With the July 31 deadline for filing annual income tax returns for the assesment year 2018-19 (for financial year 2017-18) approaching, taxpayers have started the process of filing out their income tax returns online.
For individuals who want to fill out their ITRs themselves, the process can appear somewhat complex at first. Knowing which income tax slab you fall under, and what your tax liabilities are, is a good place to start.
The Income Tax Act mandates that every person with an income in India is liable to pay income tax. For working individuals, this income entails the salary they draw or the profit they make from their business, in addition to other sources of income such as interest from savings or fixed deposits, rent earned from a property, and income from sale of capital assets such as stocks, mutual funds, property etc.
A detailed list of what constitutes income under the Income Tax Act is available here. The income so defined, however, is further divided into two categories – exempt, and taxable income. Under the Income Tax law, taxes only have to be paid on the taxable portions of a person’s income. Further, persons with an annual income upto Rs 5,00,00 can also claim a rebate of up to Rs 5000 under section 87A of the I-T act.
Once you know how much your income from different sources is, you can identify the tax bracket in which you fall.
Once you know the rate at which your income is taxed, you can proceed to calculate your tax liabilities using the income tax department’s tax calculator tool here. Several websites like ClearTax and HR Block provide similar tools in friendlier formats.
However, to use the tools you’d be required to have details of all your sources of income and expenditure, including interest paid on loans, or interest earned from various investments ready. The tool on the IT dept’s website.
For persons with income from salaries, house property, and other sources not exceeding Rs 50 lakh, the taxpayer needs to fill the ITR 1 form on the government’s e-filing portal.
A list of income tax forms for other categories is available here.