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CALCULATION of income tax , ITR Forms & DEDUCTIONS

Many taxpayers are worried about their taxes, refunds, filing of returns ( ITR forms) and the most important aspect is calculation of  income tax so that no future correction statements need to be filed with the Income Tax Department and one can avoid the extra consultancy charges to be paid to the outsiders.

From this year, the Income Tax Department has made quite simpler the process of Filling of the Income Tax Return and simultaneously the calculation of the Correct Income Tax Payable/Refund. All the major aspects regarding the Income Tax Calculation & Income Tax Calculation have been discussed below in points for the ease of the taxpayer.

  1. Calculation of Income Tax as per Tax Slab

One should be very much aware about the tax slabs in accordance which the income of the tax payer is being taxed. The slab rate for the FY 2014-15/AY 2015-16 have been announced with some changes in the last Budget by the Honourable Finance Minister. The Slab Rates are as follows:

For General Taxpayers & Individual

SlabIncome Slab (Rs.)Income Tax Rate
00 to 2,50,000Nil
I2,50,001 to 5,00,00010%
II5,00,001 to 10,00,0020%
III10,00,001 and above30%

 

Calculation of income Tax: If you fall in Slab I, tax will be deducted on the amount that exceeds Rs. 2, 50,001/-. Similarly, tax for Slab II and Slab III will be calculated for the amount that exceeds Rs. 5,00,001 and Rs. 10,00,000/- respectively. The same principle also applies to tax slab for senior and super senior citizens as given below:

For Senior Citizens (Aged 60 Years but less than 80 Years)

SlabIncome Slab (Rs.)Income Tax Rate
00 to 3,00,000Nil
I3,00,001 to 5,00,00010%
II5,00,001 to 10,00,0020%
III10,00,000 and above30%

 

For Super Senior Citizens (Aged 80 Years & Above)

SlabIncome Slab (Rs.)Income Tax Rate
00 to 5,00,000Nil
I5,00,001 to 10,00,00020%
II10,00,000 and Above30%

 

Therefore, one should be aware of the slab limit and should carefully identify the slab in which the taxpayer comes and calculation of income tax works accordingly. You can also use Income tax calculator provided by income tax department to do calculation of income tax.

  1. Income Tax Return Form & Furnishing Correct Details:

The other important that need to be carefully considered by the tax payer that which ITR form applies to the taxpayer.

This year, loads of changes have been made keeping in mind the end goal to improve the Income Tax Return Forms. To control the Black Money, the department had in the earlierforms solicited citizens to outfit the points of interest from all their outside trips, including the costs brought about on those excursions. This pulled in an enormous kickback, which incited the division to change the ITR Forms once more.

Like consistently, the CBDT has thought of an obliged arrangement of structures that a citizen is required to fill while filling his/her government forms. This year loads of changes have been made with a specific end goal to improve the Income Tax Return Forms.

All the changes along-with some important dates and details to be furnished in the ITR have been discussed:

  1. Last date extended to August 31: The deadline for filling returns for Financial Year 2015 has been extended to August 31 from the existing July 31.
  2. Furnishing all bank account details: You have to declare all your bank account details while filling tax returns. This includes bank accounts held jointly and as a single account holder.
  3. Foreign Income: all the details of any foreign income, including the details of the amount earned from foreign country and the nature of income or source country needed to be submitted.
  4. New Tax Forms: CBDT had notified various changes in the Income Tax Return forms. They are as Follows:
ITR Form NumberNature of Income
ITR 1Individuals with Income from:Salary or PensionMore than One House PropertyInterest on Investments
ITR 2AIndividuals and HUF Income From:Salary or PensionMore than One House PropertyOther Sources, including lottery and race horses.
ITR 2Taxpayers and HUF with Income from:Salary or pensionMore than one house property or brought forward lossesCapital Gains; Other Sources, including lottery and Race Horses
ITR 3For Partners in Firm with income from:Profits of Partnership FirmSalary or PensionMore than House Property

Capital Gains

Other Sources, including lottery and race horses

ITR 4Taxpayers with Income from:Proprietorship BusinessProfessionalsCommission/Brokerage

More than One House Property

Agriculture Income > 5000/-

ITR 4S (Sugam)For taxpayers with income from:Presumptive BusinessForeign Sources/income etc.Commission/Brokerage

Agriculture Income > 5000

 

TR-V Copy to CPC office Bangalore: Unlike earlier, you don’t need to send the ITR-V copy to the CPC office in Bangalore. This is provided you submit the Aadhaar Card Number or the 10 Digit Electronic Verification Code (EVC). The new income tax returns will also will also have a place for mentioning the Aadhaar Card Number, which is one of the four ways of verifying the identity of the Taxpayer. Those who don’t have an Aadhaar Card or want to use the EVC can still send their ITR-V to the CPC office by post.

  1. Deductions mostly missed by most of the Taxpayers:

Here are few little known deductions, from specified illness to donations that tax payers tend to miss out on. Everyone is aware about the deductions available under section 80C. But there are several other deductions that a taxpayer can avail apart from general deductions.

DeductionParticulars (Specific Description)
Clubbing of Income of Disabled ChildIf you invest in the name of your spouse or minor child, the income from investment would be clubbed with your income under section 64 and taxed accordingly. However, if the child is disabled, the income from investment made in his name will not be clubbed with the income of parents.
Deduction for specified IllnessA deduction up to Rs. 40,000 can be claimed if a taxpayer suffers from any ailment specified under section 80DDB or has a dependent who is a patient. For senior citizens, the deduction is higher at Rs. 60,000. The diseases include certain neurological ailments, cancers, AIDS and haematological disorders. However, if the amount is reimbursed by the employer or insurance company, then the taxpayer is not eligible for deduction. If he gets partial reimbursement, the balance can be claimed as deduction.
House Rent Exemption without HRAMany pay house rent but can not avail exemption because there is no HRA component in their salary. Under section 80GG, you can claim a deduction for the rent even if you don’t get HRA. However, the taxpayer should not be drawing any housing benefit. Nor should he or spouse or child be owing a house in the city where he stays.
Adjusting losses against gainsIf you lost money in stocks or on other investment during the previous Financial Year, you can adjust some losses against capital gains from the sale of stocks, property, and gold or debt funds. Short-term capital losses can be set off against both short term capital gains as well as taxable long term capital gains. However, long term losses from stocks or equity funds cannot be adjusted against any gain.
Interest from Savings AccountThe interest is fully taxable but there is a small window of exemption. Up to Rs. 10,000 interest earned on savings banks account is exempt under section 80TTA. Also up to Rs. 3500 interest from a post office savings account is exempt from tax under Sec 10(15)(i). If you had a Joint Account, the exemption is higher at Rs. 7000.
Section 80G DonationsDonations under section 80G are generally not included in Form 16. You will have to claim this deduction at the time of filling your return. Depending on the organisation or fund you have contributed to, you can claim a deduction of 50-100% of the donated amount. But the deduction cannot be more than 10% of your gross total income.
Home loan processing fee and other chargesThe taxpayers who have taken the Home Loan should be aware of the tax benefits on the loan interest and principal repayment. Also, the processing fees on home loans does qualifies for deduction U/s 24. The processing fees and other charges are considered as interest and can be claimed as a deduction. This even includes the pre-payment charges.Section 24 also includes the interest paid on any loan taken for purchase, renovation or reconstruction of a house. The income tax laws do not specifically specify that only interest on a ‘housing loan’ would be eligible for deduction. Even loans taken from friends or family members are eligible for deduction under section 24. But the taxman want to see a loan agreement and the interest earned by the lender will be taxed as his Income.
Tax Deduction for DisabilitiesIf a taxpayer suffers from 40% disability (as certified by a government hospital), he can certainly claim deduction of Rs. 50,000 under section 80U. For a disabled dependant, he can claim a deduction of Rs. 50000 under section 80DD. In both cases, if the disability is very severe (as specified in the Income Tax Act), the deduction is for Rs. 1, 00,000. This is a flat deduction and does not depend on actual amount expended. This disabled person should be dependent on the taxpayer for maintenance, and should not have claimed deduction for disability separately.

 

Conclusion

The above article is solely dedicated to all the genuine taxpayers, since lots of changes have come under the Income Tax and one should be aware of such changes. Although, Income Tax Department is trying to make the process of filling of Income Tax Returns very simpler but since there are some issues or important points that once should be aware of should be kept in mind by the taxpayer.

6 Comments

  1. By SKM

    KINDLY CHK UP- ITR FORM 4 SUGAM.-AGR. INCOME SHOULD BE LESS THAN RS. 5000/- IT SEEMS THERE IS TYPING MISTAKE

    • By admin

      There may be. I will check. Thanks.

  2. By mayur tiwari

    some one has 4 acres of agriculture land in BHUTAN . the person earned rs.2.50 lacs and more by cultivating vegetables on the land . please explain me with reason is this agriculture income ..??

    • By admin

      It is not agriculture income as the land is not in India.

  3. By frankling

    if I spends half portion of my total turnover for diesel like expenses ,can I show the

    rest half as my turnover while income tax filing.

    if i do so what are the other parameters that i should arrange/take care to substantiate this.

    Please clarify

    • By admin

      Show full turnover and show diesel expense as expenses in income tax return. Limit of turnover should not be reduced by diesel.

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