1- Gross Total Income
– The process of filing tax returns begins with the computation of your Gross Total Income (GTI). GTI includes salary income; income from house property; profit and gains of business & profession; capital gain and income from other sources. These are computed after adjusting for the relevant exemptions under each head, such as HRA, interest paid on home loan, eligible allowances, etc.
2- Net taxable income
– This is the income chargeable to income tax and is computed after deductions that are allowed under Income Tax Act (i.e. various Section 80s). You pay tax on this amount.
3- Income Tax Return
– This is the form to report to the Income Tax Department the income earned (under various heads: salary, house property, business & profession, capital gain, and other sources) during the Previous Year or the applicable Assessment Year. To do so, there are various forms (viz. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7) depending on the sources of incomes earned, the amount of income earned and type of assessee (viz. Individual, Hindu Undivided Family, Firm, Company, etc.).
4- Tax Deduction at Source (TDS)
– The tax that is deducted before the payment is made to the receiver (the deductee), is called Tax Deducted at Source or TDS. Salary, interest on bank deposits, commission, consultation fees, professional fees, rent payment, etc, are subject to TDS as per the provision of the Income Tax Act. This deduction is captured in the Form 26AS or TDS certificate issued by the deductor, or the one making the payment. The assesse can use this certificate while filing income tax to get claim credit for the tax paid.
5- Advance Tax
– The tax that needs to paid in advance, in four instalments (on or before 15th June, 15th September, 15th December, and 15th March) instead of in lump sum at the end of the financial year. This applies to any person whose tax liability is Rs 10,000 or more in a financial year, those in business, and taxpayers who have opted for presumptive taxation scheme under Section 44AD or 44ADA, as the case may be.
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