Income Tax filing made easy.

What is Income tax ?

Income tax needs to be paid by every Individual, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), Corporate firms, Companies, and all other persons that generate income.

Income Tax is calculated on the income of a person in a particular financial year i.e. from 1st April of a year to 31st March of next year. For example last financial year was from 1st April 2015 to 31st March 2016. Also known as FY 2016 or FY 2015-16. One more term is Assessment year. It is immediate next year for any financial year. For FY2015-16, Assessment year will be 2016-17.

Income tax slabs for FY 2015-16

For Men Below 60 Years Of Age

Income Tax Slab	Income Tax Rate
Income upto Rs. 2,50,000	Nil
Income between Rs. 2,50,001 - Rs. 500,000	10% of Income exceeding Rs. 2,50,000
Income between Rs. 500,001 - Rs. 10,00,000	20% of Income exceeding Rs. 5,00,000
Income above Rs. 10,00,000	30% of Income exceeding Rs. 10,00,000

For Women Below 60 Years Of Age

Income Tax Slab	Income Tax Rate
Income upto Rs. 2,50,000	Nil
Income between Rs. 2,50,001 - Rs. 500,000	10% of Income exceeding Rs. 2,50,000
Income between Rs. 500,001 - Rs. 10,00,000	20% of Income exceeding Rs. 5,00,000
Income above Rs. 10,00,000	30% of Income exceeding Rs. 10,00,000

For Senior Citizens (Age 60 years or more but less than 80 years)

Income Tax Slab	Income Tax Rate
Income upto Rs. 3,00,000	Nil
Income between Rs. 3,00,001 - Rs. 500,000	10% of Income exceeding Rs. 3,00,000
Income between Rs. 500,001 - Rs. 10,00,000	20% of Income exceeding Rs. 5,00,000
Income above Rs. 10,00,000	30% of Income exceeding Rs. 10,00,000

For Senior Citizens (Age 80 years or more)

Income Tax Slab	Income Tax Rate
Income upto Rs. 5,00,000	Nil
Income between Rs. 500,001 - Rs. 10,00,000	20% of Income exceeding Rs. 5,00,000
Income above Rs. 10,00,000	30% of Income exceeding Rs. 10,00,000

Income Tax return Forms:

There are multiple type of tax payers like Individuals, Compnies, HUF etc, SO IT department has provided multiple type of ITR forms to file the ITR. Please go through the various type of forms and its description to chose the best one suitable for you.

ITR Form Name	Description of Taxpayer
ITR – 1	This is applicable to all individuals having salary or pension income or income from one house property, or income from other sources (which aren’t income from lottery winnings and income from race horses). This is also known SAHAJ.
ITR – 2	For Individuals and Hindu Undivided Families not having income from Business or Profession.
ITR – 3	This is for Hindu Undivided Families or individuals who are partnered in a firm. The income here is either by the way of interest, salary, bonus, commission or remuneration that’s due or received from the partnered firm. The head of income should be “Profits and Gains of Business or Profession”.
ITS – 4S	This is for individuals and Hindu Undivided Families who’ve opted for the presumptive taxation scheme of Section 44AD / 44AE. This is also called SUGAM.
ITR – 4	This is for individuals or Hindu Undivided Families who carry on a proprietary business or profession.
ITR – 5	This is for firms, LLPs, AOPs, BOIs, artificial judiciary persons, co-operative societies and local authorities. This does not apply to trusts, political parties, colleges, etc. who are required to instead file return of income under Sections 139(4A), 139(4B), 139(4C) and 139(4D) and do not use this form.
ITR – 6	This for companies that don’t claim exemptions under Section 11. Charitable and religious trusts can claim exemptions under Section 11.
ITR – 7	This is for persons and companies who are required to furnish returns under Sections 139(4A), 139(4B), 139(4C) and 139(4D).
ITR – V	This is the acknowledgement of filing of return of income.

E-filing the ITR

IT department has made it very simple for everyone to file ITR through their online website 

http://incometaxindiaefiling.gov.in/

Please check my last article providing some insight on how to access the e-filing site 

https://bemoneysaver.blogspot.in/2016/06/what-is-income-tax-returns.html

Types of Income

There are multiple ways to generate income and all such sources are taxed differently. Please find below the list of most common sources of income

1.    Income From Salaries:

Every individual employee receives salary from his/her employer. This earning is taxable in the hand of employee, as per the slab of income tax mentioned above.

It is mandatory for every employer to provide Form-16 to all his employees. Form-16 contains all the details like yearly income, tax deducted at source by employer, etc.

2.    Income from House Property:

Income generated from house/flat rented out is considered in this category.

3.    Profits and Gains Of Business or Profession:

This includes income from business or professional services provided.

4.    Income from Capital Gains:

Captial gains include the income generated by sale of Equity shares, plot of land, Flat or building, jewellery, etc. These are taxed as the duration for which they are hold by the person. As per the duration of ownership, gains are classified as Short term capital gains or Long term capital gains.

5.    Income from Other Sources:

Any income that is part from the above four categories is classified under this category. Mostly it includes income from Dividends, Interests, Any rental income apart from house, etc.

Deductions available for tax saving

Now comes the most interesting part. Options to save your taxes legally. Following are the deductions available under various sections of the Income Tax Act , 1961.

1.    Section 80C:

Deductions under this section are only available to individuals and HUF. This section allows for investments like PPF, ELSS, Tax saver FDs, NSC, etc. to be exempt from taxation. The maximum permissible amount limit of this category is Rs. 1.5 lakh for this FY.

2.    Section 80CCC:

Deductions under this section are on payments made to LIC or any other approved insurance company under an approved pension plan. The pension policy must be up to Rs.1,50,000 and be taken for the individual himself out of the taxable income.

3.    Section 80CCD:

Deductions under this section are for contributions to the New Pension Scheme by the assessee and the employer. The deduction is equal to the contribution, not exceeding 10% of his salary.

The total deduction available under Section 80C , 80CCC and 80CCD is Rs.1,50,000.

Additional deduction to the extent of Rs. 50,000 shall also be available to the assessee under section 80CCD(1B). The additional deduction is not subject to ceiling limit of Rs. 1,50,000 as provided under Section 80CCE.

4.    Section 80D:

This is the section that deals with income tax deductions on health insurance premiums paid. In the case of individuals, the insurance policy can be taken to cover himself, spouse, dependent children – for up to Rs.15,000 and parents (whether dependent or not) – for up to Rs.15,000. An additional deduction of Rs.5,000 is applicable if the insured is a senior citizen. In the case of HUF, any member can be insured and the general deduction will be for up to Rs.15,000 and an additional deduction of Rs.5,000.

5.    Section 80DDB:

This section is for deductions on medical expenses that arise for treatment of a disease or ailment as specified in the rules (11DD) for the assessee, a family member or any member of a HUF.

6.    Section 80E:

This section deals with the deductions that are applicable on the interest paid on education loans for an education in India.

7.    Section 80EE:

This section deals with tax savings applicable to first time home-owners. Applies for individuals whose first home purchased has a value less than Rs.40 lakh and the loan taken for which is Rs.25 lakh or less.

8.    Section 80RRB:

Deductions with respect to income by way of royalties or patents can be claimed under this section. Income tax can be saved on an amount up to Rs.3,00,000 for patents registered under the Patents Act, 1970.

9.    Section 80TTA:

This section deals with the tax savings that are applicable on interest earned in savings bank accounts, post office or co-operative societies. Individuals and HUFs can claim a deduction on an interest income of up to Rs.10,000.

10. Section 80U:

This section deals with the flat deduction on income tax that applies to disabled people, when they produce their disability certificate. Up to Rs.1,00,000 can be non-taxed, depending on the severity of the disability.

11. Section 24:

This section deals with the interest paid on housing loans that is exempt from taxation. An amount of up to Rs.2,00,000 can be claimed as deductions per year, and is in addition to the deductions under Sections 80C, 80CCF and 80D. This is only for self occupied properties. Properties that have been rented out, 30% of rent received and municipal taxes paid are eligible for tax exemption.

Hope my article helps you to understand the finer details of ITR. Last date to file ITR for this year is 31^st July 2016. Please file it way before the last date to avoid any last minute hassles.