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INTEREST FOR DEFAULT
(applicable only if Advance Tax payable is Rs 5000/- or more)

Interest u/s 234 B
If Advance Tax paid during the year is less than 90% of the total tax liability; then an interest @ 1.% per month or part of the month is payable from 1 st April to the date of payment of balance tax.

Interest u/s 234 C
If Advance Tax installment paid is less than the required amount; then an interest @ 1.% per month or part of the month is payable for the period of default.  

INCOME TAX ACT 1961

Sources of Income

1. Salary Any benefit received by employee from the employer in the form of monetary or non-monetary benefit shall be taxable under the head "Income from salary".

2. Income from House Property

i) Under the Income Tax Act, income of house property is taxed under the head "Income from House property".

ii) 30% of the Net Annual value is deductible as statutory deduction (repair expenses) irrespective of actual expense incurred.

iii)  Interest payable on the borrowed funds for the purchase, construction, repair, renewal or reconstruction of house (interest paid for prior period of construction/acquisition is allowable in 5 years in equal installments).

iv) In case of self-occupied property having annual value Nil, interest is allowed upto Rs. 1,50,000 if loan is taken before 1 st April 1999 for acquiring or constructing a property (i.e. in any other case interest is allowed upto Rs 30000)

v) Rebate under section 80C is allowed for repayment of housing loan taken from approval institutions

i) Profit and gain and other income of business or profession carried on by the assessee is taxable under the head business income.

ii) All expenses incurred wholly & exclusively for the purpose of business or profession are deductible.

iii) In case of firm, Interest paid to partners is allowable @ 12% from A. Y. 2003-04

iv) Salary to partners is allowable as per provisions of section 40 (b) (v).

i) Any profit or gain arising from the sale or transfer of capital asset is taxable under the head Capital Gain.

ii) An asset can be Short Term or Long Tern Capital Asset for the purpose of calculating capital gain.

iii) An asset shall be short-term capital asset if it is held for a period less than:

   a) Shares, Securities(Listed) & Units 12 months
   b) Any other assets. 36 months

5. Income from other sources .
A source of Income, which does not fall under any of the above-said heads is chargeable under the heads like Interest, Lottery Prizes etc

IMPORTANT DEDUCTION FOR

A.Y. 2007-08

•  U/s 80D in respect of Medical Insurance Premia.

Deduction upto Rs. 10,000/- is available to individual or HUF for Insurance Premium paid to GIC of India. However, in the case of Senior Citizen, deduction is available upto Rs.15,000/. The aforesaid premium should be paid by cheque.

•  U/s 80DD in respect of maintenance or medical treatment of handicapped dependent.

Deduction of Rs.50000/- is available to a resident individual or HUF for expenses incurred on medical treatment or amount deposited under any specified scheme for maintenance of handicapped dependent. However in case of dependent suffering from any disability over 80% exemption is available of Rs. 75000/-

•  U/s 80DDB in respect of medical treatment of specified ailments.

Deduction upto Rs. 40,000/- is available to a resident individual or HUF for expenses incurred for the treatment of specified disease or ailment. However, in case of treatment of senior citizen exemption is available upto Rs. 60,000!

•  U/s 80G in respect of Donation to Charitable Institution.

Deduction is available (upto 100% or 50%), as case may be, of the amount of donation paid to certain Institution or trust etc, to all assessee's.

U/s 80C in respect of Life Insurance Premia, deferred annuity, contributions to provident fund, subcription to certain equity shares or debentures etc.

Deduction 100% of “qualifying investment” or Rs.1,00,000/ is available to a individual or HUF and the maximum amount deductible under sec. 80C,80CCC and 80CCD cannot exceed Rs. 1,00,000.

It is important to note that there is no maximum ceiling of investment in PPF under the Income tax act.However,under the Public Provident Fund scheme,the maximum contribution is Rs 70000.00.

COST INFLATION INDEX

(for the purpose of calculating Capital Gain)

•  Assets acquired before 3 1.3.1981, the assessee has option to take cost or market price as on 31.3.1981as cost of acquisition of the asset.