Income Tax for Salaried Individuals

Income Tax for Salaried Individuals

File your Income Tax Return in Tamil Nadu and across all parts of India online. Know the procedures and formalities to get your filing done through Tax Robo.


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Income Tax for Salaried Person
 

Compute IT for Salaried Individuals and get your income tax filed today via Tax Robo. Know about the deductions, exemptions, and calculations before filing your IT returns.


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What is Income Tax?


As the name says, Income Tax is the Tax collected on the total Income of a person.

Income Tax is collected by the Income Tax Department which is a Central Government agency undertaking collection of direct Taxes for the Government of India. This makes Income Tax a Central Tax.

It comes under the supervision of Department of Revenue, Ministry of Finance in India.

The Income Tax Act, 1961 empowers the Government to collect Taxes on citizen's Income.

Income Tax For A Salaried Person In India


Salary is the remuneration received by a person for providing services based on an implied or stated contract.

People who get monthly wages for the work they do for a company or enterprise are Salaried People.

Their Salary is usually a combination of Basic Pay and various allowances + incentives.

The Salary for the purpose of calculation of Income from Salary includes:

  • Wages
  • Pension
  • Annuity
  • Gratuity
  • Advance Salary paid
  • Fees, Commission, Perquisites, Profits in lieu of or in addition to Salary or Wages
  • Annual accretion to the balance of the Recognized Provident Fund
  • Leave Encashment
  • Transferred balance in Recognized Provident Fund
  • Contribution by Central Govt. or any other Employer to Employees Pension A/c as referred in Sec. 80CCD.

Besides salary, a working individual can have other sources of income which are also Taxable as per the rules. The other sources of Income can be:


  • Income from Other Sources: This includes interest earned on savings bank accounts, fixed deposits, and winning monetary rewards in competitions such as KBC.
  • Income from House Property: Rent earned from Tenants.
  • Income from Capital Gains: Profit earned by financial tools such as mutual funds, shares, sale of property, etc.
  • Income from Business: For self-employed people working as a contractor or freelancer or ones having their own Business. Doctors, Lawyers, Tuition Teachers, CAs, Life Insurance Agents etc.


Learn more

NRI Tax Filings

Non-residents Indian (NRI) have following kind of income which is taxable in India:

  • Interest Income From Bank Account (NRO, NRE Accounts)
  • Rent From House Property
  • Capital Gains From Sale of Mutual Funds, Shares
  • Dividend income from Share, Mutual Funds
  • Capital Gain from sale of Property

Types of Taxpayers and Income Tax Slabs


There are broadly 3 categories of Taxpayers in India. They are :

    1. Individuals
    2. Hindu undivided family (HUF)
    3. Association of persons (AOP)
    4. Body of Individuals (BOI)
    5. Firms, Companies.

These Taxpayers are Taxed based on their annual incomes which has been divided into 4 groups or 4 Tax brackets. These Tax brackets include :

    1. People with annual income less than Rs. 2.5 lacs
    2. People with annual income between Rs. 2.5 lacs and Rs. 5 lacs.
    3. People with annual income between Rs. 5 lacs and Rs. 10 lacs.
    4. People with annual income over Rs. 10 lacs.


The Income Tax to be paid by people falling under these Tax brackets are as follows;

Annual Income Tax Rate (%) Amount to be paid as Tax
Less than Rs. 2.5 lacs 0 Zero (No Tax)
Between Rs. 2.5 lacs to Rs. 5 lacs 5 5% of income over Rs. 2.5 lacs
Between Rs. 5 lacs to Rs. 10 lacs 20 Rs. 12,500 + 20% of income above Rs. 5 lacs
Above Rs. 10 lacs 30 Rs. 1,12,500 + 30% of income above Rs. 10 lacs


How to file an Income Tax Return Online in India?

The following process will guide you to file your Income Tax return easily.

There are many Income Tax return forms, each meant for different categories of Taxpayers.

You must choose the ITR form which is applicable for your profession and your Tax bracket.

As per the Government Directives, it is compulsory that Aadhar must be linked with your PAN in order to file Income Tax Return.


It is important for Salaried Employees to gather these documents to file your ITR. These documents are :

  • PAN
  • Form 16 (issued by your Employer)
  • Monthly Salary Slips

If you seek to claim deductions for income earned on interest on Bank Account (which every salaried person has) granted to 

  • Taxpayers according to Section 80TTA, you must be ready with these documents :
  • Bank Statement / Passbook for interest on savings account.
  • Interest income statement for fixed deposits.
  • TDS certificate issued by Banks and others.

It contains information about Tax deducted from your monthly salary by your employer (EPF, ESI and others) details of Tax deposited by Taxpayers & Tax refund received in a particular financial year.

Form 26 AS is provided by the Income Tax department (available on Income Tax return website)


Investments made under PPF, NSC, ULIPs, ELSS, LIC qualify for deductions under Section 80C.

Keep documents related to these investments such as investment receipts, your children's school tuition fee etc. handy to claim benefits under Section 80C.

Interest paid on housing loan: Interest on housing loan is eligible for Tax saving upto Rs. 2,00,000. This is for a self-occupied house.


It may take about 48 hours for filing ITR provided all your documents are updated.

It may take longer, about 20-45 days from the date of e-verification to get the refund credited to your Bank Account.

Congratulations! You have successfully filed your Income Tax return.


Income Tax Filing Packages

Tax Robo Basic
Salary Income

₹999 .00

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  • Single Form 16
  • Salary
  • House Property
  • Interest Income
  • Pension Income
  • Donation

Tax Robo Premium
Salary Income

₹1999 .00

* All Inclusive fees

  • More than One Form 16
  • Salary
  • House Property
  • Interest Income
  • Pension Income
  • Donation
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Tax Robo Family Auditor
Salary Income

₹2999 .00

* All Exclusive tax

  • HNI (High Networth Individual) - Income Exceeds ?15 Lakhs
  • Salary
  • House Property
  • Interest Income
  • Pension Income
  • Donation
  • More than One Form 16
  • Free Tax Consulting
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Tax Robo Family Auditor
NRI

₹5999 .00

* All Exclusive tax

  • NRI
  • Foreign Income
  • Salary
  • House Property
  • Interest Income
  • Donation
  • More than One Form 16
  • Free Tax Consulting
  • Free Tax Planning  

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Five Main Heads of Income 

Income from Salary

  1. Salary is defined as the remuneration that a person receives periodically for rendering services based on an implied or express contract.
  2. The Salary for the purpose of calculation of income from Salary includes:
  • Wages
  • Pension
  • Annuity
  • Gratuity
  • Advance Salary paid
  • Fees, Commission, Perquisites, Profits in lieu of or in addition to Salary or Wages
  • Annual accretion to the balance of Recognized Provident Fund
  • Leave Encashment
  • Transferred balance in Recognized Provident Fund
  • Contribution by Central Govt. or any other Employer to Employees Pension A/c as referred in Sec. 80CCD.


Income from House Property

i. Basis of Charge [Section 22]:

  • Income from house property shall be Taxable the house property should consist of any building or land.

ii. The Gross Annual Value of the house property shall be higher of following:

  • Expected rent
  • Rent actually received or receivable after excluding unrealized rent but before deducting loss due to vacancy

iii. Deductions

Municipal Taxes

Standard Deduction [Section 24(a)]

30% of net annual value of the house property is allowed as deduction

Interest on Borrowed Capital [Section 24(b)]

Let-out property - Actual interest incurred on capital borrowed

Self-occupied property - Interest incurred on capital borrowed allowed as deduction upto Rs. 2 lakhs. The deduction shall be allowed acquisition or construction of house property is completed within 5 years.

Maximum loss set off allowed in a Financial Products year is limited upto Rs. 2 lakhs, remaining loss can be carried forward to future years, 8 years in total



Income from Capital Gains

Any Income derived from a Capital asset movable or immovable is Taxable under the head Capital Gains under Income Tax Act, 1961.
Short Term Capital Gains:
  • Sold a Capital asset within 36 months and Shares or securities within 12 months of its purchase then the gain arising out of its sales after deducting there from the expenses of sale (Commission etc) and the cost of acquisition and improvement is treated as short term capital gain and is included in the income of the Taxpayer.

Taxability of short term capital gains:

  • Section 111A of the Income Tax Act provides that those equity shares or equity oriented funds which have been sold in a stock exchange and securities transaction Tax is chargeable on such transaction of sale then the short term capital gain arising from such transaction will be chargeable to Tax @10% upto assessment year 2008-09 and 15% from assessment year 2009-10 onwards.
Long Term Capital Gain
  • A Capital Asset held for more than 36 months and 12 months in case of shares or securities is a long term capital asset and the gain arising there from is a long term capital gain. Long term capital gains are arrived at after deducting from the net sale consideration of the long term capital asset the indexed cost of acquisition and the indexed cost of improvement of the asset.

Taxation of Long term capital gains

  • The long term capital gains are Taxed @ 20% after the benefit of indexation as discussed above. No deduction is allowed from the long term capital gains from Section 80C to 80U. But in case of individual and HUF where the Income is below the basic exempted limit the shortage in basic exemption limit is adjusted against the long term capital gains.



Income from Profits and Gains of Business or Profession

Under Section 28, the following income is chargeable to Tax under the head "Profits and Gains of Business or Profession":

  • Profits and Gains of any Business or Profession.
  • Any compensation or other payments due to or received by any person specified in Section 28(ii).
  • Income derived by a trade, professional or similar association from specific services performed for its members.
  • The value of any benefit or perquisite, whether convertible into money or not, arising from Business or the exercise of a Profession.
  • Any interest, salary, bonus, commission or remuneration received by a partner from firm .
  • Fair market value of inventory as on the date on which it is converted into, or treated as, a capital asset determined in the prescribed manner.
  • Income from speculative transaction.

Income from Other Sources

"Income From Other Sources" is any income which is not specifically Taxed under any other head of income will be

  • Taxed under this head.
  • Section 56(2)(i), Dividends
  • Winnings from lotteries, crossword puzzles, races including horse races, card game and other game of any sort, gambling or betting of any form whatsoever, are always Taxed under this head.
  • Interest Income
  • Gifts received by an individual

Advantages of Filing Income Tax (IT) Returns

Eligibility

  • No Benefits In Future For Mere Filing Of NIL Income Tax Return.
  • Tax Returns Are Now Eligible Documents.

Tax Planning

  • Plan & Save Your Income Tax Payment

Risk

  • Carry Forward Loss Only The Return Filed Before The Due Date
  • Do Not Claim Wrong Income Tax Refunds

Compliance

  • Compare The Services Not Cost Of Filing Income Tax Returns.
  • First Of Wholeheartedly Plan For Taxes, Pay Taxes and Enjoying Without Non Compliances.

Document Required for E-Filing Income Tax Return

Proof of Income

  • Form 16 Copy – Part A & Part B
  • Fixed Deposits
  • Capital Gain Statement Share Broking
  • FD Interest Certificate
  • Invoice Copy
  • Contract Copy

Proof of Deduction

  • Life Insurance Premium
  • Medical Insurance Premium
  • School Fees Receipts
  • House Property Tax
  • Interest Certificate Housing Loan
  • Tax Savings Documents
  • Additional Deduction Documents

This may come as a surprise but you don't need any documents or proofs to attach with your Income Tax Returns.

All you need is your Aadhar ID linked with your PAN.

You need documents ONLY IF YOU SEEK TO CLAIM DEDUCTIONS while filing Income Tax.

You DO NOT NEED TO ATTACH ANY DOCUMENTS in your IT return application. Fill your Income Tax return honestly and claim deductions that genuinely apply to your application.

You may need documents only if an Income Tax assessing officer sends you a notice asking you to present those documents before them. Till then, procure all the documents that may be needed and keep them safe.

Advantages & Benefits of E-Filing Income Tax Returns With Tax Robo

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