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How to pay income tax using credit cards

Using a credit card to pay your income taxes could be an easy way to manage your finances at one place. You can use your account and e-filing details in order to pay your income taxes via credit card. However, paying your income taxes via a credit card might accrue you convenience charges upto 2%. Prior to 2018, these charges varied depending on the payment network that your bank account belongs to, but now the charges are the same for every payment network.

Steps for payment of taxes using credit card

  1. Visit http://www.tin-nsdl.com which is the online portal for income tax payment

  2. Under ‘Services, click on the tab ‘e-payment’

  3. Identify your income category and select the challan which is relevant for your income bracket (ITNS 280/ITNS 281/ITNS 282/ITNS 283/ITNS 284)

  4. Enter your PAN/TAN details and other necessary details like accounting head under which payment is being made, address of the taxpayer and the bank through which the payment is being made

  5. Your PAN details are verified by the income tax department

  6. After the verification process, you will be redirected to the bank’s netbanking webpage

  7. Login to your credit card netbanking account using your credentials

  8. Make the income tax payment using your credit

  9. Download the e-receipt containing details of CIN, account details and bank details, which can be used further reference.

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House Rental Allowance

HRA or house rental allowance is the amount paid by the salaried/ self-employed individuals for renting an accomodation. Tax exemption due to HRA for salaried taxpayers is calculated under section 10(13A) of income tax act and for self-employed individuals, the tax deductions based on HRA are calculated based on section 80GG of income tax Act.

How is house rental allowance calculated

The exemption in tax from HRA is calculated as the least of:

  1. Actual HRA received

  2. 50% of basic salary+DA, for the people residing in metro cities and 40% of basic salary+DA for non-residents of metro cities

  3. Excess of rent paid annually is more than 10% of the salary

Documents required to claim HRA exemption

  1. PAN card details of the landlord, in case the rent paid is greater than 1 lac

  2. Photocopy of rent agreement

  3. Rent receipt

Income on house property

It is important to calculate income on house property to calculate the total amount of tax that needs to be paid to the income tax department. Income on house property is the income earned by the assessee by leasing out his/her property. Incase the property isn’t leased out, the owner needs to pay an amount based on the rent that is equivalent to the ‘deemed rent’ i.e, the possible rent which could be paid if the property is let out.

The income from house property is calculated along with a person’s income tax, only if it satisfies three important conditions:

  1. The assessee is the owner of that property

  2. The property must consist of house,buildings and/or land

  3. The property is used for any purpose apart from running a business or profession

Deductions from house property before levying of tax

While calculating the net income earned by letting out a property, under section 24 of the income tax Act can help one to avail various deductions on the net taxable amount from the house property income. These deductions include:

  1. Standard deductions - The standard deductions allow the assessee for a deduction of upto 30% on their net annual income from the property.

  2. Deduction of municipal taxes- Any tax paid to the government during the financial year (such as, house tax) is liable for deductions from the gross annual value of the property

  3. Deduction on interest paid on home loans- Any interest paid on construction, repairing or acquiring the property is deducted from the net income tax on that property

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