All kinds of earnings are taxable – from salary, from business profits, gifts, rent, dividends, or even freelance fees – your earnings fall under the bracket of ‘income’.
You do not need to file income tax returns if your income is below Rs. 2.5 lakhs per year irrespective of whether you are self-employed or salaried. However, it is mandatory to file income tax returns if your income is below Rs. 5 lakhs annually.
Freelancing as a consultant? A TDS of 10% if applicable if you earn over Rs. 30,000 in a single transaction.
If you regularly make investments in the stocks and securities market, remember that tax is applicable basis the number of years for which your investment is made as well as the amount invested. Different rules are applicable for shares, mutual fund units, bonds, etc
Claiming a deduction
Employed? Investment proofs submission are mostly submitted in January/February based on deadlines provided by your employer. These proofs help you claim deductions. They include payment receipts of insurance premium, PPF, Tax Saving Mutual funds, National Savings Certificates, Fixed deposits, ULIPs, Housing Loan principle etc.
Have you already made a claim for deduction under Life Insurance? Remember, your Health Insurance Premium can be claimed over and above 80 CC deductions of Rs. 1.5 lakhs and is a part of section 80D.
You can claim a deduction up to Rs. 50,000 if you’ve invested in the National Pension System (NPS)
There is no limit to the deduction claimed on the interest of your education loan.
If you’ve availed of a home loan, you can claim a deduction on the principle amount of your home loan.
Donated to a charity recently? Claim a deduction under section 80G of the Income Tax Act.
Section 24 of the income tax act lets homeowners claim a deduction of up to Rs. 2 lakhs on their home loan interest if the owner or the owner’s family reside in the property.
Joint home loan tax benefits are available even if you’ve availed of a joint home loan with blood relatives such as parents and children.
An individual who pays rent in a city but owns property purchased using a home loan in another city can claim HRA exemption towards rent payment, deduction on home loan interest as per section 24 and principal repayment under section 80C.
HRA (House Rent Allowance) not a part of your income? Claim it under Section 80 (GG) of the Income Tax Act.
Form 16 (part A & B) and 26AS – are forms that must be provided to you by your employer or by you to your employees to file individual income tax returns.;
Summary of your bank statement for the current financial year is required for filing your income tax returns.
TDS certificates are required to file your ITR if you’re working as a freelance consultant.
A challan of tax payment on advance or self-assessment tax is required while filing your ITR.
Purchased property? You will need to submit proof of purchase while filing your returns.
Home loan certificate that mentions the principle amount needs to be submitted along with your ITR documents.
Paying rent? Ask your landlord to provide rent receipts to claim tax deduction under HRA.
Other taxes ; GST, Presumptive Tax, Advance Tax
If your tax liability exceeds Rs. 10,000, you are required to pay advance tax. (Exempt, if you’re aged 60 years above.)
Advance tax gives you the ease of ‘paying as you earn’ and can be paid by salaried individuals, freelancers as well as businesses.
Opted for Advance Tax? Remember the following dates –
Advance tax is payable as per the following schedule and specific percentages:
On or before 15th June: 15% of total advanced tax
On or before 15th September: 45% of total advanced tax
On or before 15th December: 75% of total advanced tax
On or before 15th March: 100% of total advanced tax
Business owners needs to file 3 GST returns every month stating records of sales, purchase and a summary of both along with taxes payable.
If there’s no specified GST rate for your service, you’re liable to pay GST at 18%
Self-employed individuals, Hindu undivided families and partnership firms can claim benefits under Presumptive tax.
Presumptive tax can be used by businesses having a total turnover of less than Rs. 2 crore
With the above key facts, we’re sure tax filing will be a lot easier this year. Make sure you file your income tax returns on time and if you found this information useful, click on the share buttons below.