Calculate your Income Tax (IT), Tips for Income Tax Planning, Filing Income Tax with Calculator

# LittleSavings

For every first quarter of the Financial Year(FY), we need to declare your investments. This is where every individual need to plan their investments.

If you are reading this in the month of April, June, July, it is the time to declare your planned investments and submit the documents to the Finance department for tax deduction.

We often miss the planned investments while submitting the Investment proofs, plan ahead will save you last minute investments. After all, your hard money should not go waste.

First lets see the Tax bracket for this FY

Income Tax Slabs	Tax Rate
Income up to Rs 2,50,000*	No tax
Income from Rs 2,50,000 – Rs 5,00,000	5%
Income from Rs 5,00,000 – 10,00,000	20%
Income more than Rs 10,00,000	30%

Most common deductions for every individual

1. HRA
2. EPF
3. Standard Deduction

For HRA, you need submit the Original rent receipts at least of one month in a quarter. No need to submit the last quarter bills(Jan - Mar).

How your eligible HRA will be calculated?

• The actual amount allotted by the employer as the HRA.
• Actual rent paid less 10% of the basic salary.
• 50% of the basic salary, if the employee is staying in a metro city (40% for a non-metro city).

The Finance department will consider, whichever amount is the least one from the above three.

Note that if your HRA is above 1 lakh, you need to submit the PAN number of the landlord.


For EPF, no additional proofs required to submit.



For Standard Deduction, no medical bills required to submit for this year. I will give more insight later on this. 

Previously we used to submit the medical bills for deduction, but for now, there is a standard deduction of 50,000 rupees for Medical Allowance and Transport Allowance and no proofs are required.


Even after the above deductions, if you are final taxable income is above 2.5 Lakhs, you need to submit the respective original proofs for the other sections/deductions. 


Glance on other sections and corresponding proofs

Home Loan	Loan Provisional Certificate
PPF/SSY	Bank Statement/Passbook statement
LIC	Copy of receipt paid for premium
NSC	NSC certificate
Mutual Funds	Mutual Fund Receipts(will be in your subscription mail)
Tax Savings FD	Bank Statement/Receipt
LTA	Original Train/Air/Bus tickets only

The proofs given in the above table for the knowledge purpose only. Please liaise with the Finance department for any other proof required.

For Last minute investments, please use the this link to open investments account from ET Money Mobile app and invest in ELSS funds to submit the IT declarations. 

Calculate your Income Tax

A few important changes to be noted in this budget are,

"A rebate of INR 12,500 for all the taxpayers who fall under 5L slab. No tax to be paid for below 5L taxable income"

"Standard Deduction has changed from 40,000 to 50,000 this time"

As per the latest changes, I have updated the Income Tax Calculator. Click here to download the link.
Please have your pay-slip to calculate your Income Tax for this Financial Year.

Follow these guidelines:
1. Enter your Total Earnings(without deductions). Exclude the bonus amount.
2. Enter the bonus amount.
3. Enter your basic salary(per month).
4. Then the rent amount will going to pay per month.
5. Enter your HRA from pay-slip.
6. Enter the EPF value per annum(Usually 1800 per month, equivalent to 21600 per annum)
7. Enter other investments covering under section 80C(PPF, SSY, Home Loan etc.,)
8. Enter medical insurance premium, if any.
9. Enter your Prof Tax, Sodexo, Other deductions from Pay-Slip.

On the Left side bottom, your total taxable income will be shown.
At the center, the total tax to be paid will be shown based on the slab.

Note: Please ignore the tax, if the total taxable income is below 5L.

Hoping this will help to find your investments plan for the present financial year.

Tips for Income tax Planning

The Indian government will always give a chance upfront on investments plan to every individual before starting of the financial year. But every time, we will not consider it as important. However, I will not preach the importance now. But from my experience, I want to share some tips on the investment planning for tax exemptions.

If we take the Income Tax structure, the big part of the investments goes to the section 80C. There are numerous ways to invest and exempt from Tax under 80C.

The upper limit under the section 80C is 1.5 L per annum, which is equivalent to the INR 12,500 per month. 
So, here I take a cut and will invest under 80C. Before the start of FY, try to fix your investment amount. My suggestion is to invest at least half of the upper limit, say 6000(excluding EPF). 

Below are the different investment options under 80C.
Employee's share of PF & VPF contribution
Life Insurance Premium self or dependants 
Public Provident Fund (PPF)
Deposit under Sukanya Samriddhi Yojana
Bank / Post Office Deposit - 5 years & above
Equity Linked Savings Scheme (ELSS Mutual Funds - self only)

Lee see in detail for each investment option.

* Investment in PF is the mandatory investment for every salaried individual. 

* In my opinion, Life insurance is not an investment and if you already have a Life Insurance, it is good to continue.

* The next immediate option to look into is Public Provident Fund(PPF). It is simple to open in any nationalized banks and Post Offices. My suggestion is open with bank. And the amount to be invested in PPF should be minimal, as we are already investing in the PF, which will help to cover your needs. And investing in PPF should be done before 5th of every month for maximum returns. And PPF account should also open in the first week of the April month.

* If you are married and have a baby, the first thing is to open an Sukanya Samrudhi Yojana(SSY) account. In fact, this is the only investment option where the interest rate is higher compared to the remaining options. And investment in SSY should be done before 10th of every month.

* The last two options, I will keep as a life savers at the last minute. As opening a Fixed Deposit account(5 years) and investment in ELSS are easy. So, If I miss above options to invest, at least by the end of the FY, I will invest either in FD/ELSS.

Now, how much one should invest in the above options.

The ideal case is 
EPF - 1800
PPF - 2000
SSY - 5000

The next section is 80D, the company already provides the Health Insurance for every employee. If your parents are coming near to 60 years of age, then one should consider the extra insurance.

As every tax payer, I don't prefer all my savings goes to the above options, but I suggest, at least one-fourth of your savings should invest here. And before every start of Financial Year, analyse the in's and out's of your salary per month.

Salary - Loans - Expenses - Rent = Remaining Amount.

This will give how much liquid amount available for the savings, which will help plan your investments.

Income Tax Filing without Form 16

There are couple of ways to file the income tax. I am going to explain the standard and trusted way of e-filing. 

Have these details in hand before filing tax. These are available from your Tax sheet. 

In flow: 
Total Salary + Bonus - 8,96,387.00 + 82,000 (Basic, HRA, Conveyance, LTA, EA, MA, OA, Food Coupons) 

Out flow: 
HRA – 48,765 
 Sodexho – 18,000 
 Home Loan Interest – 2,00,000 
 Prof Tax – 2,498 
 Medical Deduction – 40,000 
 Others – 2,898 

80C (you can avail upto 1.5 Lakhs) 
EPF – 21,600 
PPF – 50,000 
Home Loan (Principle) – 78,400 

80D 
Medical Insurance Premium – 25000 

Note: Above figures are for indicative purpose only. 

Here it starts,

1. Open the following website link - https://www.incometaxindiaefiling.gov.in/
2. Login with your corresponding credentials. Hope you are already registered.
3. Find the Dashboard and Select on the “Filing of Income Tax Return” tab after login.

4. Select the appropriate fields if you are filing tax for this Financial Year.

Note: ITR -1 should be selected if you are salaried employee.

5. You need to fill the six tabs to complete the income tax filing.
6. I am going to explain about how to fill the “Computation of Income and Tax” tab, the remaining tabs need your personal details.

3 easy steps:

Step 1:

Fill B1 – (i) Salary field by the following calculation. = Total Salary + Bonus – HRA – Sodexho – Prof Tax – Medical Standard Deduction – Others (Edu Exempt & Tax on employment) = 896387 + 82000 – 48765 – 18000 – 2498 – 40000 – 4898 = 866226

Step 2:

Fill B2 – (v) Interest Payable on borrowed capital field, if you avail home loan. Eg. 115,778

Step 3:

In the part C, fill your respective claims under Section 80C & 80D. 
Eg: 80C – 1,50,000(EPF + PPF + Home Loan Principle)

80D -Medical Insurance Premium – 25,000 

Note: 80GG will be applicable if you don’t receive HRA. 80EE will be applicable, if you are the first time house buyer and the loan must be sanctioned between 01.04.2016 to 31.03.2017

Hope in the coming posts, I'll give some insights on the Tax Plan. 

 

Income Tax Filing with Form 16

From the recent changes(2019) in the filing of income tax format, one can now easily file IT returns, with the help of Form 16. Now both has been made look similar and easy to fill in the columns of the income tax portal. 

Deadline for filing Tax - July 31st

Although the deadline is far awsay, file your income tax as early as possible. If you miss the deadline, there will be penalty levying from INR 5,000 - 10,000.


The following are the steps to be followed to file income tax with the portal.

Step 1 - Open the following website link - https://www.incometaxindiaefiling.gov.in/
Login with your corresponding credentials. Hope you are already registered.

Step 2 - Find the Dashboard and Select on the “Filing of Income Tax Return” tab after login.

Step 3 - Select the appropriate fields if you are filing tax for this Financial Year.
Note: ITR -1 should be selected if you are salaried employee. 

You need to fill the six tabs to complete the income tax filing. Please have your Form 16 before filing the income tax in portal.

Step 4 - First, Refer to the section 3 - Total amount of salary received from current employer in Form 16, and fill the same in the B1(a) Gross Salary section under Computation of Income Tax.

Please note, the first image is from Form 16 and the second image is from income tax filing website.

 Step 5 - Enter Deductions of Tax on employment under section 16(iii) into Professional tax u/s 16(iii).

Note that Standard Deduction is auto-filled by the system.

Step 6 : If you have any house property under mortgage and is self-occupied, please enter the Interest payable on borrowed capital under B2(Type of house property) with the 8th row - Total amount of other income reported by the employee(in Form 16).

Step 7 -  The total deductions under 80C can be filled in this Part C column.

80C covers your PPF, EPF, Home Loan Principle etc.,

Step 8 - The Tax on Total Income will be auto-calculated and should tally with your Form 16.

Income Tax Calculators

* In a Financial Year, if moved to another company You need to collate the income from both the companies and calculate the income tax. Click here to calculate for Income Tax.

* In a Financial Year, with the same company. Click here to calculate for Income Tax.

* New Regime calculator introduced in FY2020-21.