By Tensing Rodrigues*
Is it too late to talk about tax? Or too early? Perhaps it is just in time! Today let me talk about managing income tax for those simple souls who have no other income than from salary and bank interest. These I suppose are many. And they need not break their heads over it. It is simple.
First let us begin with the tax rates and exemption limit. Please keep in mind that these change. So check for the latest rates and limits. There is, however, a catch here. You may be wanting to know the rates applicable for a particular year.
But there are two ‘years’ you have to reckon with: the financial year and the assessment year. The financial year (FY) is the period between April 1 and March 31 in which you earn an income. Assessment year (AY) is the following year in which this income is assessed and taxed. So for the income which you have earned from April 1 2016 to March 31 2017, the AY is 2017-18. The last date for filing the return is July 31 2017. The date too may change from year to year so keep track. For knowing the rates limit or due date just Google. Type: ‘income tax rates for AY 2018-19’ or ‘due date for submission of ITR for AY 2018-19’ and so on.
IT rates for individual tax payers for AY 2018-19 are as follows (persons below age 60) income up to Rs 2,50,000 => NO TAX; Income from Rs 2,50,000 – Rs 5,00,000 => 5 per cent of the amount by which the total income exceeds Rs 2,50,000; income from Rs 5,00,000 – 10,00,000 => Rs 12,500 plus 20 per cent of the amount by which the total income exceeds Rs 5,00,000; income more than Rs 10,00,000 => Rs. 1,2,500 plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000. Surcharge: 10 per cent of income tax, where total income exceeds Rs 50 lakh up to Rs one crore; 15 per cent of the income tax where the total income exceeds Rs one crore
Now let us go to the calculation of the taxable income. When your employer pays you a salary he will deduct some tax from it. This is called the TDS or ‘tax deducted at source’. The current rate of TDS on salary is at applicable slab rate and on bank interest is at 10 per cent. After the end of the financial year (sometime in June) you can download a statement of all tax deducted from your salary and bank interest. It is called the Form 26AS, and can be downloaded from the TRACES (Income Tax) site or from your net banking site. The procedure for downloading it from the TRACES site is as follows. Go to https://incometaxindiaefiling.gov.in and login using your income tax department login and password. If you don’t have an account you’ll need to register first (see the button on top of login). Enter your PAN number, password and date of birth in DD/MM/YYYY format. And enter the captcha code. Now click on login. Go to My Account. Click on View Form 26AS in the drop down menu. Click on ‘Confirm’ so that you are redirected to the TRACES site. You are now on the TRACES (TDS-CPC) site.
Select the box on the screen and click on ‘Proceed’. Click on the link at the bottom of the page – ‘Click View Tax Credit (Form 26AS) to view your Form 26AS’. Choose the Assessment Year and the format in which you want to see the Form 26-AS. To download a PDF choose PDF. After you have made your choice, enter the ‘Verification Code’ and click on ‘View/Download’. To open the document you have to enter a password. Form 26AS password is your Date of Birth in DDMMYYY format. Form 26AS will now open. Save it for using when you file your return.
The Form 26AS is important because it states your salary and bank interest income during the finacial year along with the tax deducted from this income. Make sure that the amounts stated are correct. If you find that the form does not show all the entries (ordinarily there have to be at least twelve entries for salary and at least two entries for bank interest) check with your employer and/or the bank. Once you are sure, you can begin to calculate your total income. Your total income will be nothing but the total of the entries under salaries and bank interest.
Next time let us see how to file an Income Tax return the easy way.
*The author is an investment consultant. Readers can send their comments and queries to firstname.lastname@example.org