According to reports from Business Standard, individuals with multiple income streams face complex tax calculations when their combined income reaches specified taxable limits. The Income Tax Act categorises income under five heads: salary, income from house property, income from business or profession, capital gains, and income from other sources such as fixed deposits and dividends. Taxable income is calculated by considering all these incomes after relevant deductions are applied, then computed based on the applicable tax slab and tax regime chosen by the individual.
As reported by Business Standard, the calculation process involves several key steps for taxpayers in the old tax regime. First, add income from different sources including salary, rental income, and other sources. Then, deduct income exempt from taxation such as agricultural income and life insurance proceeds. Apply deductions under Section 80C and Section 80D, followed by the standard deduction of ₹50,000. Deduct professional tax and claim allowances such as HRA and LTA where applicable. Calculate net taxable income after subtracting total deductions from gross salary, then compute tax as per applicable slab rate.
According to the example provided by Business Standard, a person earning ₹16 lakh annual salary from full-time employment and ₹2 lakh annually from part-time work, plus ₹8,500 interest from savings, would have a total income of ₹17,58,500. After applying deductions including ₹8,500 under Section 80TTA and standard deduction, the taxable income becomes ₹17,50,000. With applicable slab rates and health and education cess, the total tax payable amounts to ₹3,51,000.
As reported by Business Standard, under the new tax regime, calculations may show different results since most deductions are not available except NPS employer's contribution and a standard deduction of ₹75,000. The tax slabs and surcharge vary based on income levels, making it crucial for taxpayers to compare both regimes based on their specific circumstances to maximise savings.
According to Business Standard, taxpayers with multiple income sources must maintain proper documentation and follow specific compliance procedures. ITR 1 is applicable for salaried individuals earning up to ₹50 lakh, while ITR 2 is for those earning capital gains and income from multiple properties. ITR 3 is for business or profession earnings. Taxpayers should verify TDS using Form 26AS (renamed as Form 168) and pay advance tax if total liability exceeds ₹10,000 in multiple installments.
