Income Tax 2023-24: Everything You Need To Know Before Filing ITR

The direct tax charged by the central government on the income earned during a financial year by individuals or businesses is known as Income Tax. Tax act as a source of income for the government which they utilize in various sectors such as healthcare, education, subsidies to the farmers, and other welfare schemes.

The income tax is calculated by the IT Department on the basis of the tax slabs defined by them. Under the New Tax Regime, a tax rebate has been introduced upto rupees 7 lakhs for income which means that people with income of less than rupees 7 lakhs do not need to pay any tax. 

Here Is How Income Tax Is Calculated:

Various factors are involved while calculating income tax such as income source, applicable tax rate, deductions, and exemptions if any. 

- Calculate your gross income

Write down the annual gross salary you receive, including the special allowances you get like House Renting Allowance. Travel Allowance, and others.

- Remove the deductions 

By investing, saving, or spending on certain items, tax deductions allow you to reduce your taxable income. Rs 50,000 is the standard deduction which can be availed by everyone without making any savings or investments. Further, Rs 1.5 Lakh deduction can be claimed for various investments and expenditures such as Mutual Funds, PPFs, and many more investments listed under Section 80C.

- Net Taxable Income

After considering all the deductions, you receive your net taxable income.

- Calculate your taxes

You can calculate the taxes according to the Tax Slab defined by the government.

The New Tax Slabs-

Income Slabs                                      Tax Rates

Upto Rs 3 Lakh                                      NIL

Rs 3 Lakh- Rs 6 Lakh                            5%

Rs 6 Lakh- Rs 9 Lakh                            10%

Rs 9 Lakh- Rs 12 Lakh                          15%

Rs 12 Lakh- Rs 15 Lakh                         20%

Above Rs 15 Lakh                                  30%

- Consolidate your net tax

Tax Rebate is given by the government to people who do not earn above a certain limit annually. Under Section 87A, a rebate can be claimed.

If you have paid tax more than required, you can claim a refund. Here is how you can submit for Income Tax Refund-

1. Collect all the necessary documents

Collect all the necessary documents relating to income, exemptions, and deductions, along with statements from financial institutions, 1099 forms from employers, and many more.

2. Understand the filing requirement

Decide whether you want to file the ITR through offline mode that is paper process or online mode through the IT portal. Go through all the details properly before deciding on the mode of filing the refund.

3. Fill out the tax return form

Form 16 is issued the latest by most organizations and is also known as a salary TDS certificate. If an employee’s salary exceeds Rs 2,50,000 then their employer is required to deduct TDS and deposit it to the government. The form is not issued if an employee’s income does not exceed Rs. 2,50,000. You can also fill out the ITR form on the Income Tax Department portal. 

4. Go through your entries

Once you fill out the form, go through the form once and ensure you have not left any detail unanswered. Make sure all the details you have entered are correct.

5. Calculate your tax liability

Follow the instructions and calculate the amount you owe or the amount due as a refund. 

6. Sign and date the return

In the next step, you need to sign and date the Income Tax Return form to certify that the information provided by you is accurate and true.

7. Submit the return

If you are filing the return online, make sure to read all the instructions before submitting the form. If you are preferring the offline method to submit the ITR, mail the form to the designated address. Make sure to have a tracking number to ensure that the form has reached the designated address.

Filing income tax is necessary as the taxes paid by individuals and businesses is used to build the nation.