What is Taxable Income
Content
What is taxable income? It implies the gross amount of income that you earn before claiming any deductions. For example, say a senior citizen, earns an income of Rs 300,000. During the year, he invests Rs 70,000 in PPF thereby bringing his income down to Rs 230,000. Now, even if Rs 230,000 is below the basic exemption of Rs 240,000, he will have to file his tax return since his gross income of Rs 300,000 was above the threshold limit.
Sources of income: Any income earned can be basically categorised under specific heads which are quite
exhaustive: Income from salary
Income from house property Income from business and profession Income from capital gains Income from other sources
The tax return filing process can thus be reduced to filling in the details of income at the appropriate place in the tax return.
Salaried individuals receive the Form 16 from their employer.
The form gives full details and break-up of the salary income. It can be used to fill in the requisite details in the tax return form. Income from house property implies the rental income of a landlord. Business or professional income is -- the net income left after deducting expenses incurred for running the business, subject to tax. Capital gain (short- or long-term) is earned when you sell mutual fund units, shares or property.
The last head is the residuary head which basically includes any interest income earned, such as that on fixed
deposits, RBI bonds and so on. An aggregation of all the above incomes should be above the basic exemption limit for you to be liable to pay taxes or to file a tax return. The rate of taxation would depend upon the applicable slab. Of course, interest incomes that are specifically tax exempt (like PPF interest) aren't to be considered in order to arrive at the total taxable income.
Return filing process: Basically, it is all about filling in the correct numbers.
The earlier two-page form SARAL, was quite the opposite of its meaning. Along with the income figures, you needed to specify the computations leading to the numbers. This had to be provided by way of a separate annexure. As a result the tax return became quite bulky and complicated. Also, each person attached his own version of the annexures leading to inconsistencies in the tax return even in respect of similar income heads.
Also, SARAL was a one size fits all kind of a solution.
This meant that whether you were an employee or a businessman, a senior citizen or a stock trader, the same form had to be used. In the new regime though one is categorised as a specific type of a taxpayer, based on the nature of income earned, simplifying matters. For most senior citizens, the newly introduced SAHAJ form is required. The forms come with clear instructions for filling it.
It is literally as simple as filling in the blanks.
The forms are available on the income tax website. It is advisable to go through these forms and familiarise oneself with them only post March 31. Reason: New forms are introduced each year with minor modifications, if any. These new forms do not require taxpayers to provide any additional information by way of annexures or even attach any additional documents. The process of filing the tax return is quite straightforward and totally hassle free. The key is to ensure that you start early and have time on your side.
Sources of income: Any income earned can be basically categorised under specific heads which are quite
exhaustive: Income from salary
Income from house property Income from business and profession Income from capital gains Income from other sources
The tax return filing process can thus be reduced to filling in the details of income at the appropriate place in the tax return.
Salaried individuals receive the Form 16 from their employer.
The form gives full details and break-up of the salary income. It can be used to fill in the requisite details in the tax return form. Income from house property implies the rental income of a landlord. Business or professional income is -- the net income left after deducting expenses incurred for running the business, subject to tax. Capital gain (short- or long-term) is earned when you sell mutual fund units, shares or property.
The last head is the residuary head which basically includes any interest income earned, such as that on fixed
deposits, RBI bonds and so on. An aggregation of all the above incomes should be above the basic exemption limit for you to be liable to pay taxes or to file a tax return. The rate of taxation would depend upon the applicable slab. Of course, interest incomes that are specifically tax exempt (like PPF interest) aren't to be considered in order to arrive at the total taxable income.
Return filing process: Basically, it is all about filling in the correct numbers.
The earlier two-page form SARAL, was quite the opposite of its meaning. Along with the income figures, you needed to specify the computations leading to the numbers. This had to be provided by way of a separate annexure. As a result the tax return became quite bulky and complicated. Also, each person attached his own version of the annexures leading to inconsistencies in the tax return even in respect of similar income heads.
Also, SARAL was a one size fits all kind of a solution.
This meant that whether you were an employee or a businessman, a senior citizen or a stock trader, the same form had to be used. In the new regime though one is categorised as a specific type of a taxpayer, based on the nature of income earned, simplifying matters. For most senior citizens, the newly introduced SAHAJ form is required. The forms come with clear instructions for filling it.
It is literally as simple as filling in the blanks.
The forms are available on the income tax website. It is advisable to go through these forms and familiarise oneself with them only post March 31. Reason: New forms are introduced each year with minor modifications, if any. These new forms do not require taxpayers to provide any additional information by way of annexures or even attach any additional documents. The process of filing the tax return is quite straightforward and totally hassle free. The key is to ensure that you start early and have time on your side.
