Not being able to figure how much of your earnings go towards paying taxes is disquieting. Take control of your taxes — it is your money after all!

Where taxation is concerned, being a woman is advantageous in our country. Special deductions are showered on us while computing income tax liability.

With the financial year-end nearing (a Financial Year starts from 1 April and ends on 31 March of the following year), you will have to make the necessary investments and pay off taxes due on income earned during the year. So how do you compute your tax liability?

Computing tax liability is divided into two parts:
(a) Calculating how much income you have earned during the Financial Year and,
(b) Calculating how much tax is payable on the income earned.
Computing your income

To calculate how much income you have earned, allocate your income under the following five heads:
1. Income from Salary — your salary income if you are a working woman.
2. Income from House Property — rental income you have earned if you own property, which you have given out on rent.
3. Business or Professional income — your earnings if you have your own business or are a practising professional such as an interior designer, feng shui consultant, etc.
4. Capital Gains — profits out of sale of assets such as equity shares, property, etc.
5. Income from other sources — any income earned, which does not fall in any of the four heads above, will be included in this head of income.

Computing The Deductions
The Income Tax Act allows certain deductions such as the premium you have paid on your mediclaim, premium you have paid on your pension policy, interest you have earned on bank deposits, etc.

Net Taxable Income
Reduce the total deductions you are eligible for, from your total income. The balance is the income on which you will have to pay tax.
So you don’t want to pay this tax?

There is a way out — to a certain extent. If your total income does not exceed Rs 5 lakhs, you can invest in certain post office schemes like National Saving Certificate (NSC), Public Provident Fund (PPF), etc and, if you have paid premium on a life insurance policy, these investments and payments can be used to get a discount or rebate on the tax amount payable.

The Income Tax Act allows between 15 per cent and 30 per cent rebate (depending on your income level) on the total of these investments and payments made up to Rs 1 lakh from the tax payable.

After using this rebate, being a woman helps because you get a further rebate of up to Rs 5,000 (under section 88C) (i e if your tax payable after taking section 88 rebate is more than Rs 5,000, reduce Rs 5,000 and the balance is now your final tax payable). If the tax payable is less than Rs 5,000, then your tax payable becomes nil.

If there is tax payable even after using section 88C, you don’t have any more options but to pay the tax!

What has been explained is the overall picture. Now let’s look at the details under each section.

Your Salary Income