Income Tax Return (salary)

Income tax has to be paid by every individual person, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), corporate firms, companies, local authorities and all other artificial juridical persons that generate income.

Taxes are calculated on the annual income of a person, and an annual cycle (year) in the eyes of the Income Tax law starts on the 1st of April and ends on the 31st of March of the next calendar year.

The law recognizes and classifies the year as “Previous Year” and “Assessment Year”.

The year in which income is earned is called the previous year and the year in which it is charged to tax is called the assessment year.

For example: Income earned between April 1st 2014 and March 31st 2015 is called the income of the previous year and will be charged to tax in the next year, or the assessment year that starts on April 1st 2015.

Taxes are collected by the government in three primary ways:

  1. Voluntary payment by taxpayers into designated banks, like advance tax and self-assessment tax.
  2. Taxes Deducted at Source (TDS) which is deducted from your monthly salary, before you receive it.
  3. Taxes Collected (TCS).

COMPULSORY FILING OF INCOME TAX RETURN

It is mandatory for one to file income tax returns in India if the following conditions are applicable -

  • If the gross total annual income (before deductions under 80C to 80U) is Rs. 2,50,000 (for ages less than 60 years), Rs. 3,00,000 (for ages 60 years but less than 80 years) and Rs. 5,00,000 (for ages 80 years and above)
  • If it’s a company or firm, irrespective of the profit or loss made in a financial year
  • If a tax refund needs to be claimed
  • If a loss under a head of income needs to be carried forward
  • If being a resident of India, one has an asset or financial interest in any entity located outside India
  • If being a resident of India, one is a signing authority in a foreign account
  • If one receives income derived from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust
  • If one is applying for a loan or a visa
  • If an NRI derives any or all of his/her income through sources in India, that income is liable to be taxable in India, and income tax returns for the same will be necessary.

In the following cases will require an e-filing of Income Tax:

  • In case a refund is required
  • In case the gross total annual income exceeds Rs. 5,00,000
  • In case an income tax refund is required





ADVANTAGES

BENEFITS OF FILING OF RETURN

  1. Creating a favourable financial history - Online filing of the income tax returns actually creates a history of your financial records with the tax department in a much faster and easier way. This history is favoured by a lot of organisations, be it financial or otherwise, whom you might have a business relationship with in the future.
  2. Proof of financial record - Having an ITR-V form is always handy, since one can readily furnish the same as a proof for any kind of financial liability or opening a line of credit.
  3. In case one has missed filing tax returns for the previous year, every additional day till July 31 increases the penal interest. Thus, filing a tax return in advance is very advisable.



PROCESS FLOW


INCOME TAX SLAB RATE FOR A.Y. 2016-17:

For Individuals Below 60 Years of Age

Income Tax Slab

Income Tax Rate

Income up to Rs. 2,50,000

Nil

Income between Rs. 2,50,001 - Rs. 5,00,000

10% of income exceeding Rs. 2,50,000

Income between Rs. 5,00,001 - Rs. 10,00,000

Rs. 25,000 plus 20% of income exceeding Rs. 5,00,000

Income above Rs. 10,00,000

Rs. 1,25,000 plus 30% of income exceeding Rs. 10,00,000

For Resident Senior Citizens (age 60 years or more but less than 80 years)

Income Tax Slab

Income Tax Rate

Income up to Rs. 3,00,000

Nil

Income between Rs. 3,00,001 - Rs. 5,00,000

10% of income exceeding Rs. 3,00,000

Income between Rs. 5,00,001 - Rs. 10,00,000

Rs. 20,000 plus 20% of income exceeding Rs. 5,00,000

Income above Rs. 10,00,000

Rs. 1,20,000 plus 30% of income exceeding Rs. 10,00,000


For Resident Super Senior Citizens (age 80 years or more)

Income Tax Slab

Income Tax Rate

Income up to Rs. 5,00,000

Nil

Income between Rs. 5,00,001 - Rs. 10,00,000

20% of income exceeding Rs. 5,00,000

Income above Rs. 10,00,000

Rs. 1,00,000 plus 30% of income exceeding Rs. 10,00,000

 


FAQS

Yes. You can file your taxes with us by providing us Form 16 from all the employers
You do not need to pay inheritance taxes in India . You need to pay taxes only when you sell the property in India as capital gains tax.
Persons earning income of more than Rs. 500,000 in a year are compulsorily required to e-file their Income Tax Returns. Paper returns are not accepted.
TDS means Tax Deducted at Source. It is the amount withheld from payments of various kinds such as salary, contract payment, commission etc. This withheld amount can be adjusted against your tax due.
You can file a self-declaration to the banker in form 15H stating that your income is below taxable limit. The form is available with your banker or the local Income-Tax office and can be downloaded from the website http://www.incometaxindia.gov.in/. This form should be filed before the interests begin to accrue in the fixed deposit account, since the declaration has no retrospective effect.
The employer is bound by law to issue TDS certificates or Form 16 to the employees. He will have to pay a penalty of Rs. 100 per day of default u/s 272A(2)g. You may complain to the assessing officer in case you do not receive this certificate. You cannot get the credit of taxes paid unless Form 16 details are filled in the ITR Form.
The ultimate responsibility to pay tax rests on the person who has earned income. If the employee deposits such tax with the employer in form of TDS then the employer will be liable for interest and penalty for failure to deduct tax.
In the case if you have tax payable then, yes, if you have not furnished the return within the due date, you will have to pay interest on tax due. If the return is not filed up to the end of the Assessment Year i.e. 31st March of the relevant assessment year then in addition to interest, a penalty of Rs. 5,000 may be levied by the assessing officer under section 271F.
A taxpayer may pay tax in any of the following forms: 1. Tax Deducted at Source (TDS) 2. Tax Collected at Source (TCS) 3. Advance tax or Self-assessment Tax or Payment of tax on regular assessment. The Income-tax Department maintains the database of the total tax paid by the taxpayer (i.e., tax credit in the account of a taxpayer). Form 26AS is an annual statement maintained under Rule 31AB of the Income-tax Rules disclosing the details of tax credit in his account as per the database of Income-tax Department.
Form 16 is a certificate or a document that is issued to salaried personnel in India by their respective employers. The Form 16 is provided by an Employer to the Employee and is used by the employee as reference as well as proof of TDS while filing Income Tax Returns. Form 16 is divided in two parts – Part A and Part B. Part A is the certificate of TDS issued by employer. Part B is annexure containing details of salary paid, other income and tax deducted.
Filing your individual tax return is mandatory by Income tax Law if the gross total income exceeds the basic exemption limit. Even if TDS is deducted from your salary by the employer, Income Tax filing is a proof that these taxes have been deposited in the government account. In many cases you are eligible for refunds and you can claim these only when you file your returns with the ITD.
If you do not file your return the following implications would have to be faced: 1. Your income-tax returns validate your credit worthiness before financial institutions and make it possible for you to access many financial benefits such as bank credits, etc. 2. You will be issued a notice by the Income Tax department for non-filing of return 3. There could be additional interest and penalties levied 4. You will not be able to carry forward your losses if any Also, in certain cases while applying for visas you will be asked to present your past 3 years IT return.
There are some disadvantages of filing after due date: • You will not be able to revise your return • You cannot carry forward losses incurred under ‘Capital Gains’ or ‘Profits and Gains of Business or Profession’ • There may be additional interest and penalty levied for the delay in filing
Yes. Apart from tax saving investments there are a lot of incomes that are exempt from Income Tax and hence are reduced from your taxable salary while making TDS calculations. The commonly allowable exemptions are 1. House Rent Allowance 2. Leave travel allowance 3. Medical allowance 4. Transport allowance There is a limit for certain allowances and others are exempt subject to certain conditions. Apart from this there are a lot of special allowances that are allowed u/s 10(14).
You need to prepare your ITR in order to assess your actual tax liability. This amount is the actual amount due to the government in form of taxes. Refund is the amount of difference if any between the tax liability as per the ITR and the TDS deducted from your salary/receipts. You are eligible for claiming a refund from the IT department only when you file the return of income. This is also known as claiming your TDS credits from the government

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