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LIFE INSURANCE

Things to know while calculating your income tax return

Janhavi Shinde Janhavi Shinde 09 January 2019

From last year till now, there have been many changes in the rules to file your income tax returns. Here’s how you can finish this task as easy as a pie and be a pro soon.

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The government of India has been trying to simplify the process of filing Income Tax Returns for the public. As a result, there have been numerous changes in the ITR filing process since the last year. There are many things worth remembering while e-filing your ITR. The most important being filing it before July 31st to avoid the penalty of Rs.5000. In case you missed to file your income tax returns and think of doing the same post December 31st, you will have to pay a huge penalty of Rs.10,000. Therefore, the first thing to remember is to know the deadlines and ensure to file the returns before that.

If you have any confusions regarding the process, do not worry. There are a number of income tax calculators available online. You can choose any of them that you find easy to use. However, it is also not wise to completely depend on income tax calculators. You must be aware about the basics of filing ITR online.

What are Some Things to Consider before Filing ITR?

Mentioned below are a few things that you should consider before filing your ITR:

Consider Previous Year

The first step to file ITR is to calculate your taxes for the previous financial year. A financial year begins on 31st of March and ends on the 1st of April the following year. Your tax year will close on March 31st, therefore you must calculate your taxes before this date. It doesn´t matter when you started your job, this is the date you need to remember.

Consider Assessment Year

Assessment year is the year in which you calculate and file your taxes for the previous years. For example, for the assessment year 2018-2019, the previous year is 2017-2018. Therefore, you will file your returns in the assessment year 2018 on or before July 31st.

Know Your Salary

You must then understand your salary structure. If you have confusions about it, you can ask your HR to provide you with the salary slip or statement. This will educate you about the components of your salary and what are the deductions to consider.

Income from Other Sources

If you are also earning an income from any other sources than your salary, you must calculate your total income. This can be from the property, capital gain, profession or business, bank accounts, fixed deposits, etc. If you have any confusions, you can use an income tax calculator.

Take Deductions in Mind

The next step is to consider the deductions. There are certain deductions that the tax department allows so that you can bring down your total income and your tax liability. The formula to remember is:

Total Income - Deductions = Taxable Income

Understand Section 80C

Consider Section 80C of the Income Tax Act which allows you to reduce a whopping Rs.1,50,000 from your gross income. You can consider a tax saving fixed deposit, ELSS mutual funds, and a Public Provident Fund (PPF) account.

Consider your TDS

Then, you should consider the tax deducted at source i.e. TDS, which is a tax deducted by the employer who makes the payments. If the employee's taxable income is over Rs. 2,50,000 annually, the employer calculates the estimated amount and deducts TDS.

Calculate Final Tax

Now, calculate your total payable tax by using the formula:

Final Payable Tax = Tax on Total Taxable Income - Already Deducted TDS

Take Standard Deductions into Account

You must also find out if you are eligible for any standard deductions. For example, salaried employees can get a deduction of Rs. 40,000 in a financial year from their gross salary instead of separate medical and transport reimbursement.

What Are Some Latest Changes to the ITR Filing Process?

To avoid making any kind of mistakes while filing ITR, you must know the changes that have been introduced in the process this year.

Change No.1

No Passwords

The documents related to ITR such as ITR-V or Form 26AS were password protected before. Starting this year, these documents will no longer be password protected and can be freely downloaded from the website.

Change No.2

Mentioning DOB not mandatory

Before this year, it was mandatory to mention your date of birth to log in for e-filing. This process has been discontinued from this year.

Change No.3

Method Changes for Form 26AS

Earlier, for downloading the Form 26AS, the system used to ask the person for the format they prefer such as HTML, PDF, etc. From this year, there has been a slight change in this process and the form first needs to be viewed in HTML and it can then be exported as PDF.

Change No.4

Selecting Details While Online Filing

The people who are eligible for ITR-1 this year will get the option of auto-populating the fields by selecting the details from their previous year's ITR or 26AS form. This is only applicable for users who are submitting their form using "Prepare and Submit Online".

Change No.5

Selecting "Verification of ITR" Option

The verification of ITR options were not required earlier until after the form was submitted. However, from this year, you will need to input how you would like to verify your return before submitting the form. Also, you will be able to change the verification option after you have completed submission.

Change No.6

Matching TDS Info with Form 26AS

One of the pros to file returns online is that the form auto-populates a large number of general details such as PAN number, name, address, etc. However, there has been an error in TDS amount auto-populate and difference was seen in ITR-1 and Form 26AS. Thus, you must check both the figures carefully to ensure the correct update.

How to Make ITR Filing an Easy Process?

If you know the basics of ITR filing and are abreast with the latest changes in the filing process, income tax returns will not be a challenge for you. Remember to consider all applicable benefits and compensations to save the money you need to pay. If this is your first time, you can use the income tax calculator to make this process easier. An income tax calculator allows you to compute your taxes without having to sit and push your brains for hours.

As a final note, you must remember not to completely rely on the imported data and must double check every entry to ensure that the forms have been filled correctly. All the best and have an easy and successful ITR filing.

Janhavi Shinde
Written by Janhavi Shinde
Right from being a Flight Attendant to a Banker and now to a Content Writer, she has tasted success in all the fields. The kinda girl who loves pets and knows how to manage difficult people and events.