Unit 1 - Income Tax – Practical Approach.pptx

NAAN MUDHALVAN
Faculty development programme

Income Tax-Practical approach
 Income Tax on Daily activities of the entity
 How to Prepare Income Tax on Individuals
 How to Prepare Income Tax on HUF
 How to Prepare Income Tax on Partnership Firm
 How to Prepare Income Tax on Pvt/public Ltd company
 How to Prepare Income Tax on Trust/BOI
 How to assess the income in different heads

Income Tax on Daily activities
of the entity
Permanent Account Number (PAN)
What is PAN? Utility of PAN
Who has to obtain PAN?
Transactions in which PAN is mandatory How to apply for PAN?
How to correct any mistake in PAN card or intimate any change in data pertaining to PAN?
Holding of more than one PAN not allowed
How to know PAN if the PAN card is lost and PAN is forgotten? Penalty for not complying with
provisions of PAN
What is PAN?
PAN is a ten-digit unique alphanumeric number issued by the Income Tax Department. PAN is issued
in the form of a laminated plastic card as given below (commonly known as PAN card):

of the entity
What is PAN?
PAN is a ten-digit unique alphanumeric number issued by the Income Tax Department. PAN is issued
in the form of a laminated plastic card as given below (commonly known as PAN card)

of the entity
Out of the first five characters, the first three characters represent the alphabetic series
running from AAA to ZZZ.
BLG PXXX D
The fourth character of PAN represents the status of the PAN holder. "P" stands for Individual
"C" stands for Company
"H" stands for Hindu Undivided Family (HUF) "A" stands for Association of Persons (AOP)
"B" stands for Body of Individuals (BOI)
"G" stands for Government Agency
"J" stands for Artificial Juridical Person "L" stands for Local Authority
"F" stands for Firm/ Limited Liability Partnership "T" stands for Trust
Illustrative PAN : BLGPX S X D
Fifth character of PAN represents the first character of the PAN holder's last name/surname in
case of an individual. In case of non-individual PAN holders fifth character represents the first
character of PAN holder's name. [As amended by Finance Act, 2023]

of the entity
Utility of PAN
PAN enables the department to identify/ link all transactions of the PAN holder with the
department. These transactions include tax payments, TDS/TCS credits, returns of income,
specified transactions, correspondence etc, and so on. It facilitates easy retrieval of information of
PAN holder and matching of various investments, borrowings and other business activities of PAN
holder.
Who has to obtain PAN? PAN is to be obtained by :
• Every person if his total income or the total income of any other person in respect of which he is
assessable during the year exceeds the maximum amount which is not chargeable to tax.
• A charitable trust who is required to furnish return under Section 139(4A)
• Every person who is carrying on any business or profession whose total sale, turnover, or gross
receipts are or is likely to exceed five lakh rupees in any year
• Every person who intends to enter into specified financial transactions in which quoting of PAN is
mandatory

of the entity
How to apply for PAN
The Income Tax Department has authorized UTI Infrastructure Technology and Services Limited
(UTIITSL) and National Securities Depository Limited (NSDL) [now protean] to set up and manage
PAN Service Centers. UTIITSL and NSDL [now protean] have established PAN Service Centers and TIN
Facilitation Centers at various places in major cities of India (hereinafter referred to as PAN application
centers of UTIITSL/Protean).
Thus, a person wishing to obtain PAN can apply for PAN by submitting the PAN application form (Form
49A/49AA) along with the related documents and prescribed fees at the PAN application center of
UTIITSL or Protean. An online application can also be made from the website of UTIITSL or Protean.
The address, phone numbers, etc., of PAN application centers of UTIITSL or Protean at which PAN
application can be submitted, can be obtained from :
• Website of Income Tax Department:www.incometaxindia.gov.in
• Website of UTIITSL :www.utiitsl.comWebsite of Protean : https://www.protean-tinpan.com/
Instant PAN
Income-tax Dept. has launched a new functionality on the e-filing portal which allows a PAN to the
assessee on the basis of his Aadhaar Number.

of the entity
How to get instant PAN using this functionality?
1) Go to https://eportal.incometax.gov.in/iec/foservices/#/pre-login/instant-e-pan and click on “Get New
e-PAN”

of the entity
This pre-login service is available to all taxpayers (except Companies) who want to register on and access
the e-Filing portal. The Registration service enables the taxpayer to access and track all tax-related
activities.
2. Prerequisites for availing this service
 Valid and active PAN
 Valid Mobile Number
 Valid email ID
3. Step-by-Step Guide
Step 1: Go to the e-Filing portal homepage, click Register.

of the entity
Step 2: Enter your PAN under Register as a Taxpayer option and click Validate. In case the PAN is
already registered or invalid, an error message is displayed.
Step 3: Enter all the mandatory details including Name, DOB / DOI, Gender (if applicable)
and Residential Status as per your PAN on the Basic Details page and click Continue.

Income Tax on Daily activities of the entity
Step 4: After PAN is validated, the Contact Details page appears for individual taxpayers. Enter
your Contact Details including Primary Mobile Number, email ID and Address. Click Continue.

Step 5: Two separate OTPs are sent to the primary mobile number and email ID mentioned in Step 5.
Enter the separate 6 digit OTPs received on the mobile number and email ID and click Continue.

Note:
 OTP will be valid for 15 minutes only.
 You have 3 attempts to enter the correct OTP.
 The OTP expiry countdown timer on screen tells you when the OTP will expire.
 On clicking Resend OTP, a new OTP will be generated and sent.
Step 6: Edit the details in the page if necessary and click Confirm.

Step 7: On the Set Password page, enter your desired password in both the Set
Password and Confirm Password textboxes. Enter your personalized message and click Register.

Note:
 Do not click Refresh or Back.
 While entering your new password, be careful of the password policy:
o It should be at least 8 characters and at most 14 characters.
o It should include both uppercase and lowercase letters.
o It should contain a number.
o It should have a special character (e.g. @#$%).
Step 8: When you are successfully registered, click Proceed to Login to begin the login process.

How to correct any mistake in PAN card or intimate any change in data pertaining to PAN?
Request for reissue of lost PAN card or for change/correction in PAN data is to be filed in “Request for
New PAN Card Or/ And Changes Or Correction in PAN Data”
Holding of more than one PAN not allowed
A person cannot hold more than one PAN. A penalty of Rs. 10,000/- is liable to be imposed under section
272B of the Income-tax Act, 1961 for having more than one PAN.
If a person has been allotted more than one PAN then he should immediately surrender the additional
PAN card(s).
Linking of PAN with Aadhaar Number

TAX-FREE INCOMES
Agricultural Income [Section 10(1)]
land in India – Chitta Adangal – updated
Amount received by a member of the HUF from the income of the HUF, or in case of impartible estate
out of income of family estate [Section 10(2)]
Share of profit received by a partner from the firm [Section 10(2A)]
Interest on notified savings certificates [Section 10(4B)]
Partial withdrawal from NPS [Section 10(12B)]
House rent allowance [Section 10(13A)]
Other items mentioned in Section 10 of the income tax act

RETURN OF INCOME
It is mandatory for every taxpayer to communicate the details of his income to the Income-tax
Department. These details are to be furnished in the prescribed form known as return of income. In this
part, you can gain knowledge about the various provisions relating to the return of income.
Person required to file the return of income
The provisions relating to filing of return of income depend upon the status of the taxpayer. The position
in this regard is given below:
In the case of companies:
Every person, being a company, has to file its return of income compulsorily, irrespective of its income
being profit or loss. In other words, it is mandatory for every company to file the return of income
irrespective of its income or loss.
In the case of partnership firms:
Every person, being a partnership firm (including Limited Liability Partnership), has to file its return of
income compulsorily, irrespective of its income being profit or loss. In other words, it is mandatory for
every partnership firm to file the return of income irrespective of its income or loss.

In the case of an Individual/HUF/AOP/BOI/Artificial Juridical Person:
Every individual/HUF/AOP/BOI/artificial juridical person has to file the return of income if his total income (including
income of any other person in respect of which he is assessable) without giving effect to the provisions of section 10(38),
10A, 10B, 10BA 54, 54B, 54D, 54EC, 54F, 54G, 54GA, or 54GB or Chapter VIA (i.e., deduction under section 80C to
80U), exceeds the maximum amount which is not chargeable to tax i.e. exceeds the exemption limit.
In the case of charitable or religious trusts:
Every person in receipt of income derived from property held under charitable or religious trusts/legal obligations or in
receipt of income being voluntary contributions referred to in section 2(24)(iia), has to file the return of income if its
total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount not chargeable
to income-tax.
In the case of political parties:
The Chief Executive Officer of every political party has to file the return of income of the party if the total income of
the party without giving effect to the provisions of section 13A exceeds the maximum amount not chargeable to income
tax.
In the case of certain associations:
The following entities are liable to file the return of income if their total income without giving effect to the provisions
of section 10 exceeds the maximum amount not chargeable to tax:
Research association referred to in section 10(21)
News agency referred to in section 10(22B)
Association or institution referred to in section 10(23A)

Due date of filing of return of income

Consequences of delay in filing the return of income
Delay in filing the return of income may attract certain adverse consequences. Following are the
consequences of delay in filing the return of income:
Loss (other than loss under the head “Income from house property”) cannot be carried forward.
Levy of interest under section 234A.
Levy of fee under section 234F*
Exemptions under sections 10A, 10B, are not available.
Deduction under Part-C of Chapter VI-A shall not be available.
* Fee for default in furnishing return of income shall be Rs. 5,000. However, where the total income of
the person does not exceed Rs. 5,00,000, the fee payable shall not exceed Rs. 1,000.

Revision of return
Sometimes the taxpayer may omit to include certain information in the return or may commit any
mistake at the time of filing the return of income. In such case any unintentional mistake or error or
omission in the return of income filed by the taxpayer can be corrected by filing a revised return.
A return can be revised at any time 3 months before the end of the relevant assessment year or before the
completion of the assessment, whichever is earlier. It should be noted that only a return filed under
section 139(1) or a belated return filed under section 139(4) can be revised.
A return of income filed pursuant to notice under section 142(1) of the Act cannot be revised under
section 139(5).
Defective return
Section 139(9) provides the list of situations in which the return of income filed by the taxpayer can be
treated as a defective return. If the Assessing Officer finds the return of income to be defective under
section 139(9), then he may intimate such defect to the taxpayer and may give an opportunity to him to
rectify such defect.
The taxpayer shall rectify such defect in the return of income within a period of 15 days of such
intimation or within such further period as the Assessing Officer may allow.

Return to be verified by whom
Updated Return
The Finance Act 2022, has inserted subsection (8A) in section 139 to enable the filing of an updated
return. The section provides that an updated return can be filed by any person irrespective of the fact
whether such person has already filed the original, belated or revised return for the relevant assessment
year or not.
An updated return can be filed at any time within 24 months from the end of the relevant assessment
year. However, an updated return cannot be filed in the following three situations

FILING THE RETURN OF INCOME
The taxpayer has to communicate the details of his taxable income/loss to the Income-tax Department.
These details are communicated to the Income-tax Department in the form of the return of income. In this
part, you can gain knowledge about various provisions and procedures relating to furnishing (i.e. filing)
the return of income. The provisions discussed in this part are applicable for furnishing the return of
income for the assessment year 2023-24, i.e., the financial year 2022-23.

FILING THE RETURN OF INCOME – Individual
File ITR-1 (Sahaj) Online
The pre-filling and filing of ITR-1 service is available to registered users on the e-Filing portal. This service enables individual
taxpayers to file ITR-1 either online through the e-Filing portal or by accessing the offline excel utility. This user manual covers the
process for filing ITR-1 through the online mode.
Registered user on the e-Filing portal with valid user ID and password
Status of PAN is active
PAN and Aadhaar are linked. Please Note: If your PAN is not linked with your Aadhaar, your PAN is made inoperative. In that case you will get a ticker message “Your PAN
is made inoperative as it is not linked with Aadhaar. Some of the accesses may be limited. You can link and make your PAN operative after payment u/s 234H.”
Pre-validate at least one bank account and nominate it for refund (recommended)
Valid mobile number linked with Aadhaar / e-Filing portal / your bank / NSDL / CDSL (for e-Verification)
Download the offline utility or avail a third-party software (If using offline mode)
ITR-1 has five pre-filed sections that you need to validate/ edit before submitting it, and one summary section where you are required to review your tax computation. The
sections are as follows:
1.Personal Information
2.Gross Total Income
3.Total Deductions
4.Tax Paid
5.Total Tax Liability

How to Access and Submit ITR - 1
You can file and submit your ITR through the following methods:
•Online Mode – through e-Filing portal
•Offline Mode – through Offline Utility
Follow the below steps to file and submit the ITR through online mode:
Step 1: Log in to the e-Filing portal using your user ID and password.

Step 2: On your Dashboard, click e-File > Income Tax Returns > File Income Tax Return.

In case you have already filled the Income Tax Return and it is pending for submission, click Resume Filing. In case you wish to
discard the saved return and start preparing the return afresh,click Start New Filing.

Step 6: You have two options to select the type of Income Tax Return:.
Step 6: You have two options to select the type of Income Tax Return:.

Step 5: Select Status as applicable to you and click Continue to proceed further.

Step 7: Once you have selected the ITR applicable to you, note the list of documents needed and click Let’s Get Started.

Select the checkbox applicable to you regarding reason for filing ITR and click Continue.

step 9: In case you wish to opt for New Tax Regime, select Yes in the Personal Information section. Please note the pop-up information
that certain deductions and exemptions are not available in the new tax regime. Review your pre-filled data and edit it if necessary.
Enter the remaining / additional data (if required). Click Confirm at the end of each section

In the Personal Information section of the ITR, you need to validate the pre-filled data which is auto-filled from your e-Filing profile.
You will not be able to edit some of your personal data directly in the form. However, can make the necessary changes by going to
your e-Filing profile. You can edit your contact details, filing type details and bank details in the form.

In the Gross Total Income section, you need to review the pre-filled information and confirm/ edit your income
source details from salary / pension, house property, and other sources (such as interest income, family pension,
etc.). You can also add details of exempt income, if any.

In the Total Deductions section, you need to add, delete, and confirm any deductions applicable to you to claim
under Chapter VI-A of the Income Tax Act.

In the Tax Paid section, you need to confirm taxes paid by you in the previous year. Tax details include TDS from
Salary / Other than Salary as furnished by Payer(s), TCS, Advance Tax and Self-Assessment Tax.

In case there is no tax liability (No Demand / No Refund) or if you are eligible for a Refund
Click Preview Return. If there is no tax liability payable, or if there is a refund based on tax computation,
you will be taken to the Preview and Submit Your Return page.

.

.
If you are shown a list of errors in your return, you need to go back to the form to correct the errors. If there
are no errors, you can proceed to e-Verify your return by clicking Proceed to Verification.

Unit 1 - Income Tax – Practical Approach.pptx

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Unit 1 - Income Tax – Practical Approach.pptx