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Tax of previous year?

indianhits (Mr.) (46 Points)

20 December 2015

Hello friends,

I am really confused with taxation. None of my collegaues are aware how exactly tax works (i.e. on how to save tax).

Kindly help me with following queries:

1) If I declare investment using ITR I form then I am saving tax for next year?? for which year income i am saving tax exactly?

2) If I earn money from 1st April 2014 - 31st April 2015 then by when should I invest so that i can save tax?

Thank You!

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9 Replies

Nikhil Kaushik (Fellow CA) (85093 Points)
Replied 20 December 2015

you need to invest by 31 March 2015 as the financial year for tax is 1 April to 31 March....

Nikit Gujarathi (Student CA Final ) (23 Points)
Replied 20 December 2015

invest between 1.4.14-31.03.15 so that you can save tax for Fy 14-15 for which you will pay tax on AY 15-16

CA Prateek Garg (CA in Practice) (1444 Points)
Replied 21 December 2015

For this you have to understand the concept of Previous Year and Assessment Year.

Whatever you earn in a previous year (or you can say any financial year) you have to file return and pay tax in respect of that income in assessment year (or you can say succeeding financial year).

For your net earnings (net of admissible deductions and investments) in FY 2014-15 you have to file return and pay tax on that income in FY 2015-16.

Similarly for your net earnings (net of admissible deductions and investments) in FY 2015-16 you have to file return and pay tax in FY 2016-17.

Hence if you want to pay less tax on income of current year you have to invest in current year. Only calculation shall be made in next year based on transaction of current year.

1 Like

indianhits (Mr.) (46 Points)
Replied 21 December 2015

Hello Mr. Garg,

oh I see.

So, what is that I am doing this month (i.e. Dec 2015)

I am sending investmnet proof to tax department by 31st Dec 2015. Is it for saving tax for this year i.e. salary I earned from 1st April 2015 to 31st March 2016?

Thank you very much

Stranger (.) (5526 Points)
Replied 22 December 2015

Absolutely Mr. Indianhits...declaration of your investments & savings till Dec, 2015 will be taken for consideration by your company for calculating the TDS or balance TDS, if any, to be deducted u/s-192 from your salary for the months Jan, Feb & March, 2016. But it doesn't mean, there is no point of investing for claiming deductions from your gross total income now for the rest of the months remaining for the P.Y. 2015-16. Even though the details has been given by you & tds will be deducted, if any, from Jan to Mar, 2016 by your company on the basis of information given by you but still at the time of filing your ITR in Assessment Year 2016-17, you can also claim the investments (eligible for deduction) made by you from Jan to March 2016, besides the investments from April, 2015 to Dec, 2015.

Hope your doubt is cleared now..

1 Like

indianhits (Mr.) (46 Points)
Replied 22 December 2015

Hi stranger, I am confused my company send me this form 16 and it had below information.

I dont understand.. why are they bothering about period 1st apr 2014 - 31 mar 2014 when I should be showing investment proof for 1st apr 2015 - 31 mar 2015.

Thank You

Stranger (.) (5526 Points)
Replied 22 December 2015

Dear, Form 16 is given by the company for the period 1-4-2014 to 31-3-2015 as there may be some TDS deducted for the P.Y. 2014-15. You should file your ITR on the basis of Form 16 for the Assessment Year 2015-16 (i.e., Previous Year 2014-15). But one thing I am not getting whether your company provided you Form 16 so late (as the last date of filing ITR for A.Y. 2015-16 has already been expired) OR by mistake it has given you Form 16 of P.Y. 2014-15 instead of Investment Declaration Form for the P.Y. 2015-16 (i.e., A..Y. 2016-17) or may be your organisation is helping you to fill the details of investment declaration form for P.Y. 2015-16 by reminding you the investments made by you in P.Y. 2014-15, so that nothing can be left by an error from your side...Anyways you can clear your confusion by asking from the HR Department of your Organisation...

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CA Prateek Garg (CA in Practice) (1444 Points)
Replied 22 December 2015

Dear Sir

Firstly I am unable to understand why you want to send investment proof to income tax dept.

To get the tax benefits all you have to do is –

-> To make any eligible investment and keep the proof of investment with you in your records.

-> At the time of filling the ITR claim the benefits of investment by making appropriate entries in the return form.

Secondly, as far as TDS certificate for current year is concerned your employer would be able to provide it only after completion of current year i.e. after 31st March 2016 and above certificate is for financial year 2014-15.

Originally posted by : indianhits
	Hello Mr. Garg, oh I see. So, what is that I am doing this month (i.e. Dec 2015) I am sending investmnet proof to tax department by 31st Dec 2015. Is it for saving tax for this year i.e. salary I earned from 1st April 2015 to 31st March 2016? Thank you very much