Paying income taxes to the Government of India on an annual basis is a duty and a responsibility of every Indian citizen. Those who earn more than a certain amount of money in the form of salaries on an annual basis have to pay taxes to the Government of India on a regular basis. Every eligible taxpayer is required to pay taxes to the Government without fail. Those who fail to do so face severe penalties from the Government itself.
Anyone who is earning more than Rs. 25,000 of an annual basis are entitled to pay a certain amount of money in the form of taxes to the Government of India. For those who do not fit into this category and have a choice, can either choose to pay or not to pay tax. However, e filing income taxes and keeping tab of the annual income and tax amount is a huge help for everyone in many ways.
Need for Filing Tax
Filing tax is an important part of the lives of those who are entitled to fill it at the end of an annual year. For others, though filing taxes is a choice, the tradition should be maintained for a number of reasons. Some of the reasons why it is important for everyone to file income taxes on a regular basis include:
Filing income tax at the end of a financial year can help to keep a tab of the expenses of an individual. Tax forms reflect the amount of money earned by an individual and the amount of money that is spent. Tax forms are a record of the finances of an individual and a reflection of the financial statistics of the income tax payer.
For anyone who is applying for loans of any sort from the bank, the taxpaying forms act as financial proof for the same. The bank will take into account the tax paying record of the individual to make sure they can trust the finances of that individual.
Those who file their taxes on a regular basis are considered to be responsible citizens of the country. Those who have to pay tax regularly need to keep filing their tax forms for years altogether so that they do not get penalized with a fine from the Government of India. A fine of up to Rs. 5,000 can be levied on any income taxpayer who has failed to assert their income tax forms at the end of a financial year.
For those who want to get returns on their individual income taxes, they need to file their tax forms correctly and they need to be approved by the Government for returns and exemptions to be made.
Exemptions for Income Tax
For those who are paying taxes to the Government of India directly from their incomes, there are a number of exemptions that are present to them. The amount of money in the form of taxes is too much of a loss for the taxpayer which is the reason why exemptions and returns of taxes take place. These exemptions are made in a number of ways. Some of the different exemptions on income tax include:
Any medical bills or treatment of any sort can be exempted from being considered under income tax returns. The amount of money that is spent on medicines and medical treatment is a huge amount for any individual which is the prime reason why they are exempted from taxes. For this, the taxpayer must provide physical bills as proof for the exemptions.
For those who are insured under an insurance policy of any sort, they are exempted from paying a certain amount of money in the form of taxes to the Government of India. This is according to Section 80D of the Income Tax Act.
Those who are insured under a loan of any sort are also exempted from paying a certain amount of money from their salaries in the form of taxes.
Those individuals who have to pay educational bills or tuition fees for another individual can apply for education exemption on their income tax forms. For this also, sufficient proof is needed to be given to the Government in order for the exemption to be approved.
Any individual who is living in a rented house or is a tenant at their parents’ house, they can apply for the house rent allowance exemption on their tax forms. This is for all those who are temporary members of a flat.
Calculating House Rent Allowance Tax Exemption
A house rent allowance is allotted to any individual who is staying in a place by paying rent to the original tenant of the place. The amount of rent that is paid from the income of an individual of a yearly basis is huge which is the prime reason the house rent allowance was considered. This special exemption is not only applicable to those who are living in rent, but it is also applicable for those individuals who are living with their parents as well.
The amount of money that can be claimed from house rent allowance depends on the total income of the taxpayer and the total amount of money that is invested in paying for the rent of the house. Some cases in which the calculation of house rent allowance includes:
For those individuals who pay more than Rs. 5,000 on a monthly basis in the form of house rent.
If more than 25% of the total monthly rent of an individual is given in the form of house rent allowance.
If the rent paid by the income taxpayer is more than 10% of the total income that is earned by the taxpayer by the course of one annual year.
For those individuals who want to avail of the house rent allowance even when they are staying with their parents, they can show proof to the Government that they pay money to their parents by taking care of their daily expenses and their well-being. This is one of the best ways in which taxes can be saved for an individual.