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Personal tax is a tax which you pay on your income directly to the government. You can file your own tax return easily once you know the criteria by which tax on income is calculated. E-Tax filing, as the name suggests, can also be done online.

Let's look at what comes under a source of income for an Indian, whether living in India or abroad:

  • Salary or Pension
  • Interest on savings account or fixed deposits
  • Your part-time job, small businesses, etc.
  • Income from property, such as rent
  • Capital gains from sale of capital assets (like mutual funds, shares, house property or agricultural land)
  • Winnings from a lottery
  • Prize money from a contest
  • Non-resident Indians need to pay tax on their income in India
  • Resident Indians need to pay tax on their global income

Tax Slabs
Pay the applicable tax rate for your tax bracket or tax slab, if you are under 60.


Income Range Tax rate Tax to be paid (FY 2017-18)
Up to Rs.2,50,000 No tax No tax
Between Rs.2.5 lakhs and Rs.5 lakhs 5% 5% of your taxable income
Between Rs.5 lakhs and Rs.10 lakhs 20% Rs. 12,500+ 20% of income above Rs. 5 lakhs
Above 10 lakhs 30% Rs.1,12,500+ 30% of income above Rs.10 lakhs

Capital gains are taxed depending on the asset you own and the period for which you've held it.


Type of capital asset Holding period Tax rate
House Property

Held for more than 36 months
Held for less than 36 months

20% 
Depends on slab rate
Debt mutual funds Held for more than 36 months 
Held for less than 36 months 
20%
Depends on slab rate 
Equity mutual funds Held for more than 12 months 
Held for less than 12 months 
Exempt
15%
Shares Held for more than 12 months 
Held for less than 12 months 
Exempt 
15%
FMPs Held for more than 36 months 
Held for less than 36 months 
20%
Depends on slab rate 

Calculating Income Tax

There are 7 different types of income tax filing return forms ranging from ITR 1 to ITR 7, applicable as detailed below.

  • ITR-1: Indian Individual Income Tax Return
  • ITR-2: Individuals and HUFs not having Income from Business or Profession
  • ITR-3: Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship
  • ITR-4: Individuals and HUFs having income from a proprietary business or profession
  • ITR-5: Firms, AOPs and BOIs
  • ITR-6: Companies other than companies claiming exemption under section 11
  • ITR-7: Persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) 

Tax payers have a lot of benefits and credits which help bring their taxes down. The numbers change by Financial Year but the broad guidelines remain more or less constant. Under Section 80 of the Income Tax Act, deductions are offered for

Home ownership

  • Stamp duty and Registration under Section 80C
  • First time homeowner benefit of Rs. 50,000 under Section 80EE
  • Tax deduction on home purchase with a home loan - Home loan principal and interest

Home renting

  • House Rent Allowance or HRA(if salaried)
  • Section 80GG (if you are renting and don't get HRA)

Health

  • Life insurance under Section 80C
  • Medical insurance under Section 80D
  • Preventative health checkups
  • Medical bills (only if salaried)

Long-term savings

  • Employee provident fund (if salaried)
  • Pension under Section 80CCD(1b)
  • ELSS funds
  • 5 Year deposits
  • PPF, NSC, ULIPS, ELSS or LIC

Health insurance under Section 80D
Make a donation and claim deduction under 80G
Invest in a pension fund under Section 80CCD(1b)
Savings bank account interest under Section 80TTA
Advance Tax and TDS (Can be claimed depending on actual savings made under above sections)

The deadlines for Income tax filing are:


Due Date Advance Tax Payable
On or before 15th June 15% of advance tax
On or before 15th September 45% of advance tax
On or before 15th December 75% of advance tax
On or before 15th March 100% of advance tax

Some Do's when E-Filing Your Income Tax Return:

  • Calculate your advance tax by adding up all the invoices received and including future payments expected till March 31 to estimate taxable income.
  • Deduct expenses directly related to the business, and any investments made under Section 80C.
  • Pay self-assessment tax if you find that the advance tax paid is insufficient, reported in Form 26AS. If employer deducted TDS, collect Form 16 for the FY, showing tax deducted, benefits and allowances availed and deductions claimed.
  • Form 16A is issued by a Bank which is deducting tax at source on your income or company paying you for freelance work.

Finally, it makes sense to file a return even when your income is not above the taxable limit of 2,50,000.

E-Tax filing is simple once you have a clear idea of the different heads and the benefits/exemptions that you can claim. Luckily, we have our experts to tell you how to do your Income Tax filing or E-Tax filing.


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Category Income Tax, Other Articles by - RevMy Startup 



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