PROJECT REPORT

ON
A STUDY OF ITR FILING OF WORKING PROFESSIONALS
IN MUMBAI REGION
SUBMITTED BY

CONTRACTOR DEEP CHETAN

BACHELOR OF MANAGEMENT STUDIES
ROLL NO. 023
SEMESTER VI
UNDER THE GUIDANCE OF

DR. GANGA SUSHEEL WARRIAR

2023 - 2024
 CERTIFICATE

This is to certify that Mr. CONTRACTOR DEEP CHETAN of Third Year

BCom (Banking and Insurance), Div.: A, Roll No. 023 of Semester VI (2023 -
2024) has successfully completed the Project titled A STUDY OF ITR
FILING OF WORKING PROFESSIONALS IN MUMBAI REGION as per
the guidelines of KES’ Shroff College of Arts and Commerce, Kandivali (W),
Mumbai- 400067.

Dr. Ganga Susheel Warriar

Project Guide
I/C Principal
External Examiner
 DECLARATION BY LEARNER

I, the undersigned, Mr.Contractor Deep chetan hereby declare that the work embodied in this
project work titled ‘A STUDY OF ITR FILING OF WORKING
PROFESSIONALS IN MUMBAI REGION’, forms my own contribution to the
research work carried out under the guidance of Dr. Ganga Susheel Warriar and is a result of
my own research work. It has not been previously submitted to this or any other University
for any other Degree/Diploma.

Whenever reference has been made to previous works of others, it has been clearly indicated
as such and included in the bibliography.

I, hereby further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Name & Sign of the student

Guided by

Dr. Ganga Susheel Warriar

 ACKNOWLEDGEMENTS

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions
in the completion of this project.

I would like to thank the Director of the college for providing the necessary facilities required
for completion of this project.

I take this opportunity to thank our Head of the Department, Dr. Sweta Mishra, for her moral
support and guidance.

I would also like to express my sincere gratitude towards my project guide Dr. Ganga Susheel
Warriar whose guidance and care made the project successful.

I would also like to express my gratitude to my College Library and the Librarian Dr. Alka
Wadhwana for having provided various reference books and magazines related to my project.

Lastly, I would like thank each and every person who directly or indirectly helped me in the
completion of the project especially my Parents and Peers who supported me throughout my
project.
 Library Attendance Certificate

This is to certify that Mr. Contractor Deep Chetan of Third Year Bachelor of

Management Studies having seat no. Roll No. 023, division A has successfully

completed his /her minimum hours of attendance in the library to complete the

100 marks project on the topic titled A STUDY OF ITR FILING OF

WORKING PROFESSIONALS IN MUMBAI REGION.

Dr. Ganga Susheel Warriar Dr. Sweta Mishra

Librarian Project Guide Head of Department
 INDEX

INDEX 1
CHAPTER 1:INTRODUCTION 3
EXECUTIVE SUMMARY 3
1.1 INTRODUCTION: 4
1.2 DEFINITIONS: 6
1.3 CANON OF TAXES 8
1.4 OBJECTIVES/ AIM OF STUDY: - 9
1.5 SCOPE OF THE STUDY 9
1.6 LIMITATIONS OF STUDY 10
1.7 METHODOLOGY USED TO COLLECT DATA 10
1.8 SALARY INCOME, PERQUISITES & ALLOWANCES 12
Deduction From Salary Income 13
1. Perquisite 13
2. Valuation Of Perquisites 13
3. Value of certain other fringe benefits: 16
4. Perquisite exempt from Income Tax 18
5. Allowance 18
6. Taxable Allowances 19
1.9 OBJECTIVES OF TAXATION: 19
Objective of raising revenue: 19
1.10 TYPE OF TAXES 20
CHAPTER 2: LITERATURE REVIEW 22
2.1 IMPORTANCE OF LITERATURE REVIEW 22
CHAPTER 3 CONCEPTUAL FRAMEWORK 28
3.1 IMPORTANCE OF CONCEPTUAL FRAMEWORK 28
3.2. FILING OF INCOME TAX RETURN 28
3.3 RATE OF INCOME TAX 31
New Tax Regime: 33
3.4 CALCULATION OF INTEREST 34
Partly Taxable Allowances 36
Compensatory allowance for working in areas of high altitude or hilly areas, also known as climate allowance:
37
Compensatory allowance for duty in modified field area: 39
Non-Taxable Allowances 40
3.5 ANNUITY/PENSION 40
3.6 GRATUITY 41
3.7 LEAVE ENCASHMENT 43
3.8 UNDERSTANDING PROVIDENT FUND 44
Contribution under pension scheme referred to in section 80CCD 45
3.9 PROFITS IN LIEU OF SALARY 46
3.10 KEYMAN INSURANCE POLICY 47
3.11 DEDUCTIONS FROM SALARY 47
Calculation of income under the head salary 48
3.12 SOME IMPORTANT CASE LAWS. 49
CHAPTER 4 RESEARCH METHODOLOGY 51
4.1 IMPORTANCE OF RESEARCH METHODOLOGY 51
4.2 SELECTION OF THE PROBLEM: 51
4.3 SOURCES OF DATA 52
4.4 SAMPLE TECHNIQUE: 53
Sample technique means the limits in which the survey was conducted. 53
4.5 SAMPLE SIZE: 53
4.6 DATA COLLECTION: 53
PRIMARY DATA:- 53
2. Questionnaire: - 54
SECONDARY DATA: - 54
4.7 TABULATION OF DATA: 55
b. Google Docs: - 55
4.8 TECHNIQUES AND TOOLS FOR DATA: 55
a. Pie chart diagram: - 55
b. Percentage technique: - 55
CHAPTER 5: DATA ANALYSIS AND INTERPRETATION 56
5.1 IMPORTANCE OF DATA ANALYSIS AND INTERPRETATION 56
5.2 DATA ANALYSIS AND INTERPRETATION 57
CHAPTER 6 CONCLUSION AND SUGGESTIONS 78
6.1 CONCLUSION: 78
6.2 FINDINGS 80
6.3 SUGGESTIONS 80
6.4 REFERENCES 83
6.5 Webliography 84
6.6 ANNEXURE 85

1
CHAPTER 1:INTRODUCTION

EXECUTIVE SUMMARY

The procedure of tax collection in India has evolved over the years an down is
subject to several acts, rules, and regulations as laid down by the Indian Income Tax
Department. In budget 2020, a new tax system has been announced and from financial
year 2020-21 an individual taxpayer is having a choice to pay tax according by
selecting anyone option between the new regime and existing one. This study aims to
analyze the individual taxpayer preference between the two regimes and evaluate the
benefit analysis on the basis of comparison between the two systems also evaluate the
compliance of Income Tax and its policies and procedure in processing the IncomeTax
Return, understand the Tax structure for salaried person and identify various Tax saving
options.
It helps to understand the average tax paid by a salaried individual person
Primary data using convenience sampling through questionnaire method which has
sample size of 100 respondents as well as secondary data from wide range of literature
and journal publications have been utilized. This study also highlights the awareness
and understanding of taxpayers towards the proposed new tax regime. Thereafter this
study helps analyse the schemes available for salaried people, the study intends to find
the awareness of tax structure amongst salaried people.
This study also finds out how salaried people are benefited through the tax
structure, it discusses the possible challenges and opportunities that taxpayers will face
in taking the decisions regarding selection of one tax regime between two. The study
concludes with suggestions are made for the betterment of investment pattern and
improve salaried tax payers’ perception about the Income Tax System and suggestions
to taxpayers which help in taking the choice between the two systems so that their
required objective can be achieved.

2
1.1 INTRODUCTION:

Income Tax Return (ITR) is a form which a person is supposed to submit to the
Income Tax Department of India. It contains information about the person’s income
and the taxes to be paid on it during the year. Information filed in ITR should pertain to
a particular financial year, i.e. starting on 1st April and ending on 31st March of the
next year.

Income can be of various forms such as:

a) Income from salary

b) Profits and gains from business and profession

c) Income from house property

d) Income from capital gains

e) Income from other sources such as dividend, interest on deposits, royalty

income, winning on lottery, etc.

The Income Tax Department has prescribed 7 types of ITR forms - ITR-1,
ITR-2, ITR-3, ITR- 4, ITR-5, ITR-6, ITR-7 and applicability of the form will depend
on the nature and amount of income and the type of taxpayer.

Below is the list of ITR forms which are most commonly applicable:

Particulars and their Applicability

● ITR-1 (also called as Sahaj): To be filed by resident individuals having total

income upto 50 lacs from following sources:
1. Salary

2. One house property

3. Other sources excluding winning from lotteries and income from horse races

4. Agricultural income upto 5,000

3
● ITR-2: To be filed by Individuals and HUFs who are not eligible to file form
ITR-1 and don’t have income from profits and gains from business or profession
● ITR-3: To be filed by Individuals and HUFs having income from profits and
gains from business or profession
● ITR-4 (also called as Sugam): To be filed by resident individuals, HUFs and
firms (other than LLP) who are residents having total income upto 50 lacs and having
income from business or profession computed under section 44AD, 44ADA or 44AE
Individuals have to compulsorily file ITR through online mode.

Following is the due date for filing of ITR:

Particulars Due Date

Person (other than company) not covered

31st July
under tax audits

Person covered under tax audit 30th September

Person who has undertaken international

30th November
transactions and is liable to report under 92E

Table no 1.1 Due dates for ITR filing

Income tax is an annual tax on income. The Indian Income Tax Act (Section 4)
provides that in respect of the total income of the previous year of every person,
income tax shall be charged for the corresponding assessment year at the rates laid
down by the Finance Act for that assessment year. Section 14 of the Income tax Act
further provides that for the purpose of charge of income tax and computation of total
income all income shall be classified under the following heads of income:

1. Salaries
2. Income from house property
3. Profits and gains of business or profession.
4. Capital gains.
5. Income from other sources.
4
The total income from all the above heads of income is calculated in accordance with
the provisions of the Act as they stand on the first day of April of any assessment year.

1.2 DEFINITIONS:

There is no precise and accurate definition for the tax and the concept of tax has
been defined differently by the different economists. Some definitions are as follows:

According to Prof Seligman – A tax is compulsory contribution from the

person to the government to defray the expenses incurred in the common interest of all
without reference to special benefits conferred.

According to Bastable -A tax is a compulsory contribution of the wealth of a

person, or body of persons for the service of the public powers.

According to Hugh Dalton –A tax is a compulsory charge imposed by the

public authority irrespective of the exact amount of service rendered to the taxpayer in
return and not imposed as a penalty for the legal offense.

The salient features are likely to be pronounced under the new direct tax laws:

1. Single Destination for all Direct Tax laws- It can be said that all direct tax
law which are in force gets replaced by the direct tax code. DTC will emerge
as a single window solution for all taxpayers. It will eventually pave the way
for unified direct tax reporting system.

2. Digitalization in legal prosecution- Introduction of the assessment unit for

tax proceedings to deal with individual & corporate taxpayers, will turns to
be a big stepby that one may get rid from the harassment faced by taxmen.
All communication between taxpayers and taxmen will be in digital form.
Moreover, all digital communication shall bear a unique document
5
 identification number.

3. Easy to Amend- The New direct tax code has been designed in such a
manner where the statue has been reflected by the essential and general
principles, upto the extent possible and the detail matter are contained in the
rules/schedules.

4. No dividend distribution Tax- The new tax law brings another good concept
that might help companies to get relieves from paying Dividend Distribution
Tax which is (15% +12% surcharge+3% cess) therefore Effective is 20.35%
as well. There is a possibility that dividend shall be taxed only in the hands
of shareholders. It may encourage the companies to declare higher rate of
dividend in contrast with early trends.

5. Simplified language- The expansion of Indian economy boosts the number of

taxpayers in last six decade. But the amount of tax collections was increased
moderately in the meantime which forces the department think over the cost
of compliance incurred by them. In order to curtails the cost, one must
facilitate to design such architecture where taxpayers are facilitating to
voluntary compliance the law. This is sought to be achieved by keeping the
law in simple language with clarity of intent. The new DTC are very simple
with less than 400 section and also replace the number of odd sections in
current IT Act 1961.

6. Stable Tax rates- In Current scenario, there is a lot of uncertainty regarding

tax rates of relevant year which are stipulated to finance act of that year due
to which taxpayers face difficulties in tax planning for each year. But this
issue also get resolve in DTC under which all tax rates are proposed to be
prescribed in schedules which obviating the needs of the finance act of every
relevant year. Further, any changes is proposed in rate schedules of new tax
law shall firstly brought before the parliament in form of amendment bill for
approval to commence such changes.

6
1.3 CANON OF TAXES

By canons of taxation, we simply mean the characteristics or qualities which a

good tax system should possess. In fact, canons of taxation are related to the
administrative part of a tax. Adam Smith first devised the principles or canons of
taxation in 1776.

That the basic principle of taxation has reminded more or less unchanged for
220 years. Since then, there has been a lot of change in the economic activities, so
modern economists like Charles F Bastable, H Dalton have added some canon to these
to update and expand them.

The Fundamental canon of taxation are as follows:

1. Canon of Equality: -Canon of equality states that the burden of taxation must
be distributed equally or equitably among the taxpayers. However, this sort of
equality robs of justice because not all taxpayers have the same ability to pay
taxes. Rich people are capable of paying more taxes than poor people. Thus,
justice demands that a person having greater ability to pay must pay large taxes.

2. Canon of Certainty: -The tax which an individual has to pay should be certain
and not arbitrary. According to A. Smith, the time of payment, the manner of
payment, the quantity to be paid, i.e., tax liability, ought all to be clear and plain
to the contributor and to everyone. Thus, canon of certainty embraces a lot of
things. It must be certain to the taxpayer as well as to the tax-levying authority.

3. Canon of Economy: -This canon implies that the cost of collecting a tax should
be as minimum as possible. Any tax that involves high administrative cost and
unusual delay in assessment and high collection of taxes should be avoided
altogether.

a. According to A. Smith: “Every tax ought to be contrived as both to

take out and to keep out of the pockets of the people as little as possible,
over and above what it brings into the public treasury of the State.”
7
 4. Canon of Convenience: - Taxes should be levied and collected in such a
manner that it provides the greatest convenience not only to the taxpayer but
also to the government.

Thus, it should be painless and trouble-free as far as practicable. “Every tax”,

stresses A. Smith: “ought to be levied at time or the manner in which it is most likely to
be convenient for the contributor to pay it.” That is why, after the harvest, agricultural
income tax is collected. Salaried people are taxed at source at the time of receiving
salaries.

1.4 OBJECTIVES/ AIM OF STUDY: -

● To evaluate the compliance of Income Tax and its policies and

procedure in processing the IncomeTax Return.
● To understand the Tax structure for salaried person.

● To identify various Tax saving options.

● To understand the average tax paid by a salaried individual person.

1.5 SCOPE OF THE STUDY

The purpose of the research is to analyse the direct tax structure of salaried
people.The study intends to analyse the schemes available for salaried people.The
study intends to find the awareness of tax structure amongst salaried people.The
research is conducted to find out how salaried people are benefited through the tax
structure.The study is done through a mixture of primary and secondary data.The scope
of the study is based on the Indian direct tax structure only.

8
1.6 LIMITATIONS OF STUDY

1. The study is restricted to 100 respondents.

2. The study is based on the response of the respondents and it is assumed

that they are honest with their response.
3. It is assured that the data provided by some of the respondents may be
biassed, which may not give the true picture about the chosen research
topic.
4. Due to the limitation of time only a small section of people has been
studied.

5. The area of study is limited to Indian tax structure only.

6. Time and money are the major constrain in the study.

7. It was difficult to collect all the information as the respondents were

hesitant to disclose the salary they receive.

1.7 METHODOLOGY USED TO COLLECT DATA

The study is based on primary and secondary data.

Primary data is also known as first hand data which is collected by researchers.
Self – administered questionnaires were distributed to be answered by the public in
large as per requirement of the questions included in the questionnaire.

The goal of the study was to provide information primarily out of raw data.
After data gathering was completed, it has been edited to detect errors or omissions and
cross checked to verify consistency with other respondents. Then the data was grouped
based on their similarity for easy handling.

Raw data was transformed into a format that is easy to understand and interpret.
Calculations of average and percentage were made for the purpose of summarizing
data.
The main tools which were used for the collection of data was investigation and
observations.
9
 Secondary data which has already been collected by someone else, not the
researcher itself. It provides reliable, suitable, adequate and specific knowledge.

Finally, the task of interpretation and a report describing the result has been done.

10
1.8 SALARY INCOME, PERQUISITES & ALLOWANCES

What Is “Salary”
Salary is the remuneration received by or accruing to an individual,
periodically, for service rendered as a result of an express or implied contract. The
actual receipt of salary in the previous year is not material as far as its taxability is
concerned. The existence of employer-employee relationship is the sine-qua-non for
taxing a particular receipt under the head “salaries”. For instance, the salary received
by a partner from his partnership firm carrying on a business is not chargeable as
“Salaries” but as “Profits & Gains from Business or Profession”. Similarly, salary
received by a person as MP or MLA is taxable as “ Income from other sources”, but if
a person received salary as Minister of State/ Central Government, the same shall be
charged to tax under the head “Salaries”. Pension received by an assessee from his
former employer is taxable as “Salaries” whereas pension received on his death by
members of his family (Family Pension) is taxed as “Income from other sources”.

What Does “Salary” Include

Section 17(1) of the Income tax Act gives an inclusive and not exhaustive
definition of “Salaries” including therein :-

● Wages
● Annuity or pension
● Gratuity
● Fees, Commission, perquisites or profits in lieu of salary
● Advance of Salary
● Amount transferred from unrecognised provident fund to recognized provident
fund
● Contribution of employer to a Recognised Provident Fund in excess of the
prescribed limit
● Leave Encashment
● Compensation as a result of variation in Service contract etc.

Contribution made by the Central 16 Government to the account of an

employee under a notified pension scheme.

11
Deduction From Salary Income

The following deductions from salary income are admissible as per Section 16 of the
Income-tax Act.

Professional/Employment tax levied by the State Govt.

Entertainment Allowance- Deduction in respect of this is available to a government

employee to the extent of Rs. 5000/- or 20% of his salary or actual amount received,
whichever is less.

1. Perquisite

“Perquisite” may be defined as any casual emolument or benefit attached to an

office or position in addition to salary or wages. “Perquisite” is defined in the
section17(2) of the Income tax Act as including.

Value of rent-free/concessional rent accommodation provided by the employer.

Any sum paid by employer in respect of an obligation which was actually payable by
the assessee. Value of any benefit/amenity granted free or at concessional rate to
specified employees etc.

The value of any specified security or sweat equity shares allotted or transferred,
directly or indirectly, by the employer, or former employer, free of cost or at
concessional rate to the assesssee.

The amount of any contribution to an approved superannuation fund by the employer in

respect of the assessee, to the extent it exceeds one lakh rupees; and
the value of any other fringe benefit or amenity as may be prescribed.

2. Valuation Of Perquisites

As a general rule, the taxable value of perquisites in the hands of the employees is its
cost to the employer. However, specific rules for valuation of certain perquisites have
been laid down in Rule 3 of the I.T. Rules. These are briefly given below.
12
Valuation of residential accommodation provided by the employer:-

Union or State Government Employees- The value of perquisite is the license fee as
determined by the Govt. as reduced by the rent actually paid by the employee.

Non-Govt. Employees- The value of perquisite is an amount equal to 15% of the salary
in cities having population more than 25 lakhs, (10% of salary in cities where
population as per 2001 census is exceeding 10 lakhs but not exceeding 25 lakhs and
7.5% of salary in areas where population as per 2001 census is 10 lakhs or below). In
case the accommodation provided is not owned by the employer, but is taken on lease
or rent, then the value of the perquisite would be the actual amount of lease rent
paid/payable by the employer or 15% of salary, whichever is lower. In both of above
cases, the value of the perquisite would be reduced by the rent, if any, actually paid by
the employee.

Value of Furnished Accommodation- The value would be the value of

unfurnished accommodation as computed above, increased by 10% per annum of the
cost of furniture (including TV/radio/ refrigerator/AC/other gadgets). In case such
furniture is hired from a third party, the value of unfurnished accommodation would be
increased by the hire charges paid/payable by the employer. However, any payment
recovered from the employee towards the above would be reduced from this amount.
Value of hotel accommodation provided by the employer- The value of perquisite
arising out of the above would be 24% of salary or the actual charges paid or payable to
the hotel, whichever is lower. The above would be reduced by any rent actually paid or
payable by the employee. It may be noted that no perquisite would arise, if the
employee is provided such accommodation on transfer from one place to another for a
period of 15 days or less.

Perquisite of motor car provided by the employer- W.e.f. 1-4-2008, if an

employer providing such facility to his employee is not liable to pay fringe benefit tax,
the value of such perquisite shall be :Nil, if the motor car is used by the employee
wholly and exclusively in the performance of his official duties.
Actual expenditure incurred by the employer on the running and maintenance of motor
car, including remuneration to chauffeur as increased by the amount representing
normal wear and tear of the motor car and as reduced by any amount charged from the
employee for such use (in case the motor car is exclusively for private or personal
13
purposes of the employee or any member of his household).
Rs. 1800- (plus Rs. 900-, if chauffeur is also provided) per month (in case the motor car
is used partly in performance of duties and partly for private or personal purposes of
the employee or any member of his household if the expenses on maintenance and
running of motor car are met or reimbursed by the employer). However, the value of
perquisite will be Rs. 2400- (plus Rs. 900-, if chauffeur is also provided) per month if
the cubic capacity of engine of the motor car exceeds 1.6 litres. Rs. 600- (plus Rs. 900-,
if chauffeur is also provided) per month (in case the motor car is used partly in
performance of duties and partly for private or personal purposes of the employee or
any member of his household if the expenses on maintenance and running of motor car
for such private or personal use are fully met by the employee). However, the value of
perquisite will be Rs. 900- (plus Rs. 900-, if chauffeur is also provided) per month if
the cubic capacity of engine of the motor car exceeds 1.6 litres.

If the motor car or any other automotive conveyance is owned by the employee
but the actual running and maintenance charges are met or reimbursed by the employer,
the method of valuation of perquisite value is different. (See Rule 3(2)).

Perquisite arising out of supply of gas, electric energy or water: This shall be
determined as the amount paid by the employer to the agency supplying the same. If
the supply is from the employer’s own resources, the value of the perquisite would be
the manufacturing cost per unit incurred by the employer. However, any payment
received from the employee towards the above would be reduced from the amount
[Rule 3(4)].

Free/Concessional Educational Facility: Value of the perquisite would be the

expenditure incurred by the employer. If the education institution is maintained &
owned by the employer, the value would be nil if the value of the benefit per child is
below Rs. 1000/- P.M. or else the reasonable cost of such education in a similar
institution in or near the locality. [Rule 3(5)].

Free/Concessional journeys provided by an undertaking engaged in carriage of

passengers or goods: Value of perquisite would be the value at which such amenity is
offered to general public as reduced by any amount, if recovered from the employee.
However, these provisions are not applicable to the employees of an airline or the
14
railways.
Provision for sweeper, gardener, watchman or personal attendant: The value of
benefit resulting from provision of any of these shall be the actual cost borne by the
employer in this respect as reduced by any amount paid by the employee for such
services. (Cost to the employer in respect to the above will be salary paid/payable).
[Rule 3(3)].

3. Value of certain other fringe benefits:

Interest free/concessional loans- The value of the perquisite shall be the excess
of interest payable at the prescribed interest rate over, interest, if any, actually paid by
the employee or any member of his household. The prescribed interest rate would be
the rate charged by State Bank of India as on the 1st Day of the relevant Previous Year
in respect of loans of the same type and for same purpose advanced by it to general
public. Perquisite to be calculated on the basis of the maximum outstanding monthly
balance method. However, loans upto Rs. 20,000/-, loans for medical treatment
specified in Rule 3A are exempt provided the same are not reimbursed under medical
insurance.

Value of free meals- The perquisite value in respect of free food and
non-alcoholic beverages provided by the employer, not liable to pay fringe benefit tax,
to an employee shall be the expenditure incurred by the employer as reduced by the
amount paid or recovered from the employee for such benefit or amenity. However, no
perquisite value will be taken if food and non-alcoholic beverages are provided during
working hours and certain conditions specified under Rule 3(7)(iii) are satisfied.

Value of gift or voucher or token- The perquisite value in respect of any gift, or
voucher, or taken in lieu of which such gift may be received by the employee or
member of his household from the employer, not liable to pay fringe benefit tax, shall
be the sum equal to the amount of such gift, voucher or token. However, no perquisite
value will be taken if the value of such gift, voucher or taken is below Rs. 5000/- in the
aggregate during the previous years

Credit card provided by the employer- The perquisite value in respect of

expenses incurred by the employee or any of his household members, which are
15
charged to a credit card provided by the employer, not liable to pay fringe benefit tax,
which are paid or reimbursed by such employer to an employee shall be taken to be
such amount paid or reimbursed by the employer. However, no perquisite value will be
taken if the expenses are incurred wholly and exclusively for official purposes and
certain conditions mentioned in Rule 3(7)(v) are satisfied.

Club membership provided by the employer- The perquisite value in respect of

amount paid or reimbursed to an employee by an employer, not liable to pay fringe
benefit tax, against the expenses incurred in a club by such employee or any of his
household members shall be taken to be such amount incurred or reimbursed by the
employer as reduced by any amount paid or recovered from the employee on such
account. However, no perquisite value will be taken if the expenditure is incurred
wholly any exclusively for business purposes and certain conditions mentioned in Rule
3(7)(vi) are satisfied.

The value of any other benefit or amenity provided by the employer shall be
determined on the basis of cost to the employer under an arms’ length transaction as
reduced by the employee’s contribution.

The fair market value of any specified security or sweat equity share, being an
equity share in a company, on the date on which the option is exercised by the
employee, shall be determined as follows:-

In a case where, on the date of exercising of the option, the share in the
company is listed on a recognized stock exchange, the fair market value shall be the
average of the opening price and closing price of the share on the date on the said stock
exchange.

In a case where, on the date of exercising of the option, the share in the
company is not listed on a recognized stock exchange, the fair market value shall be
such value of the share in the company as determined by a merchant banker on the
specified date.

The fair market value of any specified security, not being an equity share in a
company, on the date on which the option is exercised by the employee, shall be such
16
value as determined by a merchant banker on the specified date.

4. Perquisite exempt from Income Tax

Some instances of perquisites exempt from tax are given below:

Provision of medical facilities (Proviso to Sec. 17(2)): Value of medical

treatment in any hospital maintained by the Government or any local authority or
approved by the Chief Commissioner of Income- tax. Besides, any sum paid by the
employer towards medical reimbursement other than as discussed above is exempt upto
Rs.15,000/-.
● Perquisites allowed outside India by the Government to a citizen of India for
rendering services outside India (Sec. 10(7)).
● Rent free official residence provided to a Judge of High Court or Supreme
Court or an Official of Parliament, Union Minister or Leader of Opposition
in Parliament.
● No perquisite shall arise if interest free/concessional loans are made
available for medical treatment of specified diseases in Rule 3A or where the
loan is petty not exceeding in the aggregate Rs.20,000/-
● No perquisite shall arise in relation to expenses on telephones including a
mobile phone incurred on behalf of the employee by the employer.

5. Allowance

Allowances are the financial benefits that are provided to the employees by the
employers over their regular salary. While some allowances are taxable under the head
salaries, some are partly taxable or fully non-taxable.
What is an Allowance?

An allowance is a financial benefit given to the employee by the employer over

and above the regular salary. These benefits are provided to cover expenses that may be
incurred to facilitate the discharge of service for example Conveyance Allowance is
paid to foot expenses incurred for commuting to the workplace. Some of these
allowances are taxable under the head Salaries. A few of them again could be partly
taxable and few others are
non-taxable or fully exempt from taxes.

17
 6. Taxable Allowances

Dearness Allowance: Dearness Allowance (DA) is an allowance paid to

employees as a cost of living adjustment allowance paid to the employees to cope with
inflation. DA paid to employees is fully taxable with salary. The Income Tax Act
mandates that tax liability for DA along with salary must be declared in the filed return.
Entertainment Allowance: Employees are allowed the lowest of the declared amount
one-fifth of basic salary, actual amount received as allowance or Rs. 5,000. This is an
allowance provided to employees to reimburse the expenses incurred on the hospitality
of customers. However, Government employees can claim exemption in the manner
provided in section 16 (ii). All other employees have to pay tax on it.

1.9 OBJECTIVES OF TAXATION:

The basic objective of taxation is to raise resources for the State. It can be used
to reduce inequalities, to accelerate economic development, as a tool to regulate
consumption, imports and exports, in addition to its basic objective of raising revenues.
Different objectives of taxation may be summed up as under:

Objective of raising revenue:

The government requires carrying out various development and welfare

activities in the country. This objective means that the structure of taxes and tax rates
ought to be devised to generate more revenue. For this, it needs a huge amount of
funds. The government collects funds by imposing taxes. So, raising more and more
revenues has been an important objective of tax.

Regulatory objectives:

● Regulating consumption
● Regulating production
● Regulating imports and exports
● Regulating the effects of inflation, depression etc.

18
 Developmental objectives:

● Objective of economic development

● Objective of capital formation
● Objective of increasing employment opportunities.

Objectives of reducing inequalities:

● Reduction in economic disparities

● Reduction in regional imbalances.

1.10 TYPE OF TAXES

Direct Taxes At Central Level

● Income tax
● Corporation tax
● Dividend tax
● Capital gain tax
● Wealth tax
● Gift tax
● Estate duty

Direct Taxes At State Level

● Land revenue tax

● Agricultural income tax
● Professional tax

Direct Taxes At Local Level

● House property tax

BASIC CONCEPT UNDER INCOME TAX ACT

1. Assessee (Section 2(7)): An assessee is a person by whom any tax or any other
sum of money is payable under the Act.

19
2. Assessment Year (Section 2(9)): Assessment year means the period of 12
months starting from 1st April of every year and ending on 31st March of the
next year.

3. Previous year (Section 3): Income earned in a year is taxable in the next year.
The year in which income is earned is known as the previous year and the next
year in which income is taxable is known as the assessment year.

4. Assessment u/s 143(3): If the Assessing Officer, on the basis of the return filed
by the assessee, considers that it is necessary to ensure that the assessee has not
understated his income, he shall serve on the assessee a notice u/s 143(2) and,
after obtaining such information as he may require, complete the assessment
(commonly referred as scrutiny assessment) u/s 143(3).

20
CHAPTER 2: LITERATURE REVIEW

2.1 IMPORTANCE OF LITERATURE REVIEW

The theory of taxation has drawn attention for the past 160 years or more but
the main work of the research was mainly started in 20th century. For the research,
various studies have been conducted on taxation and its various aspects by the
individual Scholars, State and Central Government of India, Research Organizations,
spanning over a period of nearly nine decades. In this chapter an attempt has been
made to review some of the available and relevant studies in the area of personal
income tax planning, deductions, exemptions, enforcement of direct taxes reforms and
transparence administration to provide a theoretical background for the current study of
New Direct Tax Code (DTC). The review of literature for the research on New Direct
Tax Code (DTC), carried out here is in the chronological order that means in the order
of time of their occurrence.

There are several parts of the CTC of a salaried employee in a private company.
This comprises of Basic Salary, House Rent Allowance (HRA), Dearness Allowance,
Conveyance Allowance, medical allowances, Provident Fund, food allowance,
Entertainment Allowance, and others. From firm to firm the CTC parts differ upon the
grounds of the advantages it gives to its employees.

As per Dr Suresh Surana Founder, RSM India tax is to be revealed on the nature
of every part like allowances, perquisites, and others. “Some of these components are
fully taxable or fully exempt whereas some others enjoy a partial exemption in
accordance with the provisions of the Income Tax Act, 1961, Dr. Surana mentioned.”
Dr Surana also specified that allowance like Daily allowance, Uniform allowance,
Research allowance is privileged beneath section 10[14] of the income tax Act.
Perquisites, on the other hand, would be subjected to tax in a distinct way given by the
IT Act.

“For instance, Employee Stock Option Plan (ESOP) – ESOP is an employee

21
benefit plan, that allows the employee to hold equity in an organisation. The price on
which shares are offered to an employee is usually lower than Fair Market Value.
Where such ESOP options are provided to the employees, the difference between the
two prices would be taxable as perquisite u/s 17(2)(vi) of the IT Act, he added.” Dr
Surana specified how different parts of CTC are to be taxed.

REVIEW LITERATURE

Muneer (2002), reviewed the awareness of college and university department

teachers on tax planning measures and the investment pattern followed by them for
availing tax benefits under the Income Tax Act, 1961, for the Assessment Year
2001-2002. The study observed that there was a general level of awareness
among the respondents on the various tax planning measures available under the
Income Tax Act, 1961. The study concluded that the introduced new special investment
schemes for college and university department teachers for tax planning comes under
the income tax law.

Pandey (2002), reviewed the study for the issue relating to widening of tax
base in India in subject of various measures taken by Government in this direction. The
study opined that the scheme for compulsory filing of return increased the number of
taxpayers due to filing of return . On the other hand, it increased the paperwork for
income tax department and tax payers without resulting in increasing the tax revenue.
The author suggested that there should be provisions made to bring the agriculture
sector in the tax net in future. The study concluded that there should be emphasised on
computerization of Income Tax Department. The study at last highlighted that there
should be a friendly atmosphere developed by Income Tax Department in the country.

Chattopadhyay, Das-Gupta (2002), in their article “The Personal Income Tax

in India: Compliance Costs and Compliance Behaviour of Taxpayers”, empirically
studied the reaction of tax payers in respect to tax avoidance, compliance, tax planning,
tax saving etc. The impact of compliance and noncompliance on tax revenue is the
nidus of this research paper. Both primary and secondary data has been used for this
purpose. Questionnaire method is developed for primary data collection. Different
dependent and independent variables are derived from the data collected on the basis of
questionnaire. Regression model has been run to replicate the results.
They have concluded that legal compliance costs effect tax collection positively and tax
evasion negatively. This arise given the greater average value of time compliance costs
22
compared to money compliance costs. Further they opined that non-salary earners are
less compliant. They have also concerned on how bribe costs adversely affect
compliance and possibly, taxes.

Bhalla (2004), in his book “Tax rates, Tax compliance and Tax revenues: India,
1988-2004” glossed up the impact of structure of income tax rates on compliance, and
tax revenue. The author related among consumption, distribution, per capita income,
number of tax payers, number of returns filled and tax revenues from the year 1988 to
2004. The author also studied the elasticity of compliance and revenue.
The paper concluded that the tax cuts, tax reform, reduction in tax rates and removal of
exemptions would lead to a significant increase in direct tax revenues. The author also
concerned about low levels of compliance presently existent in India.

Bagchi (2002), studied about the direct tax and indirect taxes report by Kelkar
Committee. The study pointed out that in the report there were some basic
requirements for the changes under the Income Tax Act, 1961, like administration of
the tax, structure of the tax and deductions should be implied by the government for the
better collection of tax in the country

Navjot and Om Prakash (2003), they studied various aspects of income tax in
India from 1950 - „51 to 2003

- ‟04 in regard of personal income tax. The study revealed that the income tax rate
structure was changed very frequently, which violated the principle of stability and
created difficulties in tax administration in India. The study also suggested that a
number of incentive provisions in the form of deductions and allowances have been
incorporated in to personal income tax rate structure, which reduced the rigour of
taxation. At last, the authors observed that these incentives, to some extent provide tax
benefit to higher income taxpayers, but decrease the progressivity of tax rate structure
in India.

Das Gupta (2004), examined the effects on tax compliance of simple reforms
in personal policy of income tax administration in India. The study suggested that there
should be tax payers voluntarily disclosing higher incomes with assigned to special
assessment units of the income tax department of India. He further suggested that there
23
are some special incentives declared for understate their incomes. The study tried the
best to incorporate these spills over in estimating revenue effects of increased support
staff of the income tax department of India. The study at last concluded that there
should be made some significant for expanded staff employment and also made some
changes in existing assessment procedures for staff and tax payers for healthy
administration of Income tax Department.

The Standing Committee on Finance (2004-‘05) Fourteenth Lok Sabha :

The committee studied the requirement of widening the tax base under the
India. The study further also evaluated how to control the evasion of taxes in the India
for better execution of law. The study opined that equal emphasis should be provided
by the Govt. on the efforts for widening the tax base and to tackle tax evasion in the
India. The committee highlighted that in case ineffective steps taken to prevent evasion
of taxes emerged a huge black money and prevalence of a parallel economy in the
country and Government would lost significant amount of revenue under the country.
The committee suggested that there must be made some strong and sincere rules and
policies by the Government. Some corrective measures are necessary to strengthen the
anti evasion machinery of the tax department to control tax evasion in India for future
development of the country.

Bernardi and Fraschini (2005) theoretically studied about tax system and tax
reform in India. Both direct tax and indirect tax has been included in this working
paper. The authors have taken all components of both direct tax and indirect tax. The
study has been conducted from 1990 to 2000. The paper made certain conclusive
observation like direct taxes still are in an infant state, both as weight as well as
structure and large complexities prevails in indirect taxation. Moreover, the authors
compiled that tax reforms of India should reduce both tax evasion and costs of
compliance, and should eliminate most of the distorted behaviour coming from tax
avoidance.

Rao & Rao (2006) made an extensive analysis examination of tax trend and
reform in India in their research work. The dissected the tax revenue trend, its reason
and economic effect. The contribution of direct tax and indirect tax to total tax revenue
has been studied over a period of time. The share of Tax Deducted at Source (TDS) to
personal income tax was also studied.They concluded that tax cuts immensely poured
the Government revenue.

Pandey (2006) trailed a theoretical study on policy initiative of direct tax

24
reform based on both primary and secondary data. Questionnaire method has been used
to assess tax payer’s perception. The author raised few vital points on direct tax reform.
The study advocates about elimination of tax incentives, widening of tax base,
strengthening of tax collection machinery, encouragement of voluntary compliance,
reform in tax administration etc.

The author also emphasised on world class tax payer service and tax audit
system to enhance tax compliance. Tax audit can raise post assessment tax income by
reducing tax evasion. Further the study also focalised on corruption free tax
administration and establishment of tax culture where tax payers are happy to pay tax.
The author also concerned about the forgone tax obligations in a country like India
where poverty level is high and a overall direct participation in the formal economy is
low.

Singh and Sharma (2007) made an attempt to study the perception of tax
professionals with regard to Indian Income Tax System by collecting primary data from
100 tax consultants operating in Punjab and Haryana. Factor Analysis of data showed
that seven factors –reduction in tax evasion, extension of relief to taxpayers, incentives
for dependents and honest taxpayers, broadening the tax base, e- filing of returns,
adequacy of deductions and impact of exempt-exempt tax system played an important
role in determining the effectiveness of Indian tax system. It was observed that most of
the tax consultants were satisfied with tax rates. However, majority showed
dissatisfaction with regard to price level adjustment. It was also observed that most of
the taxpayers consulted tax experts because they found it cheap.

Ria Sinha (2010) the study observed that tax systems around the world have
undergone marketable reforms in the last 20 years and its effect on the development of
the country. She evaluated the existing tax structure in India with some of the
developed and developing countries of the world. The study was related with the
countries like Malaysia, Mexico, South Korea, Japan, China, USA, UK and Canada.
The study covered time period from 2000-2008. The study observed that the current tax
structure in India was not proper in comparison of standard level existing in the
international levels. The amount of government expenditure occurred from the
collection of taxes was comparatively very low percentage in India in respect of the
developed countries like USA, Canada, UK and Japan. The study also observed that
there were moderate rates and graduated slabs in personal income tax as well as
corporate tax under the India which is the positive sign for progress of country

25
 V Rani (2011) expressed her view regarding taxation of Income in India during
post liberalisation period and policy perspective in this regard. She has analysed the
growth of income tax revenue, performance of Income Tax Department and perception
of tax professionals regarding Income Tax System in India. The study found that
Government has tried to achieve the objective of social welfare by providing various
incentives for education, health, housing, savings, pension schemes, etc. The
Government has adopted certain measures for widening tax base such as introduction
of PAN, E- filing of income tax return, online tax accounting system etc. It was also
found that share of direct taxes in total tax revenue of Central Government, number of
income tax assessees, income tax to GDP ratio and buoyancy coefficient showed an
upward trend during this period.

Palande (2011) dig out different income tax problems and recommends certain
suggestions for improvement of income tax revenue, efficient compliance,
administration etc. This paper deals with different problem variants like lower tax-GDP
ratio, greater reliance on indirect taxes, exemptions of agricultural income, widening of
tax base etc. The author emphasised on the simplification of tax structure which
ultimately accelerate tax compliance, widening of tax base to increase tax revenue,
improving of tax administration to strengthen tax system, minimising compliance cost
as an austerity measure. It is accented that nullifying the distortions of economy is the
key when tax reforms took place. It is added that simplifications of tax structure can
yield in win-win way for both state and tax payer. Exemptions for both senior citizens
and handicapped should be eliminated including interest on house loan. The author
argued that deduction of interest in respect of housing loan is not a beneficial multiplier
for industries like steel, cement, brick making, tile, wood, sanitary etc. The author
strictly concluded that no government should take money from the people more than
what it needs for genuine capital and revenue generations.

Sharma & Singh (2017) canvassed income tax responsiveness of India in post
liberalisation period. Data from 1991 to 2015 has been used for the research work.
Authors applied regression model for data analysis after using unit root test. Income tax
revenue and GDP was taken as explained and explanatory variable respectively.
Inflation effect was nullified on both the variables.
It is derived from the paper that “The tax elasticity coefficient for the study period
(1991- 2015) has been 0.53, thus depicting the low magnitude of automatic
responsiveness for income tax collections vis-à-vis variations in economic growth post
the reforms era”.
26
CHAPTER 3 CONCEPTUAL FRAMEWORK

3.1 IMPORTANCE OF CONCEPTUAL FRAMEWORK

A conceptual framework lives at the center of an empirical study. The

conceptual framework serves as a guide and ballast to research, functioning as an
integrating ecosystem that helps researchers intentionally bring all aspects of a study
together through a process that explicates their connections, disjunctures, overlaps,
tensions, and the contexts shaping a research setting and the study of phenomena in that
setting. As a qualitative researcher, it is vital to understand what a conceptual
framework is, what its component parts are and how they interact, and how it is used to
guide high- quality, rigorous qualitative research.

3.2. FILING OF INCOME TAX RETURN

Section 139(1) of the Income-tax Act, 1961 provides that every person whose
total income during the previous year exceeded the maximum amount not chargeable to
tax shall furnish a return of income. The Finance Act, 2003 has introduced Section
139(1B) which provides for furnishing of return of income on computer readable
media, such as floppy, diskette, magnetic cartridge tape, CD- ROM etc., in accordance
with the e-filing scheme specified by the Board in this regard.

The return of income can be submitted in the following manner:

a paper form;

e-filing
a bar-coded paper return.

Where the return is furnished in paper format, acknowledgement slip attached

with the return should be duly filled in. Returns in new forms are not required to be
filed in duplicate.
Returns can be e-filed through the internet. E-filing of return is mandatory for
companies and firms requiring statutory audit u/s 44AB. From A.Y. 2011-12, it is now
also mandatory for all business entities (including individuals/HUF) liable to tax audit
to e-file their return of income. E-filing can be done with or without digital signature If
the returns are filed using digital signature, then no further action is required from the
taxpayers.
27
 If the returns are filed without using a digital signature, then the tax payers have
to file ITR-V with the department within 15 days of e-filing. The tax payer can e-file
the returns through an e-intermediary also who will e-file and assist him in filing of
ITR-V within 15 days.

e) e-Filing has been made compulsory for A.Y.2012-13 onwards for an

individual and HUF having annual income of more than Rs. 10 Lakhs. These persons
will have to electronically file return, for which digital signature are not necessary.
Where the return of income is furnished by using bar coded paper return, then the tax
payers need to print two copies of Form ITR-V. Both copies should be verified and
submitted. The receiving official shall return one copy after affixing the stamp and seal.

Vide notification dated 28.03. 2012, e-filing has been made compulsory for
A.Y. 2012-13 onwards for an individual/HUF if the total income during the previous
year exceeds Rs. 10 lakh. However digital signature is not mandatory for these tax
payers and they can transmit the data electronically and there after submit the
verification of return in Form ITR-V. Filing of return electronically under digital
signatures is mandatory for any individual required to submit return in ITR-4 and to
whom provisions u/s 44AB are applicable.

Apart from faster refunds, through e-filing, one can also avail of some value
added services such as viewing tax credit status (Form 26AS), tracking of refunds
emails/SMS alerts for processing status etc. Vide notification dated 01.05.2013 e-filing
has how been made mandatory for individuals & including salaried taxpayers earning
more than Rs 5 lakh taxable income during the year.

The Finance Act, 2005 has provided that w.e.f. 01.04.2006 every person shall
file a return of income on or before the relevant due date even if his total income
without giving effect to the provisions of Chapter VI-A exceeds the maximum amount
not chargeable to tax.

The Central Board of Direct Taxes has notified the scheme for exempting salaried
taxpayers with total income up to Rs. 5 lakhs from filing income tax return for
Assessment Year 2011-12, which will be due on July 31, 2011. Individuals having total
income up to Rs. 5,00,000 for FY. 2010-11, after allowable deductions, consisting of
28
salary from a single employer and interest income from deposits in saving bank
account up to Rs. 10,000 are not required to file their income tax return. Such
individuals must report their Permanent Account Number (PAN) and the entire income
from bank interest to their employer, pay the entire tax by way of deduction of tax at
source and obtain a certificate of tax deduction in Form No. 16. Persons receiving
salary from more than one employer, having income from sources other than salary and
interest income from a saving bank account or having refund claims shall not be
covered under the scheme. The scheme shall also not be applicable in cases where in
notices are issued for filing the income tax return under section 142(1) or Section 148
or Section 153A or Section 153C of the Income Tax Act,1961.

It may be noted that CBDT has clarified that the above exemption from filing of
return was available only for A.Y. 2011-12 and 2012-13. Hence, this exemption for
salaried tax payers having total income upto Rs. 5 lakh is NOT extended for A.Y.
2013-14.

3.3 DUE DATES FOR PAYMENT OF ADVANCE TAX & FILING OF RETURN

Liability for payment of advance tax arises where the amount of tax payable by
the assessee for the year is Rs.10,000/- or more. The due dates for various instalments
of advance tax are given below:

Due Date Amount Payable

1. On or before 15th September of the 1. Amount not less than 30% of

previous year such advance tax payable

2. On or before15th December of the 1. Amount not less than 60% of

previous year such advance tax payable

2. On or before15th March of the 1. Entire balance amount of such

previous year. advance tax payable

Table 3.1 Due dates for various instalments of advance tax:

29
 Also, any amount paid by way of advance tax on or before 31st March is treated
as advance tax paid during the financial year.

The due date of filing of return of income in case of salaried employees is 31st
of July. If the return of income has not been filed within the due date, a belated return
may still be furnished before the expiry of one year from the end of the assessment year
or completion of assessment, whichever is earlier.

3.3 RATE OF INCOME TAX

Old Tax Regime:

Individuals: In case of an Individual (resident or non-resident) or HUF or

Association of Person or Body of Individual or any other artificial juridical
person. (Other than senior and super senior citizen)

Net Income Range Rate of Income-tax

Up to Rs. 2,50,000 -

Rs. 2,50,000 to Rs. 5,00,000 5%

Rs. 5,00,000 to Rs. 10,00,000 20%

Above Rs. 10,00,000 30%

Senior Citizen: (who is 60 years or more at any time during the previous year)

Net Income Range Rate of Income-tax

Up to Rs. 3,00,000 -

Rs. 3,00,000 to Rs. 5,00,000 5%

Rs. 5,00,000 to Rs. 10,00,000 20%

30
 Above Rs. 10,00,000 30%

Super Senior Citizen

(Who is 80 years or more at any time during the previous year)

Net Income Range Rate of Income-tax

Up to Rs. 5,00,000 -

Rs. 5,00,000 to Rs. 10,00,000 20%

Above Rs. 10,00,000 30%

Hindu Undivided Family: (Including AOP, BOI and Artificial Juridical Person)

Net Income Range Rate of Income-tax

Up to Rs. 2,50,000 -

Rs. 2,50,000 to Rs. 5,00,000 5%

Rs. 5,00,000 to Rs. 10,00,000 20%

Above Rs. 10,00,000 30%

Add:

a. Surcharge: Surcharge is levied on the amount of income-tax at following rates if total

income of an assessee exceeds specified limits: -

31
 Rs. 50 Lakhs to Rs. 1 Crore 10%

Rs 1 Crore to 2 crores 15%

Rs 2 crores to Rs 5 Crores 25%

Rs 5 Crores to Rs 10 Crores 37%

Exceeding Rs 10 Crores 37%

Table 3.2 Old Tax regime

New Tax Regime:

Special tax Rate for Individuals and HUFs. The Finance Act, 2020, has provided an
option to Individuals and HUF for payment of taxes at the following reduced rates from
Assessment Year 2021- 22 and onwards:

Total Income (Rs) Rate

Up to 2,50,000 Nil

From 2,50,001 to 5,00,000 5%

From 5,00,001 to 7,50,000 10%

From 7,50,001 to 10,00,000 15%

From 10,00,001 to 12,50,000 20%

From 12,50,001 to 15,00,000 25%

Above 15,00,000 30%

32
Add:

a. Surcharge: Surcharge is levied on the amount of income-tax at following rates if total

income of an assessee exceeds specified limits: -

Rs. 50 Lakhs to Rs. 1 Crore 10%

Rs 1 Crore to 2 crores 15%

Rs 2 crores to Rs 5 Crores 25%

Rs 5 Crores to Rs 10 Crores 37%

Exceeding Rs 10 Crores 37%

Table no 3.3 New Tax Regime

3.4 CALCULATION OF INTEREST

The Income Tax Act provides for charging of interest for non- payment/short
payment/deferment in payment of advance tax which is calculated as below:

INTEREST U/S 234A: For late or non-furnishing of return, simple interest @

1% for every month or part thereof from the due date of filing of return to the date of
furnishing of return, on the tax as determined u/s 143(1) or on regular assessment as
reduced by TDS/advance tax paid or tax reliefs, if any, under Double Tax Avoidance
Agreements with foreign countries.

INTEREST U/S 234B: For short fall in payment of advance tax by more than
10%, simple interest @1% per month or part thereof is chargeable from 1st April of the
assessment year to the date of processing u/s 143(1) or to the date of completion of
regular assessment, on the tax as determined u/s 143(1) or on regular assessment less
advance tax paid/ TDS or tax reliefs, if any, under Double Tax Avoidance Agreements
with foreign countries.

33
 INTEREST U/S 234C: For deferment of advance tax. If advance tax paid by
15th September is less than 30% of advance tax payable, simple interest @ 1% is
payable for three months on tax determined on returned income as reduced by
TDS/TCS/Amount of advance tax already paid or tax relief, if any, under Double Tax
Avoidance Agreement with forgiving contribution. Similarly, if amount of tax paid on
or before 15th December is less than 60% of tax due on returned income, interest @
1% per month is to be charged for 3 months on the amount stated as above. Again, if
the advance tax paid by 15th March is less than tax due on returned income, interest @
1% per month on the shortfall is to be charged for one month.

INTEREST U/S 234D: Interest @ 0.5% is levied under this Section when any
refund is granted to the assessee u/s 143(1) and on regular assessment it is found that
either no refund is due or the amount already refunded exceeds the refund determined
on regular assessment. The said interest is levied @ 0.5% on the whole or excess
amount so refunded for every month or part thereof from the date of grant of refund to
the date of such regular assessment.
1. Overtime Allowance: Employers may provide an overtime allowance to employees
working over and above the regular work hours. This is called overtime and any
allowance received for this is fully taxable.
2. City Compensatory Allowance: City Compensatory Allowance is paid to employees in
an urban centre which may be highly expensive and to cope with the inflated living
costs in the cities. This allowance is fully taxable.
3. Interim Allowance: When an employer gives any Interim Allowance in lieu of final
allowance, this becomes fully taxable.
4. Project Allowance: When an employer provides an allowance to employees to meet
project expenses, this is also fully taxable.
5. Tiffin/Meals Allowance: Sometimes employers may provide Tiffin/Meals Allowance to
the employees. This is fully taxable.
6. Cash Allowance: When the employer provides a cash allowance like marriage
allowance, bereavement allowance or holiday allowance, it becomes fully taxable.
7. Non-Practicing Allowance: When physicians are attached to Clinical Centers of the
various Laboratories/Institutes, any non-practicing allowance paid to them become
fully taxable.
8. Warden Allowance: When an employer pays an allowance to an employee working as a
Warden i.e. Keeper in an educational Institute, the allowance received is fully taxable.
9. Servant Allowance: When an employer pays an employee to engage services of a
34
 servant, such an allowance is taxable.

Partly Taxable Allowances

● House Rent Allowance (HRA): When an employer pays an allowance for the
employees accommodation it is called House Rent Allowance. Tax exemption under
section 10 (13A) can be claimed on whichever amount is lower of the three:
● HRA as per actuals received by the employee
● Rent paid as per actuals less 10% of Basic Salary
● In Metros i.e Delhi, Mumbai, Chennai or Kolkata, as much as 50% of basic salary or
else 40% of it if the accommodation is in a non-metro.
● Any amount of House Rent Allowance received after claiming such deduction is
taxable.
● Fixed Medical Allowance: This is an allowance paid by the employer when the
employee or any of his family members fall sick for the cost incurred on their
treatment. If any such reimbursement exceeds Rs.15,000 per year; the same is taxable.
● Special Allowance:
● Under Section 10 (14)(i), allowances are exempted to the extent of the amount received
as allowance or amount spent on certain duties, whichever is the lower figure.
● Allowances covered in this category are:
● Daily Allowance: Daily allowance is given to employees to meet the daily charges
incurred when on tour or for the duration of a transfer in the job. This type of
allowance is granted when the employee is not in the usual place of duty.
● Travel Allowance: Travel allowance covers costs related to travel while on tour or on
transfer while on duty. This allowance also includes travel costs incurred while getting
transferred to another location, including packaging or transport of personal objects.
● Research/ Academic Allowance: Allowance granted for the purpose of encouraging
academic and research related training, education or professional duties is termed as
academic or research allowance.
● Conveyance Allowance: Allowance for conveyance is granted to employees in case of
expenses incurred while travelling for duties of office. However, the employer does not
pay for travel from home to work as it is not considered as a duty of the office. This
allowance comes under a different section called as ‘Transport allowance’ and is not
exempt from tax.
● Helper Allowance: Sometimes your employer allows you to appoint a helper for
35
 performing official duties of the office. In such cases, helper allowance is granted.
● Uniform Allowance: Allowance when given for the purchase or maintenance of
uniform, required to be worn while on duty is referred to as uniform allowance. This
allowance can be opted for only when an office duty prescribes a specific uniform.

Usually, it is not required to furnish details of the expenses incurred under this category
of allowance unless the expense are disproportionate to the salary or unreasonable in reference
to the duty performed by the employee. At most times, it is not required for you to keep a
proof of documents and a simple declaration serves the purpose.
Section 10 (14) (ii):

Under this section, allowance is granted to employees for working under certain set of
conditions while on duty. The amount exempted is either the amount received as allowance or
the limit mentioned, whichever is lesser.

The types of allowances in this category and exempt in allowances are listed
below:

Compensatory allowance for working in areas of high altitude or hilly

areas, also known as climate allowance:

Hilly areas of HP, UP, J&K and

Rs.300
Common places above Karnataka,
West Bengal, MP, Assam, Orissa, North East - Rs.800
Tamil Nadu, Bihar, UP and Tripura e Siachen are of J&K
1000mtr or above
- Rs.7000 per month
Scheduled or tribal or agency areas
Rs. 200
allowance:
Table no 3.4 Compensatory allowance for working in areas of high altitude or hilly areas

Allowance for duty in border area or remote area or any difficult/disturbed areas:
Table 3.5 Allowance for duty in border area or remote area or any difficult/disturbed
areas

36
Allowances ranging from Rs.200
to Rs.1300 pm are exempt under Rs.100 pm for each
the Rule 2BB Allowance for child and a maximum of
children education: two children.

Allowance for working in a 70% of allowance up to

transport system for personal Rs.10,000 pm
expenses, while on duty:

37
 Field area allowance:

Table 3.6 Field area allowance

Areas of Nagaland, J&K, HP, UP, Rs.2600 pm

AP, Sikkim and Manipur
Transport allowance for commute Rs.1600 pm. Rs.1600 per month.
between work and residence:
Transport allowance to physically
Rs.3900 per month.
disabled employee on duty to
travel to work:

Allowance granted to armed Rs.300 pm for each child up to

forces for cases of counter two children
insurgency Allowance for
employee’s children’s hostel
expenses

Compensatory allowance for duty in modified field area:

Table no 3.7 Compensatory allowance for duty in modified field area

Specific areas of West Bengal, North Rs.1000 pm

East,Rajasthan, J&K, UP and HP

Rs.3250 per month Rs.800

Island Duty allowance granted to armed forces
per month
in Andaman & Nicobar and Lakshadweep

Allowance for working in underground mines Rs.4200 pm.

Special compensatory highly active field area 9000 – 15,000ft – Rs.1060 pm

allowance

Above 15,000 ft – Rs.1600

Allowance for armed forces in a high altitude
pm
region:

38
 Non-Taxable Allowances

Some of the allowances, usually paid to Government servants, judges and employees of
UNO are not taxable. These are:
● Allowances paid to Govt. servants abroad: When servants of Government of
India are paid an

● allowance while serving abroad, such income is fully exempt from taxes.

● Sumptuary allowances: Sumptuary allowances paid to judges of HC and SC are

not taxed.

● Allowance paid by UNO: Allowances received by employees of UNO are fully

exempt from tax.
● Compensatory allowance paid to judges: When a judge receives compensatory
allowance, it is not taxable.

3.5 ANNUITY/PENSION

Annuity is a yearly payment to an employee post his retirement on account of

the funds that were saved by way of subscription to the annuity fund vide his salary
when he was in employment. Annuity received from the present employer is
chargeable to tax as Profit in lieu of Salary. Pension is taxable under the head salaries
in your income tax return. Pensions are paid out periodically, generally every month.
However, you may also choose to receive your pension as a lump sum (also called
commuted pension) instead of a periodical payment.

● Commuted and Uncommuted Pension -

Generally, the employer and taxpayer contribute together to an annuity fund,

which pays the taxpayer pension out of the fund. At the time of retirement, you may
choose to receive a certain percentage of your pension in advance. Such pension
received in advance is called commuted pension. For example, at the age of 60 years,
you decide to receive 10% of your monthly pension in advance for the next 10 years
worth Rs 10,000. This will be paid to you as a lump sum. Therefore, 10% of Rs
10000x12x10 = Rs 1,20,000 is your commuted pension. You will continue to receive
Rs 9,000 (your uncommuted pension) for the next 10 years until you are 70 and post 70
years of age, you will be paid your full pension of Rs 10,000.

39
 Taxability of Commuted and Uncommuted Pension

Uncommuted pension or any periodical payment of pension is fully taxable as

salary. In the above case, Rs 9,000 received by you is fully taxable. Rs 10,000, starting
at the age of 70 years, are fully taxable as well.
Commuted or lump sum pension received may be exempt in some instances.

● For a government employee, commuted pension is fully exempt.

● For a non-government employee, it is partially exempt.
■ If gratuity is also received with a pension – 1/3rd of the amount of pension that
would have been received, if 100% of the pension was commuted, is exempt from
commuted pension and remaining is taxed as salary.
■ And in case only pension is received and gratuity is not received – ½ of the
amount of pension that would have been received, if 100% of the pension was
commuted, is exempt.

3.6 GRATUITY
It is the amount received by the salaried person from their employer as mark of
recognition for the long-term service to the organization. An employee who has worked in an
organization for a minimum period of 5 years is eligiblefor gratuity. But not
everyone is aware that gratuity is part of our salary. Gratuity is a reward paid by employer to
Employee for services rendered by him. In simple words it is a retirement benefit received by
employee when he leaves his job.

Gratuity is taxable when it is received under the head Income form salary. An
employee can claim exemption maximum up to Rs. 20,00,000. However, calculation of
gratuity varies according to various categories of employees as follows:

40
Table no 3.8 Gratuity calculation

Categories Tax treatment

Government employee Fully Exempt

Maximum exemption from

tax –
Least of the following:

Non-government Actual Gratuity received Rs.

employee covered under 20,00,000
Payment of gratuity act No. of completed years of service or
1972 part thereof in excess of 6 month *
15/26* salary last drawn

Meaning of Salary = Basic Salary +

D.A

Maximum exemption from tax – Least of the

following:

Actual Gratuity received Rs. 20,00,000

Half of Average salary * completed year of
Non-government service (part of the month not considered
employee not covered Average salary means average of salary in
under Gratuity Act 1972 last 10 months preceding the month of
retirement

Meaning of Salary = Basic Salary + D.A +

percentage wise fixed commission on
turnover

41
3.7 LEAVE ENCASHMENT

Accumulated leave can either be encashed during service or at the time of retirement or
resignation. Any leave encashed during service is fully taxable and forms part of
‘income from Salary’.
● Leave encashment received at the time of either retirement or resignation is
either fully or partially exempt depending upon the category that an employee
falls under. This has been elaborated further below:
● Leave encashment received by Central or State Government employee at the
time of retirement or resignation is fully exempt
● Leave encashment received by legal heirs of deceased employee is fully exempt
● Leave encashment received by Non-Government employee is exempt based on
the computation provided under Section 10(10AA)(ii) and balance amount if
any is taxable as ‘income from salary’
Formula for computing leave encashment exemption of Non-government employees:
Table no 3.9 Leave encashment calculation:
Particulars Amount

Leave encashment received (A) XXXXX

Less: Exemption under Section 10(10AA) – (B)

XXXX
Least of the following:
Amount notified by the Government** Rs 3,00,000
3,00,000
(C)

Actual leave encashment amount (D) XXXX

Average salary* of last 10 months (E) XXXX

Salary per day * unutilised leave (considering

maximum 30 days
XXXX
leave per year) for every year of completed service

(F)

Leave encashment taxable – (A) – (B) XXXX

42
 *Salary for this purpose includes basic salary, dearness allowance and
commission based on fixed percentage of turnover secured by employee** Specified
amount of Rs 3,00,000 is the aggregate amount allowed as exemption irrespective of
frequency of leave encashment received by employee by various employers. If an
employee has utilised Rs 2,00,000 already at the time of first resignation, he is only
entitled to use the balance of Rs 1,00,000 for the exemption computation next time.
Hence, an overall employee is allowed a total exemption of only Rs 3,00,000 with
respect to leave encashed from all employers.

3.8 UNDERSTANDING PROVIDENT FUND

Provident fund scheme is a scheme intended to give substantial benefits to an employee

at the time of his retirement. Under this scheme, a specified sum is deducted from the
salary of the employee as his contribution towards the fund. The employer also
generally contributes the same amount out of his pocket, to the fund. The contribution
of the employer and the employee are invested in approved securities. Interest earned
thereon is also credited to the account of the employee. Thus, the credit balance in a
provident fund account of an employee consists of the following:

● Employee’s contribution
● Interest on employee’s contribution
● Employer’s contribution
● Interest on employer’s contribution.

The accumulated balance is paid to the employee at the time of his retirement or
resignation. In the case of death of the employee, the same is paid to his legal heirs.

43
Contribution under pension scheme referred to in section 80CCD

National Pension scheme is a scheme approved by the Government for Indian

citizen aged between18-60 years. Subscriber of the NPS account contributes some
amount in their account. In case of any employee, being a subscriber of the NPS
account, employer may also contribute into the employee’s account.Employer’s
contribution to NPS account would form part of salary of employees.

However, while computing total income of the employee-assessee, a deduction

under section 80CCD is allowed to the assessee in respect of the employer as well as
employee contribution under a pension scheme referred therein.
Deduction Under Section 80C, 80CCC, 80CCD & 80D Deductions on
Investments-80C Maximum Limit Rs. 1,50,000/-: 80C allows deduction for investment
made in PPF, EPF, LIC premium, principal amount payment towards home loan, stamp
duty and registration charges for purchase of property, Sukanya smriddhi yojana (SSY)
, National Savings Certificate (NSC), Senior citizen savings scheme (SCSS), ULIP, tax
saving FD for 5 years, Infrastructure bonds etc. Deduction for NPS: 80CCD (2)
Additional Limit Rs. 50,000/- : 80CCD(2) allows additional deduction of Rs 50,000 for
amount deposited to NPS account by employee. Deduction for Mediclaim: 80D You
can

44
 claim deduction of Rs. 25,000 for a Mediclaim policy of self, spouse and dependent
children. Deduction limit is increased to Rs. 50,000 if any member is a senior citizen
(60+). An additional deduction for the Mediclaim of parents is available up to Rs
25,000, if they are less than 60 years of age. Deduction limit is increased to Rs. 50,000
if parents are senior citizens (60+).

3.9 PROFITS IN LIEU OF SALARY

● Compensation on account of termination of his employment
○ The amount of any compensation due to or received by an assessee from his
employer or former employer at or in connection with the termination of his
employment.

● Compensation on account of modification of the terms and conditions of employment

○ The amount of any compensation due to or received by an assessee from his
employer or former employer at or in connection with the modification of the
terms and conditions of employment. Usually, such compensation is treated as a
capital receipt. However, by virtue of this provision, the same is treated as a
revenue receipt and is chargeable as salary

● Payment from provident fund or other fund

○ Any payment due to or received by an assessee from his employer or former
employer from a provident or other fund other than Gratuity, Pension,
Compensation received by a workman under Industrial Disputes Act, 1947,
from provident fund or public provident fund, from recognized provident fund,
from approved superannuation fund, any House Rent Allowance, to the extent
to which it does not consist of employee’s contributions or interest on such
contributions.

45
3.10 KEYMAN INSURANCE POLICY

Any sum received by an assessee under a Keyman Insurance policy including

the sum allocated by way of bonus on such policy. Lumpsum Payment or otherwise
Any amount, whether in lumpsum or otherwise, due to the assessee or received by him,
from any person – before joining employment with that person, or after cessation of his
employment with that person.

3.11 DEDUCTIONS FROM SALARY

Standard deduction of Rs 50,000 or the amount of salary, whichever is less w.e.f
Finance Act.

For section 80C- The amount of eligible investment or expenditure as specified is fully
allowed for deduction subject to the limit of Rs 1.5 lakh.
The limit of Rs 1.5 lakh deduction of Section 80C includes 80CCC (contribution
towards pension plan) and 80CCD (1), 80CCD (1b) and 80CCD (2).
A. Section 80CCD (1) is a contribution towards the National pension scheme by
the employee or self-employed and is limited to 10% of salary (basic + DA) or
20% of gross total income for self-employed.
B. Section 80CCD (1b) provides additional deduction of Rs 50,000 for
contributions towards NPS , Atal pension Yojana etc. This deduction is over
and above Rs 1.5 lakh. Hence total deduction including 80C and 80CCD (1b)
can be maximum Rs 2 lakh for a single year.
C. Section 80CCD (2) is deduction allowed to salaried for contributions made by
their employer for NPS this is also allowed at 10 % of salary (basic +DA) .

However it is important to note that there is no upper limit in 80CCD (2)

Hence for investment in 80C only , the limit is Rs 1.5 Lakh. For investment together in
80C, 80CCD (1) and 80CCD (1b), one may invest upto Rs 2 lakh in total. Whereas, a
salaried employee can avail more deduction without restriction of limit of Rs 2 lakh
under section 80CCD (2) if the employer contributes towards NPS account subject to
10% of salary.
Further please note that per Budget 2020, any contribution towards EPF, NPS
and superannuation will be added to the salary as “perquisites” and taxable under
salaries in the hands of employees.

46
Calculation of income under the head salary

Table no 3.10 Calculation of income under the head salary

Particulars Amount

Basic Salary —

Add:

1. Fees, Commission and Bonus

—
4. Retirement Benefits

5. Fees, Commission and —

Bonus

Gross Salary —

Less: Deductions from Salary —

1. Standard Deduction (upto —

Rs. 50,000)

2. Entertainment Allowance —

u/s 16

—
3. Professional Tax u/s 16

Net Salary —

47
3.12 SOME IMPORTANT CASE LAWS.

Whether the amount received by the employee on cessation of employment

with his Employer will be exempted from tax under section 17(3)(i) of the Income-tax
Act? Relevant Case Law – CIT
v. Shyam Sundar Chhaparia (2008) 305 ITR 181 (MP) Relevant Section – 17(3)

The assessee after his retirement was granted an amount of Rs. 27,50,000 as a
special Compensation in lieu of an agreement for refraining from taking up any
employment activities Or consultation which would be prejudicial to the
business/interest of his employer.
The assessee claimed that it was a non-taxable receipt being the compensation
for not taking up any competitive employment under a restrictive covenant. The
Assessing Officer did not accept the claim of the assessee on the grounds that (i) the
decision of the Supreme Court relied on by the assessee was that of an agency whereas
the case of the assessee was that of one who was in service, and (ii) section 17(3)(i)
was squarely applicable to the case of the assessee.
The Commissioner (Appeals) held that as there was restriction for the assessee
not to work in business of any type and anywhere, the compensation was received in
lieu of loss of future work and was a capital receipt. The Tribunal held in favour of the
assessee.
The High Court held that the assessee retired from service on attaining the age
of superannuation and hence there was severance of the master-servant relationship and
there was no material to suggest that there existed a service contract providing therein a
restrictive covenant preventing thereby the assessee from taking up any employment or
activities on consultation which would be prejudicial to the business/interest of his
employer.
Therefore, it could not be termed as profit in lieu of salary because it was not
compensation due to or received by the assessee from his employer or partner-
employer at or in connection with the termination of his employment. Thus, the
Commissioner (Appeals) and the Tribunal rightly held that the amount could not be
added for the purpose of income-tax.
Can reimbursement of expenditure on medical treatment taken by the assessee,
who was a member of the Legislative Assembly, be taxed as perquisite under section
17(2)(iv)? Report this ad Relevant Case Law – CIT v. Shiv Charan Mathur (2008) 306
ITR 126 (Raj) Relevant Section – 15 & 17(2) 48
Notice under section 148 was issued to the assessee, at the relevant time a sitting MLA
and former Chief Minister of the State, for the reason that he received a sum from the
State Government as reimbursement of medical expenses which amount was liable to
be taxed under section 17 but had not been offered for taxation.
The contention of the assessee was that the amount received by MPs and MLAs
was not taxable under the head “Salary” but under the head “Income from other
sources”.
The High Court held that MLAs and MPs are not employed by anybody rather
they are elected by the public, their election constituencies and it is consequent upon
such election that they acquire constitutional position and are in charge of
constitutional functions and obligations.
The remuneration received by them, after swearing in, cannot be said to be
“salary” within the meaning of section 15 of the Income-tax Act, 1961. The
fundamental requirement for attracting section 15 is that there should be a relationship
of employer and employee whether in existence or in the past.

This basic ingredient is missing in the cases of MLAs and MPs. When the
provisions of section 15 were not attracted to the remuneration received by the
assessee, section 17 could not be attracted as section 17 only extends the definition of
“Salary” by providing certain items mentioned therein to be included in salary.
Thus, the reimbursement of medical treatment taken by the assessee, who was a
member of the Legislative Assembly for open heart surgery conducted abroad was not
taxable as perquisite under section 17(2)(iv).

49
CHAPTER 4 RESEARCH METHODOLOGY

4.1 IMPORTANCE OF RESEARCH METHODOLOGY

Research methodology deals with the procedure adopted to carry out the
study.’’ A research design is the specification of methods and procedures acquiring the
information needed. It is an overall operational pattern or framework of the project the
stipulates which information should be collected from which source by what
procedures.” For conducting the project, both primary and secondary method of data
collection have been adopted.
The method used for present study was survey method using structured and
predesigned questionnaires. In this method the information is gathered mainly through
personal interviews. The survey consists of gathering data by interviewing a limited
number of respondents.

The uses of survey method are:

● To gather facts from respondents.

● To report the opinion of the respondents.
● To probe interpretation that gives various matters

4.2 SELECTION OF THE PROBLEM:

The research problem is ‘Detail analysis of direct tax structure of salaried

person and deductions’

Tax collected by government from salaried person is an important component of

the Indian tax collection.

In India 1.03 crore people have shown income below Rs 2.5 lakh and 3.29 crore
individuals disclosed taxable income between Rs 2.5 lakh to Rs 5 lakh.

So basically, they can claim full amount and have a nil taxable income. 46 lakh
individual taxpayers have disclosed income above Rs.10 lakh
50
 There are many benefits and deductions which are available that a person can
claim but very few people know or have knowledge about it. so, through my research I
would like to create an awareness about it.

And also, it is very important for a taxable person to know the tax structure that
how they are paying tax as well as the youngsters and students who will pay tax in
future and plan about the saving and investments accordingly.

A tax payer in general feels that taxes are a burden and it is human tendency to
avoid payment of tax or at least minimising the tax liability. In earlier years the tax
rates were also exorbitant. Prior to Eighties, the rate of Income-tax was as much as
97.75 per cent inclusive of surcharge. But now the scenario is fast changing. Though
the tax rates have been lowered, but still our country lacks desired tax culture like
developed nations. It has been said by Justice Homes of the US Supreme Court that
"Taxes are the price for civilisation". It is time tax is no longer considered as burden
but a price for civilization.

Those having taxable income should certainly declare the income, pay income
tax and furnish the Income tax return within prescribed time. The default or delay in
fulfilling one's obligation may result in levy of interest and penalty. Even in some cases
of tax evasion and other serious lapses the authorities may launch prosecution against
erring people. The department may carry out Survey. It has also an Investigation wing,
which is empowered to carry out search and seizure operations. Therefore one needs to
be very careful.

4.3 SOURCES OF DATA

The study is based on primary and secondary data.

Primary data is also known as first hand data which is collected by researchers.
Self – administered questionnaires were distributed to be answered by the public in
large as per requirement of the questions included in the questionnaire.
The goal of the study was to provide information primarily out of raw data.
After data gathering was completed, it has been edited to detect errors or omissions and
cross checked to verify consistency with other respondents. Then the data was grouped
based on their similarity for easy handling.
51
 Raw data was transformed into a format that is easy to understand and interpret.
Calculations of average and percentage were made for the purpose of summarizing
data.
The main tools which were used for the collection of data was investigation and
observations.

Secondary data which has already been collected by someone else, not the
researcher itself. It provides reliable, suitable, adequate and specific knowledge.
Finally, the task of interpretation and a report describing the result has been done.

4.4 SAMPLE TECHNIQUE:

Sample technique means the limits in which the survey was conducted.

Google forms were circulated in public at large and the area wasn’t restricted, it
was circulated between the people of different groups, different occupation and not
liked minded people in order to get maximum accurate responses and it was found that
young age group and young adult group have answered the questionnaire actively.
4.5 SAMPLE SIZE:
Sample size denotes the number of the responses that were collected for the
survey and its analysis. In this particular survey I have taken 100 responses from
people of different age groups who have answered the questionnaire actively.

4.6 DATA COLLECTION:

The study is based on primary and secondary data. Following are the sources of
primary and secondary data.

PRIMARY DATA:-

The primary data are the first-hand information gathered for research to solve the need
by surveying the sampling units and collection of feedback from them involves the
primary data with structured queries will be prepared for the customers. There will be
survey within the customers giving the questionnaire. The questionnaire was structured
non disguised questionnaire which the questionnaire contained, were arranged in a
specific order beside the questions asked were logical for the study, no questions can be
termed as irrelevant.
Sources of primary data:
52
a. Personal interview

b. Questionnaire

1. Personal interview: -

This method was the most appropriate way of survey, because by personal interview I
came to know about how the respondents feel about Derivatives. The personal
interview is conducting mainly for collecting information for fulfill of the
questionnaire.

2. Questionnaire: -

In this method questionnaire were distributed to the respondence and they were asked
to answer the questions in the questionnaire. The questionnaire were structured non
disguised questionnaire because the questions which the questionnaire contained, were
arranged in a specific order every besides every questions asked were logical for the
study, no questions can be termed as irrelevant.

SECONDARY DATA: -

The secondary data is collected from the NSE website and other websites,
through listing by personal observation. The secondary data are collected by some
other people for their work and it already exist. The researcher started investigation by
first examining the secondary data to see whether the problem can be partly or fully
solved by without collecting primary data. Since the secondary data was not sufficient
to solve the entire problem, so primary data were not sufficient were collected to fill the
gap. Sources of secondary data: -
A. Libraries
B. Internet
C. Journals and magazine.

53
4.7 TABULATION OF DATA:
a. Google Forms: -

Survey method is employed to collect the data from the respondents and the data is
collected with the help of a questionnaire form google forms. Google forms provide a
convenient, systematic and easy to interpret representation of data through pie charts,
bar graphs and rating scales.

b. Google Docs: -

Google Does application has been my prime aid in organising, editing and storing all of
my data in a methodical and secure manner.

4.8 TECHNIQUES AND TOOLS FOR DATA:

Data collected from the respondents have been analyzed with the help of the following
tools.

a. Pie chart diagram: -

Pie charts formed through google forms were analyzed for the research and to conclude
the result for better understanding and effective learning of the things obtained.
b. Percentage technique: -
Percentage technique is the most widely and efficient technique to be used in any
survey conducted. In this survey regarding Awareness of Derivatives in Mumbai. I
have used this technique to make the study more interesting and worth learning. It not
only makes the study effective but also makes it easy and understandable.

54
CHAPTER 5: DATA ANALYSIS AND INTERPRETATION

5.1 IMPORTANCE OF DATA ANALYSIS AND

INTERPRETATION

Data analysis is a process of inspecting, cleaning, transforming, and modelling

data with the goal of discovering Useful information, information conclusions and
supporting decision making.
Data analysis has multiple facts and approaches, encompassing diverse
techniques under the variety of names while being used in different business, science
and social science domains
In today's business data analysis is playing a role in making decision more
scientific and helping the business achieve effective operation.
Analysis refers to breaking a whole into a separate component for individual
examination. Data analysis is a process for obtaining raw data and converting it into
information useful for decision making by users. Data collected and analyse to answer
questions test hypothesis or disapprove theories
Data interpretation refers to implementation of processes through which data is
reviewed for the purpose of arriving at an informed conclusion.
The interpretation of data science a meeting meaning to the information analyse and
determines its significance and implications.
Data interpretation is a part of daily life for most people. Interpretation is the
process of making sense of numerical data that has been collected, analyse, and
presented.
People interpret data when they turn on the television and hear the news anchor
reporting on a poll, when they read advertisements claiming that one product is better
than the other, or when they choose grocery store items the claim they are more
effective than other leading brands.

55
5.2 DATA ANALYSIS AND INTERPRETATION
Q2. Age

Category Percentage Responses

18-30 77.2% 77

31-40 13.9% 14

41-50 3% 3

50-60 1% 1

60 above 5% 5

Figure 5.1: Age of Respondent

Interpretation: -

According to the survey the age group between 18-30 the blue part is 77.2% that is 77
responses, the age group between 31-40 the red part is 13.9% that is 14 responses, the
age group between 41-50 the orange part is 3% that is 3 responses, the age group
between 50-60 the green part is 1% that is 1 response, and the age group above 60 the
purple part is 5% that is 5 responses.

56
Q3. Gender

Category Percentage Responses

Male 65% 65
Female 35% 35
Other 0% 0

Figure 5.2: Gender of the Respondent

Interpretation: -
According to the survey the male gender which is the blue part is 65% that is 65
responses, the female gender the red part is 35% that is 35 responses and for the others
were no response.

57
Q4. What is your Occupation?

Category Percentage Responses

Business 13% 13
Service 38% 38
Student 46% 46
Others 3% 3

Figure 5.3: No. of people having different occupation

Interpretation: -
According to the survey the business occupation the blue part is 13% that is 13
responses, the service occupation the red part is 38% that is 38 responses, the student
occupation the orange part is 46% that is 46 responses and the other occupation which
is green part is 3% that is 3 responses.

58
Q5. Assessee Category

Category Percentage Responses

General 96% 96
Senior Citizen 4% 4
Super Senior 0% 0
Citizen

Figure 5.4: No. of people with different assessing category

Interpretation: -
According to the survey the general category the blue part is 96% that is 96
responses, the senior citizen category that is red part is 4% that is 4 responses and the
super senior citizen category were no response.

59
Q6. Assessee Class

Category Percentage Responses

Salary 76.2% 76
Business 23.8% 24

Figure 5.5: No. of people with different assessing class

Interpretation: -

According to the survey the salary class is shown in blue part which is 76.2%
that is 76 responses, and business class people is shown in red part which is 23.8% that
is 24 responses.

60
Q7. Respondents Annual Income?

Category Percentage Responses

Below 3,00,000 54.5% 54
3,00,000 – 24.8% 25
5,00,000
5,00,000 – 17.8% 18
10,00,000
10,00,000 and 3% 3
above

Figure 5.6: People with different annual income

Interpretation: -
According to the survey respondent having annual income below 3,00,000 is in
blue part which is 54.5% that is 54 responses, respondent having annual income
between 3,00,000 to 5,00,000 is in red part which is 24.8% that is 25 responses,
respondent having annual income between 5,00,000 to 10,00,000 is in orange part
which is 17.8% that is 18 responses and respondent having annual income above
10,00,000 is in green part which is 3% that is 3 responses.

61
Q8. How much amount did you pay as income tax during the previous year?

Category Percentage Responses

Below 25,000 31% 31

25,000 – 50,000 19% 19
50,000 – 75,000 4% 4
75,000 – 6% 6
1,00,000
1,00,000 and 0% 0
above
Nil 40% 40

Figure 5.7: Tax paid by the respondent during previous year

Interpretation: -
According to the survey respondents who have paid tax below 25,000 is in dark
blue part which is 31% that is 31 responses, respondents who have paid tax between
25,000 to 50,000 is in red part which is 19% that is 19 responses, respondents who
have paid tax between 50,000 to 75,000 is in orange part which is 4% that is 4
responses, respondents who have paid tax between 7,50,000 to 1,00,000 is in green part
which is 6% that is 6 responses, and respondent who have paid tax above 1,00,000
were zero and respondent who have not paid tax is in light blue part which is 40% that
is 40 responses.

62
Q9. Did you face any difficulty while filing ITR (1 TO 7)?

Category Percentage Responses

Yes 64% 64
No 36% 36

Figure 5.8: No. of respondents faced difficulty while filling IT.

Interpretation: -

According to the survey respondents who have faced problem while filing ITR
is shown in blue part which is 36% that is 36 responses and the respondent who did not
face any problems while filing the ITR is shown in red part which is 64% that is 64
responses.

63
Q10. Which tax option do you prefer?

Category Percentage Responses

Old Tax Regime 61% 61

New Tax Regime 39% 39

Figure 5.9: Tax option preference of the respondents

Interpretation: -
According to the survey respondents who prefer old tax regime is shown in blue
part which is 61% that is 61 responses and the respondents who prefer new tax regime
is shown in red part which is 39% that is 39 responses.

64
Q11. Mode of filing of IT returns

Category Percentage Responses

Self-Assess
and file 39.6% 40

directly
Through

38.6% 39
Tax

Practitioner
Through
Employer 21.8% 21

Office

Figure 5.10: Respondent’s mode of filing IT return

Interpretation: -
According to the survey respondents who are under the category who
Self-assess and file directly is in blue part which is 39.6% that is 40 responses,
respondents who file their IT returns through Tax Practitioner is in red part which is
38.6% that is 39 responses and the respondents who file their IT return through
Employers office is in orange part which is 21.8% that is 21 responses.
65
 Q12. Do you have knowledge about Direct Tax Structure of Salaried person

Category Percentage Responses

Yes 52.5% 52
No 47.5% 48

Figure 5.11: No. of respondents having knowledge about the tax structure of salaried person

Interpretation: -
According to the survey the respondents who have knowledge about tax
structure of salaried person is shown blue part which is 52.5% that is 52 responses and
the respondents who does not have knowledge about the tax structure of salaried person
is shown in red part which is 47.5% that is 48 responses.

66
Q13. Do you have knowledge about Tax saving option?

Category Percentage Responses

Yes 49.5% 50
No 50.5% 51

Figure 5.12: No. of respondents having knowledge about the tax saving
options

Interpretation: -
According to the survey the respondents who have knowledge about the tax
saving options is shown in blue part which is 49.5% that is 50 responses and the
respondents who does not have knowledge about tax saving options is 50.5% that is 51
responses.

67
Q14. What is your opinion about the Tax rate in India?

Category Percentage Responses

Too high 38.6% 39

High 49.5% 50
Reasonable 11.9% 11
Low 0% 0
Too low 0% 0

Figure 5.13: Opinion of respondents about the tax rate in India

Interpretation: -
According to the survey the respondents who think that the tax rate in India is
too high is in blue part which is 38.6% that is 39 responses, the respondents who thinks
tax rate in India is high is in red part which is 49.5% that is 50 responses, the
respondents who think tax rate is reasonable in India is in orange part which is 11.9%
that is 11 responses and no respondent think that the tax rate in India is low or too low.

68
Q15. Income Tax Rules is very complicated in India

Category Percentage Responses

Strongly Agree 31.7% 32

Agree 56.4% 56
Neither agree 9.9% 10
or

disagree
Strongly 2% 2
Disagree

Table 5.14: No. of respondents who agrees that the tax rules is complicated

Interpretation: -
According to the survey the respondent who strongly agrees that the Income
Tax rule in India is very complicated is in blue part which is 31.7% that is 32 response,
the respondent who agree that the tax rules are complicated in India is 56.4% that is 56
responses, the respondents who neither agree or disagree that the Income Tax rules is
complicated in India is shown in orange part which is 9.9% that is 10 responses and the
respondents who strongly disagree that the Income Tax rules is complicated in India is
shown in green part which is 2% that is 2 response.

69
Q16. Which option is selected for Tax Saving purpose?

Category Percentage Responses

Bank saving 21.8% 21
Scheme
LIC Policies 11.9% 12
Central 3% 3
Government

schemes
PF/ EPF/ 11.9% 12
ELSS/

Mutual Funds
Housing Loans 4% 4
All of the above 26.7% 27
Others 20.8% 21
Figure 5.15: Respondents preference/choice for Tax saving purpose

Interpretation: -
According to the survey respondents who prefer to invest in Bank saving
scheme is in dark blue part which is 21.8% that is 21 response, respondents who prefer
to invest in LIC Policies is in red part which is 11.9% that is 12 response, respondents
who prefer to invest in Central government scheme is in orange part which is 3% that is
3 response, respondents who prefer to invest in PF/ EPF/ ELSS/ Mutual Funds is in
green part which is 11.9% that is 12 responses, respondents who prefer to invest in
Housing Loans is in purple part which is 4% that is 4 response, respondents who prefer
70
to invest in all of the options given above is in light blue part which is 26.7% that is 27
response and the respondents who prefer to invest in other tax saving schemes is shown
in pink part which is 20.8% that is 21 response

71
Q17. How much amount did you invest in tax saving schemes previous year?

Category Percentage Responses

Less than 50,000 38.8% 38

50,000 -75,000 13.3% 13
75,000 – 1% 1
1,00,000
Above 1,00,000 2% 2
Nil 44.9% 44

Figure 5.16: Amount invested by the respondent in Tax Saving Schemes

Interpretation: -
According to the survey the amount invested by the respondents in tax saving
schemes during previous year which is less than 50,000 is shown in blue part which is
38.8% that is 38%, amount invested by the respondent between 50,000 to 75,000 is in
red part which is 13.3% that is 13 response, the amount invested by the respondent
between 75,000 to 1,00,000 is in orange part which is 1% that is 1 response, the
amount invested by the respondent above 1,00,000 is in green part which is 2% that is
2 response, and the respondent who did not invest any amount in tax saving scheme
during previous year is shown in purple part which is 44.9% that is 44 response.

72
Q18. Which in your opinion will be suitable Tax system for India?

Category Percentage Responses

Flat Tax 23% 23

Rate

System
Progressive 30% 30

Tax

Rate System
Regressive Tax 7% 7
Rate

System
Can’t say 40% 40

Figure 5.17: Suitable tax system for India according to the respondents

Interpretation: -

According to the survey the respondents who thinks Flat tax rate system is
suitable for India is shown in blue part which is 23% that is 23 responses, the
respondents who thinks Progressive tax rate system is suitable for India is in red part
which is 30% that is 30 responses, the respondents who thinks Regressive tax rate
system is suitable for India is shown in orange part which is 7% that is 7 response and
73
the respondent who can’t say is shown in green part which is 40% that is 40 responses.
Table 5.18: Respondents Reason to seek guidance of Tax Practitioner

Q19 Why do you seek guidance of tax practitioner ?

Category Percentage Response

Complexity 29% 29

in

Income tax laws

Frequent Changes 33% 33
in tax laws and
Procedures
Non-helping 4% 4
attitude

of tax department
Avoiding 34% 34
mistakes in

tax compliance
Figure 5.18: Respondents Reason to seek guidance of Tax Practitioner

74
Interpretation: -
According to the survey the reasons of respondents for seeking guidance of tax
practitioner because of complexity in income tax laws are shown in blue part which is
29% that is 29 response, because of frequent changes in tax laws and procedures are
shown in red part which is 33% that is 33 response, because of non- helping attitude of
tax department is shown in orange part which is 4% that is 4 response and to avoid
mistake in tax compliance is shown in green part which is 34% that is 34 response.

75
Q20. In any way New tax regime has benefitted you?

Category Percentage Responses

Yes 35% 35
No 49% 49
Felt more 16% 16
burdened

Figure 5.19: Opinion of the respondents about New tax regime

Interpretation: -
According to the survey the respondents who have been benefited through new
tax regime is shown in blue part which is 35% that is 35 responses, the respondents
who have not been benefited through the new tax regime is in red part which is 49%
that is 49 response and the respondents who felt more burdened through the new tax
regime is shown in orange part which is 16% that is 16 responses.

76
CHAPTER 6 CONCLUSION AND SUGGESTIONS

6.1 CONCLUSION:
The following conclusions are drawn from my research work.

The central government imposes tax on all kinds of income such as Central
excise, Custom duties, and Service tax apart from income pertaining to agriculture. The
state Governments of India is responsible for imposing tax pertaining to Value Added
Tax (VAT), Sales tax, Income from Agriculture, State excise duty, Stamp duty,
Professional tax, Land revenue, etc.

Tax structure is an important pillar of financial infrastructure of a nation. A tax

structure which meets the criteria of certainty, ability to pay, convenience to pay and
lesser collection cost is a sustain a growth-oriented structure of an economy.
The vision of the Income Tax Department is to be a partner in the nation building
process through progressive tax policy, efficient and effective tax administration and
improved voluntary compliance.

Direct taxation in India is taken care by the Central Board of Direct Taxes; it is
a division of Department of revenue under the Ministry of Finance.
Under the Indian Income Tax Act,1961, income earned during a financial year, i.e April
1 to March 31 is subject to income tax.

The system of direct taxes was very much complex and inefficient because of
high marginal rates of personal income tax. The taxation system in India is well
structured. The Department of Revenue of the Finance Ministry of the Government of
India is responsible for the computation; levy as well as collection of most the taxes in
the country.

The procedure of tax collection in India has evolved over the years an down is
subject to several acts, rules, and regulations as laid down by the Indian Income Tax
Department.

Revenues from personal and corporate income taxes have shown appreciable
increase after the reforms were initiated in spite of the fact that the rate of the tax have
been reduced significantly.

77
 Salaried employees earning upto Rs 5 lakh a year need not file income tax
returns from the year 2012- 13.

There are about 85lakhs salaried persons in the country whose yearly income,
including earnings from other sources like bank deposits, does not exceed Rs 5 lakh.
Lack of awareness amongst taxpayers is often cited as the main reason for low level of
compliance towards tax laws. It has been a constant endeavour of the Directorate of
Income Tax to increase the awareness of the taxpayers about the provisions of tax laws
and the steps taken by the government to reduce the complexities of tax laws and
improve Tax Payers Service. Personal income tax system in India was having a number
of deficiencies. There was low yiled. Extremely limited coverage and little compliance.

There was massive tax evasion and tax avoidance in India. High tax rates
mainly contributed towards tax evasion and tax avoidance. Another effect of this high
tax rate regime was that there were numerous exemptions, deductions and allowances.
It has been proposed to exempt the senior citizens from filing income tax returns if
pension income and interest income are their only annual income source. Section 194P
has been newly inserted to enforce the banks to deduct tax on senior citizens more than
75 years of age who have a pension and interest income from the bank.

When it comes to income tax and taxation of individuals, there is no other

section more important for salaried employees than Section 80C of the Income Tax
Act, 1961. By understanding the benefits under this section, employees can not only
maximize the salary that they take home, but can also legally reduce the tax pay-out.
Section 80C allows employees to claim tax deductions of up to Rs. 1.5 lakh, and offers
a wide range of tax-saving options.

Considering one has already applied for a home loan, they can claim tax
benefits on the principal component of the equated monthly instalments (EMIs) under
Section 80C of the Income Tax Act, with the overall limit being Rs. 1.5 lakh.
Furthermore, under Section 24 of the Act, individuals can also claim deduction for the
interest component on their home loan, with the limit being Rs. 2 lakh. However, one
can only claim the deduction if the owner, or their family members are living at the
property. In case the house is rented, then the entire interest is waived off as a
deduction.

78
 Effective from FY 2020-21, an individual salaried person has the option to
choose between the new tax regime and old or existing tax regime. If an individual has
opted for the new tax regime, then he/she is not required to submit any document or
investment proofs to the employer. On the other hand, if old or existing tax regime is
opted for, then investment proofs must be submitted before the deadline specified by
your employer to avoid higher taxes.

Individuals opting for new income tax regime should keep in mind that the
contribution to your NPS account by your employer will be taken into account while
computing taxes on your salary. Deduction under section 80CCD (2) of the Income-tax
Act is available under both the tax regimes.

6.2 FINDINGS

● People know about direct tax structure and tax saving options or
benefits.
● Through my research I have found that 52.5% know about the tax
structure of salaried person and 49.5% know about various tax saving
option
● Through my research I have found that 61% of people prefer old tax
regime
● Deduction under section 80CCD (2) of the Income-tax Act is available
under both the tax regimes
● 21.6% of people select bank saving schemes for Tax Saving purpose
● Through my research I have found that revenues from personal and
corporate income taxes have shown appreciable increase after the
reforms
● Through my research I found that 56.4% agree that Income Tax Rules
are very complicated in India

6.3 SUGGESTIONS
In the light of the findings of the present study and on the basis of the
suggestions offered by the sample salaried tax payers, the following suggestions are
made for the betterment of investment pattern and improve salaried tax payers’
perception about the Income Tax System.
79
 Salaried employees often use the provisions to avail tax benefits, and lower the
tax outflow. There are several other options under Section 80C, such as travel and
conveyance bills, and charitable donations, that enable greater tax saving for salaried
employees.

Thus, it is extremely important to understand the various tax exemptions that

employees can avail, while considering the tax-exempt income limit.
In the present study, while examine the awareness level of the salaried tax payers about
the Income Tax System, it is found that 47.5% of the sample salaried tax payers have
low awareness level about the Income Tax System (table no. 4.12). Hence, it is
suggested that Income Tax Department of the Government of India should take all
possible steps to propagate the Income Tax Laws, Rules, Policies and Reforms to the
salaried tax payers along with its importance through television, newspaper and social
medias like twitter, Facebook, WhatsApp, tax guru, tax forum etc. It may improve the
salaried tax payers’ awareness about the Income Tax System and voluntary tax
payment by them

While examine the hypothesis of there is no significant association between the

various independent variables (Gender, Age, Educational status, Marital status,
Occupational status, Nature of the family, Size of the family, Number of earning
Members in the family, Income of the individual, Family income, Savings of the
individual, Family savings, Mode of filing return and Source of information about
Taxation) of the salaried tax payers and their awareness level about the Income Tax
System with ANOVA, it is found that there is a significant association between the
awareness level and socio economic characteristics such as age, educational status, size
of the family, number of earning members in the family, income of the individual,
family income, savings of the individual, family savings, mode of filing return and
source of information about taxation. Hence, it is suggested that Income Tax
Department of the Government of India should organise various Workshops, Seminars
and Conferences. In this regard, Government of India can insist various Professional
Bodies (Institute of Chartered Accountants of India, Institute of Company Secretaries
of India and Institute of Cost and Management Accountants of India), Colleges and
Universities by offering required financial assistance.

80
 In the present study, while examine the problems faced by the salaried tax
payers towards Income Tax assessments, tax planning, filing of return, tax payment and
refund of tax, it is found that the most important problem as cumbersome procedure
and it has been ranked as first by the sample salaried tax payers.

Hence, it is suggested that Income Tax Department of the Government of India

should take all possible steps to simplify the steps involved in assessment of tax and tax
payment.

While examine the hypothesis of there is no significant association between the

various independent variables (Gender, Age, Educational status, Marital status,
Occupational Status, Nature of the family, Size of the family, Number of earning
Members in the family, Income of the individual, Family income, Savings of the
individual, Family savings, Mode of filing return and Source of information about
Taxation) of the salaried tax payers and their satisfaction level about the Income Tax
System with ANOVA, it is found that there is a significant association between the
satisfaction level and socio- economic characteristics such age, educational status, size
of the family, number of earning members in the family, income of the individual,
family income, mode of filing return and source of information about taxation. It is
therefore, suggested that the Income Tax Department should take necessary steps to
increase the satisfaction level of the salaried tax payers about the Income Tax System
by way of offering various consultancy services in the aspect of tax planning,
procedures followed in tax calculation and tax payment, e-tax technology etc.

81
6.4 REFERENCES
Bibliography

● CS Executive Taxation Module

● Concept Building Approach to Income Tax Law & Practice (Assessment
Year 2020-21) – By Dr. Naveen Mittal
● Principles of Income Tax Law & Practice (Assessment Year 2020-21) –
By Dr. Naveen Mittal
● Sachin Pimple, Asst. Prof, (2019) An Empirical Study on Perceptions
towards Tax Planning among Youth
● Saumen Chattopadhyay and Arindam Das-Gupta December, (2002) The
Personal Income Tax in India: Compliance Costs and Compliance
Behaviour of Taxpayers
● Bhalla (2004) Tax rates, Tax compliance and Tax revenues: India,
1988-2004
● Das Gupta (2004) The Economic Theory of Tax Compliance with
special Reference to Tax Compliance Costs
● Luigi Bernardi and Angela Fraschini (2005) Tax system and tax reforms
in India
● Govinda Rao and Kavita Rao (2006) Trends and issues in Tax policy
and reform in India
● Jaspal Singh and Poonam Sharma (2007) Tax Professionals’ Perception
of the Income Tax System of India: An Empirical Evidence
● V Rani(2011) Taxation of income in India a study of post liberalisation
period
● Jaspal Singh and Arun Sharma (2017) Evaluating the Indian Income Tax
Performance: An Empirical Investigation

82
6.5 Webliography

● https://shodhganga.inflibnet.ac.in/bitstream/10603/239746/9/09_chapter
6.pdf
● https://cleartax.in/s/income-tax
● https://www.bankbazaar.com/tax/direct-tax.html
● https://corporatefinanceinstitute.com/resources/knowledge/other/direct-t
axes/
● https://www.incometaxindia.gov.in/booklets%20%20pamphlets/tax-sala
ried-employees.pdf
● https://www.incometaxindia.gov.in/pages/charts-and-tables.aspx
● https://www.incometax.gov.in/iec/foportal/help/individual/return-applica
ble-1
● https://timesofindia.indiatimes.com/

83
6.6 ANNEXURE
Questionnaire Dear Respondent,

I am a research student at the university of Mumbai. Kindly spare your valuable time to
provide sincere answers to the questionnaire. I assure you that the identity and the data
provided will be confidential and will be used strictly for academic purpose only.
General information:

Name of the Respondent: -

:-

1. Age
18 – 30
31 – 40
41 -50
50 – 60
60 above
2. Gender
Male
Female
Others

3. Occupation of the Respondent

Business
Service
Student
Others
4. Category
General Senior Citizen
Super Senior Citizen

5. Assessee Class

84
 Salary
Business
6. Respondent’s Annual Income?
below 3,00,000
3,00,000 - 5,00,000
5,00,000 - 10,00,000
10,00,000 and above
7. How much amount did you pay as income tax during the previous year?
Below 25,000
25,000 - 50,000
50,000 - 75,000
75,000 - 1,00,000
1,00,000 and above Nil

8. Did you face any difficulty while filing ITR (1 TO 7)?

Yes
No

9. Which tax option do you prefer?

Old Tax Regime
New Tax Regime

10. Mode of filing of IT returns

Self-Assess and file directly
Through Tax Practitioner
Through Employer Office

11. Do you have knowledge about Direct Tax Structure of Salaried person?
Yes
No

12. Do you have knowledge about Tax saving option?

yes
No
85
13. What is your opinion about Tax Rate in India?
Too high
High
Reasonable
Low
Too low
14. Source of Information about the Income Tax Structure to the Respondent?
Tax Practitioner
Income Tax Office
Media, internet
Others

15. Income Tax Rules is very complicated in India

Strongly Agree
Agree
neither agree or disagree
Strongly Disagree

16. Which option is selected for Tax Saving purpose?

Bank saving scheme
LIC Policies
Central Government Schemes
PF/ EPF/ ELSS/ Mutual Funds
Housing Loans
All of the above
Others

17. How much amount did you invest in tax saving schemes previous year?
less than 50,000
50,000 - 75,000
75,000- 1,00,000
above 1,00,000
Nil

18. Which in your opinion will be a suitable Tax System for India?
Flat Tax Rate System
86
Progressive Tax Rate System
Regressive Tax Rate System
Can't say

87
19. Why do you seek guidance from a Tax Practitioner?
Complexity in Income Tax Law
Frequent changes in Tax laws and procedures
Non helping attitude of Tax Department
Avoiding Mistake in Tax compliance

20. In any way, has the New Tax Regime have Benefited you?
yes
No
Felt more burdened

88