Income tax is the tax that you pay on your earnings. Income tax is payable to everyone who spent at least sixty days in India during the previous tax year and at least 365 days in the previous four years.
How to Calculate Income Tax on Salary
Before calculating your taxable salary income, it is critical to obtain all the information needed to prepare your Income Tax Return Filing. You must next determine your entire taxable income, followed by the final tax refundable or payable. To compute the final tax, utilise the relevant tax rates before deducting taxes previously paid via advance tax or TCS/TDS from the tax amount payable.
Individuals can draw income from five sources under income tax regulations: salary, business or property revenue, capital gains, house property income, and income from other sources. Each individual's income must fall into one of the aforementioned categories.
Procedure for Calculating Income Tax on Salary
- Gather your pay slips and Form 16 for the current fiscal year, and include every compensation, such as base salary, HRA, TA, DA, DA on TA, and other reimbursements and allowances specified on your Form 16 (Part B) and salary slips.
- The bonus obtained during the fiscal year must be added to the computed income.
- The amount is your gross salary, from which you must subtract the exempted portion of House Rent Allowance, Transport Allowance (up to Rs.19,200 per year), Medical Reimbursement (up to Rs.15,000), and all other reimbursements supplied the real bills in respect of the costs spent.
- As a consequence, your net salary income is calculated.
Section 16(ii) of the IT Act
According to Section 16(ii) of the Income Tax Act, if an employee receives an entertainment allowance, the money is initially distributed along with the person's basic wage. Following that, it will be examined for deduction. This allowance will take up one-fifth of the person's income and will be in addition to all other allowances and perks.
Employer Payment of Professional Tax: The Central and State Governments levy a tax known as the professional tax on persons with salaried incomes, trades, jobs, and callings. This professional tax does not exceed Rs.2500 per year.
According to Section 16(ii) of the Income Tax Act of 1961, taxpayers have exclusive jurisdiction to claim a tax deduction for professional taxes paid to their employer. However, this deduction will be available only in the year in which the person pays the tax. In any event, an overdue professional tax cannot be considered for deduction.
Conclusion
Income tax filing online or e-filing is the process of electronically submitting income tax returns (ITRs) to government tax authorities in the approved format. E-filing your income tax returns is safer, easier, and faster than going to the Income Tax Office. E-filing is necessary for most tax assessees in India under existing income tax legislation, replacing the previous paper-based procedure of submitting ITR. The deadline for e-filing Income Tax Returns for the fiscal year 2022-23 is July 31, 2022.
Comments