- Collect all the details of your income from various sources, such as salary, business or profession, house property, capital gains, and other income sources.
2. Calculate Gross Total Income (GTI):
- Add up all the income from different sources to arrive at your Gross Total Income (GTI).
3. Claim Deductions and Exemptions:
- Deduct eligible exemptions and deductions under various sections of the Income Tax Act to arrive at your Total Income (TI). Common deductions include Section 80C (for investments in LIC, PPF, etc.), Section 80D (for health insurance premiums), Section 24 (for home loan interest), and others.
4. Compute Taxable Income:
- From the Total Income (TI), subtract any additional deductions that may be available, such as deductions under Section 10 (for certain allowances) or Section 80TTA (for interest on savings accounts).
5. Determine Tax Liability:
- Use the applicable income tax slab rates to calculate the income tax liability on your taxable income. The tax slabs are subject to change each financial year.
6. Include Cess and Surcharge (if applicable):
- Apply cess and surcharge as per the prevailing rates on the income tax calculated to arrive at the final tax liability.
7. Offset TDS and Advance Tax Paid:
- If you have already paid TDS (Tax Deducted at Source) by your employer or other deductors or paid advance tax, deduct these amounts from the total tax liability.
8. File the Income Tax Return (ITR):
- Choose the appropriate ITR form based on your income sources and residential status. Commonly used forms for individuals are ITR 1 (Sahaj), ITR 2, ITR 3, ITR 4 (Sugam), and ITR 5.
9. Enter Tax Computation Details:
- Fill in the income details, deductions claimed, tax computation, and other required information in the chosen ITR form.
10. Validate and Submit the ITR:
- Review and validate the filled ITR form to ensure accuracy and completeness. After that, submit the return on the official income tax e-filing portal.
11. E-Verify the ITR (if required):
- After filing the return, e-verify it using any of the available methods like Aadhaar OTP, Net Banking, Demat Account, Bank Account, or EVC (Electronic Verification Code).
12. Preserve the ITR Acknowledgment:
- Keep a copy of the ITR-V (acknowledgment) as proof of filing the income tax return.
Proper tax computation ensures accurate payment of income tax and compliance with tax laws. If you find the process complex, consider seeking help from a qualified chartered accountant or tax consultant.
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