Tax season is around the corner! Oh, how we wish we were taught how to do our own taxes in school instead of the Pythagoras theorem. That's why every time somebody talks about taxes, our first response is to run to our fathers for help. After all, we've conveniently given them the responsibility of doing these things since they've been doing it for ages. But we're independent women and one of the most important responsibilities of adulting is knowing how to handle our money smartly, including doing our taxes. So this time, I challenge you all to do it without your papa's help and let's see how well you handle it!
All the best, ladies!
While finances may not be your cup of tea, it's important you get comfortable with them. Read up as much as you can about income tax. With new budgets every year, a lot of new rules are introduced that you need to stay on top of. Start by trying to understand simple things like the income bracket you fall under, TDS, exemptions that apply to you and deductions you can claim. This will give you an approximate idea of the amount of tax you're supposed to pay. The good news is that if you've paid more, you will get a refund!
Pro Tip: You can now file your taxes online and the process has become streamlined and easier!
Before you start filing, there are several documents you should have at hand to avoid any last-minute confusion. These documents include--your PAN card, bank account details, salary slips, Form 16, rent slips (if any), details of income from property, any investments, any capital gains and interest income.
There are seven types of forms available online that can be filled. However, salaried employees must fill ITR 1 which is for individuals with income from salary, one house property and interest income up to Rs 50 lakhs. They must also have a copy of their Form 16 with them. Form 16 is used by companies to give their employees information about the tax that has been deducted. This is your Salary TDS certificate and proof of the tax already paid by employees.
You may have made some smart investments over the years and may receive income from them, which needs to be declared as well. Some types of other incomes are:
1. Income from house property on rent.
2. Income in the form of dividends, interest on securities or interest on a savings account.
3. Long-term or short-term capital gains.
4. Income from a lottery, gambling or betting.
5. The compensation received in some form like a pension.
Each type of income is taxed in a different way, which is also subject to change, and you must understand the rate of taxation on each income that is applicable to you.
To help you save money, the Income Tax Department lets you claim deductions and exemptions. Some of the common ones that most people can claim are:
1. Investments made under Section 80C in instruments like Public Provident Funds, Tax Saving Fixed Deposits, National Savings Certificates, the premium paid on a life insurance policy, repayment of housing loan, contribution to Employee Provident Fund among others.
2. Interest earned on savings accounts under Section 80TTA up to a certain limit that is subject to change.
3. Interest paid on home loan under Section 24.
4. Medical Insurance premium paid for self, spouse, children or dependents under Section 80D.
5. Donations made to approved bodies under Section 80G, 80GGA, 80GGB, and 80GGC.
6. Rent paid can also be claimed under Section 80GG if it has not been claimed anywhere else.
There are many other such deductions that depend on how you spent your money through the year.
Hope this helps, ladies!
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