Well, you never know when you will opt for a new job for a hike or for personal growth, if any deserving opportunity comes in your way then you will surely take advantage of the same. In the case where you get a hike in your salary in a particular financial year, then the total annual income on Income Tax Return (ITR) would be based on actual income accrued and not on the latest CTC which you will get on joining the new company.
It is important for salaried people to pay more attention while declaring their income as a wrong information can lead the person towards a tax evader and might have to pay a heavy penalty.
When it comes to salaried people, the tax will be calculated on the basis of annual income of the person in a particular financial year and deduct the same in equal instalment on a monthly basis. If you ever changed the job during any particular financial year then the company will deduct taxes based on accrued income.
With the same, the life of a taxpayer would become easy he/she will be assured that they are paying taxes on time as it will directly deduct from salary. This particular concept of taxation is known as Advance Tax.
To make this process easier and to make sure about the steady flow of funds to the government, the IT (Income Tax) Act has laid down the provision of ‘pay as you earn’ or Advance Tax. This form of ‘pay as you earn’ taxation is famous by the name of TDS (Tax Deducted at Source).
What about taxation on income from other sources than salary?
There are many professionals or salaried person carry several different sources of income other than the basic salary, in such cases, advance tax needs to be paid. If you have any source of secondary income that includes bonds, stocks etc then you have to pay an advance tax. When it comes to self-employed people or businessmen then the TDS has to be paid on every 15th of September, December and March in instalments of 30 percent and 40 percent, respectively. It is ideal for businessman and self-employed people who are not aware of their earnings at the end of the financial year and then pay as they earn. When it comes to advance tax, the taxpayer usually calculates their tax liability on the basis of estimated earnings. Below is the schedule of payment of advance tax.
|Due date of the instalment||The amount that you need to pay|
|• On or before 15th September||Minimum 30 percent of the advance tax liability|
|• On or before 15th December||Minimum 60 percent of the advance tax liability|
|• On or before 15th March||100 percent of the advance tax liability|
What a person will do in case of where there is balance tax liability after paying Advance Tax, TDS etc?
At the time of filing return, you will find that there is still some balance that has to be paid after paying your advance tax, TDS, the remaining can be deposited by the name of Self Assessment Tax.
e-filing income tax returns
It is easier than you think. Suppose if your income is around Rs 5 lakhs per annum, then it is advisable for you to file the ITR online. E-filing is really easy and the process of online claims filing has made it more popular and preferable. It is highly popular among taxpayers.
For the assessment year 2015-16, the IT department has provided more ease by reducing the number of pages in the ITR form to three, dropping the clause to declare foreign travel and dormant bank accounts.
The income tax is levied on the annual income between the April 1st of the previous year and ending on 31st March of assessment year (subsequent year). The year in which income is earned is called the previous year and the year in which the income is charged to tax is popular as assessment year.
So, take advantage of the same that will help in long run.
(Views expressed in the article are a personal observation of Naval Goel – CEO & Founder of PolicyX.com)