With the launch of the revised tax system from 1st April 2018, there are many changes that have been made. One such change was to increase the standard deduction by 150%. Similarly, there is a new limit on deductions which will now cap out at Rs 20,000. This means that your expenses can no longer be fully deducted from your income. With these changes, it is important to adjust your personal and business fiscal planning accordingly.
You need to file your KRA returns if you are an individual or you’re a firm (other than an NRI company) that falls under the category of Knowledge Users. If you are unsure whether you qualify as a user or not, consult a tax professional.
How do I know if I need to file my Return under the KRA?
1. If you earn less than Rs 40,000 per month and you’re a non-resident Indian, you need to file your return under the KRA.
2. If you are a resident Indian or if your total income is more than Rs 40,000 per month, but less than Rs 80,000 per month and you fall in any of the following categories:
– Non-resident alien (NRI)
– Resident foreigner
– Person with disabilities
– Person who has taken a loan from NBFCs after 1st April 2018
– Trustee of trust where all its members are NRIs/PIOs/PIOHs/PIOAHS – The person whose income is more than Rs 80,000 per month only needs to file his return under the KRA if he belongs to any of these categories.
What is a KRA Return?
Knowledge User Assessment Return is a return that you need to file if you are an individual or firm (other than an NRI company) in India. This return helps the government examine your knowledge of the tax rules.
The KRA returns are due on and filed by 31st March 2019.
Step 1: First, open your e-filing account on www.net-profiteverywhere.com
Step 2: Fill out the ‘New’ form and select your state.
Step 3: Fill out the personal details in the ‘Personal Details’ section of the form.
Step 4: After filling out the personal details, you will have to select your occupation from the list. You can choose any one of the options that are available.
Step 5: After completing this step, you will have to provide your PAN number in the next section as well as enter your tax-related information like date of birth and name change.
Step 6: Lastly, upload a scanned copy of your Aadhaar card or a passport photo with an ID proof (which has a photograph) in the ‘Photo ID Proof’ section of the form. Your account is now ready for submission! The process takes just five minutes!
Step 2: Know your TDS deduction limit for FY 2018-19
The standard deduction for FY 2018-19 is Rs 15,000. Here’s how to find out the amount of your TDS deduction limit if you have a business:
1. Enter your income from all sources in the first column.
2. Enter the total number of days that you work in FY 2018-19 in row 3 (or enter 0 if you do not work).
3. Subtract all expenses from your total income in row 4, and enter that amount on line D in column 1 (column 1 is for individual taxpayers).
4. Multiply line D by 20% and enter that amount on line E at column 2 (this is the amount of TDS limit applicable to an individual taxpayer).
5. Add up all expenses and multiply it by Rs 1,500 or multiply it by 1/10th of Rs 20,000 whichever is lower, then enter the result on line F at column 3 (the TDS limit applicable to a firm with one member).
6. Subtract any tax deducted under section 80C or section 80CCD(1) or section 80CCD(2) or Section 80DD or Section 80TTA from your TDS limit at column 4 if applicable as per Schedule IIB (Schedule IIB provides for various exemptions from payment of tax under certain circumstances).
Step 3: Know your Total Income limit for filing returns under KRA
The Income Tax Department has released the new Income tax slabs for the year 2018-19. For individuals, a person will be taxed according to the slab rate that falls in between Rs 2,50,000 and Rs 3 lakhs. For firms (other than NRI companies), a firm will be taxed according to the slab rate that falls in between Rs 50,000 and Rs 1 crore.
Step 4: Now, know your TDS deductible limit for FY 2018-19
In your next step, you need to know the deductible limit for TDS (Tax Deducted at Source) for FY 2018-19. The deductible limit is calculated by multiplying the total amount of tax paid by 5%.
If you have paid Rs 10,000 as TDS on business income and Rs 1,000 as TDS on personal income, then your deductible limit would be Rs 5,000.
Step 5: Sum up
The fifth step is the most important one. You will have to sum up your expenses in some way or another and decide on which line you should put them down. It is best to put it down as a direct cost or a business expense, as it will be easier for you to get rid of it that way.
If you have opted for the standard deduction, then you can figure out the amount that you need to subtract from your income total by adding the amount of deductible expenses on your W-4 form. If there are additional personal deductions, then you can deduct those too. If not, then calculate your taxable income by adding the number of exemptions and then figuring out how much tax needs to be charged for that specific amount.