• How to proceed if one never paid income tax in person?

Hello,

I've recently got a job in a new company this month. My agreed upon salary is Rs.40,000 per month.

I've been asked to submit few documents such as address proof, past salary slips, relieving letter of past employer, and a heads up on annual tax saving investments.

Now I've never paid any tax directly myself. Although I'm not sure if my previous organisation did it on my behalf. We didn't have too many employees there as well. I'm kind of completely unaware of these process but I realise it's important to know and understand it. Hence I decided to take some action now.

Kindky advice on how to proceed with paying my taxes, declaring investments etc. The entire process all in all.

PS. I've an ELSS mutual fund going on for which I pay Rs. 500 monthly. I started this fund as I was adviced for the same by a friend a while back.

I know this may not be adequate information, however I need some solid advice on the entirety of the subject. Thank you.
Asked 15 days ago in Income Tax

Dear Sir,

 

Hope you are doing well !!

 

We may assist you in entire procedure.

 

It is advisable to take a phone consultation for detailed discussion.

Payal Chhajed
CA, Mumbai
4309 Answers
69 Consultations

5.0 on 5.0

Hi,

 

As an employer, every organization is required to estime income and consequent income-tax on the same for all their employees and deduct income-tax where applicable every month.  Due to this, every employer obtains declaration from employees on their investment plans for the year and for certain expenses which are allowed as deduction under the Income-tax Act.  This income-tax estimation by employer could undergo changes where there is any change in income element or investments actually made in the year end vis-a-vis those declared at the begninng of the year.  

 

Under income-tax act, a deduction of Rs. 150,000 is allowed where amount is invested in the streams specified by the government.  illustratively, these include Life insurance premium, housing loan repayment, public provident fund, employee provident fund, equity linked saving scheme ("ELSS") etc., Apart from these, there are also allowable deduction for house rent where it is an element of your salary, medical insurance premium etc.,  the current income-tax slab rate is as follows:

 

Less than 250,000 - nil

2,50,000 to 5,00,000 - 5%

5,00,000 to 10,00,000 - 20%

above 10,00,000 - 30%

 

Further, there is a rebate where your taxable income is less than Rs. 5,00,000 ie.  there will not be any income tax payable where your income after all the deductions is less than Rs. 5 lakhs.  Apart from the above, there is an option which could be exerciesed for alternative tax rate in which case, the aforesaid investment deductions, loss from house property etc, will not be available for adjustment against your salary income.  The alternative slab rate option under section 115BAC of the Income-tax Act, if exercised would be as under:

 

Less than 250,000 - nil

2,50,000 to 5,00,000 - 5%

5,00,000 to 7,50,000 - 10%

7,50,000 to 10,00,000 - 15%

10,00,000 to 12,50,000 - 20%

12,50,000 to 15,00,000 - 25%

Above 15,00,000 - 30%

 

Hope the above would suffice.  

 

Thanks and Regards

Lakshay

Lakshay Singhvi
CA, Chennai
7 Answers
1 Consultation

Not rated

Hi

 

Considering you have only this income of Rs. 40k per month, your total income for the year would be Rs. 4.8 lacs. 

There are no taxes if your total income is less than 5 lacs. So there would be no TDS deduction even if you don't submit any investment details to the company.

 

The deduction for your ELSS investment is available under section 80C. You may report it accordingly in the form given by your company.

 

We may discuss the issues in detail over a phone consultation.

Lakshita Bhandari
CA, Mumbai
4733 Answers
294 Consultations

5.0 on 5.0

Let's have a phone consultation I'll be more than happy to assist and guide you in your tax planning and try to make you understand tax in simple words.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
3218 Answers
32 Consultations

5.0 on 5.0

Hello,

 

An Individual earning more than Rs. 2,50,000 in a F.Y. is required to compulsory file its income tax return. 

The tax applicable to an individual is charged on slab rates. In your case, for earnings of Rs. 40,000 per month, being less than Rs. 5 Lakhs in an F.Y., there would be no tax payable however return filing would be mandatory.

The investment made eligible for deductions u/s. 80C, 80D, etc, and income on such investments are also required to be declared in the income tax return. Investment in ELSS is eligible for deduction u/s. 80C.

I hope this answer satisfies your requirements. For further understanding and IT compliances, you can contact us directly or take a phone consultation.  

 

Regards,

CA Hunny Badlani

Hunny Badlani
CA, Madhya Pradesh
2093 Answers
6 Consultations

5.0 on 5.0

You may check your payslips. If your organization was deducting TDS it would be appearing in your Salary Slip and your previous company will also give you Form 16.

Again in your new job, your employer will deduct TDS and then pay salsry as your salary is above the taxable limits. You can declare the investment in ELSS to your employer. This will reduce upon some tax. Rest I will need the salary details to work out the tax calculation and advice you the amount of investments you need to make to save upon taxes.

Ruchi Goel Anchal
CA, Gurgaon
129 Answers

5.0 on 5.0

- On the basis of Rs.40 per month, you will not be liable to pay tax though filing of ITR is mandatory. Ask declaration form from HR and fill it.

Vivek Kumar Arora
CA, Delhi
3610 Answers
208 Consultations

5.0 on 5.0

Hi

It's better to take a phone consultancy for further details discussion.

Karishma Chhajer
CA, Jodhpur
1670 Answers
11 Consultations

5.0 on 5.0

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