EXECUTIVE SUMMARY

TAX FILING:- E-Filing of IT Returns is the process of electronically

submitting your Income Tax Return to the Income Tax Department.
This electronic submission can be done in one of the following ways:
. MANUALLY :
Where you take the output of the software in XML or non-XML format , convert
to XML in case of the latter and upload it to the Income Tax Website.
AUTOMATICALLY:
Providers that are Authorized E-Return Intermediaries of ITD, are integrated with
the Income Tax Department and authorized to E-File your Income Tax Return.
Such providers allow you to E-File your return with a click of a button.
XML upload is tedious and user may run into issues for incorrect format or
validation error.

INTRODUCTION TO TOPIC
1) HISTORY OF TAX
The Income-Tax was introduced in India for the first time in 1860 by British
rulers following the mutiny of 1857.The period between 1860-1886 was
period of experiments in the context of Income-Tax. This period ended in
1886 when first income tax act came into existence. The pattern laid down
in it for levying of tax continues to operate even to-day though in some
changed form. In 1918 another Act-Income Tax act was, 1918 was passed
but it was short lived and was replaced by income-tax Act, 1922 and
remained in existence and operations till 31st March 1961.

2) PRESENT ACT
On the recommendation of the law commission and direct tax enquiry
committee and in consultation with Law Ministry a bill was framed. This bill
was referred to a select committee and finally passed in sep. 1961. This act
came into force from 1st April 1962 in whole of the country. Income tax Act
1961 is a comprehensive Act and consists of 298 section, sub-section
running into thousands, schedules, rules, etc. and is supported by other acts
and rules. This act has been amended acts since 1961. The annual finance
bill represented to Parliament along with budget make far-reaching
amendments in this acts every year.

3) IMPORTANCE OF TAX
The taxes levied by government from the pool of resources to be used for the
collective benefit of the public. The Taxation is an exercise in the collective
solution of individual problems. The state takes upon itself the duty of
solving the problem of the underprivileged and needs finances for this
purpose. The government can mobilize resources by imposing taxes on the
privileged ones.
The taxation structure of the country can play a very important role in the
working of our economy. Some time back the emphasis was on higher rates
of tax and more incentives. But recently the emphasis has shifted to the
decrease in the rates of tax and withdrawal of incentives. While designing
the taxation structure it has to be seen that it is in conformity with our
economic and social objectives. it should not impair the incentives to
personal savings and investment flow and on the other hand it should not
result into decrease in revenue to states.
In our present day economic structure income tax plays a vital role as a
source of
Revenue and a measure of economic disparity. Our taxation structure
provides for two types of taxes-direct and indirect: the income tax, wealth
tax and gift tax are direct taxes whereas sales tax and excise tax are indirect
taxes.

 According to section 14 of Income-Tax Act 1961 provides for the

computation of total income of an assessee which is divided into five
heads of income. Each head of the income has its own method of
computation. These five heads are:
1) Income From SALARIES;
2) Income from HOUSE PROPERTY;
3) Income From PROFITS AND

GAINS

OF

PROFESSION;
4) Income from PROFITS AND GAINS; and
5) Income from OTHER SOURCES.

TAX SLABS

RESEARCH METHODOLOGY

BUSINESS

AND

Research:-The systematic investigation into and study of materials and sources in

order to establish facts and reach new conclusions.

Research Process:-

TYPE OF RESEARCH/ STUDY THE SIP IS RELATED TO.

Data collection :Primary data-- 1. Discussions done with staff members.

2. Discussions with clients.

Duration of the Research:- Duration of Research was two months.

Research /Study Process

Type of research/ Study the SIP is related to.
Sample design if used
Sample size if used
Data collection
Duration of the Research /Study Process
Data Analysis method used

PART 1: PROCESS FOR FILING TAX RETURNS

Whether you wish to go in for the quick e-filing process or manually file your income tax
returns, here is a helpful guide to assist you in completing and submitting this vital document by
yourself.
1) GO

TO THE WEBSITE http://www.incometaxindia.gov.in/

2) CLICK THE LINK E-FILE INCOME TAX RETURN AT THE

TOP LEFT CORNER OF THE HOME PAGE

3) SELECT THE

CORRECT FORM - There are two income tax forms for

salaried individuals. ITR-1 is for those who derive their income from salary,
pension or interest while ITR-2 is for income from capital gains, house property
and other sources. Those who wish to submit their tax returns manually may
download the PDF forms - External website that opens in a new window from
here. These forms need to be printed, filled by hand and signed before submitting
to your local income tax office.
For Individuals, HUF (Hindu Undivided Families)

Select appropriate Income

Tax Return (ITR)
Preparation Software

ITR-1

ITR-2

ITR-3

ITR-4

Individu
al

Individu
al

Individual

Individua

& HUF

& HUF

& HUF

Income from
Salary/Pension

Income from
Other Sources
(only Interest
income or Family
Pension)

Income/Loss
from Other

Sources

Income/Loss
from House
Property

Capital
Gains/Loss on
sale of
investments/prop
erty

Partner in a
partnership Firm

Income from
Proprietary
Business/Professi
on

For Association of Persons (AoP), Body of Individuals (BoI), Local Authority,

Companies, Trusts, Fringe Benefit Tax (FBT) Return

Select appropriate Income

Tax Return (ITR)
Preparation Software

ITR5

Firms, AoP,
BoI, LA

ITR-6

ITR7

Compani
es

Trust
s

Income/Loss from
Other Sources

Income/Loss from
House Property

I
T
R
-8

Only
FBT

Capital
Gains/Loss on
sale of
investments/prope
rty

Income/Loss from
Business

Fringe Benefit
Tax

ITR-7 will not be available for e-Filing

SELECT APPROPRIATE TYPE OF RETURN FORM ITR 1 TO

ITR 8
WHO CAN USE WHICH FORM
ITR-1
This Form can be used by an individual whose total income during the previous
year i.e., financial year 2008-09 includes income chargeable to income-tax under
the head salaries or income in the nature of family pension as defined in the
Explanation to clause (ixia) of section 57 but does not include any other income
except income by way of interest chargeable to income-tax under the head income
from other sources. There should not be any exempt income other than agriculture
income and interest income. It may please be noted that a person who is entitled to
use this form shall not use Form ITR-2. Further, a person in whose income the

income of other person like his/ her spouse, minor child, etc. is to be clubbed is
also not entitled to use this form.

ITR-2
This Form can be used by an individual or a Hindu Undivided family whose total
income does not include any income chargeable to income-tax under he head
Profits or gains of business or profession. It may please be noted that a person
who is entitled to use Form ITR-1 shall not use this form. Further, a person who is
partner in a firm is required to use Form ITR-3. In case a partner in the firm does
not have any income from the firm by way of interest, salary, etc. and has only
exempt income by way of share in the profit of the firm shall not use Form ITR-2.

ITR-3
This Form can be used a person being an individual or a Hindu Undivided family
who is a partner in a firm and where income chargeable to income-tax under the
head Profits or gains of business or profession does not include any income
except the income by way of any interest, salary, bonus, commission or
remuneration, by whatever name called, due to, or received by him from such firm.
In case a partner in the firm does not have any income from the firm by way of
interest, salary, etc. and has only exempt income by way of share in the profit of
the firm shall use this form only and not Form ITR-2.

ITR-4
This Form can be used by a person being an individual or a Hindu Undivided
family who is carrying out a proprietary business or profession.

ITR-5
This Form can be used a person being a firm, AOP, BOI, artificial juridical person
referred to in section 2(31) (vii), cooperative society and local authority. However,
a person who is required to file the return of income under section 139(4) (a) or
139(4) (a) or 139(4) (b) or 139(4) (c) or 139(4) (d) shall not use this form.

ITR-6
This Form can be used by a company, other than a company claiming exemption
under section 11

ITR-7
This Form can be used by persons including companies who are required to furnish
return under section 139(4A) or under section 139(4B) or under section 139(4C) or
under section 139(4D).

ITR-8
This Form is applicable in case of a person who is not required to furnish the return
of income but is required to furnish the return of fringe benefits
4)

USE OF RETURN PREPARATION SOFTWARE - Those citizens

who wish to avail the e-filing system need to download the Return Preparation
Software - External website that opens in a new window for each ITR form. This
software is an excel file that requires one to type in personal details as well as
financial information from TDS certificates, bank statements, deductions made and
interest statements.

5) GENERATING AN XML FILE - After keying in the details, check once

for accuracy. After you are satisfied, click the 'Generate' button to create your tax
return in XML format. This format helps in sharing of structured data across
different information systems. Save this XML file on your computer.

6) REGISTER - The next step requires you to register at the Income Tax
website - External website that opens in a new window. Your registered Permanent
Account Number (PAN card) has to be entered as your username.

7) LOGIN - After registering, enter your user id and password to login. Click on
the relevant form on the left panel and select 'Submit Return'.

8) UPLOAD

XML - Browse to select the XML file, which you had generated

and saved in Step 3. Click on the 'Upload' button to upload the file.

9) ACKNOWLEDGEMENT - After the file is successfully uploaded,

acknowledgement details or the ITR-V Form will be displayed. Take a printout of

this acknowledgement for your records.

10) DIGITAL SIGNATURE - If your income tax return was digitally signed,
then no further paperwork or visit to the income tax office is needed. Here is some
information about how to get a digital signature - External website that opens in a
new window.

INSTRUCTIONS FOR FILLING UP FORM ITR-V

1. Rule 12(3)(iii) of the Income-tax Rules, 1962 provides that any assessed can file
a return of income electronically without the use of a digital signature. In such

cases only an acknowledgement needs to be filed with the Department physically

by the assessed.
2. Once a return of income is filed electronically on successful transmission of the
data, Form ITR-V duly filled shall be generated by the Income-tax Departments
server to the assessed. This ITR-V will also contain the acknowledgement number
of electronic transmission and the date of the transmission as an evidence of filing
for the benefit of the assessed. Please down load a copy of such duly filled Form
and verify under your signature in the space provided. In case the return was
prepared by a Tax Return Preparer (TRP), the particulars of TRP be also filled and
this verification form be countersigned by the TRP.
3. This acknowledgement in Form ITR-V duly signed by the assessed needs to be
filed physically (in duplicate) with the concerned Assessing Officer. One copy of
this acknowledgement would be returned back to the assessed for his record.
4. The codes for the form number and the status of the assessed shall be generated
electronically by the Departments server.

11) VERIFICATION - If your return is not digitally signed, then you need to
print and fill up the verification part of the acknowledgement cum verification
form (ITR-V). This has to be signed and submitted to the local Income Tax Office
within 15 days to complete the e-filing process.

12) ADDITIONAL ASSISTANCE - In case you require any more help in

filing the paper copy of the return, please contact the Public Relations Officer at
your local Income Tax Office. One may also phone the Aayakar Sam Park Kendra
(ASK) call center at 124-2438000 or email at ask@incometaxindia.gov.in.

LIMITATIONS

Every work has its own limitations. Limitations are extent to which the process
should not exceed. The following limitations for the project are:

INVESTOR IGNORANCE was faced during discussions with

respondents as the topic is related with their income part so respondents
were a bit reluctant towards disclosing their true feelings, so I have to first
built up the trust & then talk about the investments.

TIME CONSTRAINTS have also become a major limitation as

Portfolio Management is such a vast subject which involves in-depth
study analysis.

GETTING APPOINTMENTS with people was difficult as most of the

people were busy and it was difficult to contact them again and again.

PEOPLE PROVIDE FALSE DATA as they were scared about

providing actual data such as net income, premium paid etc.

CONCLUSION

PREFERRED INVESTMENTS
AFTER MY RESEARCH I CAME TO A CONCLUSION THAT PEOPLE
HAVE FOLLOWING PREFERRENCES REGARDING THE
INVESTMENT OPTIONS AVAILABLE

MOST PREFERRED:
Insurance
Fixed deposit
Mutual fund

LEAST PREFERRED:
Shares.
Govt. securities.

REASONS FOR NOT INVESTING

ACCORDING TO MY STUDY, PEOPLE HAD THE FOLLOWING REASONS
FOR NOT ACTIVELY INVESTING THEIR ADDITIONAL MONEY.
LACK OF KNOWLEDGE
LACK OF TRUST
LOW INCOME
MARKET CONDITIONS
NO SAVINGS

BIBLIOGRAPHY

WEB SITES

www.moneycontrol.com
www.learntoinvest.com
www.valueresearchonline.com

BOOKS
INVESTMENT AND PORTFOLIO ANALYSIS
By: Prasana Chandra
BASIC INCOME TAX TIPS