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How to Prepare Anticipatory Income Tax Statement?

To find out the taxable income and the tax to be paid for the financial year, the government servants calculate the anticipated income of a financial year. One 12th of the tax amount is deducted from the salary each month. This system prevails for a long time. But this was not followed properly by most of the govt servants. Now the finance department has published a circular regarding implementation of 8+4 EMI Model for the remittance of income tax based on the salary amount drawn by the govt servants.


What is 8+4 EMI Model?

Let us take the 12 months of a financial year as two parts – the first 8 months and the next 4 months. The first premium of income tax is usually deducted from the salary of March in a financial year. The deduction of same amount of tax premium would continue in the following 8 months if there are no other changes. We would get a clear idea of the income of the present financial year after 8 months. There may be changes in the salary income that was in the month of March. Hence it is preferred to make calculations again including the changes. Most of us have experienced the difficulty of paying a huge amount towards tax in the month of February for not revising our anticipatory income and tax. So, a revised anticipatory statement can be prepared after 8 months and tax deduction can be done based on the new amount.

Gross salary including basic salary, allowance, perquisites is calculated and deductions from 80 C to 80 U, housing loan interest, professional tax etc are lessened from the total salary income to calculate the tax amount. As per the anticipatory income statement, one 12th of tax should be deducted in the salary bill of every month. If the income tax amount is not deducted from the income sources, 1% interest and 1.5% of interest for not being paid the tax amount should be remitted. Penalty can be levied upon the defaulters and those who reduce the amount that is to be deducted. When there is an increase in the total salary amount due to salary hike or interest or other allowances, the govt servants should give a revised anticipatory statement and revised income tax amount ought to be deducted from the salary of the following months.

Major changes in the new budget 2019-20


There are two major changes in the budget presented for the financial year 2019-20. There would be a rebate of Rs.12,500/- for those with Rs.5 lakh/- income limit. Besides, the standard deduction of Rs.40,000 has been raised to Rs.50,000/. The standard deduction of Rs.50,000/- would be done from the total income of all those with salary income.

If the taxable income (after all deductions including standard deductions) is Rs.5 lakh or below 5 lakh, a maximum of Rs.12,500/- rebate has been allowed in sec 87 (A). The tax rate for the amount of rupees from 2,50,000 to 5,00,000 is 5%.

For a person with taxable income of Rs.5 lakh, the rest of the amount after 2.5 lakh would be taxable and the tax amount for the same is Rs.12,500/. At the same time, the rebate amount of Rs.12,500/- is applicable to him also. Thus he would be free from paying tax amount. Whereas, the rebate is not allowed in the case of taxable income above Rs.5 lakh. Here, the tax rate as that of previous year for the amount after Rs.2.5 lakh has to be followed and such persons are benefited by the standard deduction amount only.

Anticipatory Income Tax Software 2019-20

Various software tools given here can be made use of, for preparing anticipatory income tax statement.

Downloads
Anticipatory Income Tax Software for 2019-20(Ms Access) Utility Prepared by Alrahiman
Anticipatory Income Tax Software for 2019-20(Ms Excel) Utility Prepared by Babu Vadukkumchery
Anticipatory Income Tax Software for 2019-20(Ms Excel) Utility Prepared by Jijo George
Related Downloads
Income Tax Software Tools
Chief Minister Distress Relief Fund and Income Tax returns

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3 comments to ''How to Prepare Anticipatory Income Tax Statement?"

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