🔍
Basic Concepts of Income Tax in India - Exempt Income, Deductions, Rebate, FY, AY, TDS, Advance Tax - YouTube
Channel: Yadnya Investment Academy
[2]
Hello friends Welcome to
[4]
Yadnya investment academy,
[5]
today we will talk about some
[7]
basic concepts of income tax.
[9]
So we are talking about income and tax
[12]
let us understand first what is tax?
[15]
So basically we can say in simple terms
[17]
like we need income to run our house,
[20]
similarly to run the country government needs
revenue
[25]
and that revenue they collect from tax.
[28]
So tax are of two types
[31]
one is direct taxes
[32]
which is collected from a taxpayers income
or wealth
[37]
and second is indirect taxes
[40]
the services we avail
[42]
or the goods we purchase
[44]
the tax we pay there like GST
[47]
or if some goods are imported
[49]
it has custom duty,
[52]
so those are indirect taxes.
[54]
So today we are talking specifically
[56]
about direct taxes
[57]
and basic concepts and terms related to it.
[61]
Government collect direct and indirect taxes,
[65]
so how the government does its utilization?
[67]
In terms of utilization if we see
[70]
the cost to run country like defence
[74]
or creating infrastructure
[76]
or making dams, roads, electricity
[79]
so for these type of expenditure money
required by government
[82]
is utilized from our taxes.
[86]
So this was about tax
[88]
now let us talk about income,
[91]
income are of different types
[93]
like salary, rent, capital gains,
[97]
interest coming from your FD
[101]
or savings that is also income.
[103]
For simplicity purpose in income tax act
[106]
these incomes are divided in five
different heads,
[110]
So we will see what are these five heads.
[112]
First is income from salary
[114]
and income from pension
[116]
if you are doing job in a company
[119]
the salary you receive from your employer
[122]
that is considered in this head,
[124]
anything can be in it, the salary components,
[127]
perquisites,
[128]
additional facilities you may be having
like ease off,
[132]
rent free accommodation, loan
[135]
means if company is giving you interest
free loans
[137]
so such perquisites it is a part of salary
[140]
and these are considered in your income
from salary,
[144]
apart from this if you are a retired person
[148]
means 65 plus or you have taken retirement
[151]
so the pension you receive
[153]
that also comes under income from salary.
[155]
Second is income from house property,
[158]
what comes in income from house property
[160]
self occupied property
[161]
the property in which you are living
[163]
on that if you are paying interest on
housing loan
[166]
that deduction is also considered under
this head.
[171]
If you have let out any property
[174]
and you are receiving rent from there
[176]
so that income is also considered in this head
[180]
Third is income from business and profession,
[183]
if you are a professional
[185]
or you are doing some freelancing
[186]
you have some business or some shop
[189]
or a office where you provide service to
people
[192]
sell goods
[193]
so the profit you get from these
[196]
is considered in this head.
[199]
Fourth is income from capital gain,
[201]
in income tax act some capitals assets
[203]
are defined
[204]
like land, building, debentures,
[207]
bonds, shares, mutual funds etc. etc.
[210]
So if you have purchased these capital assets
[214]
and if you sell after holding them for
some time
[217]
so the profit or loss you have
[220]
that is called capital gain
[222]
and if you sell in loss
then it is capital loss,
[224]
so these capital gain and capital loss
[226]
are considered under income from capital gain.
[230]
Fifth is income from other sources,
[232]
it is a miscellaneous income head,
[234]
any income
[236]
which is not considered in four heads we had
discussed above
[241]
can be considered under this head.
[244]
Like interest on savings
[246]
interest on fd’s,
[247]
if you have bought share of cooperative banks
[252]
then the dividend you have received
[253]
or any other income which is not
[256]
considered in the above four heads
[258]
and these five heads
[260]
means income from house property,
[261]
income from salary,
[263]
income from business or profession,
[264]
capital gains or other sources
[266]
so the total amount after combining these
five heads
[270]
is called gross total income,
[273]
there is one more other than
[275]
this government has exempted some income like
[278]
if there is some investment like in PPF
[282]
so in PPF presently they have exempted
the interest
[285]
or the dividend coming from shares or
mutual funds
[288]
that is exempted income on
[290]
which there is no tax
[292]
but while filling income tax
[294]
it is compulsory to disclose that income
[298]
it is only a discloser thing
[300]
you will not be charged any tax on it.
[302]
It is not considered anywhere in your
gross total income.
[306]
As we have seen
[308]
we are not charged tax on gross total income,
[311]
government has allowed deduction on
[313]
some investments or some expenditures
[317]
like you are investing in PPfs,
[319]
or investing in sukanya samrudhi yojna
[321]
or investing in ELSS funds
[323]
or if there is mediclaim,
[326]
interest on savings
[327]
so that can also bring deduction up to 10,000
[329]
Section 80c is a very popular section
[331]
where you will be knowing there are different
investments,
[335]
under 80c there can be a deduction up to
1,50,000
[339]
similarly there are many other sections
[341]
where government has given monetary elements
[345]
where you get deductions on expenditure
[349]
or investment and these amount
[350]
which you spend or invest
[353]
that amount is deducted from gross total
income
[357]
and the net amount left on that tax comes,
[360]
this net amount is called net taxable income
[363]
After this come rebate,
[365]
rebate means
[366]
if said in simple terms
[369]
your net taxable income
[371]
means the income which comes after making
[374]
deductions from gross total income,
[376]
if that income is 5 lacs or less then
[380]
the government has waived off the taxes
coming on that
[384]
and this waiver is called rebate
[387]
so if we see current tax slab tax coming on
[390]
a income of 5 lacs is around 12,500
[395]
if you are below 60 years of age
[398]
so if tax is 12500 then
[400]
it is completely waived off,
[402]
you will get a full rebate of 12500
[406]
alright now we turn towards next term
[410]
one more thing
[413]
if your income is more than 5 lacs
[415]
then facility of rebate is not available
to you,
[418]
according to your applicable tax rates
[421]
you will have to pay tax
[423]
and there are other components of taxes also
[426]
like basic tax,
[428]
your taxes comes according to the tax slab
[431]
we can also make a separate video on this
[434]
as this will be a detail concept
[436]
this is a introductory video
[437]
we will not go in the details
[439]
but your taxes which comes according to the
tax slab,
[444]
above that there can be surcharge also
[447]
ranging from 10 to 15%
[449]
then health, education cess may also come
[452]
of 4% etc.
[455]
And all this together constitutes tax
liability,
[459]
now after this what are the ways to pay tax?
[463]
So one is TDS
[465]
second is advance tax
[466]
and third is self assessment tax
[468]
so TDS is tax deducted at source
[471]
means before you receive income in your hand
[475]
whoever pays you income deducts
[477]
a certain percentage of income as tax
[481]
that is called tax deducted at source
[484]
this tax can be deducted on salary,
[486]
on rent, if you are earning professional fees
[491]
then whoever is paying
[493]
will cut a certain percent of amount from
your income as tax
[499]
which is TDS
[500]
apart from this there is advance tax.
[502]
Advance tax means
[504]
in your financial year
[505]
on your income you calculate an estimate
[510]
and you find out amount of estimated tax
liability
[513]
and throughout the year you can pay it in
instalments
[517]
this tax you have to pay
[519]
there was a difference in direct tax and
indirect tax
[522]
that burden of indirect taxes can be shifted
[525]
but burden of direct taxes can’t be shifted.
[528]
The advance tax instalments we are talking
about
[531]
is your tax
[532]
which is distributed in different timelines
[536]
Ok apart from this third is self assessment
tax,
[540]
whatever is your total tax liability
[543]
from that after deducting TDS
[545]
and deducting the advance tax you have paid
up to 31st march
[549]
whatever liability comes
[550]
that you have to pay at the time of filing
income tax return
[555]
and if you do not pay this tax
[558]
and with tax pay liability you filed the
return
[564]
then your return will be considered invalid
[566]
you can receive notice from income tax
department
[569]
so keep in mind
[570]
that when you are filing income tax return
[572]
then it is compulsory to pay complete tax
[576]
ok so we have seen about income
[580]
about taxes
[581]
we have also discussed gross total income,
[584]
net taxable income,
[585]
how to pay taxes etc.
[587]
Now we will talk
[588]
about some common terms which are used of
[591]
that one is financial year
[593]
which is called previous year
[596]
and second is assessment year.
[597]
Financial year is generally in India
[601]
financial year starts from 1st of April
[604]
and ends on 31st March every year
[606]
so if we are talking about financial year
19 – 20
[610]
then we are talking about financial year
starting
[613]
on 1st of April 2019
[614]
and ending on 31st March 2020,
[617]
means we have covered period from 1st of
April 2019 to
[620]
31st March 2020,
[623]
in this period whatever income you earn
[626]
that becomes taxable in your assessment year
[630]
so basically assessment year is
[632]
immediate following year of financial year,
[635]
if we are talking about financial year 19 – 20
[638]
so that becomes assessment year 20 – 21.
[642]
So in FY 19- 20
[646]
means from 1st of April 2019 to
[648]
31st March 2020 if you have earned any income
[653]
then filing its tax return
[655]
up to July 20 is mandatory,
[659]
I hope you have understood these concepts
[662]
if you have any queries
[664]
then you can write it in the comment section
[666]
we will come again
[668]
to talk with you on some new topic
[670]
till then allow me friends, Jai Hind
Most Recent Videos:
You can go back to the homepage right here: Homepage