Filing IT returns? Here are some basics you need to know
Mumbai: Filing tax returns for the first time? Here are a few important jargons that you need to know while getting ready for IT returns.
PAN Card
The IT department of India identifies each individual with the help of his/her respective 10-digit PAN number. All major financial transactions will need your PAN number.
This PAN number is given by the IT department to each individual, Business, Firm, and Company, in the form of a laminated card (called the PAN card).
TAN number
TAN is also a 10 digit number given by the tax department to all companies. Whenever a company makes a payment to someone, tax is deducted at the company’s end and becomes a part of the government account on behalf of the tax department.
TDS
Tax Deducted at Source (TDS) is the amount deducted by company/Individuals before making a payment to others. This prevents the burden of payment of lump-sum tax from falling upon the individual at the end of the financial year.
TDS on salary:
The employer deducts tax at source before paying the wages and salary to the employees. This information is present in the Form-16, which is annually issued by the company to its employees.
TDS on Non-Salary:
The tax deducted at source on payments like Rent, Interest Income, Commission, Consultation fees, Freelancer charges, etc (essentially anything other than Salary). These are also stated on Form 16A.
80C
80C of the Income Tax Act allows certain investments and expenditure to be deducted from total income up to the maximum of Rs 150,000
Fixed Deposits
Fixed Deposits of 5 years or more with a scheduled bank are also eligible for deduction under section 80C.
Employee Provident Fund
Provident Fund deductions that your employer makes from your salary – IS known as Employee Provident Fund and this forms a part of 80C.
Public Provident Fund (PPF)
Money deposited by you in your PPF account. Each year, the money that you deposit in your PPF account can be added to form part of your 80C deduction. Note that each year a maximum of Rs 1,00,000 can be deposited in your PPF account.
