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Filing taxes? 20 FAQs answered

July 16, 2008

4. Taxes get deducted from my salary every month. Do I need to file income tax return?

Yes. Filing of tax is compulsory for every person whose gross total income, that is, the income under the five heads before allowing for any deduction such as insurance premium, exceeds the basic exemption limit. For financial year 2007-08 (assessment year 2008-09), this exemption limit was Rs 145,000 for women below the age of 65, Rs 195,000 for persons above 65, and Rs 110,000 for any other individual.

Every person falling in the tax bracket should file a return, even if his tax liabilities have been taken care of by the employer through tax deducted at source.

Persons whose salaries have been subjected to TDS are also required to file return because they may have earned from sources other than salary.

5. I have earned under two heads—salary and capital gains. Which form should I use to file my return? How will my tax be assessed?

As an individual assessee, if you have earned income from capital gains in addition to your salary, you will have to file your return in form ITR-2. For taxation, you will have to first segregate capital gains into short-term and long-term.

Any gain from selling shares held for more than a year is termed long-term. Gain from sale of shares held for a year or less is called short-term. If you have paid the securities transaction tax on all share trading, LTCG will be exempt from tax and STCG will be taxed at 10 per cent for FY 2007-08.

Your gross tax outlay will depend on your salary income, income from capital gains, income from other sources like interest on bank deposits, and the deductions you are entitled to.

6. I was in two jobs. How should I file return?

The aggregated income from both your employers will be considered while calculating your tax. Ideally, both companies should give you Form 16 for salary earned during the relevant period. Try to get a salary certificate from your previous employer if you cannot get Form 16 from him. Submit this estimate and a declaration in Form 12B to your current employer who will then incorporate these details in the Form 16 that he issues.

What if I miss the deadline? Read on....

Image: A tax preparer hard at work | Photograph: Tim Boyle/Getty Images

Also read: Now, save up to Rs 50,000 in taxes
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