​​​
  1. 10 things about income tax every taxpayer should know

10 things about income tax every taxpayer should know

As an income tax payer, it is our duty to be aware of the basics of income tax so that we could pay our taxes correctly and without making any mistake which may cost us dearly going ahead.

By: | Published: March 20, 2018 3:04 PM
income tax, income tax return, ITR, income tax refund, income tax slab for FY17-18, income tax payment,  Form 26AS, TDS Here are 10 things which you must be aware about being an income tax payer.

Despite rising income and growing tax compliance, less than 2% Indians pay income tax currently. Therefore, paying income tax definitely gives us a proud feeling that we are contributing to the development of our country. However, only paying tax is not enough. As an income tax payer, it is our duty to be aware of the basics of income tax so that we could pay our taxes correctly and without making any mistake which may cost us dearly going ahead. Here we are taking a look at 10 such things which you must be aware about being an income tax payer:

1. Understanding  Financial Year & Assessment Year

Financial year is the year in which you earn an income. It starts on 1st April and ends on 31 March of the next year. Assessment year is the next year following the financial year. For example, financial year 2017-18 is from 1 April 2017 to 31 March 2018 and its assessment year 2018-19 shall be from 1st April 2018 to 31st March 2019.
“Being an income tax payer it is very important to understand these terms used by the Income Tax Department, otherwise if the year goes wrong, then it may lead you into trouble. So, the next time you file your tax return or make the payment of challan, then keep this point in mind,” says CA Abhishek Soni, Founder, tax2win.in.

2. Income Tax Slabs
There are different income tax slab rates for various class of taxpayers. Being a taxpayer it is important to know in which slab do you fall and what percentage of tax needs to be paid accordingly. In case of individuals, the income tax slab rates can be classified on the basis of age into the following categories:

a. Income Tax Slab For Individual:
1.1 Individual (resident or non-resident), who is of the age of less than 60 years :

Taxable income

Tax Rate (FY 2017-18)

Up to Rs. 2,50,000

Nil

Rs. 2,50,000 to Rs. 5,00,000

5%

Rs. 5,00,000 to Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

1.2 Resident senior citizen, who is of the age of 60 years or more but less than 80 years:

Taxable income

TaxRate (FY 2017-18)

Up to Rs. 3,00,000

Nil

Rs. 3,00,000 – Rs. 5,00,000

5%

Rs. 5,00,000 – Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

1.3 Resident super senior citizen, who is of the age of 80 years or more:

Taxable income

Tax Rate (FY 2017-18)

Up to Rs. 5,00,000

Nil

Rs. 5,00,000 – Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

Plus:

Surcharge: 10% of tax where total income exceed Rs 50 lakh and 15% of tax if total income exceeds Rs 1 crore.

EC & SHEC: 3% of tax plus surcharge

Note: An individual is entitled for rebate u/s 87A if his total income does not exceed Rs 3,50,000. The amount of rebate shall be 100% of income tax or Rs 2,500, whichever is less.

From FY18-19, Health & Education Cess @ 4% of Income Tax shall be levied instead of the current EC & SHEC.

B. Income Tax Slab Rate For Co-operative Society:

Taxable income

Tax Rate(F.Y. 2017-18)

Up to Rs. 10,000

10%

Rs. 10,000 to Rs. 20,000

20%

Above Rs. 20,000

30%

Plus:

Surcharge: 12% of tax where total income exceeds Rs 1 crore

Education cess: 3% of tax plus surcharge [4% from F.Y. 2018-19]

C. Income Tax Slabs for Others:

A partnership firm (including LLP) or a local authority are taxable at 30%. Surcharge and Education Cess shall be levied at various rates in their respective cases.

3. Check out 26AS for TDS claim

Any tax deducted on salary can easily be checked from the Form 16 provided by the employer. However, for tax deducted on all other incomes, a person needs to check out his Form 26AS online. Further, apart form TDS, 26AS also refeclts the payment of advance tax made.

“If there is a discrepancy or mismatch in any of the incomes and TDS being reflected in 26AS, then before filing return notify the deductor about it and get it rectified. It is important because a mismatch will surely lead to a notice,” informs Soni.

4. E-verify your ITR

This is one of the things which you cannot afford to ignore. Every year after filing your income tax return (ITR), you need to verify your ITR as not verifying your ITR is as good as not filing ITR. For e-verification, there are two options, i.e. manually (sending ITR-V to CPC Bangalore) and electronically (E-Verification). Further, there are various ways for verifying electronically like through net banking, Aadhaar OTP etc.

5. Disclose all assets if earning over Rs 50 lakh

Taxpayers earning above Rs 50 lakh are required to disclose the details of the financial assets (including movable and immovable assets) which they own as on date. This is the duty of every such taxpayer. Therefore, don’t forget to mention it in your ITR. Being a responsible taxpayer don’t forget to comply with this requirement if you fall into such category.

6. Disclose foreign assets and income

To curb tax evasion, a person is required to give details of his foreign bank accounts as well as details related to it, like account opening date, interest accrued during the year, etc. Any misreporting of foreign assets may put you in trouble. Being a responsible taxpayer, don’t forget to comply with this requirement if you fall into such category.

7. Do not ignore income from previous employer

After changing their job, employees often forget to give the information of their previous employer to their new employer. Often, “the new employer also doesn’t take into account the income earned from the previous job. Tax is then deducted on the assumption that income for the remaining months is the only income for the year. But this poses a problem when such individual files their tax returns after the year-end. At that time, the incomes from the two employers are added and the deduction and exemption are halved and tax liability arises,” says CA Vertika Kedia, Co-Founder, Tax2win.in.

8. Pay Advance Tax, if liable

Advance Tax is like Pay as You Earn. Taxpayers whose estimated tax liability after TDS is Rs 10,000 or more are required to pay advance tax. However, a resident senior citizen who does not have any income from a business or profession is not liable to pay advance tax. Being a responsible taxpayer compute your tax liability and pay advance tax, if required. This tax needs to be paid in installments during the year by all individuals and corporate taxpayers.

9. Include all income from 26AS

Almost half of the taxpayers forget to include interest from tax-saving fixed deposits and other FDs. “Some taxpayers are of the belief that it is tax-free, which is a myth. They don’t know that although these deposits help save tax under Section 80C, but the interest earned from them is fully taxable. As a taxpayer, therefore, keep in mind to include such income from your 26AS in your next ITR to avoid any after effects,” says CA Kamal Murarka, Head-Tax Research Team, Tax2win.in.

10. No originals required

There is no need to submit any document in original to the I-T department during the process of filing income tax returns. They are also not required to be given to your CA, if you are taking any such assistance. Just keep the copies of the documents ready in your file as the IT department may ask you to furnish the same at a later stage.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top