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When
there is an income tax, the just man will
pay more and the unjust less on the same
amount of income.”
Greek philosopher Plato left this world
about 350 years before Christ, but in
this quote, he said something that would
apply at all times, in all lands. When
you add the incomes under all the five
heads and account for the deductions to
get your total taxable income, the amount
on which you have to pay tax, Plato’s
quote might find an echo in your mind
too. There’s some relief for those
with an annual income of Rs 1 lakh or
less—they don’t have to pay
tax. The limit is Rs 1.35 lakh and Rs
1.85 lakh for women and those above 65
years of age respectively. The tax payable
at different income levels is shown in
the table. Remember, filing of return
is compulsory if your taxable income exceeds
the basic limit indicated above, even
if the tax payable is nil. You need to
file returns even if you have incurred
losses as a businessman or professional.
A
surcharge and an education cess is levied
on the amount of tax payable. The surcharge
is 10 per cent of the tax amount and has
to be paid if your annual income exceeds
Rs 10 lakh. The education cess of 2 per
cent has to be paid if your annual income
is above Rs 1 lakh. These charges push
the tax rate of 10 per cent to 10.2 per
cent, 20 per cent to 20.4 per cent and
the highest tax slab to 30.6. For those
with income exceeding Rs 10 lakh, the
rate becomes 33.6 per cent, including
surcharge and education cess.
If
the tax already deducted by your employer
(TDS) is more than the tax payable, you
are eligible to get a refund of the excess
amount. Mention the details of your bank
account in the tax form so that the refund
gets credited to it.
The
fundamental rule of income tax is that
tax becomes due as soon as income is earned.
In the case of salaried employees, tax
is deducted every month after estimating
the total income for the year and accounting
for deductions. As far as business income
is concerned, it is difficult to estimate
income from day-to-day transactions. Therefore,
tax is charged on estimation of income
basis. As a thumb rule, if your income
from a business or profession comes to
Rs 100 at the end of a financial year,
the income tax department assumes that
Rs 30 (30 per cent) of it accrued up to
September, Rs 60 (60 per cent) accrued
up to December and the total income, that
is, Rs 100, accrued till March. You are
supposed to match this income pattern
while depositing self-assessment tax.
You will have to pay a penalty in the
form of interest on the due amount if
you don’t pay, pay less, or defer
paying the advance tax. Don’t worry
if you have paid all the taxes, but not
filed your return by the due date, as
the IT Act permits you to file the return
till the end of assessment year. However,
if you don’t meet this deadline too,
you are liable to pay a penalty of Rs
5,000.
American
Novelist Herman Wouk said, “The only
imaginative fiction being written today
is income tax returns.” Our advice:
do your bit as a responsible citizen of
the country, pay taxes on time, stay away
from fiction, and relax.
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