Not tax advice. Computation tools only. Have a professional review before filing.
OOpenAccountants
openaccountants/skills/in-income-tax.md
in-income-tax.md547 lines26.2 KB
v20
1---
2name: in-income-tax
3description: >
4 Use this skill whenever asked about Indian income tax for self-employed professionals, freelancers, or sole proprietors. Trigger on phrases like "how much tax do I pay in India", "ITR-4", "ITR-3", "Sugam", "Section 44ADA", "Section 44AD", "presumptive taxation", "new tax regime", "old tax regime", "advance tax India", "TDS credit", "PAN", "80C", "80D", "income tax return India", "surcharge", "health and education cess", "UPI income", "Razorpay payout", "Paytm business", or any question about filing or computing income tax for a self-employed individual in India. This skill covers new regime vs old regime rate tables, presumptive taxation (44ADA for professionals, 44AD for business), regular computation (ITR-3), surcharge, cess, standard deduction, Section 80C/80D deductions, advance tax schedule, TDS credits, PAN requirements, and ITR-4 (Sugam) structure. ALWAYS read this skill before touching any Indian income tax work.
5version: 2.0
6jurisdiction: IN
7tax_year: 2025-26
8category: international
9depends_on:
10 - income-tax-workflow-base
11---
12 
13# India Income Tax (आयकर) -- Self-Employed Skill v2.0
14 
15---
16 
17## Section 1 -- Quick Reference
18 
19| Field | Value |
20|---|---|
21| Country | India (भारत) |
22| Tax | Income Tax + Health & Education Cess (4%) + Surcharge (if applicable) |
23| Currency | INR only |
24| Tax year | Financial Year (FY): 1 April -- 31 March |
25| Current year | FY 2025-26 (Assessment Year 2026-27) |
26| Primary legislation | Income Tax Act, 1961 (as amended by Finance Act, 2025) |
27| Tax authority | Central Board of Direct Taxes (CBDT) / Income Tax Department |
28| Filing portal | incometax.gov.in |
29| Filing deadline | 31 July 2026 (non-audit cases) |
30| Contributor | Open Accountants Community |
31| Validated by | Pending -- requires sign-off by a Chartered Accountant (India) |
32| Skill version | 2.0 |
33 
34### New Tax Regime Rate Table -- FY 2025-26 (Default) [T1]
35 
36| Total Income (INR) | Rate |
37|---|---|
38| 0 -- 4,00,000 | 0% |
39| 4,00,001 -- 8,00,000 | 5% |
40| 8,00,001 -- 12,00,000 | 10% |
41| 12,00,001 -- 16,00,000 | 15% |
42| 16,00,001 -- 20,00,000 | 20% |
43| 20,00,001 -- 24,00,000 | 25% |
44| Above 24,00,000 | 30% |
45 
46**Section 87A Rebate (New Regime):** If taxable income ≤ Rs. 12,00,000, tax is fully rebated (zero tax). For salaried persons with Rs. 75,000 standard deduction, effective zero-tax threshold is Rs. 12,75,000.
47 
48**Cess:** Add 4% Health & Education Cess on all income tax computed (after rebate).
49 
50### Old Tax Regime Rate Table (Below 60) [T1]
51 
52| Total Income (INR) | Rate |
53|---|---|
54| 0 -- 2,50,000 | 0% |
55| 2,50,001 -- 5,00,000 | 5% |
56| 5,00,001 -- 10,00,000 | 20% |
57| Above 10,00,000 | 30% |
58 
59**Section 87A Rebate (Old Regime):** If taxable income ≤ Rs. 5,00,000, rebate up to Rs. 12,500 applies.
60 
61### Surcharge (Both Regimes) [T1]
62 
63| Total Income (INR) | Surcharge Rate |
64|---|---|
65| Up to 50,00,000 | Nil |
66| 50,00,001 -- 1,00,00,000 | 10% of income tax |
67| 1,00,00,001 -- 2,00,00,000 | 15% of income tax |
68| 2,00,00,001 -- 5,00,00,000 | 25% of income tax (new regime only 25%) |
69| Above 5,00,00,000 | 37% (old regime); 25% (new regime cap) |
70 
71### Presumptive Taxation Rates [T1]
72 
73| Section | Who | Presumptive Rate | Threshold |
74|---|---|---|---|
75| 44ADA | Specified professionals (doctors, lawyers, CAs, architects, consultants, etc.) | 50% of gross receipts = deemed profit | Gross receipts ≤ Rs. 75,00,000 |
76| 44AD | Business owners (non-professionals) | 8% of turnover (6% if digital receipts) = deemed profit | Turnover ≤ Rs. 3,00,00,000 |
77 
78### Conservative Defaults [T1]
79 
80| Ambiguity | Default |
81|---|---|
82| Regime not specified | New tax regime |
83| Nature of income unclear (professional vs business) | Professional (44ADA) -- more conservative |
84| Digital vs cash receipt mix unknown | 100% cash (8% rate under 44AD, not 6%) |
85| Filing status unknown | Individual below 60 |
86| TDS credits not confirmed | Exclude until Form 26AS verified |
87| Advance tax paid unknown | Nil advance tax paid |
88 
89### Red Flag Thresholds [T1]
90 
91| Flag | Threshold |
92|---|---|
93| 44ADA limit exceeded | Gross receipts > Rs. 75,00,000 -- must file ITR-3 |
94| 44AD limit exceeded | Turnover > Rs. 3,00,00,000 |
95| Advance tax mandatory | Tax liability > Rs. 10,000 in the year |
96| TAN required (deductor) | If the self-employed person pays salaries or contractor fees |
97| Tax audit required (professional) | If gross receipts > Rs. 75,00,000 under 44ADA |
98 
99---
100 
101## Section 2 -- Required Inputs and Refusal Catalogue
102 
103### Required Inputs
104 
105**Minimum viable:** Bank statement for the full financial year (1 April -- 31 March) in PDF, CSV, or pasted text. Confirmation of whether income is professional or business, and whether new or old regime applies.
106 
107**Recommended:** Form 26AS / Annual Information Statement (AIS) for TDS credits, advance tax challans (ITNS 280), all client invoices, Form 16A (TDS certificates from clients), PAN.
108 
109**Ideal:** Complete books of accounts (if not presumptive), all receipts for deductions under 80C/80D (old regime only), GST returns (if GST-registered).
110 
111### Refusal Catalogue
112 
113**R-IN-1 -- Non-Resident Indians (NRI) and RNOR.** "This skill covers Resident individuals only. NRI/RNOR taxation involves different income sourcing rules, DTAA analysis, and TRC requirements. Escalate."
114 
115**R-IN-2 -- Firms, Companies, LLPs.** "This skill covers individuals (sole proprietors/freelancers) only. Partnership firms, private limited companies, and LLPs file separate returns with different rates. Out of scope."
116 
117**R-IN-3 -- Capital Gains.** "Capital gains on shares, mutual funds, property, or other assets require detailed computation under Sections 111A, 112, and 112A. Escalate."
118 
119**R-IN-4 -- International Transactions / DTAA.** "Double taxation treaty analysis, foreign tax credits, and transfer pricing are out of scope. Escalate."
120 
121**R-IN-5 -- Tax Audit Cases (non-presumptive).** "If gross receipts exceed the presumptive threshold and a tax audit is required under Section 44AB, this skill cannot replace a statutory audit. Escalate."
122 
123---
124 
125## Section 3 -- Transaction Pattern Library
126 
127This is the deterministic pre-classifier. When a bank statement line matches a pattern, apply the treatment directly. If no pattern matches, fall through to Tier 1 rules in Section 5.
128 
129### 3.1 Income Patterns (Credits)
130 
131| Pattern | Tax Line | Treatment | Notes |
132|---|---|---|---|
133| NEFT CR / RTGS CR / IMPS CR [client name] | Gross receipts (44ADA/44AD) | Business income | Professional service fee received -- add to gross receipts |
134| UPI [client name] / UPI CREDIT | Gross receipts | Business income | Digital receipt -- counts as electronic for 44AD 6% rate |
135| RAZORPAY SETTLEMENT / RAZORPAY TRANSFER | Gross receipts | Business income | Payment gateway payout -- match to invoices |
136| PAYTM PAYOUT / PAYTM SETTLEMENT | Gross receipts | Business income | Digital payment payout -- electronic for 44AD |
137| CASHFREE SETTLEMENT / CASHFREE PAYOUT | Gross receipts | Business income | Payment aggregator payout |
138| STRIPE PAYOUT INDIA / STRIPE TRANSFER | Gross receipts | Business income | International invoicing via Stripe India |
139| PAYPAL TRANSFER / PAYPAL PAYOUT | Foreign income (Gross receipts) | Business income in INR | Convert at RBI reference rate on date received |
140| SALARY CREDIT / SAL ADV [employer] | Salary income (Section 17) | NOT professional income | Employment income -- separate head, Form 16 required |
141| INTEREST CREDIT / INT CREDIT / FD INTEREST | Income from Other Sources | NOT business income | Bank interest taxable; FD interest TDS may apply |
142| DIVIDEND CREDIT / DIV [company] | Income from Other Sources | Taxable dividends | Domestic dividends taxable since FY 2020-21 |
143| REFUND FROM INCOMETAX / IT REFUND | EXCLUDE | Not income | Tax refund is not taxable |
144| LOAN DISBURSEMENT / LOAN CREDIT | EXCLUDE | Not income | Loan principal is liability, not income |
145| GST REFUND / IGST REFUND | EXCLUDE | Not income | GST refund is not taxable income |
146 
147### 3.2 Expense Patterns (Debits -- for ITR-3 filers; ITR-4 presumptive filers do not itemise)
148 
149| Pattern | Schedule C Category | Treatment | Notes |
150|---|---|---|---|
151| OFFICE RENT / COMMERCIAL RENT [landlord] | Rent | Fully deductible | Deduct TDS at 10% if monthly rent > Rs. 50,000 |
152| ELECTRICITY [BESCOM/MSEDCL/TATA POWER/TNEB] | Utilities | Deductible (business portion) | Home office: apportion by usage |
153| BROADBAND / JIOFIBER / ACT / AIRTEL BROADBAND | Communication | Deductible (business portion) | Mixed use: apportion |
154| MOBILE RECHARGE / AIRTEL / JIO / VI | Communication | Deductible (business portion) | Business calls only |
155| SWIGGY BUSINESS / ZOMATO FOR BUSINESS | Meals/entertainment | Deductible if business | Document business purpose |
156| AMAZON BUSINESS / FLIPKART BUSINESS | Office supplies | Fully deductible | Business account purchases |
157| ZOHO SUBSCRIPTION / FRESHBOOKS / TALLY | Software | Fully deductible | Business software |
158| GOOGLE ADS / META ADS / LINKEDIN ADS | Advertising | Fully deductible | Digital marketing |
159| CA FEES / LEGAL FEES / CONSULTANT FEES | Professional charges | Fully deductible | TDS may be required (Section 194J) |
160| LIC PREMIUM / TERM INSURANCE | NOT business expense | Section 80C deduction (old regime) | Personal insurance = not a business expense |
161| HEALTH INSURANCE / MEDICLAIM [Star/HDFC Ergo/Bajaj] | NOT business expense | Section 80D deduction (old regime) | NOT deductible as business expense |
162| PPF DEPOSIT / ELSS PURCHASE / NSC | NOT business expense | Section 80C deduction (old regime) | Investment deductions |
163| ADVANCE TAX CHALLAN / ITNS 280 | EXCLUDE | Prepaid tax | Not a business expense; credit against liability |
164| TDS DEDUCTED / TDS TO GOVT | EXCLUDE | Prepaid tax (credit) | Claim as credit on Form 26AS |
165| GST PAYMENT / GST CHALLAN | EXCLUDE | Indirect tax | Not deductible as income tax expense |
166| SWIPE / POS [vendor] | Mixed -- check | Identify payee | Could be office supply, travel, entertainment |
167| PROFESSIONAL TAX [state] | Deductible | Fully deductible | State professional tax paid |
168| BANK CHARGES / ACCOUNT MAINTENANCE / NEFT CHARGES | Bank charges | Fully deductible | Business account only |
169 
170### 3.3 UPI and Digital Platform Patterns
171 
172| Pattern | Treatment | Notes |
173|---|---|---|
174| UPI/CR/[amount]/[client name] | Gross receipts | Electronic -- qualifies for 6% deemed profit under 44AD |
175| PHONEPE CR / GPAY CREDIT / PAYTM CREDIT | Gross receipts | Digital receipt |
176| BHIM UPI / BHIM CREDIT | Gross receipts | Digital receipt |
177| NEFT/RTGS credits | Gross receipts | Electronic -- qualifies for 6% under 44AD |
178| CHEQUE DEPOSIT / CHQ DEP | Gross receipts | Digital (account payee cheque) -- qualifies for 6% |
179| CASH DEPOSIT / CASH / CDM | Gross receipts | CASH -- applies 8% under 44AD, not 6% |
180 
181### 3.4 TDS Deductions (Credits on Statement = Tax Credits)
182 
183| Pattern | Treatment | Notes |
184|---|---|---|
185| TDS BY [client name] / TDS DEDUCTED | Tax credit -- do NOT reduce income | Gross up income; claim TDS as credit on Form 26AS |
186| 194J TDS / TDS 194J | Professional fee TDS at 10% | Client deducted TDS on professional fees |
187| 194C TDS | Contractor TDS at 1%/2% | Contract payment TDS |
188 
189---
190 
191## Section 4 -- Worked Examples
192 
193### Example 1 -- UPI Payment from Client
194 
195**Input line (HDFC Bank statement):**
196`15-Jun-2025 | UPI/CR/250615123456/ALPHA TECH SOLUTIONS | 85,000.00 CR | Bal 3,42,500.00`
197 
198**Reasoning:**
199Credit via UPI from a business client. This is a professional fee receipt. Under Section 44ADA (professional), 50% of gross receipts = deemed profit. Under 44AD (business), 6% applies as UPI is digital/electronic. Confirm whether taxpayer is a specified professional. Receipt is electronic -- qualifies for the 6% rate if under 44AD.
200 
201**Classification:** Gross receipts Rs. 85,000. Add to annual total.
202 
203### Example 2 -- Razorpay Settlement
204 
205**Input line (ICICI Bank statement):**
206`22-Aug-2025 | RAZORPAY SOFTWARE PVT LTD | 1,24,650.00 CR | Ref: RPY2025082211234`
207 
208**Reasoning:**
209Razorpay collects payments on behalf of the seller, deducts their fee, and pays out net amount. The gross receipts (before Razorpay fees) are the taxable income. Razorpay fee of Rs. 350 (approx.) is a business expense. Gross receipts = Rs. 1,25,000; Razorpay fees = Rs. 350 deductible (ITR-3 filers). For presumptive filers (ITR-4), no itemisation -- deemed profit handles all expenses.
210 
211**Classification:** Gross receipts Rs. 1,25,000. Razorpay fee Rs. 350 is deductible for non-presumptive filers only.
212 
213### Example 3 -- LIC Premium Payment
214 
215**Input line (SBI Bank statement):**
216`01-Apr-2025 | LIC PREMIUM/OTH/NEFT | 45,000.00 DR | Balance 2,85,000.00`
217 
218**Reasoning:**
219Life insurance premium. This is NOT a business expense. Under the old regime, LIC premium qualifies for Section 80C deduction up to Rs. 1,50,000 combined limit. Under the new regime, 80C deductions are not available. Cannot be classified as a deductible business expense in either regime.
220 
221**Classification:** EXCLUDE from business expenses. Old regime: add to 80C pool (max Rs. 1,50,000 combined). New regime: no deduction.
222 
223### Example 4 -- TDS Deducted by Client
224 
225**Input line (Axis Bank statement):**
226`10-Jul-2025 | NEFT CR/MNRVA CONSULTING/INV0042 LESS TDS | 90,000.00 CR`
227 
228**Reasoning:**
229Client paid Rs. 90,000 after deducting 10% TDS on Rs. 1,00,000 invoice. The gross income is Rs. 1,00,000 (not Rs. 90,000). The TDS of Rs. 10,000 is a tax credit visible in Form 26AS. Report Rs. 1,00,000 as gross receipt and claim Rs. 10,000 TDS as credit.
230 
231**Classification:** Gross receipts Rs. 1,00,000. TDS credit Rs. 10,000 (verify in Form 26AS).
232 
233### Example 5 -- Cash Deposit
234 
235**Input line (Kotak Bank statement):**
236`05-Sep-2025 | CASH DEPOSIT / CDM / BRANCH | 30,000.00 CR`
237 
238**Reasoning:**
239Cash deposit. For 44AD taxpayers, cash receipts are taxed at 8% deemed profit (not the 6% digital rate). For 44ADA professionals, cash and digital are both 50% deemed -- no distinction. Cannot treat as digital receipt. Ask: was this cash collected from a client for a business service?
240 
241**Classification:** Gross receipts Rs. 30,000 (cash). For 44AD: counted toward 8% deemed profit pool (not 6%).
242 
243### Example 6 -- Advance Tax Challan Payment
244 
245**Input line (HDFC Bank statement):**
246`14-Sep-2025 | INCOMETAX DEPT/ITNS 280/ADVANCE TAX | 25,000.00 DR`
247 
248**Reasoning:**
249Advance tax payment to the Income Tax Department. This is NOT a business expense -- it is a prepayment of income tax liability. Record as advance tax paid (to be credited against final liability). Self-employed persons must pay advance tax in four instalments if annual liability exceeds Rs. 10,000.
250 
251**Classification:** EXCLUDE from income/expenses. Record: Advance tax paid Rs. 25,000 (15 September instalment).
252 
253---
254 
255## Section 5 -- Tier 1 Rules (When Data Is Clear)
256 
257### 5.1 Presumptive Taxation -- Section 44ADA (Professionals)
258 
259**Legislation:** Section 44ADA, Income Tax Act, 1961
260 
261Applicable to specified professionals: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, and any other profession notified by CBDT.
262 
263- Gross receipts ≤ Rs. 75,00,000: eligible for presumptive scheme
264- Deemed profit = 50% of gross receipts (taxpayer may declare higher)
265- No need to maintain books of accounts
266- File ITR-4 (Sugam)
267- No deduction for actual expenses allowed -- 50% covers all
268 
269### 5.2 Presumptive Taxation -- Section 44AD (Business)
270 
271**Legislation:** Section 44AD, Income Tax Act, 1961
272 
273Applicable to any business (non-professional) with turnover ≤ Rs. 3,00,00,000.
274 
275- Deemed profit = 8% of gross turnover (cash receipts)
276- Deemed profit = 6% of gross turnover (digital receipts: NEFT, RTGS, UPI, cheque, electronic transfer)
277- Mixed receipts: apply 6%/8% pro-rata
278- File ITR-4 (Sugam)
279 
280### 5.3 Tax Computation Flow (New Regime)
281 
282```
283Gross receipts / turnover
284- Presumptive expenses (44ADA: 50% of gross; 44AD: 92-94% of gross)
285= Presumptive profit (Business Income)
286+ Other income (interest, dividends, salary)
287= Gross Total Income
288- Standard deduction for salaried component (if any)
289= Total Income
290Apply rate table (Section 1)
291= Income Tax
292x 1.04 (add 4% cess)
293= Total Tax Payable
294- TDS credits (from Form 26AS)
295- Advance tax paid
296= Tax due / refund
297```
298 
299### 5.4 Advance Tax Schedule
300 
301**Legislation:** Sections 207-219, Income Tax Act
302 
303| Instalment | Due Date | Cumulative % of Liability |
304|---|---|---|
305| 1st | 15 June | 15% |
306| 2nd | 15 September | 45% |
307| 3rd | 15 December | 75% |
308| 4th (final) | 15 March | 100% |
309 
310Advance tax is required when estimated tax liability for the year exceeds Rs. 10,000. Shortfall attracts interest under Sections 234B and 234C.
311 
312### 5.5 Interest for Late Payment / Default
313 
314| Situation | Interest | Section |
315|---|---|---|
316| Advance tax not paid / shortfall | 1% per month on shortfall | 234C |
317| Tax not paid by March 31 | 1% per month from April 1 | 234B |
318| Late filing after July 31 | 1% per month on tax due | 234A |
319 
320### 5.6 Filing Deadlines
321 
322| Scenario | Deadline |
323|---|---|
324| Non-audit cases (most freelancers) | 31 July 2026 (for FY 2025-26) |
325| Tax audit cases (Section 44AB) | 31 October 2026 |
326| Belated return | 31 December 2026 (with interest) |
327| Revised return | 31 December 2026 |
328 
329### 5.7 Non-Deductible Items (Both Regimes)
330 
331| Item | Reason |
332|---|---|
333| Income tax itself (advance tax, self-assessment tax) | Not deductible |
334| LIC premiums, PPF, ELSS | Personal investments (80C in old regime only) |
335| Mediclaim/health insurance | Section 80D (old regime only) |
336| Personal drawings / withdrawals | Not a business expense |
337| GST paid on sales | Indirect tax, not income tax deduction |
338| Fines and penalties | Not incurred for business |
339 
340---
341 
342## Section 6 -- Tier 2 Catalogue (Reviewer Judgement Required)
343 
344### 6.1 Regime Selection Optimisation
345 
346Old regime is better only when total deductions (80C + 80D + HRA + home loan interest + other) exceed the tax saving from wider new regime slabs. Flag for reviewer to compute both and compare. Typical breakeven: substantial 80C investments + home loan interest + HRA.
347 
348### 6.2 Mixed Professional and Business Income
349 
350If a taxpayer has both professional income (44ADA) and business income (44AD), each must be computed separately using its own presumptive rate. Combined income is then aggregated. Flag for reviewer.
351 
352### 6.3 Home Office Deduction (ITR-3 filers only)
353 
354Self-employed persons maintaining regular books (ITR-3) may claim proportionate rent, electricity, and internet for a home office. Acceptable apportionment: floor area ratio or dedicated usage hours. 44ADA/44AD presumptive filers cannot claim this separately -- covered by deemed profit.
355 
356### 6.4 PayPal / Foreign Client Receipts
357 
358Foreign receipts converted to INR at SBI TT buying rate on date of receipt (or RBI reference rate). If annual foreign receipts exceed Rs. 20,00,000, the taxpayer may have GST implications. Flag for reviewer.
359 
360### 6.5 Clubbing of Income (Spouse / Minor)
361 
362If income earned by a spouse or minor child is attributable to the taxpayer's assets or business, it may be clubbed with the taxpayer's income. Flag for reviewer if transfers to spouse or minor detected.
363 
364---
365 
366## Section 7 -- Excel Working Paper Template
367 
368```
369INDIA INCOME TAX WORKING PAPER -- FY 2025-26
370Taxpayer name: _______________ PAN: ___________
371Filing form: ITR-4 (Presumptive) / ITR-3 (Regular) [circle one]
372Regime: New / Old [circle one]
373 
374A. GROSS RECEIPTS / TURNOVER
375 A1. Digital receipts (UPI, NEFT, RTGS, cheque) ___________
376 A2. Cash receipts ___________
377 A3. Total gross receipts (A1 + A2) ___________
378 
379B. PRESUMPTIVE PROFIT (ITR-4 only)
380 B1. 44ADA: A3 x 50% ___________
381 B2. 44AD digital: A1 x 6% ___________
382 B3. 44AD cash: A2 x 8% ___________
383 B4. Presumptive profit (B1 or B2+B3) ___________
384 
385C. OTHER INCOME
386 C1. Interest income ___________
387 C2. Dividend income ___________
388 C3. Salary / pension ___________
389 C4. Total other income ___________
390 
391D. GROSS TOTAL INCOME (B4 + C4) ___________
392 
393E. DEDUCTIONS (Old Regime only)
394 E1. Section 80C (LIC, PPF, ELSS, tuition, etc.) ___________
395 E2. Section 80D (health insurance) ___________
396 E3. Section 80G (donations) ___________
397 E4. Total deductions (max 80C: 1,50,000) ___________
398 
399F. TOTAL INCOME (D - E) ___________
400 
401G. TAX COMPUTATION
402 G1. Income tax (per rate table) ___________
403 G2. Less: Section 87A rebate ___________
404 G3. Surcharge (if applicable) ___________
405 G4. Health & Education Cess (4% of G1+G3-G2) ___________
406 G5. Total tax payable ___________
407 
408H. TAX CREDITS
409 H1. TDS (from Form 26AS) ___________
410 H2. Advance tax paid ___________
411 H3. Total credits ___________
412 
413I. NET TAX DUE / REFUND (G5 - H3) ___________
414 
415REVIEWER FLAGS:
416 [ ] Form 26AS verified against bank statement?
417 [ ] Regime choice confirmed?
418 [ ] Cash vs digital receipt split confirmed?
419 [ ] TDS certificates received for all credits?
420 [ ] Advance tax interest computed (234B/234C)?
421```
422 
423---
424 
425## Section 8 -- Bank Statement Reading Guide
426 
427### Indian Bank Statement Formats
428 
429| Bank | Key Format | Key Fields |
430|---|---|---|
431| HDFC Bank | CSV / PDF | Date, Narration, Value Date, Debit, Credit, Closing Balance |
432| ICICI Bank | CSV / Excel | S.No, Value Date, Transaction Date, Cheque/Ref No, Transaction Remarks, Withdrawal (Dr), Deposit (Cr), Balance |
433| SBI | CSV / PDF | Txn Date, Value Date, Description, Ref No/Cheque No, Debit, Credit, Balance |
434| Axis Bank | CSV | Tran Date, CHQNO, Particulars, Debit, Credit, Balance |
435| Kotak Mahindra | XLS | Date, Description, Chq/Ref No, Debit(INR), Credit(INR), Bal(INR) |
436 
437### Key Narration Patterns
438 
439| Narration | Meaning | Tax Action |
440|---|---|---|
441| NEFT/CR/[ref]/[sender] | Electronic credit via NEFT | Business income |
442| UPI/CR/[date]/[ref]/[sender] | UPI credit | Business income (digital) |
443| CASH DEP / CDM | Cash deposit | Business income (cash) |
444| TRF TO [own account] | Internal transfer | Exclude |
445| IMPS/[ref]/[name] | IMPS credit | Business income (digital) |
446| ATW/[ATM ref]/[branch] | ATM withdrawal | Investigate -- personal or business? |
447| INT PD / INTEREST CREDIT | Bank interest | Other income |
448| SALARY/SAL | Salary credit | Employment income |
449| ADVNC TAX / ITNS 280 | Advance tax payment | Tax prepayment (credit) |
450 
451---
452 
453## Section 9 -- Onboarding Fallback
454 
455If the client provides a bank statement but cannot answer onboarding questions immediately:
456 
4571. Classify all UPI/NEFT/RTGS/cheque credits as potential gross receipts (digital)
4582. Classify all CDM/cash deposits as potential gross receipts (cash)
4593. Apply conservative defaults: new regime, professional (44ADA), 50% presumptive profit
4604. Mark all salary credits and interest separately
4615. Flag advance tax challans as prepaid tax credits
4626. Generate working paper with clear PENDING flags
463 
464Present these questions:
465 
466```
467ONBOARDING QUESTIONS -- INDIA INCOME TAX
4681. Are you a specified professional (doctor, CA, lawyer, architect, etc.) or a general business?
4692. New or old tax regime? (Default: new)
4703. Total gross receipts for FY 2025-26?
4714. What % of receipts were received via UPI/NEFT/RTGS/cheque (vs cash)?
4725. TDS deducted by clients -- do you have Form 26AS / AIS downloaded?
4736. Advance tax paid -- any ITNS 280 challans this year?
4747. Old regime only: any LIC, PPF, ELSS, health insurance, home loan repayments?
4758. Is your PAN linked to your bank account?
476```
477 
478---
479 
480## Section 10 -- Reference Material
481 
482### Key Legislation
483 
484| Topic | Section |
485|---|---|
486| Presumptive taxation (professionals) | Section 44ADA |
487| Presumptive taxation (business) | Section 44AD |
488| New tax regime | Section 115BAC |
489| Advance tax | Sections 207-219 |
490| Interest for default | Sections 234A, 234B, 234C |
491| TDS on professional fees | Section 194J |
492| TDS on rent | Section 194I |
493| Section 80C deductions | Section 80C |
494| Health insurance deduction | Section 80D |
495 
496### ITR Form Guide
497 
498| Form | Who Uses It |
499|---|---|
500| ITR-4 (Sugam) | Presumptive income (44ADA/44AD), total income ≤ Rs. 50,00,000 |
501| ITR-3 | Business/professional income NOT under presumptive scheme |
502| ITR-1 (Sahaj) | Salaried individuals only, no business income |
503 
504### Known Gaps / Out of Scope
505 
506- Capital gains (Sections 111A, 112, 112A)
507- NRI / RNOR taxation
508- Partnership firms, companies, LLPs
509- DTAA / double taxation relief
510- Cryptocurrency taxation (VDA -- Section 115BBH)
511 
512### Changelog
513 
514| Version | Date | Change |
515|---|---|---|
516| 2.0 | April 2026 | Full rewrite to v2.0 structure; transaction pattern library; local bank formats; worked examples |
517| 1.0 | 2025 | Initial version |
518 
519### Self-Check
520 
521- [ ] New regime applied by default unless old regime confirmed?
522- [ ] 4% cess applied after rebate?
523- [ ] Surcharge checked for income > Rs. 50,00,000?
524- [ ] Cash vs digital receipts split verified for 44AD?
525- [ ] TDS credits verified against Form 26AS, not just bank statement?
526- [ ] Advance tax interest computed if shortfall > Rs. 10,000?
527 
528---
529 
530## PROHIBITIONS
531 
532- NEVER apply old regime without explicit confirmation from client
533- NEVER allow LIC/PPF/health insurance premiums as business expenses (they are 80C/80D items in old regime only)
534- NEVER use net bank receipt as gross income when TDS was deducted -- always gross up
535- NEVER allow income tax (advance tax, self-assessment tax) as a business deduction
536- NEVER apply the 6% deemed profit rate to cash receipts under 44AD (8% applies)
537- NEVER advise NRI clients using this skill -- escalate
538- NEVER present tax calculations as definitive -- always label as estimated and direct client to their Chartered Accountant for confirmation
539 
540---
541 
542## Disclaimer
543 
544This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a Chartered Accountant or equivalent licensed practitioner in India) before filing or acting upon.
545 
546The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com). Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.
547 

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Quality

Q2: Research-verified

Deep research against tax authority sources. Not yet tested on real data.

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Accountant Review

Unverified
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About

Use this skill whenever asked about Indian income tax for self-employed professionals, freelancers, or sole proprietors. Trigger on phrases like "how much tax do I pay in India", "ITR-4", "ITR-3", "Sugam", "Section 44ADA", "Section 44AD", "presumptive taxation", "new tax regime", "old tax regime", "advance tax India", "TDS credit", "PAN", "80C", "80D", "income tax return India", "surcharge", "health and education cess", "UPI income", "Razorpay payout", "Paytm business", or any question about filing or computing income tax for a self-employed individual in India. This skill covers new regime vs old regime rate tables, presumptive taxation (44ADA for professionals, 44AD for business), regular computation (ITR-3), surcharge, cess, standard deduction, Section 80C/80D deductions, advance tax schedule, TDS credits, PAN requirements, and ITR-4 (Sugam) structure. ALWAYS read this skill before touching any Indian income tax work.

INty-2025

4 of 5 in the IN workflow: