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Tax Planning

Return Filing

Now that we have a complete understanding of the structure of income tax, exemption limits, and deductions. Finally, it is time to calculate our tax and file a return.


What are the five easy steps to calculate income tax?

The calculation of taxation depends upon the income tax slab and status of a person as mentioned under the Act.


The following steps will help you calculate-


Step 1: Know your income
The first thing which a taxpayer should know is how much income was earned by that person in the previous year for which he is liable to calculate tax. 


Step 2: Deductions
After this, calculate the amount of deductions you have invested in. These deductions will be deducted from the total income calculated by you for tax purposes.


Step 3: Calculate any taxes paid
Verify the amount of advance tax, if any, paid by you. This will help you to calculate the balance amount of tax payable.


Step 4: Tax slab
Know the taxation slab under which you fall.  One should know the status as to whether you are an individual or HUF, or firm or company or any other assessee.  Accordingly, you will come to know the rates of tax applicable to you.


Step 5: Online tax calculator
Click on the Online tax calculator, which will redirect you to the income tax site where you will be able to calculate the income tax payable online after following all the above steps.

Try calculating tax for yourself as an individual with a salary income of ₹5,00,000 p.a.


Who should apply for Permanent Account Number (PAN) ?

Following persons should mandatorily hold a PAN:

  • A person, whose total income is more than the maximum amount not chargeable to tax,
  • A person, whose income from business or profession exceeds ₹5 lakhs,
  • A person,  whose tax has been deducted at source,
  • An importer or exporter
  • A charitable trust
  • Any person liable to pay excise duty or is in manufacturing or production business.
  • A person liable to pay goods and service tax
  • Any person who enters in any financial transactions wherein quoting PAN is compulsory.

Discuss the different modes of collection of Income Tax -TDS, Advance Tax & Self-Assessment tax?

The different modes of collection of income tax are mentioned as below:


Tax deducted at source (TDS) – TDS stands for Tax Deducted at Source. “At source” means at the point of origin or issue. Herein it means that tax is deducted at the origin of income.


Illustration:  Mr. X is a salaried person working in ABC Limited. His income is taxable as per the respective tax slab under the provisions of the Income Tax Act, 1961. Herein, ABC limited will pay salary to Mr. X after deducting the tax amount (as calculated under the respective slab for the financial year) and pay the balance amount. Thus, salary refers to the source of income and the amount deducted refers to the TDS amount. Herein ABC Limited is the deductor (one who deducts TDS) and Mr. X is the deductee (on whose behalf TDS is deposited).


TDS is deducted on several sources of income i.e. interest income, dividend income, royalty income, income from professional services etc. 
Now in case you have multiple deductions during the year, it becomes very difficult to trace the total amount of TDS paid. Hence, you end up calculating the wrong tax amount. To cross check as well as to prevent any miscalculation with respect to the total unclaimed TDS amount, you need to simply download Form 26AS.


Advance tax - Advance tax is the amount of income tax paid to the Government based on probable tax liability of the previous year.


Advance tax needs to be paid in the following manner:

Self assessment tax - Tax paid by the assessee after 31st march but before the due date for return of income is called self assessment tax.


Note: Both the self assessment tax and advance tax can be paid in this FORM.  An assessee should ensure that he selects the correct column.


What is Tax Refund and how to get a refund?


Tax refund refers to the excess of tax paid to the Government by the assessee. This excess amount is to be returned back by the Government. 

Usually the amount is remitted back into the bank account of the taxpayers. Otherwise, an assessee can also check the status of the tax refund online by clicking here.


For claiming the refund of tax, an assessee needs to fill FORM 30 stating the details as mentioned therein to the income tax department.


What is the Return of income?


Return of income is a format prescribed by the Government in the form of forms wherein an assessee mentions the details of the income and expenses, taxes paid, refund to be received etc. This format is prescribed in the form of different forms based on the status and nature of income of the assessee.

These forms can be downloaded from the income tax website itself.


What are the documents for Evidence of Income?


Documents of evidence of income are basically the proof of income. It can be salary slips, an interest certificate, bank transaction statements etc. Though they need not to be submitted while filing return of income, the assessee should maintain a proper record of all these documents for 7 years to substantiate the income earned if required by any assessing authority in future.


What are the points to be kept in mind while filing returns?


While filing return of income, following points should be kept in mind:

  • An assessee should be careful with the due date of filing the return if income because a delay may lead to no carry forward of losses of the previous year.
  • Cross check the amount TDS with Form 26AS available online.
  • Filing return on the basis of all the documents evidencing the income earned. The figures entered in the return should be exactly as mentioned in the supporting documents.
  • Identify the correct form for filing return of income.
  • Enter correct details of all the important information such as PAN, bank number details etc
  • Once the return is filed, the acknowledgement receipt of the return of income is to be dispatched to the CPC, Bangalore within one hundred twenty days.

What are the modes of filing return of income?

The different modes are as follows:

  1. Paper Form
  2. E-filling with digital signature
  3. Electronic transfer of data under Electronic Verification Code (EVC)
  4. Electronic transfer of data and submission for ITR-V


What is E-filing and state its benefits?


E-filing means filing the return of income through the income tax website. The income tax department (IT department) has provided an e-filing utility software to prepare the return of income and then upload it in the website. This software is quite user friendly and minimizes the hurdles of manual cumbersome filing of return.


One of the most important benefits of e-filing is that if one maintains all the documents properly, he can file the return from anywhere and any place saving time with less trouble. 


What is a digital signature?

Digital Signature Certificates (DSC) are the digital equivalent (that is electronic format) of physical or paper certificates. 
Few Examples of physical certificates are drivers' licenses, passports or membership cards. 


Certificates serve as proof of identity of an individual for a certain purpose…………………., a digital certificate can be presented electronically to prove one’s identity, to access information or services on the Internet or to sign certain documents digitally.”


Key Points

  • Form 26AS is the concise details of the TDS, TCS and the advance tax or the self assessment tax paid by the assessee. It can be downloaded from the income tax website by entering the assessee details.
  • The assessee should contact the tax deductor and cross-check whether any errors have been made by the tax deductor in entering any deductee details.
  • The sections related to TDS are section 192, 193 and 194 of the Act.
  • Click on the link to see the status of PAN applied.
  • ITR-V is the acknowledgement receipt of filing the return of income.
  • The due date of filing return of income by an individual or HUF is 31st July.
  • The due date of filing the return of income by the company is 30th September.
  • The return can be revised subject to the condition that the revised return should be submitted before the end of assessment year or completion of assessment (whichever is earlier).
  • DSC is required to be used for signing the e-forms/documents.

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