E-filing of
tax returns has grown manifold in the past 6 years. In 2007-8, less than 22 lakh
taxpayers filed their returns online. Last year, more than 2.15 crore taxpayers
took the online route. The end of the current financial year is still more than
3 months away but e-returns have already crossed the 2 crore mark. The surge is
also due to the new rule that requires taxpayers with an annual income of Rs 5 lakh to file their tax return online.
Filing tax returns online is easy. The
average taxpayer won't take more than 30-40 minutes to enter all the details and upload the return. It is also very
cost-effective. Tax filing
portals charge individual
taxpayers anything between Rs 200 to Rs 900 for uploading their tax returns. You
can also do it for free on the
official website of the income tax
department.
Calculate
your gross taxable income and the tax payable after all
deductions and exemptions. Private portals charge a fee because they hand-hold
taxpayers through the process. It's easier and ensures that your
tax return is error free. Some e-fling companies even
verify your return for a small
fee. They check if you have entered correct information and alert you when you
are going wrong.
Before you file your returns,
check whether the tax you paid has been correctly credited to your name.
The Form
26AS has details
of the tax deducted on behalf of
the taxpayer and can be easily checked online. It is even easier if you have a
net-banking account with any of the 35 banks that offer this
facility.
Otherwise you can go to the
official website of the income tax department and
click on "View
Your Tax Credit". First-time users will have
to register but it takes less
than 5 minutes before you can log on and view your
details.
Common
deductions and exemptions
Your gross
taxable income gets reduced by the following deductions and
exemptions.
TAX SAVING
INVESTMENTS: Under
Sec 80C, up to Rs 1 lakh invested in specified products or spent on certain
heads is eligible for deduction. See the
table below for a checklist.
YOUR
SECTION 80C CHECKLIST
Choose
the Tax Saving Investment that suits you considering the four basic
parameters.
INVESTMENTS
ELIGIBLE FOR TAX BENEFITS
|
OPTION
|
RETURNS
|
SAFETY
|
FLEXIBILITY
|
LIQUIDITY
|
|
PF,
Valuntary PF
|
8.5%
|
High
|
High
|
Withdrawal
on retirement.
|
|
PPF
|
Market-
linked (8.7% for current year)
|
Highest
|
High
|
Withdrawal
possible after fifth year.
|
|
5-Year
Bank FDs
|
8.9%
|
High
|
Low
|
Lock-in
for five years.
|
|
NSCs
|
8.5%
|
Highest
|
Low
|
Locked
in for five or 10 years.
|
|
Senior
Citizens’ Saving Scheme
|
9.3%
|
Highest
|
Moderate
|
Lock-in
for five years, Interest paid quarterly.
|
|
Insurance
Policies
|
6.7%
|
High
|
Very
Low
|
Locked
in till plan matures.
|
|
ULIPs
|
Market-
Linked
|
Depends
on option chosen
|
High
|
Partial
withdrawals possible
|
|
NPS
|
Market-
Linked
|
Moderate
|
High
|
No
withdrawals before retirement.
|
|
ELSS
|
Market-
Linked
|
Low
|
Moderate
|
Locked
in for three Years.
|
HEALTH
INSURANCE: Up to Rs
15,000 premium for self and family and Rs 15,000 for parents (Rs 20,000 if
seniors) gets deduction under Sec 80D. Rs 5,000 of the limit can be on medical
check-ups.
HOME LOAN
REPAYMENT: While
principal portion of EMI gets deduction under Sec 80C, interest of up to Rs 1.5
lakh is deductible under Sec 24 (b). Extra deduction of Rs 1 lakh for this
year.
EDUCATION
LOAN: The interest
paid on an education loan from a bank for a full-time course in a recognised
institution is fully deductible for up to 8 years.
HOUSE RENT
ALLOWANCE: The least
of these three is exempt:
-
HRA received
-
Rent paid minus 10 per cent basic pay
-
50 per cent of basic pay (40 per cent in non-metros)
Expenses
eligible for tax benefits:
HOME LOAN
REPAYMENT: Principal
part of the EMI is deductible under Sec 80C.
SCHOOL
FEES: Tuition fees
of up to two children in a recognised educational
institute.
HOME
PURCHASE: Stamp fee
and registration of the house is tax deductible.
INCOME
FROM SALARY
Salary
Allowances
Perks
+
INCOME
FROM OTHER SOURCES
Interest
Dividents
Royalty
Lottery
winnings
+
CAPITAL
GAINS
Debt
Funds
Stocks and
equity funds
Gold
Real
estate
+
PROPERTY
Rental
Income after 30% standard Deduction
+
BUSINESS
OR PROFESSION
Net Income
after deducting expenses
=
GROSS
TAXABLE INCOME
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