July 31st is fast approaching. It’s that time of the year when you are required to file your income tax return. For those of you who have still not filed your return, this leaves you with less than 1 month to put in all your paperwork and file return before the government comes knocking on the door.
If you are like most who like to avoid the hassle of reading complicated laws or fear filling forms, click here and we will help you in filing your return. However, if you would like to do things on your own, here are some helpful insights.
The following are the major deductions and changes that have taken place for this year’s filing for F.Y 2015-16 (A.Y. 2016-17):
Tax rates maintained at last year’s levels – The tax rates applicable will depend on the age and the category one falls under Income Tax Act classifications. However, due to no change in the Income Tax slabs and rates in the Financial Bill, 2015 , the tax rates are same for F.Y 2014-15 and 2015-16.
The basic exemption limit will remain at Rs 2.5 lakhs and for small tax payers (with an annual income of not more than Rs 5 lacs), the tax deduction under Section 87A will be Rs 2,000. However, the surcharge on Income tax where total income exceeds Rs 1 crore, is increased to 12% from the earlier 10%.
Deductions as per Chapter VI –This is undisputedly the most important tax saving section for any tax payer. The changes in the following sections should be noted:
Section 80C/80CCC
The maximum amount allowed to be claimed as a deduction under 80C and 80CCC sections is Rs 1.5 lacs for each financial year if invested in instruments such as Public Provident Fund (PPF), Tax Saving Mutual funds, National Savings Certificates (NSC), Repayment of Principal on Housing Loan, Life Insurance Premium, Equity Oriented Mutual Funds and Contribution to Employee Provident Fund (EPF).
From the financial year 2015-16, an additional deduction of Rs 50,000 is allowed for investing in NPS (National Pension Scheme) account. This additional deduction is over and above the deduction allowed to be claimed under Sections 80C and 80CCC.
Section 80D
- The tax deduction limit for health insurance was increased from Rs 15,000 to Rs 25,000 for non-senior citizens and for senior citizens (age above 60 years), it was increased from Rs. 20,000 to Rs 30,000.
- Super senior citizens (aged above 80 years) without health insurance can claim deductions on medical expenses upto Rs 30,000. However, this deduction will be allowed if no payment has been made towards the health insurance of the super senior citizen. The aggregrate of health insurance premium and medical expenditure incurred would be limited to Rs. 30,000.
Section 80U
The tax deduction limit for a person who has been certified by a medical authority as a person with disability has been increased from Rs. 50,000 to Rs. 75,000, and for a person with severe disability it has been increased from Rs. 1,00,000 to Rs. 1,25,000.
The following are a few noteworthy points for this year’s tax returns filing:
- Collect FORM 16 – Every salaried person needs to collect this from their employer they have worked with in Financial year 2015-16 as it contains the details of Tax Deducted at Source (TDS) on salary for services rendered.
One should collect Form 16A which provides details of the TDS deducted on account of any income that they have received. For example, collection of the form from the bank if it has deducted TDS on interest income, or from the tenant if he has deducted TDS on rent.
This has to be submitted during the IT filing.
- Check bank interest earned – All the interest earned on savings and fixed deposits needs to be enumerated in the filing to avoid any error by omission. This can also be viewed in Form 26AS which is available on the Income Tax website for every PAN. This has the details of all TDS deducted income and high-value transactions. This is of a great help in filing as it helps match the details in the bank statements.
- Keep loans information ready – If there is an availment of a home loan or an education loan, the loan statements should be kept ready to avail deduction for interest and principal repaid.
- Count all “other” income – Other sources of income including rent from premises, income from dividend (even though exempt has to be reported), or gift above Rs 50,000 received from non-relatives, also needs to be reported in the income tax return.
- Documents on Capital Gains Tax – All the information and documents related to purchase and sale of financial assets (mutual funds, shares, bonds) and immovable assets (property) needs to be kept handy.
- Super-rich tax – Assessees with income over Rs 50 lacs per annum have to give details of their movable and immovable assets held at the end of the year in the tax returns. Also, any income from outside India and immovable or movable asset owned outside India needs to be disclosed.
These are the basic things one should know for a hassle- free experience during income tax returns filing.
However, remember you still have a choice. Our experienced CA can assist you in managing your taxes and avoiding issues related to self filing.
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