10 Easy Steps to Tax Filing

Following are the 10 easy steps for Tax filing.




Step 1:Identify your sources of income under some income heads.

Step 2: Keep documents ready

Step 3: Compute the Gross Total Income (GTI)

Step 4:Calculate deductions

Step 5:GTI minus deductions.

Step 6: Calculate total taxable income

Step 7:Calculate tax payable

Step 8:Find your tax rates

Step 9:Choose the correct income tax return (ITR) form.

Step 10:File returns



Step 1: Identify your sources of income under these income heads.

Categorize your income against the relevant item. The income heads can be of following kind.

· Income from Salary

· Income from Business/Profession

· Income from House Property

· Income from Capital Gains

· Income from Other Sources



You can maintain a table for this purpose. This will help you to categorize your income from different sources.

S. No.

Income Head

Income Amount

1

Salary



2

Business/Profession



3

House Property



4

Capital Gains



5

Other Sources





Step 2: Keep documents ready

You should know which documents you need to keep in hand in order to calculate your tax. You should identify the sources of income and place them under the right income heads. Here is a list of documents to be maintained.



Income from Salary

· 4Form 16

· 4Form 12 BA



Income from Business/Profession

· Profit/loss account 4Balance sheet

· TDS (Tax Deducted at Source) certificates

· Advance tax challans

· Bills/vouchers



Income from House Property

· Particulars of tenants, including their PAN

· TDS certificate 4Gross rent received

· Advance tax challans



Income from Capital Gains

· Contract notes

· Advance tax challans

· Sale/purchase documents of moveable/immoveable assets



Income from Other Sources

· All documents related to income

· TDS certificates

· Advance tax paid



Step 3: Compute the gross total income (GTI)

Add up your earnings from the five income heads to arrive at total taxable income. To get your total taxable income, you will have to subtract the standard tax deductions (Section 80) from the gross income.



Income from salary

Gross salary includes basic salary, commissions, allowances and perquisites. Subtract certain deductions from this. The balance is charged under the head 'salary income'. Your basic, allowances, commissions and bonuses are fully taxable.



Step 4: Calculating deductions

Add up all your Section 80C and non-80C deductions and minus it from your gross total income.



House rent allowance (HRA): This is exempted up to a certain limit if you are actually paying house rent. The lowest of three amounts, actual HRA received, rent paid in excess of 10 per cent of basic salary and 40 per cent of your basic salary (50 per cent for Mumbai, Kolkata, Delhi and Chennai), would be exempted. Conveyance allowance up to Rs 800 per month is exempt from tax.



Leave travel allowance (LTA): It is a reimbursement for travel expenses that you and your family members incur within India while you are on leave. While LTA can be paid to you every year, it is treated as tax-free only for two journeys in a block of four years. Both these journeys can be made in any one of the four years or spread out over the four years.

Step 5: GTI minus deductions.
Medical allowance: Reimbursement of medical expenditure incurred by you and your family is tax-free up to Rs 15,000 per annum. All reimbursements need to be supported by bills.




Perquisites: These are benefits that you get in addition to your regular salary. These are usually in the form of accommodation, car and concessional loans. The total of all perquisite values is added to the salary and tax is calculated on the usual slabs.



Premium for group medical and term insurance paid by your employer escapes the tax net. However, you need not worry about calculating all this. Your employer will give you Form 12BA, which will show the value of your perks as part of your salary.
Step 6: Calculating total taxable income




Income from House Property

Rental income from a residential or commercial property that you own is taxable. If you have more than one house property and one is self-occupied, then even if the other properties are not rented out, they will be treated so and the implied rent, based on annual value of the property, will be taxed.



The gross annual value is the highest of the municipal value, the actual rent, or the fair rental value. Preferential treatment is given to one self-occupied house, whose annual value is taken as 'Nil'. The interest payable on home loans is tax-deductible up to Rs 1.5 lakh a year.



Income from capital gains

Short-term capital gains are included in your gross total income and taxed according to the slab in which your income falls. Except listed securities, long-term gains made from all other asset categories are taxed at 20 per cent with indexation. Gains from shares or equity MFs are tax-free in the long term. These gains are taxed at 15 per cent in the short term, provided, of course, that the securities transaction tax has been paid.
Income from others sources


Usually, any income that does not fall under the four heads of income mentioned above is taxed under this head. Examples of such income are, interest earned on bank fixed deposits, savings account and National Savings Certificates. Now that you have the numbers right, you can proceed to the final act of actually filing your taxes.



Step 8: Finding your tax rates

Individual taxpayers are categorized as women, senior citizens and others. Identify your category and check out your tax liability according to the tax slab applicable for assessment year 2009-10 or financial year 2008-09
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