An Income Tax is a taxation that is imposed on an individual or business by the Government on the income the former generate. In our country, Income Tax is monitored and administered by the Central Board of Direct Taxes (CBDT) under the Ministry of Finance. STEPS TO FILE INCOME TAX
Follow the steps below to file your Income Tax:- Sign up or register on incometaxindiaefiling.gov.in
- Your PAN number as your User ID
- View your Tax Credit Statement. Note that your TDS certificate needs to tally with the figures in your statement
- Now, click on Income Tax return form
- Select your Financial Year
- Download the ITR form which is applicable to you
- Fill in the necessary details using your TDS certificate in the excel attached
- Click Calculate Tax
- Make the payment and fill up the details in the challan
- Click on ‘validate’ and confirm the details
- An XML file will be generated
- Save the XML file
- Now Click on ‘Upload Return’ and upload your XML file
- A window will pop up where you will be needed to sign the file digitally
- If you have digital signature, then select ‘yes’, otherwise ‘no’
- This will generate the ITR Verification form (ITR-V)
- Take a print out of the same and sign it in blue ink
- Post the form through speed post or ordinary post within 120 days of online submission of your Income Tax Filing to the following address:
Income-Tax Department-CPC,Post Bag No.1,Electronic City Post Office,Bengaluru – 560100,Karnataka.DOCUMENTS REQUIRED TO FILE INCOME TAX RETURN
The following are the essentials for Income Tax Returns:- Your PAN number, AADHAR Card details, and Current address
- All Bank account details of the selected Financial Year
- Proofs of income (salary slips, Fixed Deposits, Savings Account, etc.)
- The deductions claimed under section 80
- Details of payments of TDS and advanced tax
Income Tax Calculator
An Income Tax Calculator is an online calculation tool which helps in summing up the amount of tax an individual needs to pay. The calculation is done on the basis of the budget proposed by the Union. How to Calculate Income Tax?
To calculate tax, you can use the easy online Income Tax Calculator tools. Follow the steps provided below to calculate your tax liability:- Select the financial year of which you wish to calculate the tax
- Select your age group
- Click ‘Go to Next Step’
- Put in your salary that is taxable (taxable salary is the salary which is the amount left after deducting exemptions like HRA, LTA, etc.)
- Now enter the other necessary details like interest income, rental income, etc.
- Once again, Click on ‘Go to Next Step’
- Now input your taxation saving investments under the following sections: 80C, 80D, 80E, 80G, and 80TTA
- Click on ‘Calculate’, and your taxation liability will be displayed
Illustration
To understand how to calculate tax liability, a quick example is as follows. Say, Dipak works in an IT Firm and receives a basic salary of Rs. 50,000. He also receives a House Rent Allowance of Rs. 25,000 and a Special Allowance of Rs. 13,000 per month. He lives in a rented house in Mumbai by giving a rent of Rs. 20,000. He also receives a Leave Travel Allowance of Rs. 20,000 per annum. So the structure of Dipak’s income is as follows:
| Nature | Amount | Deduction | Taxable |
| Basic Salary | Rs. 6,00,000 (P.A.) | — | Rs. 6,00,000 |
| House Rent Allowance | Rs. 3,00,000 | Rs. 1,80,000 | Rs. 1,20,000 |
| Leave Travel Allowance | Rs. 20,000 | Rs. 12,000 (after the submission of bill) | Rs. 8,000 |
| Special Allowance | Rs. 1,56,000 | — | Rs. 1,56,000 |
| Gross Total | | | Rs. 8,34,000 |
NOTE: You can also calculate the HRA component on any HRA calculator tool available online. Income Tax calculation includes incomes one receives from several sources. Incomes generated from salary from employer, rental income/interest paid on home loan, incomes that generate from purchase or sale of shares, income from business/freelancing, interest from savings account, fixed deposits, or bonds, are all must be incorporated in the Income Tax calculation. In our example already mentioned above, Dipak receives an income from his savings account, which amounts to Rs. 8,400; interest from his FDs which is Rs. 10,000 in the whole of a given year. To save his Income Tax, Dipak has some investments like PPF (Rs. 50,000) and has also purchased ELSS of Rs. 20,000 (in a year). He also has a LIC premium of Rs. 8,000 and a medical insurance of Rs. 12,000. These investments help Dipak in claiming deductions in his Income Tax under the following sections:| Nature | Deduction (Max.) | Valid Investments | Amount Claimed |
| Section 80C | Rs. 1,50,000 | PPF deposit (Rs.50,000)ELSS (Rs. 20,000)LIC Premium (Rs. 8,000)EPF (12%) which gets deducted by his employer (Rs. 72,000) | Rs. 1,50,000 |
| Section 80D | Rs. 25,000 (self)Rs. 50,000 (parents) | Medical Insurance (Rs. 12,000) | Rs. 12,000 |
| Section 80TTA | Rs. 10,000 | Interest from Savings Account (Rs. 8,400) | Rs. 8,400 |
So, now we have to calculate Dipak’s Gross Taxable income after including the deductions he gets from his tax saving investments:| Nature | Amount | Total |
| Income generated from Salary | Rs. 8,34,000 | |
| Income generated from other sources | Rs. 18,400 | |
| Gross Total of Income generated (Salary+others) | | Rs. 8,52,400 |
| Deduction under Section 80C | Rs. 1,50,000 | |
| Deduction under Section 80D | Rs. 12,000 | |
| Deduction under Section 80TTA | Rs. 8,400 | Rs. 1,70,400 |
| Total Taxable Income | | Rs. 6,82,000 |
In India, Income Taxation is calculated based on tax slab. After making deductions like the above, deductions of taxes already paid and Tax Deducted at Source (TDS), the remaining taxable income is then taxed at the proposed slab rate. TAX SLAB: | Gender |
| Taxable Income | Rate of Taxation |
| Upto Rs. 2,50,000 | Exemption from tax |
| Rs. 2,50,000 to Rs, 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | Rs. 12,500+20% of income exceeding Rs. 500,000 |
| Above Rs. 10,00,000 | Rs. 1,12,500+30% of income exceeding Rs. 10,00,000 |
| Senior Citizen |
| Taxable Income | Rate of Taxation |
| Upto Rs. 3,00,000 | Exemption from taxation |
| Rs. 3,00,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | Rs.10,000+20% of income exceeding Rs. 500,000 |
| Above Rs. 10,00,000 | Rs. 1,10,000+30% of income exceeding Rs . 10,00,000 |
| Very Senior Citizen |
| Taxable Income | Rate of Taxation |
| Upto Rs. 5,00,000 | Exemption from taxation |
| Rs. 5,00,0001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | Rs. 1,00,000+30% of income exceeding of Rs. 10,00,000 |
So, as per the tax slab, Income Tax for Dipak’s taxable income will be as follows:| Taxable Income | Tax Rate | Amount |
| Up to Rs. 2,50,000 | Exemption from Taxation | 0 |
| Rs. 2,50,000 to Rs. 5,00,000 | 5% | 12,500 |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% | 36,400 |
| Above Rs. 10,00,000 | 30% | 0 |
| Cess | 4% of Total Tax [4%(Rs. 12,500+Rs36,400)] | 1,956 |
| Total Income Tax | Rs. 12,500+Rs.36,400+Rs.1,956 | Rs. 50,856 |
Thus, Dipak’s Income Tax would be Rs. 50,856.NOTE: The Union Budget for FY2019-20 has proposed full tax rebate for income up to Rs. 5,00,000 under section 87A. Glossary: Tax Deduction Section? Below is a detailed list of the sections (already aforementioned) that aids in deductions of Income Tax. Section 80C: Under this section, one can claim a deduction up to Rs. 1,50,000 under certain payments or investments one makes. This section also incorporates four subsections. The following investments are eligible for this section:- Life Insurance
- Sukanya Samriddhi Yojana
- Public Provident Fund (PPF)
- Equity Linked Saving Scheme (ELSS)
- Five Year Bank Deposits
- Stamp Duty and Registration Charges
- Senior Citizens Saving Scheme
- National Savings Certificate
- Home Loan Principal Repayment
Section 80D: This section allows an individual to avail deductions by paying premium towards a government-issued policy of health insurance. Policies for self, spouse, and dependent children can help in deductions too. Under this section, a maximum of Rs. 100,000 can be claimed. Section 80E: Under this section, an individual can avail deductions when he gets an approved loan from a certified financial or charitable institution for his or her ward’s higher education. However, one must note that the institution which is giving them the loan is permitted for tax benefits. The maximum amount that can be deducted under this section is Rs. 3 lakhs. Section 80G: Under this section, tax deductions can be availed on the funds that has been donated to a charitable institution. The limit of this deduction is dependent on the following factors:- 100% deductions without limit- Donations made to National Defence Fund, National Illness Assistance Fund, Prime Minister’s Relief Fund, etc.
- 100% deductions with qualifying limits: donations to family planning and sports development organisations.
- 50% deductions without limits: Donations to Prime Minister’s Drought Relief Fund, Rajiv Gandhi Foundation, etc.
- 50% deductions with qualifying limits: Donations to Places of Local authority or religious institutions.
