Any income that does not fall under any of the four heads of income above is taxed under the head income from other sources. An example is interest income from bank deposits, winning from lottery, any sum of money exceeding Rs 50,000 received from a person (other than from relative, on marriage, under a will or inheritance).
Deduction is the reduction that one can claim under different heads to reduce the tax liability, thereby reducing the income tax that pays.
Section 80C offers a window of investment opportunities on up to Rs 1 lakh investment in each financial year. This benefit is available to everyone, irrespective of their income levels. For instance, if you are in the highest tax bracket of 30 per cent, the investment of Rs 1 lakh under this section will save you Rs 30,000 each year. The various financial products that qualify for Section 80C benefits are as follows:
•Life Insurance premium payment
•Home loan principal, wherein the principal portion of the home loan EMI qualifies for deduction under Section 80C
•Employees Provident Fund (EPF) where 12 per cent of your salary is deducted every month and an equal amount is contributed by your employer and put into a fund maintained by the government or your company’s provident fund trust. Only your contribution towards the fund is eligible for deduction from taxable income of the basic salary towards EPF
•Tuition fees up to children can be claimed for. However, any payment towards any development fees or donation to institutions is excluded
•Contributions to the public provident fund
•Investments in the senior citizens savings scheme
•Savings in notified term deposits in scheduled banks with a minimum period of five years under the bank term deposit scheme, 2006. Savings in post office time deposits with 5-year lock-in
•National Savings Certificate, six-year government-backed security available at post offices
•Investments in tax planning mutual funds, popularly known as Equity-Linked Savings Scheme (ELSS)
•Investments in pension plans
•Section 80D: Premium payments towards medical insurance for self, spouse, children and parents qualify for deduction. The qualifying amounts under Section 80D for self, spouse and dependent children is up to Rs 15,000. Additional deduction up to Rs 15,000 for the parents going up Rs 20,000 if the parent, for whom the policy is bought is aged 65 years or more at any time during the financial year in which the premium was paid.
•Section 24: Interest on home loan with a maximum deduction of Rs 1.5 lakh as interest payment on home loan for self-occupied property and unlimited for property that is let out.
•Section 80E: Interest on educational loan qualifies for deduction on full-time studies for any graduate or post graduate course. However, there is no benefit on principal repayments.
•Section 80G: Donations to funds and charities from 50 or 100 per cent of the donated amount, depending on the charity, is deductible from income. But this shouldn’t exceed 10 per cent of your gross total income.
•Section 80DD: Deduction up to Rs 50,000 or Rs 1 lakh on the medical treatment of a dependent with a disability, certified by a medical authority.
•Section 80DDB: Deduction up to Rs 40,000 for assessee under 65 years and Rs 60,000 for senior citizens on costs incurred for treatment of specified illnesses such as malignant cancer, chronic renal failure, Parkinson’s disease and other listed diseases.
•Section 80CCF: Investment in infrastructure bonds up to Rs 20,0000 a year qualified for deductions under this section. The below table explains you the eligible deduction for different residential status.
When to pay Income tax
•An individual having salary income and no business income must file his return not later than 30th June of the assessment year.
•The due date of filing returns by an individual having business income and whose accounts are not required to be audited is 31st August.
•The return should be in the prescribed form.
•It is necessary to file a return to claim a refund of any excess tax paid.
•You need to attach documentary support for tax deducted at source, investments or payments made that allow you to claim deductions and tax rebates and employer’s certificate in Form 16A.
•The income tax year or assessment year is the year in which income of the previous year is to be assessed. The financial year following a previous year is called the assessment year in relation to that previous year. Thus the assessment year for the previous year 2009-10 is 2010-2011.
•An assessment, therefore, comprises of two stages Computation of total income, and Determination of the tax payable thereon.
•On completion of both these stages, an assessment is said to be made.
Where to pay Income Tax
•Through online deposit
•Through Nationalised banks
How to pay Income Tax
•Auditor or Chartered accountant or Tax Return Preparers
Transaction mode to pay tax
Considerations when filing returns
•Right tax computation
•Right details such as PAN, bank account number, address and name
•Payment by the due date Visit the Income Tax Dept / NSDL website. https://onlineservices.tin.nsdl. com/etaxnew/tdsnontds.jsp
•Click on the “CHALLAN NO./ITNS 280
•On this page choose (0021)INCOME-TAX (OTHER THAN COMPANIES)
•Type your Permanent Account No (PAN)
•Choose Assessment Year: choose 2012 - 2013
•Fill up all other details requested
For Type Of Payment choose (300)SELF ASSESSMENT TAX
Choose your Bank Name where you have online banking, so that you can pay your taxes
Click on Proceed, (located at the bottom of the web page)
Once you have paid your taxes, Income tax department will issue you a receipt.
Using this receipt please fill up our Advance Tax or Self Assessment Tax page you can continue filing returns through the online interface for preparing and processing your returns.
It is a private key which ensures the authenticity of an electronic document, which may be an e-mail or a spreadsheet. Digital signature is issued by the Ministry of Corporate Affairs. So, if you have a digital signature, go to https://incometaxindiaefiling.gov.in/portal/ individual_huf.do. Choose the respective form, read the instructions mentioned in the excel file. Fill the sheets and save it on your computer. To upload it, go to https://incometaxindiaefiling.gov.in/portal/ uploadXML.do?assyr=2010. Create a user ID and follow the instructions that come on the screen.
If you don’t hold a digital signature, don’t worry. It’s not mandatory that all tax filers possess a digital signature. In fact, for those who don’t have one, the process is more or less the same as above, except that it would not be completely paper-free. Once you are done with uploading the excel file from the income tax department’s site, you need to submit ITR-V (or income tax verification form).