Does the prospect of the tax season cause you to quit in the hives?
You're almost definitely liable for taxes if you're operating on a paycheck from a job. Your company withholds the taxes you owe from your wages during each pay cycle and transfers them to the relevant federal and state governments on your behalf. Yet, this is only the first stage in the method.
Preparing your taxes could potentially be an easy and stress-free operation if you're doing a little research on the front end. It's just about the coordination and money. The government calculates how much tax you owe by splitting the taxable profits into chunks — also known as tax brackets — and each chunk is taxed at the same tax rate.
The benefit about that is that no matter what band you're in, you're not having to pay the tax rate for your whole salary.
Income Tax Return
Income tax is a tax imposed and collected on an individual's income by the Central Government. The income tax laws are regulated by the Income Tax Act 1961. Today, everybody needs to digitally file ITRs (Income Tax Returns), except for super-senior citizens (those 80 years of age or older) who are required to submit their ITRs in paper format.
In order to file ITRs online, one is required to be listed on the income tax department's e-filing website.
Steps to file your ITR like a PRO
- Collect required documents
The first step is to gather all the documentation you need to send to the ITR, such as Form 16, payslips and interest certificates. The report will help you calculate your gross taxable income and provide you with the specifics of the income tax deducted at the source (TDS).
Form 16: Form 16 is a certificate issued by the employer that contains the information you need to prepare and file your income tax return. Employers shall submit it each year on or before 15 June of the following year, directly after the financial year in which the tax is deducted. Form 16 has two parts: Part A and Part B.
Part A: Employers will create and access this portion of Form 16 via the TRACES portal. Components of Part A include the name and address of the employer, TAN (Tax Deduction Account Number) & PAN (Permanent Account Number) of the employer, PAN of the employee, Summary of tax deducted & deposited quarterly, which is certified by the employer.
Part B: Part B of Form 16 is an extension of Part A. When you adjust your work after one financial year, it is up to you to determine if you like Part B of the form from both the employer and former employer.
- Download Form 26AS: Form 26AS is your tax passbook, which consists of all the specifics of the tax that was withheld from your income during the financial year and registered against your PAN. You will cross-check your TDS certificates with Form 26AS to ensure that the tax withheld from your salaries, such as income and interest, is deposited with the government and against your PAN.
- Compute Total Income,Total Liability and Final Tax payable
Total income is calculated by combining income under five separate headings and taking all of the applicable deductions permitted under the Income-Tax Act and offsetting losses.
Once you determine your total income, you have to measure your tax obligation by applying the tax rates in place for the financial year, as per your income tax. Income tax levies and thresholds stayed constant for the financial year relative to the previous year.
After you have estimated your tax liabilities in the previous phase, subtract taxes that have already been paid by you by TDS, TCS and Advance Tax during the year. Include interest, if any, owed under parts 234A, 234B and 234C.
- Fill out Income Tax Return Form: Now, fill out the ITR form. If you want to demand a rebate from the tax department, you can do so only if you submit an ITR. You would, therefore, have to submit the ITR even if you are not expected to do so. When submitting the ITR, make sure you use the right ITR type to submit it. If you submit your ITR using the wrong form, it will be pointed to as a faulty return and you will be required to file it again.
- Verification of ITR: Verification is the final phase in ITR filing. When you decide to validate your tax return by electronic means, you would not be forced to give any paperwork to the tax department. However, if you want to validate your return on a physical basis, you will be asked to submit a properly signed copy of ITR-V/Acknowledgment to 'CPC, Post Box No. 1, Electronic City Post Office, Bangalore-560100, Karnataka, India'.
- IT department will process a return after verification: When the return has been checked, either through e-verification or through physical means, the income tax department will start reviewing the tax return and ensure that all the details you have entered are accurate in compliance with the Income Tax Act and also cross-check the details you have entered with the other information available. When the return has been registered, the IT Department must convey the same to you by email to your registered e-mail ID.
Tax Benefits under Section 80C of the Income Tax Act
Section 80C of the Income Tax Act 1961 deals with tax deductions. Section 80C explicitly decreases gross profits as the tax burden is significantly decreased under section 80C. Many citizens reap the benefits of section 80C explicitly or implicitly. The cumulative tax refund is up to ₹1.5 lakhs.
- All types of Provident Fund
- Tax Saving Fixed Deposits
- National Pension System
- Sukanya Samridwdhi Scheme
- Senior Citizenship Saving Scheme
- Life Insurance policies
- Home Loan
- National Saving Certificate
Filing your taxes is integral. This is the way it can be done.