Computation of total income and tax liability:
Step 1: Compute the income of an individual under 5 heads of income on the basis of his residential status.
Step 2: Income of any other person, if includible under section 60 to 64, will be included under respective heads.
Step 3: Set *** of the losses if permissible, while aggregating the income under 5 heads of income.
Step 4: Carry forward and set *** of the losses of the past years, if permissible, from such income.
Step 5: The income computed under step 1 to 4 is known as Total Income from which deductions under section 80C to 80U (Chapter VIA) will be allowed. However, no deduction under these sections will be allowed from short term capital gain covered under section 111 A, any long term capital gain and winning of lotteries etc., though these incomes are part of total in come.
Step 6: The balance income after allowing the deductions is known as total income which will be rounded *** to the nearest Rs. 10.
Step7: Compute tax on such total income at the prescribed rates of tax.
Step 8: Add education cess and secondary and higher education cess @4%. Step9:Allow relief under section 89, if any.
Step10: Deduct the TDS and advance tax paid for the relevant assessment year. The balance is the net tax payable which must be rounded *** to the nearest Rs. 10. This tax has to be paid as self-assessment tax before submitting the income tax return.
