Tax Computation for Self Employed/Professional Class:
People in this category are fully responsible for their tax computation and filing of Income tax return well in time.
A self-employed person can enjoy the tax efficiency benefit by at least 15% as against similar salary income.
All your work/business related expenses can be claimed as business expenses.
Vouchers/bills would be required to support expenses as proper book keeping is required to be maintained.
Expenses including rent or home office expense, travel costs, communication costs (telephone, internet), business meetings, supplies and utilities can be claimed as expenses.
Expenses relevant to business only are supposed to be claimed.
Claims may be made for depreciation on work related assets like laptops/computers, furniture, UPS and vehicles.
Bad business debts may be written off.
Losses may be carried forward for 8 years.
Income distribution among family members, who can assist in the business (legitimately), may be done.
Tuition fees for your child’s education can also be claimed. The overall limit of this section is Rs 1 lakh.
Section 80D provides deduction for medical insurance premiums of oneself and family upto Rs 15,000.
An additional Rs 15,000 can be claimed towards medical premiums of parents.
If you are staying in a rented home you can claim the rent paid as deduction u/s 80GG, upto Rs 24,000, based on certain conditions.
If you buy a house, you can claim a deduction of upto Rs 1.5 lakh on interest paid.
The premiums paid towards life and health policies will provide for tax breaks u/s 80C and 80D.
Tax saving schemes having one time payment option and avoid large commitments if your income is irregular.
The documents required are by and large the same. These are:
Savings bank account/statement (All Banks).
Public Provident Fund(PPF)
Interest on Fixed Deposits
National Savings Certificate(NSC)
National Pension Scheme(NPS)
Home Loan Principal Payment
Insurance – Life, Health, Vehicle and Home.
Any other income required to be clubbed with Income, if it is one or more of the following:
Income from House Property
Profit and Gains, Fees, Commission, from business or profession
Any other source
They need also to ensure that all the form 16 are available before filing of ITR (though it is the obligation of the tax
deducting organisation to upload the Form16 on Income tax website).