Assessment your Tax for ITR

Kamal Baruah *

“You made it possible” a campaign got fascinated to onlookers these days. Income Tax Department thanks taxpayers for supporting nation building from power to heath, bridges and highways etc. It was on that day July 24, 1860 Income tax was introduced in India by James Wilson then financial member of the council of India for British East India Company under Crown rule of Queen Victoria to compensate for the losses after unsuccessful uprising in 1857 made by the British regime. This year has been celebrated to mark 159 years of the existence of this levy.

Direct tax collections have reached Rs 11.37 trillion in the last fiscal. Interestingly, the tax data analysis viewed that 16% of personal income-tax collection i.e. Direct Tax comes from the salaried taxpayers and pensioners. 31st July is normally the deadline for filing ITR for individuals however the government extended till August 31 for FY 2018-19.

Although individuals face uphill task when there is a time for ITR, their hearts filled with hope, trust, aspirations for own country, when Government aspires to make India a $ 5 trillion economy from $ 3 Trillion currently. Over 5.29 Crore ITR have been filed by taxpayers last year.

Individuals and entities that do not need their accounts audited are required to file ITR. One cannot submit ITR to the Income Tax Department unless due tax paid in full. Tax payable might be seen at the time of filing ITR. This is called Self Assessment Tax. Self Assessment tax means any balance tax paid by the assesses on the assessed income after taking Tax Deducted at Source (TDS) and Advance tax into PAN account before filing the Income Tax returns (ITR).

It is paid for a particular Financial Year (FY) end. There is no specific date for paying this tax by filling a Tax Challan ITNS 280 at specified bank branches or online to ensure successful e-filing.

From Assessment Year (AY) 2019-20 onwards, all incomes including interest earned from bank to post office is reflected. Wherever there is Permanent Account Number (PAN), they all included in one platform i.e. 26 AS (Annual Assessment). Now Aadhaar and PAN are interchangeable and it is permitted to file ITR by citing Aadhaar number for those who do not have PAN.

Advance tax is usually payable when tax liability exceeds Rs. 10,000 in a FY. However tax paid after 31 March, it is penalized in the form of interest under Section 234B of the Income Tax Act. You can also get your return verified from a Chartered Accountant to make sure that you paid the correct amount.

Tax payers have been foxed to assesses, while calculating tax. Taxmen expect the work of tax collection in a fair and transparent manner. IT Department should also assist and support taxpayers for e-filing returns and other tax-related obligations. Tax Slab is a basic thing to understand.

The tax rate for individuals in the lowest tax bracket of Rs 2.5 Lakh to Rs 5 Lakh is 5 %, 20% for between 5 Lakh to 10 Lakh and 30% for above 10 Lakh. There is nil tax for income upto 2.5 Lakh (3 Lakh for senior citizen and 5 Lakh for very senior citizen) for FY 2018-19. Tax now exempted for all upto 5 Lakh from FY 2019-20. A tax payer must verify the amount of TDS at Form 16 of employers and Form 26 AS at IT website. TDS for other incomes are reflected in Form 16 A.

All we need is to add all incomes like salary/pension, interest earned on Fixed Deposit (FD), SCSS from Bank/Post Office. There is a separate line for quarterly interest from savings account at tax compendium which can’t be shown zero if one gets interest from FD.

For calculating taxes, permissible deductions are deducted from Gross Total Income. The next step is to deduct Standard Deduction of Rs 40,000. There is an exemption of interest income on upto Rs 10,000 (50,000 for senior citizen) under Sec 194A. Other deductions are under 80Cs (1.5 L Insurance etc), 80Ds (25,000-75,000 Health Insurance), Interest on Home (2 L) / Education (no upper limit) Loan, NPS (50,000). However, the education cess and secondary & higher secondary cess is 4%.

Donation to Prime Minister Relief Fund (100% exemption) and other charitable institutions (50%) can further improve on pay slip. Physical disability taxpayers can claim investment from 75,000 to 1.25 Lakh. Also there is a provision for medical expenses (upto 1Lakh) of dependent children/parents and Medical Treatment of Sp disease on ailment prescribed. Interest earned from PPF/SSA is totally exempted.

As per Sec 10(26) in the case of members of schedule tribe defined by Article 366(25), residing in area of Nagaland, Manipur, Tripura, Arunachal Pradesh, Mizoram, districts of North Cachar, Mikir, Khasi, Jaintia and Garo Hills and Ladakh region of the state of J&K are exempted from TDS.

For claiming income tax refund, one has to submit bank account number, IFSC code and documentations for investment. Mismatch in income and expenses might individual get trapped. IT Dept depended largely on AIR (Annual Information Return) by Banks, Credit Card companies, Mutual Fund and Registrar for real estate deals on high value transactions.

Social media posts related to foreign holidays, luxury cars, 5-star stays or lavish social events may get trouble from spending pattern not commensurate with the income disclosed in ITR. However working professional with a travelling job can spend beyond the annual limit by a credit card for spending regularly on flight, hotel and commute for which the company reimburses later.

This year a country-wide 'taxpayer e-assistance campaign' is launched on 24 July by Finance Minister Nirmala Sitharaman to mark that historic day. That will certainly help voluntary taxpayers for e-filing.