Calculation of Advance Tax

If you are salaried person with only salary as the sole source of income, Advance Tax would not be applicable as tax deducted at source would be taken care of by your employer. If you have other sources of income, such as, income from capital gains, shares and mutual funds, income from house property, etc.; Advance Tax is mandatory. Using the projected income for the fiscal year, the tax payable is to be calculated as per the tax slabs applicable for the current financial year.

Calculation of tax liability

The income tax which is charged to you is based on the tax slabs declared by the Government in its annual budget every year. Taxable income is arrived at after adding all your different sources of income and subtracting the deductions that you have taken advantage of under Section 80C to 80U. The result after these deductions from your gross income will be your taxable income. Apply the appropriate tax rate to your income, based on the amount of taxable income you have and the method you are using for filing. This number will be your tax liability.

Capital Gains/Loss calculation

Taxes on your net capital gain(s) will vary depending on your marginal income tax bracket and holding period of the asset. For every capital gains tax (CGT) event that happened to your assets during the year, you need to work out your capital gain or capital loss. If you have both capital gains and capital losses, you also have to work out your net capital gain/loss for the year.

Filing of Tax returns

End of the every financial year is so often a nightmare as this is when people run from pillar to post to file their yearly income tax. But one’s trouble does not end here, especially if the point in case is paying extra taxes. While the process of getting the tax refund might be arduous one, timely steps can simplify the process of filing income tax.

Refunds process

Filing the income tax return on time is the most important pre-requisite for claiming a Tax refund. Timely steps can simplify the Tax refund.

Lower tax deduction certificates

As per the provision of income tax act, TDS/TCS is required to be deducted at the time of making any payment. This TDS is deducted by the person making the payment and is required to be deposited with the income tax departments before the due date of depositing TDS.

To reduce the hardship faced by the tax payers, the gov’t inserted the section 197 which states that in case the total tax liability of the person whose TDS is being deducted is less than the amount of TDS that is being deducted, he or she may file an application to income tax officer to give him a certificate for Nil or Lower deduction of TDS. Once such certificate is generated under section197, the TDS will be deducted as per the TDS rate stated in the certificate.

NRI Forms - 15CA and 15CB processes

15CA and 15CB is the processes that will have to be followed before any remittance can be made towards NRE accounts.

Currently, remittances to non-residents are allowed by banks if the person making the remittance furnishes an undertaking, accompanied by a certificate from a Chartered Accountant (“CA”) certifying the rate for withholding tax as per section 195 of the Act. The banks then forward the certificates to the Reserve Bank of India (“RBI”), which in-turn forwards it to the Income tax department. Finance Act 2008 inserted a new sub section (6) to section 195 effective from April 1, 2008, which requires the person responsible for making payment to a non-resident to furnish information relating to such payments in forms to be prescribed. The Central Board of Direct Taxes (“CBDT”) has now, by notification No 30/2009 dated March 25, 2009, prescribed a new rule 37BB in the Income Tax Rules, 1962 (“the rules”) prescribing Form 15CA and Form 15CB to be filed in relation to remittances to non-residents under section 195(6) of the Income Tax Act, 1961 (“the Act”). This new rule is effective from July 1, 2009 and shall apply to all remittances being made after July 1, 2009.