Understand Income Tax, Challan 280, TDS, Form 16

All of the articles for learning the fundamentals of understanding income tax are listed on this page. If you make money, you must pay taxes. Understanding income tax requires knowledge of terms such as income tax, TDS, Challan 280, and Form 16.

Important Tax Dates For Individuals for Income Tax

DateWhat to do
31st JulyFile ITR
15th Jun1st installment of advance tax for individuals for the current FY
15th Sept2nd installment of advance tax for individuals for the current FY
15th Dec3rd installment of advance tax for individuals for the current FY
15th March4th  installment of advance tax for individuals for the current FY
Understand Income Tax
I MAGE credit: Getty Images. Understand Income Tax
If you miss the deadline on July 31st, you have two choices.
  • By the deadline of March 31 of that Assessment Year, you may file your return without incurring any penalties if there is no outstanding tax to be paid.
  • But if you still have a tax liability, you will have to pay monthly penal interest on the tax due if you file your return by 31 March of the Assessment Year.

How to Calculate Income Tax

Income tax filing and processing comprises of following stages.

  • calculating overall income.
  • TDS deducted, advance tax paid claims
  • claiming legitimate deductions to reduce taxes (80C, 80D).
  • calculating the amount of tax due.
  • Making an ITR
  • amending the ITR and paying any applicable self-assessment taxes.
  • sending an ITR.
  • Sending ITR-V and e-verifying ITR
  • ITR processing: Processed or Notified

Income Tax Slabs for FY 2020-21/FY 2021-22 are

Surcharge10% of tax where total income exceeds Rs. 50 lakh 15% of tax where total income exceeds Rs. 1 crore25% on income between Rs 2 crores to Rs 5 crores37% on income between Rs 5 crores to Rs 10 crores
Education CessHealth & Education cess: 4% of tax plus surcharge
Tax RebateRs 12,500 for income up to 5 lakh under/section 87A

Variety of Income

The total income a person receives over the course of a fiscal year, or his gross whole income, is the sum of all of his sources of income. One of the following five heads may get it:

  • earnings from a salary:
  • Earnings from Real Estate: You will be taxed on any home or business property you possess. Even if your property isn’t rented out, it could still be seen to be doing so and subject to taxation as such. Claim for Interest on a Loan falls under this category if you have taken out a mortgage.
  • Income from Capital Gains: When you sell stocks, bonds, gold, real estate, mutual funds, or other types of property, you are required to pay what is known as a capital gain tax. 
  • Depending on the asset you sold and the length of time you owned it, it is categorized as either Long Term Capital Gain Tax (LTCG) or Short Term Capital Gain Tax (STCG).
  • Income from Business or Profession Profits and Gains: 
  • Your profession or business- income is taxed under the heading “profits and gains of business or profession.

The difference between a business’s operating credit receipts and company’s costs is the revenue subject to tax.

The income tax return must include income from other sources, such as interest on savings bank accounts, fixed deposits, recurring deposits, and senior citizen savings programs (SCSS). Revenue from Other Sources refers to all income that does not fall under the categories of salary, real estate owned, business & profession, or capital gain.

Forms TDS and 26AS

TDS is a percentage that is taken out while receiving different types of income, such as wages, commissions, rent, interest on dividends, etc. The money taken out is then sent to the government’s account.

For instance, a monthly Form 16 is provided by an employer to indicate that TDS has been deducted from an employee’s salary. When purchasing real estate or paying rent that is greater than Rs 50,000, TDS may be required.

  • Employer, bank, or financial institution will withhold TDS in accordance with TDS rate.
  • The deductee may submit a self-declaration in Forms 15G or 15H to avoid TDS if his income is not greater than the amount subject to tax (Ex Senior Citizen)
  • You receive a TDS certificate, Form 16 or Form 16A, from your employer, bank, or financial institution, which documents this deduction.
  • TDS can be shown in Form 26AS as well. 
  • TDS must be claimed while submitting an ITR.
  • The amount of tax due may differ from the TDS that was deducted (for example, 10% TDS on FDs, but tax is based on income slabs).
  • In order to file an ITR, you must pay additional taxes (Advance Tax or Self Assessment Tax)
  • The majority of individuals who must deduct tax at source from people or organizations must get a Tax Deduction and Collection Account Number, or TAN (Exceptions are TDS on Rent, Buying property)

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