Entering Gross vs. Net Salary in ITR: Which Is Correct?
- Farheen Mukadam
- Sep 15
- 8 min read
Accurate salary disclosure is a key aspect of filing your Income Tax Return (ITR). The Income Tax Law requires taxpayers to report their total income from various sources, including salary, in order to calculate their tax liabilities. For salaried individuals, it is essential to understand how to correctly disclose their salary to ensure compliance with tax laws and avoid penalties. Let's explore a detailed explanation of the Income Tax Law's stance on salary disclosure, the differences between gross and net salary, and a step-by-step guide on how to properly enter your salary details in your ITR. We will also address common questions and provide the latest updates on the process.
Table of Contents
What the Income Tax Law Says About Salary Disclosure
According to the Income Tax Act, all individuals receiving a salary must disclose their total income earned during the financial year. This includes not only the basic salary but also any allowances, bonuses, and perks. The law requires that all income be declared under the correct head—' Income from Salary'—and that deductions such as provident fund (PF), professional tax (PT), and others are accurately accounted for to arrive at the taxable income.
When filing your ITR, it is crucial to ensure that your salary is reported in line with the information provided in your Form 16, which your employer issues. Form 16 details your salary income, tax deductions, and the tax that has already been deducted at source (TDS).
Where to Find the Right Salary Figure
The primary source for finding your correct salary figure is Form 16, issued by your employer. This form contains a breakdown of your salary and the tax that has been deducted at source. Form 16 includes both Part A and Part B:
Part A provides details about your employer and the TDS deductions made.
Part B details the breakdown of your salary, including your gross salary, exemptions, and deductions under various sections such as Section 10 (HRA, other allowances).
Your gross salary, as listed in Part B of Form 16, should be used as the basis for salary disclosure in your ITR. If you are filing without Form 16, your pay slips can also serve as a source to determine your salary figure.
Gross vs. Net Salary Explained
Understanding the difference between gross and net salary is essential when filing your tax return.
Gross Salary: This is the total salary amount that your employer pays before any deductions. It includes basic salary, allowances, bonuses, overtime pay, and other compensations.
Net Salary: Net salary, also known as "take-home pay," is the amount you receive after deductions like provident fund (PF), professional tax (PT), and any other deductions. Net salary is what you actually get credited into your account each month.
When filing your ITR, you need to report your gross salary, not the net salary, since the government taxes the total income you earn before deductions.
Step-by-Step: How to Enter Salary in ITR
Filing salary information in your ITR is a crucial step. Here’s how to correctly enter your salary in the ITR:
Log in to the ITR portal: First, log into the Income Tax Department’s e-filing portal using your credentials.
Select the correct ITR form: Choose the ITR form that corresponds to your income. Most salaried individuals use ITR-1 (Sahaj).
Fill in personal details: Provide your personal details, such as your name, PAN, and contact information.
Enter salary details:
In the 'Income Details' section, choose 'Income from Salary'.
You will need to fill in your gross salary as provided in Form 16, under the 'Income from Salary' section.
Fill in other relevant details, such as allowances, perquisites, bonuses, etc., as applicable to your salary.
Claim deductions: Enter deductions under various sections, like Section 80C for Provident Fund contributions, Section 10 for HRA exemptions, etc.
Calculate tax and verify: The ITR form will calculate the tax payable based on the details entered. Verify all entries for accuracy.
Submit your ITR: Once everything is verified, submit the form, and complete the e-verification process.
Conclusion
Accurate salary disclosure is essential for a smooth and accurate tax filing process. By understanding the components of your salary and following the correct steps to file your ITR, you can ensure that you remain compliant with the Income Tax Act and maximize your potential deductions. Remember to always verify your salary details with Form 16 or your pay slips, report gross salary, and claim any eligible exemptions to reduce your taxable income. Filing your ITR correctly will not only help you avoid penalties but also ensure you receive any potential refunds in a timely manner. For a seamless filing experience, it is highly recommended to download theTaxBuddy mobile app for a simplified, secure, and hassle-free process.
FAQs
Q1: Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
Yes, TaxBuddy offers both self-filing and expert-assisted plans for ITR filing. The self-filing option is ideal for taxpayers who are familiar with the filing process and prefer to handle their tax return independently. With this option, TaxBuddy provides the necessary tools, guidance, and checks to ensure accurate filing. For those who prefer assistance or have more complex tax situations, the expert-assisted plan connects you with a qualified tax professional who will guide you through the filing process, ensuring that your return is accurate and compliant with tax laws. This flexibility allows taxpayers to choose the plan that best suits their needs and comfort level.
Q2: Which is the best site to file ITR?
The best site to file your ITR depends on your specific needs.TaxBuddy is an excellent choice for those looking for a seamless filing experience. It offers a comprehensive platform that allows both self-filing and expert-assisted filing. TaxBuddy’s user-friendly interface, accurate tools, and customer support make it ideal for individuals and businesses alike. For those who prefer filing through the official government platform, the Income Tax Department’s e-filing portal is also a reliable option. However, TaxBuddy's added features, such as AI-driven filing, expert assistance, and error-checking, make it a top contender for those seeking a more efficient and supportive filing experience.
Q3: Where to file an income tax return?
You can file your ITR on the official Income Tax Department’s e-filing portal at incometax.gov.in. Alternatively, platforms like TaxBuddy simplify the process by offering a more user-friendly interface, along with the option to file with expert assistance. TaxBuddy ensures accurate filing, timely support, and additional features like TDS credit verification, making it easier for taxpayers to comply with the regulations. Whether you file directly with the government or through a platform like TaxBuddy, both options ensure your filing meets legal requirements.
Q4: Can I file my ITR after the deadline without penalties?
No, you cannot file your ITR without penalties after the deadline. If you miss the original filing deadline, you can still file a belated return, but it will incur a penalty. The penalty for late filing is up to ₹5,000 for taxpayers filing after the deadline. Additionally, you will be charged interest on any unpaid taxes under sections234A, 234B, and 234C. Filing a belated return is allowed until December 31, 2025, for FY 2024-25, but it is always advisable to file before the deadline to avoid penalties and interest.
Q5: What happens if I fail to file ITR within the extended deadline?
If you fail to file your ITR within the extended deadline of September 15, 2025, for FY 2024-25, you can still file a belated return by December 31, 2025. However, this will incur a penalty, and your refund processing will be delayed compared to those who filed on time. The penalty can be up to ₹5,000, and interest will be levied on any unpaid taxes. Additionally, filing after the deadline could increase the chances of your return being selected for scrutiny, leading to further delays in processing.
Q6: How do I check the status of my income tax refund?
You can check the status of your income tax refund by visiting the Income Tax Department's e-filing portal. Once logged in with your PAN and assessment year details, you can easily track the progress of your refund. If you filed your return through TaxBuddy, you can also track the refund status directly through their platform. TaxBuddy offers real-time updates and notifications, keeping you informed throughout the refund processing stages.
Q7: Does TaxBuddy assist with TDS credit verification?
Yes, TaxBuddy assists with TDS credit verification. The TDS credits are crucial for ensuring that the correct amount of tax has already been deducted at source, and that this is accurately reflected in your ITR. TaxBuddy’s system cross-checks your TDS credits with the information available in the government’s records to avoid discrepancies. This helps prevent errors in your return and ensures that you do not face delays in receiving your refund due to mismatches.
Q8: How long does it take for TaxBuddy to process an ITR filing?
The time it takes to process an ITR filing on TaxBuddy depends on the complexity of the return. For simple returns, the process can take as little as a few hours. TaxBuddy’s AI-driven system ensures fast and accurate filing, with automatic checks to reduce errors. For more complex filings that require expert assistance, the process may take a bit longer, especially if additional documentation is required. In general, TaxBuddy ensures that your return is filed as efficiently as possible while maintaining accuracy.
Q9: What if I file ITR after the extended deadline?
If you file your ITR after the extended deadline of September 15, 2025, you can still file a belated return by December 31, 2025. However, you will face penalties for late filing, and your refund processing will be delayed. The penalty for late filing can be up to ₹5,000, and interest will be charged on any outstanding taxes. It’s always advisable to file your ITR as early as possible to avoid these additional costs and delays.
Q10: Are there penalties for errors in my ITR filing?
Yes, errors in your ITR filing can lead to penalties, interest, and delays in the processing of your refund. Common errors such as incorrect income reporting, missing deductions, or failing to account for TDS credits can result in penalties. Additionally, errors may lead to scrutiny from the tax authorities, which could further delay your refund. To avoid these issues, TaxBuddy offers automated error checks and expert assistance to ensure that your filing is accurate and compliant.
Q11: Can I make corrections in my ITR after filing?
Yes, you can make corrections in your ITR after filing by submitting a revised return. If you realize there were mistakes in your return, such as incorrect income reporting or missing deductions, you can file a revised return before the end of the assessment year. The revised return allows you to correct any discrepancies and avoid penalties or scrutiny. It's crucial to file revisions promptly to ensure your tax records remain accurate and up to date.
Q12: Does TaxBuddy support all tax regimes for ITR filing?
Yes, TaxBuddy supports both the old and new tax regimes for ITR filing. It helps you determine which regime benefits you the most, based on your income, exemptions, and deductions. The old tax regime offers exemptions and deductions but comes with higher tax rates, while the new tax regime simplifies the process with lower tax rates and fewer deductions. TaxBuddy's platform ensures that you choose the most tax-efficient option and maximises your savings.
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