With only a few days remaining before the last date of filing your tax returns, let’s have a look at the tax slabs, as well as the various steps through which you can file your tax returns.
In this article
- What Is the Tax Structure in India?
- Three Categories of Individual Taxpayers Are:
- Income Tax Rates Prevalent in India Are as Follows:
- How Do I File an Income Tax Statement?
- Step 1: Collection of Requisite Documents
- Step 2: Downloading Form 26AS
- Step 3: Computation of Total Income For the Financial Year
- Step 4: Computation of Tax Liability
- Step 5: Calculation of the Total Tax Payable
- Step 6: Filing of Income Tax
- Step 7: Verification of ITR (Electronically or Physically)
- Step 8: E-Verification Receipt from the Income Tax Department
What Is the Tax Structure in India?
In India, income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been prescribed for different slabs (based on the income of an individual person).
In fact, tax rates keep increasing with an increase in the income slab (revised during annual budget in the month of February)
Further, the budget of 2018 did not announce any changes in income tax slabs this time; therefore, it remains the same as that of last year.
Three Categories of Individual Taxpayers Are:
- Individuals below the age of 60 years (includes residents as well as non-residents);
- Resident Senior Citizens (60-80 years of age);
- Resident Super Senior Citizens (above 80 years of age)
Income Tax Rates Prevalent in India Are as Follows:
Individuals Below the Age of 60
|Income up to Rs. 250,000||NIL||–|
|Income from Rs. 250,001- 500,000||5%||4% of Income Tax|
|Income from Rs. 500,001- 10,00,000||20%||4% of Income Tax|
|Income more than 10,00,000||30%||4% of Income Tax|
In addition to the above tax rates and cess charges, a surcharge of 10% of income tax is levied, where the total income exceeds Rs. 50 lakhs, up to Rs. 1 crore.
Also, if the total income exceeds Rs. 1 crore, the surcharge applicable is 15%.
For senior citizens (60- 80 years old), no tax is applicable up tan o income of Rs. 300,000.
Whereas for a super senior citizen (80 years or more) this amount is Rs. 500,000.
Post this; the tax slabs for all senior and super senior citizens remain the same.
How Do I File an Income Tax Statement?
Step 1: Collection of Requisite Documents
The first step is to collect all the required documents one will need to file the ITR, such as Form 16, salary slips from employer and interest certificate forms.
The documents aid in the calculation of total tax liability and also provide the details of tax deducted at source (TDS) from income in the financial year.
TDS certificates should be digitally signed and the amount of tax deducted as shown in TDS certificate should match with the amount shown in the salary slip.
Step 2: Downloading Form 26AS
Form 26AS is a document which shows all the details of tax that has been deducted from one’s income during the financial year and deposited against the PAN.
One can download the tax credit statement, i.e., Form 26AS from the TRACES website.
To download this, the first step is to login to one’s account, then click on ‘My Account’ tab and select ‘View Form 26AS’.
The website will redirect to TRACES.
Step 3: Computation of Total Income For the Financial Year
Once someone has verified all the taxes that have been deducted from his/her income, he/she can compute the total income chargeable to tax.
Total income is computed by adding incomes from the five different heads and claiming all the relevant deductions allowed under the Income Tax Act.
The Five Heads of Income Are as Follows:
- Income from Salary;
- Income from House Property;
- Income from Profits and Gains of Profession or Business;
- Income from Capital Gains;
- Income from Other Sources
Step 4: Computation of Tax Liability
After computing one’s total income, the next step is to calculate the total tax liability by applying the tax rates in force for the particular financial year, (FY 2017-18 is highlighted in the above chart) as per one’s income slab.
Step 5: Calculation of the Total Tax Payable
After computation of the tax liability for the financial year, the next step is to compute the total tax liability by deducting taxes that have been already paid by through TDS, TCS and Advance Tax during the year.
The next step is to add interest (if any), payable under section 234A, 234B and 234C.
Interest under section 234 A– Default in furnishing the return of income;
Interest under section 234 B– Default in payment of advance tax;
Interest under section 234 C– Deferment of advance tax
This will tell you if the taxes are already paid by the assesse or any additional tax has to be paid or if the assesse has paid any excess taxes and a refund is due.
Any additional tax can be paid physically via cheque or online, using challan ITNS 280.
Step 6: Filing of Income Tax
Once taxes have been paid, one is required to file the ITR.
Even if someone has an income tax refund due, he/she is required to file ITR.
While filing ITR, one needs to ensure that they are using the correct ITR form to file it. If someone files the ITR using the wrong form, then it will be termed as a defective return and will therefore be required to file it again.
The Different Categories of Income Tax Return (ITR) Forms and Who They Are Meant For:
|ITR 1 (SAHAJ)||Individuals with income from salary and interest|
|ITR 2||Individuals and Hindu Undivided Families (HUF) not having income from business or profession|
|ITR 3||Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship|
|ITR 4||Individuals and HUFs having income from a proprietary business or profession|
|ITR 4S (SUGAM)||Individuals/HUF having income from presumptive business|
|ITR 5||Firms, AOPs, BOIs and LLP|
|ITR 6||Companies other than companies claiming exemption under section 11|
|ITR 7||Persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)|
Step 7: Verification of ITR (Electronically or Physically)
The last process of filing your ITR is verification.
There are six ways to verify the ITR. Out of this, five are electronic methods and one is the physical verification of the ITR.
If someone wishes to verify the tax-return electronically, he/she will not be required to send any documents to the tax department. It can be done through any of the electronic modes as mentioned below:
The 5 Methods are as Follows:
- Using One Time Password (OTP)
- Generating EVC using net-banking
- Receiving EVC by using bank account based validation system
- Verifying returns through Demat Account Number
Step 8: E-Verification Receipt from the Income Tax Department
Once the assesse has received the acknowledgment of e-verification, the filing of income tax return is complete.
After receiving the ITR-V, either through e-verification or physically, the income tax department will process the return to ensure that all the details filed by you is correct and as per the Income Tax Act.
They will also cross-check the details filed by the assessee with other available data.
It becomes all the more important to file the income tax return on time, as there is a penalty for missing the deadline. The maximum penalty is Rs 10,000.
Disclaimer: The views expressed in this post are that of the author and not those of Groww