Income tax Calculation

Income Tax Calculation

To calculate the amount of tax the tax payer has to pay, he/she needs to understand the following things:

• Who is liable to pay tax in India?
• How to compute the Gross Taxable Income?
• What all incomes do not form part of the Gross Taxable Income?
• What are the permissible deductions from the Gross Taxable Income?
• What are the exempt limits and rates of taxes applicable on the net taxable Income?

Who is liable to pay tax in India?

All resident Indians, be it individuals or group of individuals or an artificial body, is liable to pay taxes in India. Thus, following categories are liable to pay tax

• Individuals
• Body of Individuals or Firms
• Hindu Undivided Family (HUF)
• Association of People
• Companies (irrespective of whether registered under the Companies Act)
  

  How to Compute the Gross Taxable Income?

  Any income received, accrued or deemed, to be received or accrued by a resident Indian, whether in India or abroad, during the previous year, is subject to tax in India. Also, non-residents who received, accrued or deemed, to be received or accrue income in India are subject to tax as per the Income Tax Act. The income earned is classified under the following heads as per the Income Tax Act:

  • Income from Salary: Income under the head Salary includes any amount of salary due to the employee, whether paid or not. Section 17 of the Income Tax Act defines salary as ‘any amount received as salary, perquisite and profits in lieu of salary.
  • Income from House Property: The annual value of property of which the assesse is owner is chargeable to tax under the head ‘House Property’. However, this does not include the self-occupied property. In case of other properties, the amount of actual rent received or might reasonably be expected to be received is charged to tax, subject to deductions under section 24. Section 24 allows the assesse to claim deductions to the extent of 30% of the annual value or rent received. Also, the amount of interest paid on the loan borrowed for the purchase of property is allowed as a deduction up to Rs. 2,00,000.
  • Income from Profits and Gains of Business or Profession: As the name suggests, ‘Profits and Gains’ of any business or profession carried out by the assesse during the previous year is charged to tax under this head.
  • Income on Capital Gains: Any profit derived from transfer or sale of any capital asset is chargeable to tax under the head ‘Income on Capital Gains’. Capital asset would include property, shares and securities, jewellery or any art of work. The income earned under this head is divided into Short Term Capital Gain and Long Term Capital Gain, based on the tenure for which the capital asset is held by the assesse.

  Short Term Capital Gain is profit earned on sale of short term capital asset, which is held for not more than 36 months by the assesse. Long Term Capital Gain is profit earned on sale of long term capital asset, which is held for more than 36 months by the assesse. However, in case of certain assets like shares, the holding period for long term capital asset is reduced to 12 months.

  • Income from other sources: Any income earned by the assesse and not chargeable to tax under any other head of income is charged to tax as ‘Income from Other Sources’. Thus, income from other sources would include but not limited to the following:
    • Interest on fixed deposits or securities
    • Dividend income
    • Family pension, subject to a deduction of one third or Rs. 15,000/- whichever is lower.

  
  The income earned is thus bifurcated amongst various heads of income. Gross total Income is arrived at by totaling the income earned under all the above heads of income.

  Gross Total Income = Income from salary + Income from house property + Income from business/profession + Income from Capital Gains + Income from other sources.

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Due Date For ITR Filling 

The due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 31st July 2021 under sub-section (1) of section 139 of the Act, as extended to 30th September 2021, is now further extended to 31st December 2021.

start filing your ITR for FY 2020-21 with these Document 

1. Aadhaar number
2. Bank account details
3. Capital gains
4. Details of investment in unlisted shares
5. Form-16
6. Interest income and TDS certificates/Form 16A from banks and post office
7. TDS certificates from other incomes
8. Form 26AS
9. Tax-saving investment, expenditure proofs

INCOME TAX FILING PROCESS FOR 2021

How can I file my income tax return for India 2021?

Log in to the e-Filing portal by entering user ID (PAN), Password, Captcha code and click 'Login'.

On Income Tax Return Page:

1. PAN will be auto-populated.
2. Click on  'Assessment Year'
3. Click on 'ITR Form Number'
4. Click on 'Filing Type' as 'Original/Revised Return'
5. Click on 'Submission Mode' as 'Prepare and Submit Online

Business Income Tax

  Business Income Tax Return Filling 

 What Is Business Income Tax Return Filing?

Business tax return is basically an income tax return. The return is a statement of income and expenditure of the business. It is also called the U.S. Corporation Income Tax Return.

 

What Is Needed For Business Income Tax Return?

1. Gross receipts from sales or services.
2. Sales records for accrual-based taxpayers (accounts receivable)
3. Returns and allowances.
4. Business checking/savings account interest (1099-INT or statement)
5. Other income, including rental income, federal and state gasoline or fuel tax credit, or refund.

Gains of ITR Filling

 What IF you don’t file your ITR’s?

Your income is below the basic exception limit, and then you might as well skip filing your income tax return? Would you still file ITR’s or Let it go. Before you prepare your mind to not file your ITR read on to know the Gains of Filing Income Tax Return on time.

Gains of ITR Filling

Faster Loan Approval

Filing the ITR will help you to get a faster loan, in the future if you apply for any kind of loan. Banks can ask for a copy of tax returns as proof of income statement. This is a mandatory document for loan approval. 

Income & Business Proof

Income Tax Return can be used as proof of your Business Income and Business Address.

 

Get a Refund on time

Interest on the Refunds is not paid if we file the ITR's late.

 

Avoid Penalty

If you do not file ITR’s on time then you have to pay a penalty of up to Rs 10,000.

 

Carry Forward Your Losses

It is a provision that allows you to move a tax for future lose for offset profit. By using this you can claim for reducing tax payment.   

Quick Visa Processing

This is a mandatory document for the visa. They will ask for your tax return for the past couple of years at the time of the visa application and advice you to pay it on time.

Income tax type and how to file

 What is income tax?

Income Tax Return (ITR) is a form that a person is supposed to submit to the Income Tax Department of India. It contains information about the person's income and the taxes to be paid on it during the year. Income from salary. Profits and gains from business and profession.

Type of income tax

ITR-1

ITR-2

ITR-3

ITR-4

ITR-5

ITR-6

ITR-7

How to file income tax?

1. Go to the e-Filing website.
2. Login to the e-Filing website.
3. Choose the right income tax form.
4. Check your personal details.
5. Fill in your income details.
6. Check the total taxes you are due or your tax return.
7. Declare, sign and send.
8. What are the available Tax Reliefs for Year Of Assessment 2020? (Tax filed in 2021)

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