Rules to file an Income Tax Return are gradually changing. Do you want to know what are the things that you should know before filing your income tax return calculation? Read on!
As time flies, the rules to file an income tax return calculation are gradually getting modified. Older processes are replaced with newly revised procedures to make it easy for an individual to file his income tax return. The Indian Government has been doing a lot to transform the process of filing public income tax returns. Consequently, a lot of changes have been implemented in the filing process since last year. The primary thing to know in this regard is the deadlines missing which impose a vast penalty upon you. It is necessary for you to file returns before the due date. Knowing the basic rules of ITR filing in India reduces hassles. Let’s see things to know while calculating your income tax return in this article.
Things to Know While Calculating your Income Tax Return
It is always beneficial for you to consider a few things before you file your ITR.
Consider financial year
While filing an income tax return, the primary step involves the income tax return calculation of your taxes for the previous financial year. The duration of a financial year is from the 31st of March to the 1st of April of the following year. As the financial year ends on the 31st of March, it is necessary to calculate your taxes before this date. The date is the same for all individuals and it is very important to remember the due date for filing your taxes.
Consider assessment year
An assessment year is the one in which the tax calculation and ITR filing of the previous year take place. If the duration between 2021-2022 is considered the assessment year, then the processes of 2020-2021 should be calculated before 31st March 2021.
Salary breakup
Post consideration of both years, you need to have a clear understanding of your salary structure. If you are having any problems, you are free to ask your head for the salary statement. This document will help you to know the salary components and more about tax deductions.
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Income from other sources
Total income tax return calculation is compulsory if you are obtaining money from different sources other than your salary. The source of other income can be capital gains tax, property, business, fixed deposits, bank accounts, etc. You can use an income tax return calculation in case of any confusion.
Keeping the tax deduction in mind
The step that follows after the calculation of the total income is the consideration of various deductions. The total income and your tax liability can be brought down by certain deductions which are imposed on you by the tax department. The formula for calculation is:
Total income – deductions = taxable income
Knowledge of Section 80C
The Income Tax Act consists of section 80C, which permits a reduction of ₹1,50,000 from the net income. Fixed deposits, mutual funds, and the public provident fund can be considered to save taxes.
TDS consideration
Understanding Section 80C is followed by the consideration of the tax deducted at source. It is the tax deducted by the employer who makes a payment. When the taxable income of an employee is over 2,50,000 per annum, then the employee should calculate the estimated amount and then deduct TDS from it.
Final tax calculation
You can easily calculate the total payable tax by taking the help of the following formula:
Final payable tax = Tax imposed on taxable income – TDS(Already deducted)
Consideration of standard deductions
Lastly, it is essential for you to discover if you are eligible for any standard deductions. For instance, employees receiving salaries may get a deduction of ₹40,000 in a single financial year. The subtractions are made from the gross pay.
Latest Changes Imposed upon the ITR Filing Processes
Mistakes while filing income tax can be eliminated by knowing about the latest changes to the ITR filing processes:
No passwords
Important documents related to income tax return calculation, like the ITR-5 or form 26AS, were previously protected by passwords until last year. During the current financial year, the government has made changes according to which no documents will be covered by passwords anymore. Instead, they will be available on the website and can be easily downloaded at per convenience.
Mentioning the Date of Birth is not compulsory
While logging in to the Income tax return calculation website for e-filing an ITR, providing the date of birth was mandatory till the previous financial year. Recent changes have made mentioning it not compulsory anymore.
Changes in Method for Form 26AS
Previously, while downloading Form 26AS, the system used to demand a particular format from the user. The preferable structures were PDF, HTML, and many more. Changes suggest that from the current financial year, the process will be slightly different from the current financial year. It is such that the form is to be first viewed in HTML format and then can be converted to a PDF.
Selection of details while filing online
The users/income taxpayers who have eligibility under ITR-1 in the current year will have the privilege of auto-populating the fields. It can be performed by selecting the previous year’s ITR or 26AS form details. However, this process is only applicable to those who submit the form through the “Prepare and Submit Online” option.
Choice of “Verification of ITR” option
Earlier, the ITR verification options were not required until the submission of the form. But, from the current year, the taxpayer will need to input selections for verifying the return before the form submission. Further alterations include verification option changes after submission.
Matching Form 26AS with the TDS information
Online file returning has the advantage that the form can auto-populate several general details such as name, address, and PAN number. However, an error is generated in the TDS amount if there is any difference between Form 26AS and ITR-1. Therefore, both the figure details must be carefully checked and then updated.
Conclusion – Things to Know While Calculating your Income Tax Return
The Government of India has lately imposed various changes in filing an income tax return calculation. Hence, keeping yourself updated with the basics of filing an ITR and the latest process changes reduces confusion and complexities. Proper understanding will help you to consider all the possible compensations and benefits, which will save a lot of good money. Hope this blog things to know while calculating your Income tax return is helpful. If you are new to the process of filing ITR online, our experienced team at Vakilsearch can help you to make the process easier.
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