Include all income sources

Even though TDS has been deducted on your salary, other income like interest on savings account, interest on fixed deposit, rental income, capital gain etc. need to be reported. If this information is not given, the tax department can send you a notice. Actually, all this information is already available in the Annual Information Statement of your PAN.

Claim required deductions and exemptions

Salaried individuals can avail several deductions and exemptions to reduce their taxable income such as Section 80C- Deduction on Investment, Section 80D- Health Insurance Premium, HRA (House Rent Allowance). Verifying Form 16 with your investment proofs will eliminate any mismatch and you can avail all the benefits.

Check TDS and Form 26AS

Always cross-check the TDS shown in your Form 16 with Form 26AS and Annual Information Statement. If there is a mismatch, correct it with your employer or deductor. Otherwise, tax credits will not be reflected correctly and may result in delay in refund or additional tax payable.

File ITR on time and confirm your return

Filing ITR on time saves you from paying late fees, interest and losing some carry-forward relief. After filing, it is necessary to e-verify the return. If doing it online, post Aadhaar OTP, net banking or bank account verification and if doing it offline, post the signed ITR-V. Only e-verified returns are valid for refund and compliance.

File ITR correctly

Salaried people think that ITR gets filed automatically because of TDS deduction, but it is your responsibility to file it correctly. When you declare your full income, set deductions correctly, check TDS and file the return on time, you avoid penalty and also get refund easily.

What is ITR and when is the last date for this year?

Income Tax Return (ITR) is actually your annual tax accounting. In this, you tell the government how much you earned last year, how much tax was to be paid on it and how much tax you have already deposited. This makes it clear whether you have to pay more money to the government or it will refund you. The last date to file ITR for the financial year 2024-25 is September 15, 2025.

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In India, freelancers have to pay their own tax, whereas the tax of employed people is paid by their company by deducting it from their salary. It is necessary for every eligible citizen of the country to pay income tax. In fact, as the time for filing income tax returns approaches, many freelancers and consultants are confused about how their tax calculation differs from that of salaried people.

The main difference is not just limited to the choice of ITR form, but also the calculation of tax, deductions and filing deadlines. While filing ITR, the income of salaried persons is taxed as ‘salary’ whereas the income from freelance or consultancy work falls under the “profits from business or profession” category. This classification determines what deductions are available and how you record.

Rules for deduction of tax

Salary class people are given Form 16 by the company. On the other hand, freelancers have to follow more stringent rules. Companies deduct tax at source before paying salary to salaried class people. On the other hand, freelancers have to manage and pay their taxes themselves. Freelancer taxpayers can choose ITR 3 or ITR 4 for filing ITR.

TDS Deduction

TDS means Tax Deducted at Source. This is a method by which the government deducts tax on your income in advance so that there is no tax evasion later. Usually the client deducts 10% TDS before making your payment and deposits it to the government under your PAN number (Permanent Account Number). You should collect Form 16A from your clients and match it with Form 26AS to ensure that the tax deducted is correct. This will allow you to claim the deducted tax while filing your income tax return and avoid paying tax again.

Do all freelancers have to register under GST?

If your annual income is more than Rs 20 lakh (or Rs 10 lakh in some states), you must register under GST. After registration, you will have to pay 18% GST on invoices to your customers in India. GST registration and filing of returns from time to time may be necessary. Following the rules not only helps in avoiding penalties but also ensures that your business continues without any interruption.

How to do tax filing?

Freelancers usually have to file taxes using ITR-3 or ITR-4 form . If you opt for presumptive taxation under section 44ADA, you can pay tax on 50% of your total income. This method is easy and does not require much calculation. You should also keep the receipts of professional expenses like your office rent, internet bill, software subscription etc. This can help you reduce your taxable income.

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The deadline to file ITR is July 31. If you have to fill ITR then you should start preparing for it. Let us know the complete method of filing ITR. It is very important for all salaried employees to file Income Tax Return (ITR). If there is any mistake or irregularity in it, you may be fined and legal action is also taken against you. The deadline to file ITR is July 31, which is very near.

In such a situation, if you are a salaried employee, then you should collect all the necessary documents, forms and other information to file ITR. With this you will be able to file ITR without any hassle.

Also Read: SEBI changed the rules of M-Cap, will be implemented from 31 December 2024

Start ITR from here

You should ensure that your Aadhaar is linked to your PAN card before filing ITR. You should also check the bank account in which you want the refund. If it is not validated, your refund may get stuck.

It is important to choose the right ITR form

It is important to choose the correct ITR form before filing the return. If you select the wrong form, the return will also be considered incorrect. Then you have to file revised ITR using the correct form. You can avoid this hassle by choosing the right form. If you are a salaried taxpayer then you have to file ITR-1.

What is ITR-1 form?

If your income is less than Rs 50 lakh during a financial year, you will have to fill ITR-1 form. This income should come from sources like salary, family pension and agricultural income (up to Rs 5,000).

Who cannot file ITR-1?

If you are not an Indian citizen, you cannot file ITR-1. Apart from this, there are some other conditions which may prevent you from filing ITR-1.

• Your total annual income should be more than Rs 50 lakh.
• You may also earn money from lottery, horse racing, legal betting.
• Capital gains come under the purview of capital gains tax.
• You have invested in unlisted equity shares.

These documents are necessary

You should download the Annual Information Details (AIS). In this, you will get all your previous tax details. Form 16 and other important documents should be kept with you. Although investment or TDS proof is not required to be submitted with the return. But, you should keep these documents with you so that you can show them to the authorities in case of assessment or inquiry.

Keep these things in mind

Download AIS and Form 26AS. If any error or mismatch is found in it, correct it immediately. One should avoid filling ITR form in haste. Whenever you fill the form, cross check it. With this, you will be able to correct any errors in time and your refund will not get stuck.

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In such a situation, the process of filling ITR starts before June itself. ITR-1 and ITR-4 have also become available online and offline, so ITR can be filled through them as well.

But till when Form 16 will be available?

Form 16 for this financial year may start being issued on or after June 15, 2023. From June 15, all the companies start issuing this form to their employees. If your TDS is deducted between April-2022 to March-2023, then it can also come till the end of June. You can take information from your company that by when your Form-16 can be released. If you have changed jobs during this period, you can also ask for Form 16 from your old company. Generally, companies give Form 16 at the time of relieving the employee.

What is Form 16 ?

Form 16 is a pre-filled form, which contains information about your salary income, TDS deduction, etc. How much salary income you have received from your employer for the whole year, how much TDS has been deducted, how much tax liability has been created, all this is told.

Check these details in Form 16A

In Part-A of Form-16, the amount of TDS (tax deducted at source) of the employee has been deducted and deposited, it also contains information about the PAN-TAN of the employer. Employer can generate and download Form 16 of TRACES https://www.tdscpc.gov.in/app/login.xhtml  You should know that if you have changed jobs in a financial year, separate Part-A will be issued to you from both the employers for both the periods. 

What is in Form 16A?

• Employer’s name and address
• TAN and PAN of the employer
• Employee’s PAN
• Information about the amount of tax deducted and deposited by the employer.

Check these details in Form 16B

In Form 16B, the details of the employee are prepared by the employer. It contains information about salary breakup and tax deductions approved under Income Tax Chapter VI-A. If you have changed jobs, then you should take Form 16B from both the companies.

Keep these four things in mind

• When you get Form 16, make sure to check that all your information is correct in both the parts. 
• Also check whether your salary breakup, TDS deduction amount is correct or not.
• If any detail is misprinted, get it rectified immediately from your HR or Finance department.
• If the TDS amount has been wrongly deducted, then the employer on your PAN will deduct the correct TDS amount and process the return again and then issue you the updated Form-16.

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Many such provisions have been made, under which a taxpayer in the country can get tax exemption on his earnings. And now after the new income tax regime has become the default, the employee has to manually choose under which tax regime he will pay his tax. Deduction is available in both old and new tax regime, but there is a big difference between the two.

Also, many such deductions are not available in the new tax regime, which are available in the old regime. In such a situation, you should know which deduction you can claim on choosing which regime, so here we are telling what are the options available for claiming tax deduction with the salaried employee.

Rebate under 80C, 80CCC and 80CCD(1)

Section 80C of the Income Tax Act is one of the most popular tools for tax exemption. Under this section, you can get a discount of up to 1.5 lakh. If you have bought life insurance premium, invest in provident fund, pension scheme or have invested money in annuity plan of LIC or any other insurance company, then you can claim deduction under this section. You can get this discount only in the old regime.

Deduction under section 80CCD(2)

This is such a tax deduction, which you can claim in both old and new tax regime. In this section, you can get exemption on investment in Government Pension Scheme i.e. National Pension System. Employees coming under the Central and State Government can claim a deduction of 14% of their salary and 10% of the salary of other employees.

House Rent Allowance (HRA Tax Deduction)

If you live on a rented house and pay rent, you can claim deduction on house rent under section 10(13A) while filing tax under old tax regime. HRA is calculated on the basis of your salary structure, rent, city and HRA received from the company.

Exemption will be available under section 24(b)

The government gives you tax exemption even considering the interest paid on the home loan. If you are paying interest on home loan for the property you are currently living in, you can claim interest deduction while filing ITR in the old tax regime. On the other hand, in the new tax regime, you get a deduction on the home loan of such property, which you have given on rent. Under this section, the interest paid on the home loan is deducted from the rental income, thereby reducing the tax on your rental income.

Standard deduction benefits

The benefit of standard deduction is available in both the regimes. Under this, you can take a discount of 50,000.

87A exemption

This is another tax deduction that you can claim on both the old and the new. In the old regime, you get tax rebate on income up to 5 lakhs, while in the new regime it has been increased to 7 lakhs. In the old regime, you get a rebate of Rs 12,500, while in the new regime it is Rs 25,000.

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If you are a salaried employee and are about to retire, you can get Rs 7,200 as pension every month after retirement. Now you must be thinking that after retirement, how will you get a pension of Rs 7,200 every month and how to calculate it, then let us tell you that both public and private sector employees are considered eligible for post-retirement pension. That’s why employees get pension after retirement .

Employees’ Provident Fund (EPF) was created when the Parliament approved the EPF Act. The funds contributed to the Employer and Employee Permanent Account are managed by the EFPO. This is known by a unique account number (UAN number), as per the law. Using the EPF calculator, salaried employees can calculate their savings with accuracy.

Employees are required by law to contribute 12% of their basic monthly salary plus EPF. The employer is then compelled to contribute in like manner. Money is deposited by both the employee and the employer in the Permanent Account identified by UAN or Unique Account Number. EFPO oversees all the employees of India and fully monitors their PF account. With the help of EPF calculator, you can calculate your savings correctly.

Calculate your savings like this

First enter your basic salary and your age.

Then the employer’s contribution (EPS+EPF), total interest received, and total maturity amount will be shown.

How does the EPF calculator work?

Every employee of India contributes 12 per cent of his basic salary and dearness allowance to the EPF account every month. For example the employee’s contribution will be 12% of Rs.60,000 i.e. Rs.7,200. That is, after retirement, you will continue to get Rs 7200 as pension throughout your life.

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As long as you remain in the job, you contribute to the EPF and when you retire, you have a sufficient amount, from which you can use this money on essential things in your old age. But many times it happens that due to lack of information or due to some mistakes, the PF account gets closed.

So it is very important for you to know that you should not make any such mistake. Account may be closed If you have not transferred your PF account from the company in which you used to work earlier, and the old company got closed. In such a situation, if there is no transaction from your PF account for 36 months i.e. money was not put in it, then your PF account will be closed. EPFO keeps such accounts in the ‘dormant’ category.

How will it be active again?

Once the account is ‘inactive’ you will not be able to transact, you will have to apply to EPFO ​​to reactivate the account. Even after being ‘inactive’, interest continues to accrue on the money lying in the account, that is, your money is not sunk, you get it back. Earlier, interest was not available on these accounts. But, in 2016 the rules were amended and interest was introduced. You should know that till the age of 58 years, interest continues to accrue on your PF account.

When is the account ‘inactive’?

• According to the new rules, the EPF account becomes ‘inactive’ if the employee has not applied for withdrawal of EPF balance.
• Even after 36 months of retirement when the member turns 55 years after that
• When the member permanently settles abroad
• If a member died
• If the member has withdrawn all superannuation funds
• If you have not claimed the PF account for 7 years, then this fund is put in the Senior Citizen Welfare Fund.

What are the instructions regarding EPFO?

EPFO has said in one of its circulars that there is a need to be careful in settlement of claims related to dormant accounts. Care should be taken that the risk related to fraud is minimized and the claim is paid to the right claimants.

Who will authenticate dormant PF accounts

In order to settle the claim relating to inoperative PF accounts, it is necessary that the employer of the employee substantiate that claim. However, if the employees whose company is closed and there is no one to certify the claim, the bank will authenticate such claim on the basis of KYC documents.

Which documents will be required?

KYC documents include PAN Card, Voter ID Card, Passport, Ration Card, ESI ID Card, Identity Card, Driving License. Apart from this, any other identity card issued by the government like Aadhaar can also be used for this. After this, the Assistant Provident Fund Commissioner or other officers will be able to approve the withdrawal or transfer of the account according to the amount.

With whose approval the amount will be received

If the amount exceeds Rs.50 thousand, the amount will be withdrawn or transferred after the approval of the Assistant Provident Fund Commissioner. Similarly, if the amount is more than 25 thousand rupees and less than 50 thousand rupees, then the account officer will be able to approve the fund transfer or withdrawal. If the amount is less than Rs 25,000 then the dealing assistant can approve it.

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