Income Tax Services
We also offer income tax services that comprise taxation on income earned in a financial year a part of which is taxable as per rates prescribed for that year. With the financial year running from 1 April to 31 March of following year, broadly taxpayers are classified as residents or non-residents where the individual taxpayers can be classified as ‘residents but not ordinary residents’.
Our team of tax consultants and financial advisors also allows us to offer Income tax consultancy services that are aimed at offering business solutions to Manufacturers, Traders, Dealers as well as Service providers of industry.
An individual is considered resident in India if he is in India in tax year for:
182 days or more;
60 days or more where the period of 60 days stands changed to 182 days or more for –
- Indian citizens/persons of Indian origins on visit to India
- For citizens of India leaving India for employment abroad as members of crew of Indian ship during tax year
- A resident is “not ordinarily resident” in India in any tax year if he:
- Has been “non-resident” in India in nine out of 10 previous years preceding that year
- Has during previous seven years, preceding that year been in India for total period of 729 days/less
Taxability Based on Status:
|Residential Status||Indian Sourced Income||Foreign Sourced Income||Resident||Taxable in India||Taxable in India|
|Resident but not ordinarily resident||Taxable in India||Not taxable in India||Non-resident||Taxable in India||Not taxable in India|
Heads of Income
Income is categorized under five broad heads/classes where the taxable component of income is ascertained as per the rules for particular head/class of income followed by aggregation for determining total taxable income. These include:
Salaries – Received against services rendered and include wages, pension, fees, commission and taxable value of perquisites.
Income from house properties that comprise income that arises from use of residential/commercial properties. Here, only two prescribed deductions are permitted while computing income.
Profits and Gains from Business/Profession that covers income earned from business/profession that is net of permissible deductions, against revenue earned.
Capital Gains that covers gains which arise from transfer of capital assets and the period of holding determining classification of asset, which then determines manner of taxation. The gains comprise short-term assets and long-term capital assets.
Sale of Certain Specified Investments that are subjected to taxation under which tax is levied on value of transaction.
Income from Other Sources that are residuary head/class of income covering any income not specifically dealt with under other heads.
Tax rate for Individuals for Financial year 2015-16 (Assessment year 2016-17) is as follows:
|Individual (except senior citizen)||Senior citizen (Above 60 years)||Senior citizen (who is 80 years or more||Rate|
|0 – 250,000||0 – 300,000||0-500000||Nil|
|Rs. 250,001 to Rs. 500,000||Rs. 300,001 to Rs. 500,000||–||10%|
|Rs. 500,001 to Rs. 1,000,000||Rs. 500,001 to Rs. 1,000,000||Rs. 500,001 to Rs.1,000,000||20%|
|> Rs. 1,000,000||>Rs. 1,000,000||> Rs. 1,000,000||30%|
* Education Cess @ 3% of the Income Tax will be levied extra.
* Surcharge @12% is applicable on Income exceeding 10,000,000.
Rules Governing Foreign Nationals –
For foreign nationals, Indian tax law provides exemption of income earned subject to prescribed conditions. This is based on conditions like –
- Individual’s stay in India does not exceed 90 days
- Payment made is not deducted in computing income of employer
- Remuneration received by person employed on foreign ship provided his stay in India not exceeding 90 days
- Remuneration of foreign diplomats, consular staff, trade officials and their staff and family
- Income of employee/consultant of government approved foreign charitable institutions
- Income-tax @ 30% of total income
- Surcharge at the rate of 7% of income tax provided that total income exceeds Rs. 1 crore
- Education Cess @ 3% of total of Income-tax and surcharge
- Income-tax @ 30% of total income
- Surcharge at the rate of 12% of income tax provided that total income exceeds Rs. 1 crore
- Education Cess of 3% of total of Income-tax and surcharge
Kinds of Taxes
Annual Tax which is levied on income earned in a financial year and is based as per the rates declared in annual budget. With rates varying with each budget, the tax is payable in advance by way of quarterly installments during financial year.
Minimum Alternate Tax (MAT) is tax levied @ 19.055% of book profit. Here, the surcharge is at the rate of 7% of such income tax provided that total income exceeds Rs. 1 crore. Further, the Education Cess is @ 3% of total Income-tax and Surcharge.