What They Didn't Teach You In School: A Homegrown Guide To Doing Your Taxes

Homegrown's here to help you do your taxes.
Homegrown's here to help you do your taxes. Convera

The following article was written by Homegrown Staff in collaboration with BizExpress.

BizExpress is a one-stop shop for MSMEs. They offer services in Company Registration, GST Registration, Tax Advisory, Trademark, Investor Pitch Decks, Digital Marketing Services and even Website Development.

We learned a lot in school and some subjects were an absolute nightmare! But let’s face it, we don’t even use most of what we learnt. Homegrown is here to change that and take you through some of the most important pieces of knowledge one ought to know in the professional world.

The Indian tax system can be somewhat complex and you can often find yourself asking "How do I do my taxes?" or "How do I pay my taxes?"

We want to simplify this for you so that everyone knows what to do and what not to do. As an employed individual (working in a company or self-employed), here are some basics that everyone should be aware of. 

What is a Financial Year (FY)? 

This runs from April to March of the following year. For example, the previous Financial Year (FY) was from April 2022 to March 2023. Investments (if any) for that FY must be made within this period. Another term you will hear a lot about when you are filing your tax returns is Assessment Year (AY). An AY is the year in which your previous FY’s taxes are evaluated. If you have paid more taxes than you are supposed to, you will get a refund in the Assessment Year. For example, if you want to file returns for FY 22-23, you must mention the Assessment Year as AY 23-24, since your taxes are being assessed in the current year. 


Every taxpayer gets the benefit of deductions. There is a sandard deduction applicable for both tax regimes (New & Old) of Rs 50,000. Apart from this, there are additional savings/investments that you can do in order to reduce your taxable income. However, you must show proof for these mentioned savings/investments. 

How To Calculate Tax

Taxable Income = Gross Income - Deductions 

Gross Income: Sum of all income streams 

Deductions: Savings/investments that you have made in that FY which can be used to reduce your taxable income


A few companies take away what is called TDS (Tax Deducted at Source). Think of this as an advance tax for your employment or service which is paid to the government on your behalf, by your employer. Essentially, every payment to be made for a service must be taxed.

 Phew! That was a lot to take in, still with us so far? Great! It only gets better from here. Let’s talk a little bit about your Employment Contract. 

How Does Your Salary Breakup Affect Tax?

There are some parts of your salary breakup that play an important role in tax deductions. These are called allowances and they help reduce your overall taxable income. All of the below allowances are only available to those who have opted for the Old Tax Regime. 

Some of important allowances include: 

1. House Rent Allowance (HRA) - You are eligible to claim a maximum amount of tax exemption for your house rent as per the HRA details mentioned in your employment contract. If your house rent is more than Rs 1 Lakh in a year, then your landlord will need to provide their PAN details.

 2. Medical Allowance - This is a very important allowance as everyone at some point has few medical expenses throughout the year. Every employee is entitled to get up to Rs 15,000 as tax reimbursement each year, provided they show valid medical bills/expenses for that respective FY.  

3. Food Allowance Meal Coupon - These are options (Sodexo/Zeta, for example) which if opted for by an employee, will help reduce a certain amount of tax for that FY. Tax is exempted on a fixed amount of ₹100/day (₹50 per meal) and for 22 working days in a month, that will allow an employee to get Rs 2,200 of tax exemption per month and a maximum deduction of Rs 26,400 in a Financial Year. 

4. Leave Travel Allowance (LTA) - Some companies offer a Leave Travel Allowance to their employees which can be claimed as a tax deduction if you have incurred any travel expenses in a fixed four-year slot. However, there are a few conditions to be met before you can claim this.

- You must have actually completed the journey that you are claiming.

- The exemption under LTA is valid only for domestic travel. No international travel is covered here.

- LTA is applicable for the employee as well as their spouse, up to 2 children and dependent parents.

- You can only avail LTA for two journeys within a 4-year slot. The current slot is from 2022 to 2025.

- You are eligible to apply for LTA for two domestic journeys till 2025. Your LTA limit will be mentioned by your employer. 

There are other ways to increase your deductions and reduce your overall taxable income. These constitute various investment areas such as Public Provident Fund (PPF), Life Insurance Premium, Tax Saving Fixed Deposits, Tax Saving Mutual Funds, Systematic Investment Plans, National Pension Scheme, House Loan Repayment and many more. 

Homegrown's here to help you do your taxes.
A Simplified Homegrown Guide To The 2023-2024 Union Budget

Should You File Your Income Tax Returns? 

The last day to file Income tax returns is July 31. I’m sure you’ve heard this multiple times before. But are you really aware of the advantages of filing your tax returns? Filing taxes every year shows that you abide by the law and are diligently being transparent with the Government about your taxes paid. Each person must file their income tax returns every year, even if they don’t fall under the taxable brackets. But why would someone file returns if they don’t even pay taxes, you might ask? For one thing, it can ease the process of applying for a visa if you are a diligent taxpayer and returns filer. This shows that you adhere to the required rules and policies in an ethical manner. It also helps you with loan applications. If you ever have plans of buying a new car/bike/home, your income tax return filing status plays a significant role. Additionally, a good record of tax return filings helps with job applications abroad

For business owners, tax filing documentation is necessary for most vendor registrations with corporate firms. If you wish to opt for Government bids and tenders in the future, your IT Returns are very important and give you high credibility. Additionally, if your company makes a loss this FY, you will be able to carry forward losses to the following year and offset them against future profits.

But this isn’t the best part of income tax return filing. You can also get your tax money back if you end up paying extra tax. Now who doesn’t love that? If you end up investing more in a financial year as compared to how much your taxable income is, you are eligible to get some money back.


Have you ever heard of TDS or Tax Deducted at Source? Every transaction contains two parties, a payer and a recipient. By law, the recipient must have this payment taxed by the government, for any service they are providing to the payer. For this reason, a TDS amount has to be deducted by the payer and a net amount is then paid out to the recipient (after TDS reduction).

Let’s consider an example. Jack has just started a business and needs a logo for his company. He reaches out to Tom, who is a graphic designer. Let’s say that both of them agreed upon the price of Rs 10,000 for the logo design. Once the work is completed, Jack has to pay Tom Rs 10,000 for the work. However, Jack is legally liable to cut 10% TDS (percentage & conditions of TDS vary from party to party) from Rs 10,000 and hence, pays Tom only Rs 9,000. The remaining Rs 1,000, is to be paid to the government as part of Tom’s tax. At the end of the FY, if Tom does not fall in the taxable bracket, Tom can get back the Rs 1,000 from the government during his income tax returns filing. 

How To File Your Income Tax Returns 

You can file your returns online here.

You will need to keep your PAN Details handy, along with your Form 16 (provided by your employer), and Form 26AS which will directly be linked with your PAN Number. Form 16 is a document which your employer of the previous FY will provide to you around the month of June. If your Form 16 does not show any of the investments that you have made in the previous FY, you can add that to the portal while filing your returns. Form 26AS is also provided by your employer. You can also download it via the Income Tax Portal link above.