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4.8 Star User RatingFiling Income Tax returns, paying taxes and understanding the tax terminologies seems to be such an impossible thing to do. You might have sometime tried hands upon these things, but, would have returned unsuccessful.
We will try help you decode the basic terms and all such things necessary to make Income Tax Filing easy for you.
The financial year is the year in which you earn an income. Assessment year is the year in which you evaluate your income and file income tax return. You will be able to disclose your income for the year only after completion of the year. Hence, assessment year is always the year next to financial year.
For example :-
If you are disclosing income earned from 1st April 2017 to 31st March 2018, you would be filing your income tax return for FY 2017-18 and AY 2018 -19 respectively.
Understanding difference between Financial Year & Assessment Year becomes vital as these are quoted on every document you file or receive from the income tax department.
The income tax return is filed with department in a prescribed set of forms known as income tax forms. The understanding of IT forms becomes important because government every year issue new forms, which are relevant for filing ITR in that year. There are different forms for people earning income from different sources like salary, business & profession etc.
Some incomes which are not chargeable to tax are known as exempt incomes. Although no tax needs to be paid on such income but mentioning them while filing ITR is required. One such common example is saving bank account interest. Saving bank account is exempt from levy of taxes upto Rs.10,000/- hence people have adopted the wrong practise of not specifying the amount earned as interest while filing return.
This might be a thing which have bothered you number of times. Put an end to all such confusions and find the list here of different modes from which you can get your income tax return filing done
In India we follow slab taxation system, which can be classified based upon the age of taxpayer. The tax rates differ with difference in slabs, hence it becomes important to gather a knowledge of slab taxation system prevalent.
| Taxable income | Tax Rate (F.Y. 2017-18) |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,000 to Rs. 5,00,000 | 5% |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
| Taxable income | Tax Rate (F.Y. 2017-18) |
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,000 – Rs. 5,00,000 | 5% |
| Rs. 5,00,000 – Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
| Taxable income | Tax Rate(F.Y. 2017-18) |
| Up to Rs. 5,00,000 | Nil |
| Rs. 5,00,000 – Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
ADD:
Surcharge: 10% of tax where total income exceed Rs. 50 Lac but does not exceed 1 crore
15% of tax if total income exceeds Rs. 1 crore.
EC : 2% of tax + surcharge
& SHEC: 1% of tax + surcharge
Note: Rebate u/s 87A is available to an individual taxpayer = 100% of income-tax payable or Rs. 2,500 ( whichever is less )
The rebate will be applicable only if total income of that individual does not exceed Rs. 3,50,000/-
EC & SHEC shall be replaced by Health & Education Cess @ 4% from Assessment Year 2019-20
| Taxable income | Tax Rate(F.Y. 2017-18) |
| Up to Rs. 10,000 | 10% |
| Rs. 10,000 to Rs. 20,000 | 20% |
| Above Rs. 20,000 | 30% |
ADD:
Surcharge: 12% of tax where total income exceeds Rs. 1 crore
EC: 2% of tax + surcharge
& SHEC: 1% of tax + surcharge
A partnership firm (including LLP) or a local authority are taxable at 30%. Surcharge and Education Cess shall be levied as under.
ADD:
Surcharge: 12% of tax where total income exceeds Rs. 1 crore
EC: 2% of tax + surcharge
& SHEC: 1% of tax + surcharge
Domestic companies are taxable in two categories namely
ADD:
Surcharge:
Tax is deducted on salary you earn by the employer under section section 192. Also, if you earn any income from FD interest, rent, professional fees, commission, consultancy services etc, the income you receive is net of TDS (if income exceeds the prescribed limit).
While filing your taxes you can claim set off of taxes payable with such amount of TDS already deducted from your income on various occasions. There might occur a situation that your TDS is deducted but not deposited with the tax authorities or you forgot to claim any amount while filing your ITR.
In all such situation the ultimate loss will occur to you, hence we suggest cross checking your TDS details with form 26AS. If you notice any discrepancy in form 26AS contact the deductor to revise his return for avoiding expected IT notices at your end.
We often tend to forget incomes like interest received on FDs or income tax refunds, to be mentioned while filing income tax return. For such non routine transactions it is highly recommended to completely go through your form 26AS before filing ITR for this year. So that you don’t add to the list of unwilling defaulter as per income tax norms.
Advance tax is nothing but paying your taxes to government before 31st march of the financial year. You are mandatory required to pay tax in advance if your total tax liability after setting off TDS in that year is Rs. 10,000/- or more.
The resident senior citizens not being professionals or doing any business are not required to make any payment for advance taxes.
Verification is a next step after you have filed your ITR. It is an inevitable part of income tax return filing. In case No verification is done it lead to as if No ITR was filed by you.
With change in time verification has become more and more convenient. You can verify your return in these manners
You are normally required to verify or e verify the return filed within a time limit of 120 days from filing the tax return.
Changing job for growth prospectus is a welcoming thing. And, we congratulate you for the same!
But, from taxation point of view, If you have changed a job during the year, disclose your income received from last employer to the current one. This is not compulsory but will make things easy for you in many ways. It will lead to correct deduction of TDS by your existing employer. And, will save you from tedious task of combining the income, exemptions, TDS deducted and re computation of taxes when you would be filing return after a substantial time.
The income tax department at the time of filing of ITR, never seeks for original copies of your income sources, basis of deduction claimed or anything. It is just at a later stage, after your return is processed department may ask you to furnish some details on which it want to gain some clarity. hence, you must keep a record of all documents so that, they can be produced before authority i asked. But, you need them to show while filing return is an absolute myth.
We keep on hearing everywhere that DON’T SHARE YOUR PASSWORDS for banks, income tax details etc. Still we come across new cases every next day. Trust the experts, The Income tax department or any such authority NEVER asks you to share your passwords, PIN, OTP, Bank details etc. So become a vigilant citizens and a smart user and stop yourself being trapped into these scams through fake phone calls or emails.
The departments have the relevant database stored with them and do not need your credentials to check anything.
If you are earning over Rs. 50 lakhs annually you need to disclose all your asset details while filing ITR. Both movable (like car) and immovable assets (like property) needs to be disclosed.
In case you overlook the provision you might expect a income tax notice soon. So, be tax compliant to avoid notices.
People have found way out to avoid taxes or reduce tax liabilities by investing abroad. To keep a check over such activities, Income Tax department has made it mandatory for all of us to report all assets we have or incomes we earn from abroad.
The reporting shall be made in your tax return filed for the concerned year.
We hope that the blog helped you learn the basic terms related to income tax filing. And, now onwards you will not be caught in the income tax word web. For any further queries please write in the comment section below. You can also seek our assistance for income tax return filing.
