Section 139(1) of the Income-Tax Act has been amended w.e.f: AY 97-98 with a view to bring larger number of persons in the tax net. In order to increase the tax base now any person who satisfies any two of the four conditions, viz. is owner of a vehicle; or, occupies specified floor area of an immovable property; or incurs expenditure for himself or any other person on foreign-travel; or subscribes to a telephone, then he is required to file a return.

For an individual the maximum limit of income which is not chargeable to tax, for assessment years 1997-98 and 1998-99 is Rs 40 . 000.Besides such persons, any other person who is to claim a refund, or carry forward losses (for example loss under the head `income from property') or who seeks any other benefit (for example deductionof income of a blind individual) may also file the income tax return. It is important to note that from the assessment year 1993-94 onwards, the return of income has to be compulsorily filed if the income of an individual exceeds the basic exemption limit.

What is the assessment year?

Assessment year is the period of 12 months succeeding the relevant previous year (i.e. the accounting year) ending on 31st March. For example assessment year 1998-99 is the period of 12 months w.e.f. 1-4-97 to 31-3-98.What are the due dates for filing IT returns?

In the case of an assessee earning income from salary primarily, the due date for filing the income tax return is 30th June of the assessment year. For example, the due date for assessment year 1998- 99 would be 30th June 1998:

Which is the prescribed form for filing of IT returns?

The assessee enjoying income from salary, and whose total income does not include income under the head `Profits and Gains of Business or Profession' has to file hisincome tax return in Form No. 3. He can also file the return in Form No. 2A if his net taxable income is Rs 1.20 lakh or less and the following further conditions are satisfied:

a) There is no income from business or profession;

b) There is no brought forward or carried forward loss/allowance under any head of income except from house property.

Assessees fulfilling the above conditions have the option of using even the existing Form No. 3 in place of Form No.2A.

What are various heads of income?

The various heads of income are:

a) Salaries b) Income from House Property

c) Profits & Gains of Business or Profession

d) Capital Gains, and e) Income from other sources.

While computing income from the above mentioned different heads, the following procedure has to be adopted:

First, the taxable income from each source is to be computed under each head of income by allowing deductions peculiar to that head, and then they are aggregated. For example in the case of an assesseederiving income from salary, house property, and interest income from fixed deposit in a bank, firstly, the taxable income under the head "salaries", then "income from house property", and lastly the taxable income under the head "income from other sources" for bank interest etc. will be computed. Thereafter, all the three incomes under the three heads would be aggregated. From this aggregate amount, certain eligible deductions would then be made to arrive at the net taxable income on which income tax is chargeable.

How to pay the tax under the IT Act?

The employer or his representative making payment to an assessee earning income from `salary' is under obligation to deduct certain amount of tax from such payment(s) made during the financial year. Such deduction from the payment is called "Tax Deducted at Source" i.e. TDS. The person making this TDS is obliged to pay such tax to the Central Government within the prescribed time-limits. This payment of TDS to the Central Government is treated aspayment of tax on behalf of the assessee. The assessee may furnish to his employer particulars of his income under any head other than "salary", and of any tax deductecd at source thereon in the prescribed Form (No.12C). The employer shall take such other income and tax, if any, deducted at source from such income, into account for the purpose of computing the TDS from his salary income. However, this aggregation is not permitted in case such income under any other head is a loss. `This loss is not permissible to be adjusted by the person paying salary but can be claimed as deduction at the time of filing of return and a refund sought. In order to remove any difficulty in obtaining such refund, the assessee may make an application in Form No. 13 to his Assessing Officer, and, if the Assessing Officer is satisfied that the total income of the taxpayer justifies a lower rate of deduction or no deduction at all, he may then issue an appropriate certificate to that effect which should be taken into accountby the person making the payment of salary while deducting tax at source.

In case the assessee does not wish to furnish particulars of his income under other heads to his employer then he has to estimate his total taxable income under the different heads of income during the previous year, and pay tax thereon during the financial year itself, after excluding the tax deductible at source, by the due dates specified under the Income-Tax Act .

`These payments are called "Advance Tax Payments". However, the liability for payment of advance tax arises only where the amount of such tax payable by the assessee during that year is Rs 5,000 or more. Also, any amount paid by way of Advance Tax on or before the 31st March of that year is treated as Advance Tax paid during that financial year. After the return is prepared, and the net taxable income finally determined, it may so happen that, after taking into account the amount of TDS and Advance Tax if any already deducted/paid still some tax or interest(payable for delay in furnishing the return or delay in payment of advance tax) remains to be paid. This amount should be paid as self-assessment tax before furnishing the return.

It is, therefore. important to note that before furnishing the return, the assessee has to pay the entire tax and interest, if payable,and the proof of such payment of taxes has to be attached to the return.How to Compute Your Salary Income

S K Joshi

Published by Directorate of Income Tax, New Delhi