Compute income tax liability and file your return

Compute income tax liability and file your return

Compute income tax liability and file your return
Is filing Income Tax return for a salaried person is rocket science? Won’t it be better if we file returns on our own?
 
Based on this, some frequently asked questions are answered to help filing I-T returns for salaried employees.
 
1 What is financial year (FY) and what is assessment year (AY)?
The year in which we earn our income is financial year (FY). The year in which the incomes are assessed for tax is assessment year (AY).

FY-Income earning year starts from April 2016 ends with March 2017(2016-17). The tax for FY is assessed in 2017-18 (AY).

2 What is total income and taxable income?
The total income is gross salary plus other incomes (if any). Whereas, the taxable income is the income upon which the tax to be paid.

For instance, if total salary plus other incomes for FY16-17 is Rs 10 lakh, and an investment of Rs 1.50 lakh has been made in approved securities, then the total income is Rs 10 lakh and the taxable income is Rs 8.50 lakh. I-T is payable upon Rs 8.50 lakh.

3 Which investments qualify for deduction under Sec. 80C?
The contribution to  Employee’s PF, Life Insurance Premium, Public Provident Fund, ULIP Policy, Investments in bank FD (Tax Saver Scheme), ELSS (equity linked savings scheme) Funds, National Savings Certificates, Housing Loan Instalments, Payment of Children’s Tuition fee (Up-to two children) are eligible deduction under Sec 80C-(Maximum Rs 1.50 lakh).

4 Can the HRA received be offset against the rent paid for the residence?
The rent paid by you is exempted from income tax subject to certain stipulations under [Section 10(13A)]which depends on the annual income, annual rent paid, property location and actual HRA received.  

5 Can the Interest paid on housing loan (HL) qualifies for exemption?
If the house has been constructed by availing a loan (on or after April 1, 1999) the interest on HL is exempted to the extent of Rs 2 lakh (if the house is self-occupied) or whole of interest charged on housing loan (If the house is rented out).  

6  Is there any I-T exemption for contribution towards national pension scheme (NPS)?
Any contribution made to NPS can be claimed as exemption u/s 80CCD to the extent of Rs 0.50 lakh. This is in addition to exemption under Sec. 80C

7 What is the exemption limit for premium paid on Medical Insurance Policies?
Premium paid up to Rs 25,000 on health insurance policies can be claimed as an exemption u/s 80D. If the policy covers senior citizens the exemption limit extends upto Rs 30,000.

8 Whether the interest received on savings account(SB) and fixed deposits(FD) are taxable?
SB interest in excess of Rs 10,000 is only taxable. But in case of FD, irrespective of the amount, interest is fully taxable.
 
9  Whether the interest paid on education loan for higher studies is exempted from IT?
Interest paid on education loan of self, spouse and children from bank/FI is exempted from IT u/s 80E.
 
10 What documents need to be kept ready to file my IT return?
Documents to be kept ready are Form 16, Form 26AS, interest certificate –HL/education loan, interest certificate-FDs, rent receipt (If annual rent exceeds Rs 1 lakh — PAN no. of landlord), details of eligible investments, premium receipts-life/non-life policies, advance tax payment receipts, details of rental income and bank statement(s), IFSC Code(s), account number(s).

11 What process to be followed to file my I-T Returns?
Go to Internet banking — access e-filing window — fill details as per Form-16/interest certificates. Utility of IT department matches TDS and remittance of Tax — check the correctness of data — Press submit button — E-verify through Aadhaar. Once e-verified, there is no need to submit the hard copy. Download the filed return, print a hard copy and file it.

Or go to income tax site https://incometaxindiaefiling.gov.in/ and follow the instructions. 

Is it not simple to file your I-T Return on your own rather than spending time and money running behind a tax consultant?

(The writer is an Assistant Professor — Senior Scale, Manipal University Bangalore Campus)
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