After having identified your sources of income, you need to select the right income tax form. Forms have been categorized on the basis of streams of income. The income tax website clearly specifies which form to pick, depending on your stream of income. For .e.g. if you are a salaried individual and have only salary and income from other sources as your source of income, then you need to pick ITR-1.
We are ten days away from the deadline of filing income tax returns. You now need to get your act together if you haven’t yet done the groundwork to file your returns. Here is a quick guide of the steps you should follow to ensure that you are able to meet the deadline without any hassles.
- Identify all your sources of income
Income can be from various sources such as salary, business, renting of a owned house, capital gains on share trading or sale of immovable property, fees for consultancy services rendered or from other sources such as bank interest. The first step is to identify all your sources of income.
- Ensure that important documents are handy
You will need to have some documents in place which will help in filling the form. For income from salary, Form 16 is needed, for capital gains on shares, transaction documents may be needed and for income from other sources, bank passbook and other supporting documents may be needed. Make sure you keep all the documents handy so that lack of information/insufficient does not obstruct your return filing process.
- Select the right income tax form
After having identified your sources of income, you need to select the right income tax form. Forms have been categorized on the basis of streams of income. The income tax website clearly specifies which form to pick, depending on your stream of income. For .e.g. if you are a salaried individual and have only salary and income from other sources as your source of income, then you need to pick ITR-1.
- Arrive at your taxable income number
In order to arrive at your taxable income number, you need to add all your sources of income which will give you your gross total income number; and then subtract the deductions available under Section VI-A of the Income tax Act from the gross total income. The number you arrive at will be your taxable income. The deductions available under Section VI-A of the Income tax Act pertain to section 80 of the Income tax Act.
- Calculate your tax liability
Depending on the category you fall in (senior citizen, women) and your taxable income quantum, you will have to identify the tax bracket that you fall into and accordingly calculate the tax amount.
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Individuals other than women and those above 65 years Women below the age of 65 years Individuals 65 years and above Up to Rs. 160,000 Nil Up to Rs. 190,000 Nil Up to Rs. 240,000 Nil Rs, 160,001- Rs. 300,000 10% in excess of Rs. 160,000 Rs, 190,001- Rs. 300,000 10% in excess of Rs. 190,000 Rs, 240,001- Rs. 300,000 10% in excess of Rs. 240,000 Rs. 300,001- Rs. 500,000 Rs. 14,000 + 20% of income in excess of Rs. 300,000 Rs. 300,001- Rs. 500,000 Rs. 11,000 + 20% of income in excess of Rs. 300,000 Rs. 300,001- Rs. 500,000 Rs. 6,000 + 20% of income in excess of Rs. 300,000 Above Rs. 500,000 Rs. 54,000+ 30% of income in excess of Rs. 500,000 Above Rs. 500,000 Rs. 51,000+ 30% of income in excess of Rs. 500,000 Above Rs. 500,000 Rs. 46,000+ 30% of income in excess of Rs. 500,000
So for a woman, if the taxable income is up to Rs. 190,000, then the tax liability is nil.
After calculating the tax, education cess including secondary and higher secondary cess needs to be added to the tune of 3% to arrive at the tax liable figure inclusive of cess.
- Calculate tax payable
In order to assess the tax you need to pay to the income tax authorities, subtract tax deducted at source (TDS) from the tax liability calculated above. The balance will be the amount you need to pay. You should pay the same to the Income tax authorities. The same can be done online or you can pay cash at any designated bank branch or by cheque at a bank branch where you have an account. You will get a receipt number also called the challan number which is required to be quoted in your income tax return form.
In cases where the TDS is greater than your tax liability, you will be eligible for a tax refund. For the same, you need to clearly specify your bank account number and in case you want an electronic refund, the MICR code needs to be mentioned.
- Information on exempt income and Annual information return
The income tax authorities require you to disclose exempt income received during the financial year and all transactions crossing a particular threshold under Annual information return. This section is as important as all other details that need to be filled. So make sure adequate importance is given to it.
You do not have a moment to lose, the last day to file returns is tommorrow! (July 31st) So hurry!