Income Tax: Key Terms

Deemed Income

• Refers to income that isn't directly received but is taxed as if it were.

Protective Assessment

• An assessment made to protect the revenue in cases where there is uncertainty about who is liable to pay tax.

Set-off and Carry-Forward Losses

• Set-off allows adjusting losses against income in the same assessment year.
• Carry-forward allows carrying losses forward to subsequent years for adjustment against future income.

Advance Payment of Tax Provisions

• Taxpayers are required to estimate their income for the financial year and pay advance tax in installments if their tax liability exceeds a certain threshold.

Purpose of PAN (Permanent Account Number)

• A unique identification number used for tracking financial transactions and tax payments.

Marginal Relief for Taxpayers

• Provides relief when an increase in income leads to a higher tax liability, ensuring the increase in tax does not exceed the increase in income.

Rebate and Relief in Income Tax

• Rebate is a reduction in the amount of income tax payable.
• Relief is granted to reduce tax liability due to specific circumstances.

Ways of Collecting Income Tax

• Tax Deducted at Source (TDS)
• Advance Tax
• Self-Assessment Tax
• Tax collected at source (TCS)

Taxes in the GST System

• Central Goods and Services Tax (CGST)
• State Goods and Services Tax (SGST)
• Integrated Goods and Services Tax (IGST)

Contents of a GST Tax Invoice

• Supplier's name, address, and GSTIN
• Invoice number and date
• Recipient's name, address, and GSTIN
• Description of goods or services
• Value of supply
• GST rate and amount
• Place of supply
• Signature of the supplier

Conditions for GST Registration Cancellation

• Closure of business
• Change in the constitution of the business
• Turnover falling below the threshold limit

Input Tax Credit (ITC)

• Mechanism allows businesses to reduce their tax liability by claiming credit for the GST paid on their inputs.

Conditions for Tax Deduction at Source (TDS) Under GST

• TDS is deducted by specific entities.
• When the payment to the supplier exceeds ₹2.5 lakhs.

Grounds for a Refund of Tax Under GST

• Excess payment of tax
• Export of goods or services
• Refund arising from inverted tax structure

Types of E-Ledgers Maintained by the GST Network (GSTN)

• Electronic Cash Ledger
• Electronic Credit Ledger
• Electronic Tax Liability Ledger

Section 115BAC of the Income Tax Act

• Provides a new tax regime with lower tax rates, but requires foregoing certain exemptions and deductions.

Section 80G in Income Tax

• Allows deductions for donations made to charitable institutions and relief funds.

Assessment and Types of Assessment

• The process of calculating income and tax liability.
• Types of assessment include self-assessment, summary assessment, scrutiny assessment, and best judgment assessment.

Income Tax Authorities in India

• Central Board of Direct Taxes (CBDT)
• Assessing Officer (AO)
• Income Tax Officer (ITO)
• Commissioners of Income Tax
• Income Tax Appellate Tribunal (ITAT)

Difference Between Old Indirect Tax System and GST System

• The old system had multiple taxes like excise duty, sales tax, and service tax.
• GST is a unified tax system.

Definition of a Return

• A document filed by taxpayers.
• Details income, deductions, and tax liability.
• GSTR-1, GSTR-3B, GSTR-9 are different returns under GST.

Aggregation of Income

• Bringing together income from different sources and heads to compute total income.

Taxable Income Received by a Minor Child

• Generally included in the income of the parent with the higher income, subject to certain exemptions.

Relief of Tax U/S 89

• Granted when salary is received in arrears or in advance.

Section 80GG

• Provides deduction for rent paid.

CBDT (Central Board of Direct Taxes)

• The apex body responsible for the administration of direct taxes in India.

TDS Certificate of Income Tax

• A certificate issued by the deductor.
• States the amount of tax deducted at source.

Zero Rated Supply

• A supply of goods or services on which no GST is levied.

HSN Code

• Harmonized System of Nomenclature , a standardized system of names and numbers to classify traded products.

GSTIN (Goods and Services Tax Identification Number)

• A unique identification number assigned to every registered taxpayer under GST.

GSTR-1

• A monthly return filed by registered taxpayers.
• Details, sales and output of goods and services.

Special Audit

• Conducted when there are complexities in the accounts that cannot be resolved through normal audits.

E-Way Bill

• A document required for the movement of goods.
• Valued over ₹50,000.

'Best Judgment Assessment'

• An assessment made by the Assessing Officer.
• Done on their best judgment due to the assessee's failure to provide necessary information.

Advantages of GST System

• Elimination of the cascading effect of taxes
• Simplified tax structure
• Increased efficiency in tax administration

Procedure for Cancellation of GST Registration

• An application needs to be filed.
• Followed by verification by the tax authorities.

Levy of CGST, SGST, and IGST

• CGST is levied by the Central Government on intra-state supplies.
• SGST is levied by the State Government on intra-state supplies.
• IGST is levied on inter-state supplies.

Powers of GST Authorities

• Inspection
• Search
• Seizure

Deductions allowed under Section 80C of the Income Tax Act, 1961:

• Life Insurance Premium
• Provident Fund Contributions
• Investments in National Savings Certificate

Types of Income Tax Returns

• ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7.

E-Filing of Income Tax Return Steps

• Register on the income tax portal.
• Download the appropriate ITR form.
• Fill in the details, verify, and submit.

Provisions Relating to Deduction of Income Tax at Source

• TDS is deducted at specified rates on various payments.
• Like salary, interest, and commission.

Time of Supply

• Refers to the point in time when the liability to pay GST arises.

Long Term Capital Losses

• Can be set off against only against any capital gains

Section 10 of Income Tax Act

• Deals with incomes exempt from tax.

Deduction for medical treatment expense

• Covered under Section 80DDB.

Total deduction under Sec. 80 C + 80CCC + 80CCD(1)

• Cannot exceed Rs. 1,50,000.

Tax Levied on Import

• IGST

IGST

• Integrated Goods and Services Tax

Section 70 of Income Tax Act

• Deals with
• Assessment after Partition of a Hindu undivided Family*

Tuition fee is deductible under Section

• Section 80C

Deduction under Section 80QQB

• For royalties income

Set off of tax paid on purchase of raw materials

• Input Tax Credit

Clubbing of income

• Clubbing of income is including someone else's (Spouse, minor child) income to assessee’s income.

Provision of Section 80DD

• Deduction in respect of maintenance including medical treatment of a dependent who is a person with disability

Tax Collected at Source

• The tax collected by the seller from the buyer at the time of sale is called Tax Collected at Source (TCS)

Due dates of filing voluntary return of income

• Varies based on the type of assessee.
• Usually July 31st or October 31st.

Cascading effect of tax

• When tax is paid twice or multiple times on the same transaction is the cascading effect of tax

Three disadvantages of GST

• Increased Compliance Burden
• Technical Issues
• Higher Tax Rate

Concept of IGST

• Levied on all inter-state supplies of goods and services.

Advantages of GST

• Simpler Compliance
• Reduced Tax Burden
• Improved Competitiveness

Regulations for inter head adjustment of losses under Section 71

• Losses can be adjusted against income from other sources under the same head in the same assessment year.

Section SOTTA

• Set Off, Transfer, and Adjustment

Advantages of GST

• Simplified Tax Structure
• Increased Efficiency
• Improved Compliance

Penalties Imposed for Offences under GST

• Delay in filing GST returns attracts late fees.
• Not filing GST returns may lead to penalties .
• Committing fraud may result in penalties and prosecution.

Types of assessment under Income Tax Act

Assessments are broadly classified into self-assessment

• summary assessment
• scrutiny assessment
• best judgement assessment

Rates of GST

• Rates include 0%, 5%, 12%, 18%, and 28%.

Deduction allowed u/s 80D

• Medical insurance premium

Aggregate turnover

• The total value of all taxable, exempt, and export supplies of goods and services of a person with the same PAN

Casual Taxable person

• A person who occasionally undertakes transactions involving the supply of goods or services in a state or union territory where they do not have a fixed place of business

Credit Note

• A document issued by a seller to a buyer, reducing the amount that the buyer owes to the seller

Debit Note

• A document issued by a buyer to a seller, increasing the amount that the buyer owes to the seller

GSTR-9

• An annual return to be filed by registered taxpayers under GST

GSTR-9B

• A reconciliation statement

What is Input Tax Credit ?

• A tax which a business pays on its purchases and which it can use to reduce its sales tax liability

Special audit ?

• An audit conducted when there are complexities in the accounts

GST Registration Certificate

• Requires Basic details
• Proof of business registration
• PAN card details
• Bank details
• Aadhaar card details
• Photographs

Mr. Rakesh's Gross Total Income :

• Includes income from Basic Salary
• Medical allowance
• City Compensatory Allowance
• Examinership Remuneration
• Royalty from books
• Income from card games
• Amount received from lottery (Net)
• Expenses on lottery tickets

Recovery of tax?

• Recovery is the process of collecting taxes that have not been paid by the due date.

Various modes of recovery under income tax Act

• Attachment and sale of movable and immovable property
• Arrest and detention of the defaulter
• Appointment of a receiver
• Management of the defaulter's property by the tax authorities

GST ?

• The Goods and Services Tax (GST) is an indirect tax imposed on the supply of goods and services

Evolution of GST system in India.

• Designed to remove the cascading effect of taxes to promote a common national market

Income assessable under the HUF

• Only if the property was converted from separate property into joint family property

Maximum deduction under Chapter VI-A

• Chapter VIA of the Income Tax Act, 1961 deals with deductions from gross total income

Validity of GST registration certificate ?

• Valid until cancelled

Which tax is levied in case of Intra-State Supply?

• CGST & SGST

HSN stands for

Harmonized System of Nomenclature

Supply shall attract IGST

• Interstate supply

Tax rebate?

" Rebaite is reduction in the amount of income tax payable.

GSTR-2?

GSTR-2 has been suspended for the time being.

Aggregated turnover?

• Sum total value of taxable supplies
• Exempt supplies
• Export supplies of all goods and/or services effected

protective assessment

• An assessment made to protect the revenue in cases where there is uncertainty about who is liable to pay tax. Which is also required under income tax act?

CBDT?

The Central Board of Direct Taxes (CBDT) is responsible for the administration of direct taxes in India.

Four exempted goods from GST

• Fresh vegetables and fruits;
• Unprocessed food grains;
• Milk and eggs;
• Newspapers and periodicals

19 What is the meaning of supply in GST?

• Supply in GST refers to any form of sale, transfer, exchange, barter, license, rental, lease, or disposal of goods or services

How input tax is differing from Output tax?

• Input tax is the tax paid on purchases, while output tax is the tax collected on sales

Inter head adjustment of losses under Section 71

• Losses from one head of income can be set off against income from another head during the same assessment year.

Procedure for e-filing of income tax return.

• Register on the income tax portal. -Download the appropriate ITR form.
• Fill in the details, verify, and submit.

Activities not to be supplied as goods and services

• Services provided by an employee to the employer within the scope of their employment
• Services by any court or tribunal established under the law

Kapil donated as in previous year

• Donation to poor students
• Approved charitable institution