Taxation in India

India's tax collection structure is well divided and the central government, state governments and local bodies are responsible for it. The union governments collect income tax, central excise and service tax while the state governments levy taxes on land revenue, vat, stamp duty etc. The local bodies are responsible for water tax, octroi and many other taxes.

There are three broad classification of taxes, namely, ad valorem and specific taxes, indirect and direct taxes and progressive and regressive taxes. An ad valorem tax means the tax is imposed on the basis of total value of the commodity whereas the specific tax is the tax imposed on the basis of weight, quantities, size, breadth and width.

Direct tax is imposed on someone and its burden is not shifted to another and borne by the person himself example income tax, corporate tax. Indirect taxes are imposed on someone but whose burden can be shifted to someone else example excise duty, sales tax and customs duty.

A Progressive tax is a tax under which as income goes up, the rate of tax will go up so as those earning higher income ends up paying more. A proportional tax is a tax under which whatever be the income level, the rate of tax remains the same so that differences between higher income and lower income is same before tax as it is after tax.

Every citizen should follow proper tax planning practices. This means that he should pay his taxes as well as makes proper investment and select right tax saving instruments. The tax that is to be paid is deduced on the income earned and the kind of investment made. There are many tax exemptions investment, which is made on the basis on source of income. The investors should have proper tax planning to avail these benefits.

The income tax can be calculated with the help of income tax calculator. It calculate the taxable income by combining the income on the basis of salary, allowances and incentives, capital gains and other sources of income. For the fiscal year 2007-08, income up to Rs 1, 10,000 per annum is exempted from such tax. For the income above this amount, there are various slabs. The additional charge of 10 per cent is levied if the income crosses Rs 8, 50,000. The education cess of 2 per cent is added along with this charge.

In India, the amount of indirect taxes was very high compared to the direct taxes. In 1991, prior to tax reform, just 19 per cent of the taxes came from direct tax while the percentage was 81 per cent from the indirect taxes.

The fact that in a country indirect taxes are predominant against direct taxes suggest that burden of taxation falls more heavily on the poor people because indirect taxes are taxes on commodities.
But after tax reform based on Chelliah and Kelkar committee recommendation, many of these characteristics have been addressed to make the tax structure simple, broad based, reduce the multiplicities of taxes, reduce complexities of taxes and even plug evasion.

Source by Divya Prasad

Selecting the Business Structure and the Process of Company Registration in India

To work legally, in India, every business has to register itself. The process of company registration starts by deciding the structure of it. By selecting the proper structure, a company can:

  1. Meet targets set easily.
  2. Operate at its highest efficiency.

A Business Structure – the Vital Necessity of it

The structure of a corporation determines two essential factors:

  1. The filing of Income Tax returns.
  2. The compliances that have to be adhered to.

To give a clearer picture take this example:

A business registered as a company has to file income tax returns along with annual returns to the Registrar of Companies. On the other hand, a firm registered as a sole proprietorship merely has to file income tax returns. Moreover, a company’s financial books need must be audited once a year which means extra expenses of:

  1. Auditors.
  2. Accountants.
  3. Tax filing authorities.

Another example of how a business composition can influence the company is:

Some structures like a PLC or LLP have the image of being investor-friendly because they are separate legal entities. It signifies that a business which hopes to get a monetary backup in the future would fare better as a PLC or LLP. If the owner chooses to register as a sole proprietor, he or she may face issues while looking for outside investors.

Essentially, it means consider many factors before electing the business structure because they impact the venture in the long run.

Four Primary Business Structures in India

The options an entrepreneur has when deciding the formation of business are:

  • OPC

One Person Company allots a single individual as the sole-proprietor of a firm. This type of structure is ideal for a company that has just one owner or promoter. It was introduced in 2013.

  • LLP

Limited Liability Partnership has more than one owner. Called partners, there is a restriction on the liability they have to bear. It is equal to the contribution they made. The LLP is a separate legal entity.

  • PLC

Private Limited Company is also a separate legal entity from its creator. The most common type of structure, it has directors and shareholders. The firm considers all of them as employees.

  • PLC

Public Limited Company also has a separate legal existence, and like an LLP, the liability of its members is restricted to their shares. This structure is formed by “a voluntary association of members.”

A Business Structure – How to Select the Right One While Applying a Company Registration Online

To pick the right choice of a business structure, ask the following questions.

  • What is the number of owners of the business?

An OPC is ideal when one individual is putting up the total initial capital. An LLP or a Private Ltd. Co. would be better suited for businesses that have 2 or more owners and are also looking for further investment by new entities.

  • Does the initial investment affect the structure?

Yes, it can influence the decision. For example, owners who don’t want a substantial investment at the starting can pick:

  1. A Partnership.
  2. Sole Proprietorship.
  3. A Hindu Undivided Family.

Entrepreneurs who are sure to recoup compliance and setup cost can choose:

  1. Private Limited Company.
  2. OPC.
  3. LLP.
  • How much liability can be borne?

Structures like PLC and LLP have a clause for restricted liability. It indicates that in case there is a default of loans the members will only repay the amount equal to:

  1. Their contribution.
  2. Value of shares held.

In other structures such as partnership, HUF, and sole-proprietor, the liability has no limit. They members or owners have to repay the entire cost which can put personal assets at risk.

  • What are the applicable tax rates of the business structures?

For an entity registered as a company or partnership, a flat tax rate of 30% is applicable. For HUF and sole-proprietorship, the slab rates applied are standard.

  • Will others be investing in the company?

Any business that hopes to get investments from venture capitalists or other parties should register it as a Private Limited company or LLP. They are measured as trusted entities and therefore easier to get financial backup.

The Process to Registering a New Business

A new company Registration or startup in India can now be easily registered easily online. The new process was incorporated by the Ministry of Corporate Affairs a few years back. The basic steps that need to be taken to register a business are:

  1. Get a Digital Signature Certificate, also known as DSC.
  2. Get a Director Identification Number, also called DIN.
  3. Accurately fill in the New User Registration form, also termed as eFrom.
  4. Submit the eForm.

The company is now registered and ready to work in India legally.

Source by Uma Nathan

How to Make the Best Use of a Tax Calculator?

Are you confused about your total tax liability? Do you want to calculate the exact sum of money you owe to the taxman? If yes, then the tax calculator is the best tool for you. Although the financial advisors and tax consultants claim to provide the perfect solution for tax savings in a particular year, the online tax calculator has left them behind.

Tax calculation is not a simple task at all as we have to consider various elements for making the exact calculations to compute the taxes payable to the Income Tax Department. While filing the tax returns, it becomes quite essential to follow each step accurately so as to be sure that every component is considered. The tax calculator is one of the necessities for an individual assessee as it assists him / her in computing the absolute values. Do you know how you can make the most of such an amazing tool? Let's evaluate.

Reasons to Opt for Tax Calculators

  • Simple Calculations: – The tax planning calculator available online in India is easy-to-use even for a layman. One is required to fill in the specifications, and it generates the exact sum.
  • Recommendations for Investments: – There are some tax calculators in India which provide the suggestions for better investments. As we know that Section 80C of the Income Tax Act provides tax deduction up to Rs.1.5 lakh, the tax planning tools recommend the plans through which one can avail such deduction.
  • Tax Planning Made Easy: – Tax planning in India is a haphazard task as there are several parameters which are required to be kept in mind. These online tax calculators simplify such activities by providing the best solutions.

Different Elements for Tax Computation

The tax calculations are complicated due to the problems involved in the assessments. Thus, one needs to use the best tax calculators in India so that the exact values ​​for return filing can be generated. The online tax planning calculator uses the following components to measure the exact values:

  1. Type of Assessee – The first thing that one needs to mention in the calculator is the type of person one is. Out of the different classes of assessees, viz., Individual, HUF, company, BOI, etc., it is a must to mention in which category one falls. Moreover, in the case of an individual, it is requested to specify his / her age group so that the calculations are made as per the correct slab rates.
  2. Residential Status – It is a further necessity for the assessee to specify the residential status. The reason being is that Income Tax Act has different rules and requirements for Resident, Non-Resident Individuals (NRIs), and Resident & Not Ordinarily Residents (RNOR).
  3. Gross Annual Income – Once the type of assessee and the residential status is decided, one is requested to specify the annual income on which payable taxes are computed. It is the gross annual income which is earned by the assessee in the particular financial year. It is that sum on which different adjustments are made, and one claims deductions to compute the net taxable income.
  4. Deductions Claimed – The online tax calculator also asks for the deductions which are claimed under different sections of the Act, say 80C, 80D, etc. This amount is deductible to compute the net taxable income after going through the appropriate adjustments to fetch the correct tax liability for the current financial year.

Hence, by evaluating the exact sum of the amount payable to the taxman, one can do the best tax planning in India for any financial year. The tax calculator is the best tool to be used online as one need not pay any amount for using it. If you too have concerns in calculating your taxes, then you must begin with the best tax calculator.

Source by Akshita Tripathi

Offshore Tax Planning – An Overview on Offshore Tax Planning

What Is Offshore Tax Planning?

If you are living abroad or working abroad, then you are open to the opportunities of offshore tax planning. There are benefits with being levied offshore taxes and you can’t avail of this tax structure if you are working in your home country. The current scenario forces a lot of people to leave their home country for a good career in their life and if your home country does not offer you with a good career option, it is always better to opt for a career overseas. For such professionals, there is tax planning that can be done and such tax planning activities are known as offshore tax planning. Investing on properties and investments offshore is the basics of offshore tax planning and there are benefits with such investments.

Benefits of Offshore Tax Planning

– Offshore tax planning offers you a lot potential tax saving options mainly because of you having offshore domiciled investments.

– If you are investing offshore, then the profits that you get from those investments can be made to grow tax free.

– Using a good offshore strategy can allow you to manage the repatriation of the assets that you own a lot more efficiently when you plan to return to your home country.

– Offshore banking can also provide you with tax savings, but it is dependent on a lot of factors.

– Non-resident tax structures are different to the tax structures levied on residents and usually the tax rates are lower for non-resident professionals.

Non-Resident Tax Benefits

If you are not a resident of your home country then the taxation of your income will largely be different to the taxation of residents. The main reason for the difference is because; you will pay taxes even though you are not living in your home country and using the infrastructure of your home country. The non-resident tax slabs are a lot more relaxed and it is a face that non-resident taxation has a lot of sops. The tax benefits for non-residents will differ with the country that you are a citizen of and also the number of years you have been a tax payer. Investments that are made out of your home country will not attract taxes and the income from those investments is largely tax free. So if you are a non resident and want to know about non-resident tax benefits, get the help of a professional to make things easier for you.

How to Know About Non-Resident Tax Benefits

It is a known fact that no taxation rules and regulations are easy to understand, so it is always better to seek the help of a professional to help you with the taxation strategies. Similarly non-resident tax benefits are not easy as there are a lot of clauses and regulations involved in them. Therefore if you wish to make the most of the benefits that you will get for being a non resident of your home country, avail the services of a tax consultant who is an expert in offshore taxation.

Source by Ned Rat

10 Common Myths Surrounding Fixed Deposits and Earned Interest

Fixed Deposits, also called as Term Deposits, are one of the most traditional investing options. While we may be hearing a lot of noise around Mutual Fund SIPs, Liquid, Balanced and Debt Funds, Stock Picking, Tax Free Bonds, PPF, EPF etc, the fact of the matter is that nothing can beat the assurance and simplicity of a fixed Deposit. Though tax inefficient and not the best returns provider, fixed deposits do deserve their own pie in your portfolio. Tell me whether there is any other investment option you know which is as simple, assured, liquid, monitoring free and risk free – all rolled in one – as a Fixed Deposit? There is actually none. It does come at a price of tax inefficiency and slightly lower returns, but in quite many cases – returns may not be the only criteria to decide on your investments.

So, if you have started to feel happy that all that chunk of Fixed Deposits lying almost unattended in your bank accounts is now justified, let me throw a word of caution here. Your Fixed Deposit is earning interest. Bank may be deducting some tax as well (TDS). But you may be liable for more tax. And if you have not been paying that, you might be in for deep trouble. Yes, at the time of filing your Income Tax Returns, you are liable to calculate the additional tax that you need to pay from your Fixed Deposit interest – and then pay it as well. This may be completely over and above the TDS that the banks may have deducted. If you have been ignoring that, then I am sure you also understand that ignorance of law is never an excuse. Inefficiently managed interest accrued from your bank Fixed Deposits can actually land in you in deep trouble with the taxman.

Let us remove some of the common myths surrounding the Fixed Deposits and the interest accrued out of them:

Myth 1

Fixed Deposit interest is hidden from the taxman

Fact 1

All Banks report the interest accrued against your PAN Number to the IT Department. So, gone are those days when banks and their branches were disconnected. Today, in this interconnected world of PAN and Adhaar, there is no way you can escape from the prying eyes of the taxman.

Myth 2

Bank has already deducted TDS – so, you don't need to pay any more tax

Fact 2

Banks deduct only 10% of the interest earned as TDS, or 20% if you have not provided the PAN Number to the bank. But you may actually be liable for more. It all depends on your total income in the financial year. If you fall in the 30% tax bracket, then you are liable to pay 30% tax on the interest earned from fixed deposits – after adjusting for 10% or 20% TDS that may already have been deducted by the bank. If you are in the 20% tax bracket, and the bank has deducted only 10% TDS, then you are liable to pay another 10% tax on the interest that you have earned.

Myth 3

You have submitted Form 15G / H – so there is no tax liability

Fact 3

Form 15G / H has a very specific purpose wherein you are confirming to the bank that you are not likely to fall even in the 10% tax bracket in the current financial year – and hence you are requesting the bank not to deduct TDS. But if that does not turn out to be true by the end of the financial year, you got to pay tax as per the tax slab you fall in.

Myth 4

Your interest is less than Rs 10,000 in a financial year and thus there is no tax liability

Fact 4

Even INR 1 interest earned from Fixed Deposits is liable to be taxed, unless of course you fall in 0% tax slab. This exemption of Rs. 10,000 is not applicable on Fixed Deposit interest. This exemption is only available for interest earned out of the money idling in your savings account. So, you are liable to be taxed even if your interest income is less than INR 10,000. The only benefit you have is that the bank will not deduct any TDS till the interest crossed INR 10,000. Even if that is the case, you will need to pay the applicable tax at the time of filing ITR.

Myth 5

I have a recurring deposit. Interest is not taxable here

Fact 5

100% incorrect. Whether it is FD or RD, every single rupee of interest earned is taxable as per your current tax slab

Myth 6

I have invested in a 5 year Tax Free FD. It will not be taxed now

Fact 6

Quite contrasting to their name, Tax Free FDs are actually NOT tax free. Yes, they don't help you save tax from your interest income earned out of the fixed deposit. They do help you save tax by showing the principal investment under Section 80C, just like you may save tax by showing EPF or PPF investment under Section 80C. However, every single rupee of interest is taxable as in any normal fixed deposit.

Myth 7

National Savings Certificates (NSC) or Kisan Vikas Patras (KVP) are tax free

Fact 7

Again, none of this is true, and every single rupee of interest is taxable as in any normal fixed deposit.

Myth 8

Senior Citizen Deposit Scheme is Tax Free

Fact 8

Again, none of this is true, and every single rupee of interest is taxable as in any normal fixed deposit.

Myth 9

I have invested in an FD in my wife's name. So, I am saved of any taxes.

Fact 9

Money gifted to a spouse does not attract tax. But if that money is invested, the income it generates is clubbed with the income of the giver and taxed accordingly. If a husband has invested in fixed deposits in the name of his wife, the interest will be taxed as his income. So, better avoid wasting your time and effort.

Myth 10

I have invested in my child's name. So, I am saved of any taxes.

Fact 10

Money gifted to a child does not attract tax. But if that money is invested I the name of aa minor child, the income it generates is clubbed with the income of the giver and taxed accordingly. If a father has invested in fixed deposits in the name of his minor child, the interest will be taxed as his income. So, better avoid wasting your time and effort. In case of children though, there is a small exemption of Rs 1,500 per year per child for a maximum of two children.

Calculate the Tax payable on FD interest

1. Calculate your total interest income from all the Fixed deposits in a financial year. Say, it is INR 50,000

2. Find your tax slab (based on your total income – which includes all sources of income, including FDs). Say, it is 20%

3. Based on 1 and 2 above, calculate the tax payable on FD interest. It will be 20% of 50,000 = INR 10,000

4. Check Form 26AS to see the TDS already deducted. Assuming it was deducted at the standard rate of 10%, it will be INR 5,000

5. Additional Tax payable at the time of filing ITR = INR 10,000 (as per 3) – INR 5,000 (as per 4) = INR 5,000

How do I file Tax for interest income?

Report the total interest as "Income from other Sources"

In the ITR form, it will be added to your total income and will be taxed according to the tax slab you will fall into.

Avoid trying to be smart with the IT Department

In today's interconnected banking system, avoid the following, play safe and live a peaceful life:

1. Do not try to submit Form 15G / H just to avoid TDS. Giving a false declaration can be considered a very serious offence – which could even lead to jail up to 2 years. This information makes its way to the Form 26AS of the individual. One can only imagine what will happen to an investor whose Form 26AS indicates submission of Form 15G or 15H at multiple banks and an income that exceeds the basic exemption limit. In any case, even if you are able to avoid TDS by the bank, you are liable to calculate and pay the total tax while filing ITR. Playing such games is just not worth the effort.

2. Do not waste your time and energy splitting your bank FDs across multiple banks or branches. Every account is connected through your PAN number.

3. Avoid trying to save tax by investing in the name of your spouse or minor children. There is a clubbed income provision which leads to all the interest earned by your spouse or child to be clubbed with your income and taxed accordingly. In some cases, it might help investing in the name of your parents, because the clubbing provision does not apply there. However, just ensure that the parents income and tax liability should not go up because of that.

Having a clear understanding of Fixed Deposits and tax liability arising out of the interest income from the same will keep this investment option the way it was designed – simple, guaranteed, liquid, monitoring free and risk free. You will be able to enjoy its true charm then!

Source by Manoj Arora

Tax Payment Guide

Step by step Guide:

When do I need to pay the taxes?

A tax payer will not be able to pay their returns until they clear out their tax due, all in full. A lot of times you will find some payable amount of tax during the time of return filing. You are required to pay the income tax online. This allows for successful filing of returns online later on too. In case you’ve delayed your tax payment post 31st of March, you will then have to complete the payment of interest under 234B and 234C.

For individuals, the normal date of payment of advanced tax for the financial year 2016-2017 is as follows:

On or before 15th of June for up to 15% of tax.

On or before 15th of September for up to 45%.

On or before 15th of December for up to 75%.

On or before 15th of March for up to 100%.

How to calculate your advanced taxes?

The following procedure demonstrates the right method to calculate the right amount of advanced tax that you are liable to pay. You are liable to pay income tax in advance if you have dues exceeding 10,000 INR. Typically, the income tax returns are taken care of through the appropriate TDS returns filing done through the employer of a salaried person.

The steps to calculate your tax dues are:

Determine your total income

Freelancers are required to deduct their expenses

Deduction allowances

Calculate tax due on total income based on slabs provided.

Ensure that you have cleared your tax dues as per the provided tax installments given below. Any miscalculation may cause you file your returns once again which is a very long and hectic procedure that you want to avoid.

How to pay income tax?

It is very easy to pay your income tax. Simply follow the steps described below and pay your taxes on the go without any issue whatsoever.

Challan 280: Visit the government’s tax department website. Download and fill the Challan 280.

Fill out all of your personal information or details as asked. A piece of advice; for individual people filling out tax, ensure to fill the assessment year very carefully.

Cross check all the information that you’ve filled and you click submit. You will then be redirected to the payment gateway portal for payment of the taxes.

Once the payment is done, verify the same on the receipt as well.

Source by Navtej Singh

Income Tax for Beginners

Firstly, are you supposed to pay Income Tax?

The answer depends on the year. For your income for the year 2011-12 (1st April, 2011 to 31st March, 2012), you will have to pay tax if

  • you are a resident man with a taxable income of more than Rs. 1,80,00
  • you are a resident woman with a taxable income of more than Rs. 1,90,000
  • you are a resident senior citizen (age 60+) with a taxable income of more than Rs. 2,50,00
  • you are a resident very senior citizen (age 80+) with a taxable income of more than Rs. 5,00,000

How much tax am i supposed to pay?

You must have heard of 'Income Tax Slabs'. For a resident male, the slabs for the year 2011-12 are

Income Slab – 0 to 1,80,000
Rate – 0%

Income Slab – 1,80,001 to 5,00,000
Rate – 10%

Income Slab – 5,00,001 to 8,00,000
Rate – 20%

Income Slab – above 8,00,000
Rate – 30%

This means that if your income is less than 1,80,000 you don't have to pay tax.

If your income is, say, Rs. 2,30,000, you have to pay at 10% on the amount by which it exceeds Rs. 1,80,000. In this case your tax liability would be (2,30,000 – 1,80,000) * .10

And if your income is, say, Rs. 6,00,000, you have to pay tax on Rs. 3,20,000 (5,00,000 – 1,80,000) at 10%, and on Rs. 1,00,000 (6,00,000 – 5,00,000) at 20%.

So, that means every year I have to go to the Income Tax Department and pay it?

Most probably, no. To make things simple on your end, the Department makes your employer do the same. Your employer will deduct it from your salary and pay it for you. This is called TDS – Tax Deducted at Source.

What is this Form 16?

How do you know if your employer is paying your tax on time? and what is the amount?

Your employer will give you a Form 16 at the end of a year. This form 16 has details about the salary he has paid to you, the tax he has deducted on it, and paid to the Income Tax Department.

What is Advance Tax / Self-Assessment Tax?

Your employer will deduct tax on your salary income and pay it to the Income Tax Department, but what if you have income from other sources as well?

Say, you sold a piece of land and made a decent profit on it. You now have to pay tax on this profit. Unfortunately, your employer won't pay it. You will have to do it.

Take another case. Your employer did not deduct tax on your salary. He will face penalties from the Income Tax Department, but what about you? You will now you have to pay it to the Income Tax Department directly. It's a rare case.

This is called Advance Tax / Self-Assessment Tax

Is there any difference between the above two?


If you pay it during the year, ie, between 1st April, 2011 and 31st March, 2012 (for 2011-12) it is called Advance Tax.

If, while preparing your tax return, you realize that you still have to pay tax, and pay it so, it is called Self-Assessment Tax. Thus Self-Assessment Tax is paid after 31st March, 2012.

What are income tax deductions?

Deductions are certain tax benefits you might be allowed to avail. If your income is Rs. 4,00,000, and you are allowed to deductions of Rs. 1,00,000, you will only have to pay tax on Rs. 3,00,000 at the slab rates.

There are numerous deductions. Example:

  • Premium paid on a Life Insurance Policy
  • Housing Loan Repaid
  • Amount deposited in a PPF (Public Provident Fund) Account
  • Certain Mutual Funds purchased
  • ULIPs purchased

Ok, so my employer pays tax on my behalf. So, my job is done? I don't have to do anything, right?

Not really. You have to file an income tax return with the Income Tax Department. A return is nothing but a form that states the income you have earned throughout the year, the tax you were supposed to pay on, that tax you actually paid, the benefits you availed, etc …

You can approach an accountant to help with your return, or better still, do it yourself using a private online income tax efiling portal.

Source by Nishant S Agrawal

Income Tax Basics For Young Professionals

So you have only just started earning and are on the path of self discovery especially with regards to your financial life, right? And one of the vital aspects to that would be – taxes. Understanding tax is not easy, but very much necessary. So, lets take it one step at a time – we are going to specifically look at – Income Tax. Here are some of the common confusions and relevant explanations surrounding the whole process.

What is income tax?

Income tax is the tax you pay to the government. It is based on the income you earn, i.e. when your income exceeds a certain slab, then you are required to pay tax on the excess amount earned.

Why should I pay tax on my earnings?

Every citizen is obligated to pay income tax as per law [Income Tax Act]. The collected sum is used for further development of the nation.

How much should I pay?

The amount of tax you will have to pay is purely dependent on which income slab your salary falls in. The percentage of tax to be paid will also vary depending on:

1) Whether you are a man, woman or a senior citizen [the income slabs are different for all three]

2) Your income and the slab it belongs to(that is specific to you). For instance, the tax payable by someone who is earning between 180,000 and 500,000 will be 10% of the amount that exceeds 180,000.

Similarly, if the income is between 500,000 and 800,000, then the taxable income is a fixed amount plus 20% of the amount that exceeds 500,000 and so on.

How often should I pay?

Income Tax is paid on a yearly basis. The duration considered here is between April 1st to March 31st of the next year. This period is also known as a financial year or ‘previous year’.

And the last date to file your income tax returns would be July 31st.

How to file income tax?

Filing Income tax can be a daunting task, which is why you have to options:

– doing it yourself

– engaging a good chartered accountant.

You also have the facility of filing income tax online or offline.

What are the documents required for filing tax?

The documents to be submitted while filing are as follows:

1. Form 16 – is given to you by the company you work for. It consists details of the tax that was deducted from your salary. This is the main indication that you have paid income tax.

2. Form 16A – is given to you by the bank or financial institution where you have invested in term deposits. This indicates the various tax deductions at source for your account.

3. Bank Statement Summary – shows the transactions performed by you throughout the financial year. This will include everything from savings, investments, expenses, loans and also income earned.

4. Property details – any property sold or bought by you in the previous financial year should be recorded and duly submitted at the time of filing tax returns.

5. Interest certificate – In case you are paying monthly installments towards your housing loan, if you want to save on tax, then you will have to show the supporting documents in the form of interest certificate from the institution that provided you the loan.

6. Investment details – if you haven’t already declared it in the Form 16, then do it here. Details of your investments in tax saving tools such as public provident fund and so on.

7. Receipt of advance tax (if any) – to show that you have paid advance tax.

Is the salary I receive the only form of income?

No, there are various types of taxable income:

1. Your salary

2. Rental Income (if any)

3. Income from business

4. Capital gains (for eg, sale of property)

5. Incomes from bank deposits, cash gifts and so on.

Some of the key points to be kept in mind while filing income tax are as follows:

  • Make sure your signature is uniform across all the documents you use for filing
  • Do not overwrite or misspell in the form
  • Double check the PAN number you have given.
  • Even the date written matters
  • Original TDS certificates and receipts to be produced at the time of filing.
  • Avoid delay payment of tax as it attracts a fine.

Source by Priya Agarwal

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