Salary Return Filing
Salary return filing is the process of declaring income earned from salary and paying income tax by filing the appropriate Income Tax Return (ITR). This is mandatory for individuals whose income exceeds the basic exemption limit.
- TDS (Tax Deducted at Source):Employers deduct TDS every month based on estimated annual salary and applicable tax slabs. The deducted amount is deposited with the government on the employee’s behalf.
- Form 16:
Form 16 is issued by the employer annually and contains a detailed summary of the salary paid and TDS deducted. It serves as the primary document for filing salary returns.
- Form 16:
- Salary Components:
Salary includes components such as basic pay, HRA, bonuses, LTA, and perquisites. Each component has different tax treatments and affects the final tax liability.
- Salary Components:
- Deductions under Chapter VI-A:
Employees can claim deductions like ₹1.5 lakh under Section 80C (e.g., LIC, PPF), Section 80D for health insurance, and others to reduce taxable income.
- Deductions under Chapter VI-A:
- Exemptions:
Exemptions like HRA, standard deduction (₹50,000), and professional tax are allowed. These help reduce the gross salary to arrive at taxable income.
- Exemptions:
- ITR Filing Deadline:
The usual deadline for filing ITR for salaried individuals is 31st July of the assessment year. Late filing attracts penalties and interest.
- ITR Filing Deadline:
- Accounting Entry in Books:
Salary expense is debited, while bank (net salary paid) and TDS payable (tax deducted) are credited in the accounting records.
- Accounting Entry in Books:
- Reconciliation:
Salary details must be cross-verified with Form 16, payslips, and Form 26AS to ensure accurate return filing and avoid notices from the tax department.
