Understanding Tax

For a significant portion of the populace at NIT Trichy, the expectation is that they will get placed in a firm which will offer them monetary compensation in the form of salary.

When such an individual becomes an earning facet of society, his income and assets are subject to a tax levied by the government called income tax. Hence it becomes critical for any student to understand the basics of filing his returns.

IT returns: A document you file with the state tax board reporting your income, profits of your business and other assets which provide you an income. The segment of the government that handles income tax returns and administers various tax acts and legislation is called the Income Tax department. It is a subsection of the Department of Revenue, which in turn is headed by the Indian Ministry of Finance.

A fiscal/financial year (FY): The period in which income is earned. Under the Income Tax Act (ITA), it is also referred to as a ‘previous year’ and is from 1st April to 31st March every year. An Assessment Year (AY) is the 12 month period immediately following the fiscal year when tax returns are filed for income earned in the previous year.

Resident: If an individual stays in India for 182 days or more in a year, he is treated as resident in that year regardless of his citizenship.

DTAA: It is a taxation pact signed between the Indian government with several foreign governments to provide tax relief to certain fractions of the Non-Resident community. As per this agreement, if an individual happens to have taxable assets in India, from income earned abroad, he can avoid paying tax in both countries for the same assets.

IT benefits: A tax benefit is a deduction from tax paid intended to reduce the taxpayer’s burden while supporting certain types of commercial activity, which are covered under section 80 of the Income Tax Act.

Ways to file your IT

• Get a Personalized Account Number (PAN) Card. Filing your return can be done offline or online. To choose, visit the official government site.
• If you choose to file offline, download the relevant challan from the above link, fill it and file.
• For online payments, choose the relevant online form for your tier. Fill in the generated XML file with your assets and your calculated return. Submit.
• If you encounter difficulties at any step in the process, you can consult government employed, Tax Return Preparers (TRPs) to assist you.

To simplify the process of income tax calculation. the government has provided us with a relatively user-friendly Tax Calculator.

Tax Deductions at the Source (TDS) is the system of Income Tax in India. The key feature of this system is that the IT returns filed by the citizen are calculated based on his gross income and only later are the income tax concessions in the form of refunds made.

Delayed Returns: Delayed returns have a maximum due date of two years from the end of the financial year in which the income was obtained, failing which, one would face a jail term.

By Abinesh, Suriya, Nishit.