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Basics of filing income tax returns

January 25, 2010 18:16 IST

If saving taxes is a cause for concern, filing tax returns is an equally worrying thing for most taxpayers. Thanks to the complex system of tax filing, with its various forms and exclusions that invariably change every financial year, taxpayers are left in the lurch!

Here's a simple ready reckoner that takes you through the steps to file tax.

Identifying your income sources

This is the point where you should start. Identify the various sources from where you get your income. The monthly salary is the source of income for the employed, while it is the income from business or profession the source for the self-employed.

Other taxable sources of income include the income that you receive from your house or property on rent or lease, capital gains like income from shares, and income from other sources.

You need to have related documents for these various source of income to calculate your tax.

Calculating gross income

The next step is to calculate the gross income. This is done by placing the figures under each of the income heads.

Computing deductions

You must add up all your Section 80C and non-80C deductions of Income Tax Act. There are online and offline help resources available in computing this.

For example, if you are paying house rent, it is exempted from tax up to a certain limit. Conveyance up to a certain amount is also exempted. Similarly, leave travel allowance is also not taxable, but only for a certain number of journeys in certain number of years.

Then there are medical allowances, and perquisites that should be reduced up to a certain limit.

Calculating tax payable

Reduce the total deductions from the gross total income to arrive at the actual amount on which the tax is to be paid. The income from house property and capital gains are taxable. Also, tax deducted at source (TDS) if any should be subtracted from your total tax liability.

Finding out tax rate

The final taxable income figures will further differ for a woman, a senior citizen or others.

  • For individual tax payers, no tax for income below Rs 1.6 lakh (Rs 160,000).
  • Women tax payers have no tax for income below Rs 1.9 lakh (Rs 190,000).
  • Senior citizens do not have to pay tax if their income is below Rs 2.40 lakh (Rs 240,000).

The income tax slabs for assessment year 2009-10 as per the Union finance ministry website:

Income tax slabs 2009-2010 for Men

Income tax slab (in Rs.)

Tax

0 to 160,000

No tax

 

160,001 to 300,000

10%

 

300,001 to 500,000

20%

 

Above 500,000

30%

 

Income tax slabs 2009-2010 for Women

Income tax slab(in Rs.)

Tax

0 to 190,000

No tax

 

190,001 to 300,000

10%

 

300,001 to 500,000

20%

 

Above 500,000

30%

 

Income tax slabs 2009-2010 for Senior Citizens

Income tax slab(in Rs.)

Tax

0 to 240,000

No tax

 

240,001 to 300,000

10%

 

300,001 to 500,000

20%

 

Above 500,000

30%

 

The surcharge on the tax for income above Rs 10 lakh (Rs 1 million) has been removed.

Filing the correct ITR form

This depends on your source of income. ITR-1 is the form to be filled in by individuals having income from salary or pension and income in the form of interest.

ITR-2 is the form should be filled in by persons who in addition to the above list of income sources also receive income from capital gains, income from house or property and income from other sources.

All self-employed individuals making income from business or profession should fill in the ITR-4 form.

Filing the tax return

This can be done offline and online. Online payment of taxes can be done through e-filing website, and through internet banking. Offline payment modes can be direct submission of ITR form at the income tax office or through a chartered accountant.

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Related News: ITR, ITR-4, ITR-2, ITR-1, TDS
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