LMP failed to claim deduction of 80D)
Unaware of change in income tax slab, i.e. if they work under two employer (case 4
of Mr. ABC)
Individuals are not aware about the income that is exempted under section 10. ( In
case 5, about HRA claim)
Some individuals are also not aware that they need to file their return to income tax
department; they think paying tax means they have filled their returns.
Misconception about E-filing v/s Manual filing.
52
Chapter-10
Recommendation
53
Recommendation according to the cases:
Pension
Planning for retirement is an important exercise for any individual. A retirement plan from
a life insurance company helps an individual insure his life for a specific sum assured. At
the same time, it help him in accumulating a corpus, which he receives at the time of
retirement.
Some of pension plans are:
National pension scheme

Varishtha Pension BimaYojana
Donation
By the mean of donation we can contribute towards improving our society and also get
deductionunder section 80G. Individuals can make donation in:
Prime Ministers National Relief Fund

National defence Fund
Prime Ministers Armenia Earthquake Relief Fund
The Africa (Public Contribution- India) Fund, etc. To get 100% deduction as a
qualifying limit. And also they can donate in under limit people.
Jawaharlal Nehru Memorial Fund
Prime Ministers Drought Relief Fund
National childrens Fund, etc.
To get 50% deduction as a qualifying limit.
Five year fixed deposits (FDs), National Savings Scheme (NSC), other bonds
These products are fair if your risk appetite is really low and if you are not too keen to
build wealth, Generally speaking, in all that we do wealth creation should be the
underlying motive.
Public Provident Fund (PPF)

This has been a long time favourite of most people. It is a non-brainer and hence most
people prefer this. The current returns are 8.7%, and minimum amount of Rs. 500/- pm one
can deposit.
54
Recommendation against revised tax slab rates

As mentioned above, the tax slabs are changed for individuals and senior citizen.
Individuals will get a relief against their tax liability
They can take additional benefit by making investment under section 80C, as government
has increased the deduction by Rs. 50000/-. In this way they will be able reduce their
liability. And person having home loan for self occupied property they will get an
advantage of reducing their tax liability as interest component a increased by Rs. 50000/-.
By seeing this one can take all these benefit and reduce their tax liability.
Assesses are suggested to keep up to date knowledge of own business regarding financial
matters. Assesses should be tax educated. They should be punctual and alert in case of
tax obligations. Individual assesses should maintain books of accounts maintained by the
assesses should be accurate and as required by the law.
It is also recommended that individual should go to tax consultant for planning their tax
and to file their return as this will reduce filing errors return and will also save their time
and money.
55
Chapter-11
Conclusion
56
Conclusion
At the end of this study, I can say that Income Tax has different provisions for taxation for
various age groups. Tax planning for every individual is very important not only it saves
the liability but also helps one into invest in various policies and funds like LIC, Pension
scheme, PPF; ULIP etc. It also saves the of an individual in the form of investment and
plays a vital role for his/ her future. By planning tax in advance it reduces the tax liability
and also it helps the individuals to make investment in such a way that it gives benefit
them for their entire life. So one must make sure that he makes his investment properly so
that he/she can avail the benefit of under chapter VI A.
And we can also say that given the rising standards of Indian individuals and upward
economy of the country, prudent tax planning before hand is must for all the citizens to
make the most of their incomes. However, the mix of tax saving instruments, planning
horizon would depend on an Individuals total taxable income and age in the particular
financial year.
57
Chaptar-12
Bibliography
58
Bibliography
Books
Dr.Vinod k. Singhania (AY 15-16)

TAXATION (AY 15-16) BY ICAI
SubhashLokhotia How to save Income Tax 1st Edition
ICMAI-GROUP 1 (INTERMEDIATE) A.Y 15-16
Magazines
THE CHARTERED ACCOUNTANT STUDENT (July 2014)

Budget (2016-17)
Websites
www.incometaxindiaefiling.gov.in
www.icmai.com
www.economictimes.com
www.icai.org
http://profit.ndtv.com
http://economictimes.indiatimes.com/personal-finance
59

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Chapter-1

The project on INCOME TAX PLANNING IN INDIA WITH RESPECT TO

Income Under The Head Salaries

2.1 INDUSTRY OVERVIEW

2.1.1. ORGANIZATION AND FUNCTIONS

2.2 HISTORICAL BACKROUND OF C.B.D.T.

Chief Commissioners/Commissioners of Income Tax

Director General (Inv.)/Directors of Income Tax (Inv.)

Director General (Exempt.)/Director of Income Income-Tax (Exemp.)

Director General (Foreign Tax)/Director of Income Tax(Foreign Tax)

Commissioners of Income-Tax (Appeals)

Commissioner of Income-Tax (Judicial)

Commissioner of Income-Tax (Computer Operations)

Commissioner of Income-Tax (Audit)

Commissioner of Income-Tax (CIB)

Commissioner of Income-Tax(Departmental Representative),

Commissioner of Income-Tax (Departmental Representative), Income Tax

To monitor the day-today functioning of field formations, the CBDT is assisted by

4. Directorate of Organizations and Management services

Technical and Office Set up:

Data Confidentiality & Security.

Overview of Income-Tax Law in India

To study the overview of Income Tax in India

IMPORTANCE OF INCOME TAX ACT 1961

6.1 BASIC INFORMATION ABOUT TAXES IN INDIA:

6.2 INCOME TAX RETURN:

the year, whether through regular income (wages), interest,

6.3.1 DETERMINATION OF THE RESIDENTIAL STATUS OF AN

He is in India for a period of 182 days or more in that financial year

6.3.3 CLASSIFICATION OF ORDINARY RESIDENT & NON

Resident in India in at least 2 out of 10 years immediately preceding

Presence of at least 730 days in India during the years immediately

6.3.4 NON RESIDENT AND NON RESIDENT IN INDIA:-

TAXABILITY OF INDIVIDUALS IS SUMMERISED IN THE TABLE

Resident or ordinarily Taxable

INCOME TAX SLABS AND RATES FOR ASSESSMENT YEAR 201617

Individual Resident Aged< 60

Individual resident aged below 60 years

Where the taxable income does not exceed Rs. NIL

Where the taxable income does not exceed Rs. NIL

Where the taxable income does not exceed Rs. NIL

Any NRI or HUF or AOP or BOI or AJP

Where the taxable income does not exceed NIL

which the taxable income exceeds

Education cess: 3% of the total of income tax and surcharge.

Company other than a domestic company

@ 50% of on so much of the taxable income as consist of (a) royalties received

Rs. 700/- (1000-300)

Income from salary

WHAT DOES SALARY INCLUDE

Leave Travel Concession u/s 10(5)

Income from house property

30% of NET value as repair cost (this is mandatory deduction)

Income from other sources

The age of the individual taxpayer

DEDUCTIONS UNDER CHAPTER VI A

Section 80c deduction:

Section 80CCC deduction:

Section 80D deduction:

Section 80DD deduction:

Section 80DDB deduction:

Section 80E deduction:

Section 80G deduction:

Section 80TTA deduction: