While everyone loves to earn money – the more the better, however, the same enthusiasm is not always observed when it comes to filing tax returns. This is primarily due to the misconceptions surrounding the entire exercise of filing taxes. Many salaried individuals feel that since their employer has already deducted the taxes via TDS, they need not worry about filing their returns. Some avoid doing it because they feel the process is too complicated and hiring a financial consultant or a chartered accountant is not feasible for everyone.
However, in legal terms, filing ITR is mandatory for all individuals who have an income even if it is more than 2.5 lakhs (in case of those below 60 years of age) or 3 lakhs (in case of those who are more than 60 years old but less than 80 years old) or 5 Lakhs (for those who are more than 80 years old) need to compulsorily file tax returns. These exemption limits keep changing from time to time as announced by the government.
Also, the process for filing the returns is actually very easy especially if one is aware of the different kinds of ITR Forms, their applicability and some commonly used terms.
ITR-1 Form or “Sahaj” (derived from the Hindi word meaning “easy”) is the most commonly used form for filing Income Tax returns. It is primarily used by salaried individuals. However, there are certain categories of salaried individuals who need to submit their returns through other forms such as ITR Form or the ITR Form 2A.
The ITR-1 Form can be used by individuals who fall in any of the following categories:
- Any salary or pension earned by an individual from his/her employer and taxable under the category “Income from Salary”
- Income from house property
- Income from other sources such as interest income, dividends earned, etc.
If the income of the taxpayer has been clubbed with the income of a minor or a spouse, the additional income should also adhere to the previously mentioned clauses, for the taxpayer to use ITR Form 1.
Individuals who fall in any of the following categories are excluded from the scope of ITR Form 1. Hence, they need to fill out the other ITR Forms as applicable to their case.
- Income arising from lottery or winnings from horse races or legal gambling
- Income from multiple house properties. Also, any loss under “Income from House Property” which has been carried forward from the previous financial year.
- Income from capital gains that are taxable. This includes both long term as well as short term capital gains.
- Agricultural income which is more than Rs. 5,000.
- Income from Professional fees or income earned through business
- Loss under the head “Other Sources”
- Individual applying for relief under DTAA from double taxation or foreign tax that has been paid as per provisions of Section 90, Section 90A or Section 91.
- Any resident individual having an asset not located within the country or one who acts as a signing authority for accounts located out of the country. The term asset, for this purpose, includes financial interest such as shares or bonds, in any entity.
Taxpayers need to submit the duly complete ITR-1 Form by 31st July of the assessment year to file taxes for the previous year. For example, if the income was earned anytime between April 2015 and March 2016, then the assessment year for the same would be 2016-17. The ITR-1 Form needs to be submitted on or before 31st July 2016 in this case.
In case the taxpayer fails to complete the tax within these timelines, he/she can file a “Belated Return” any time before 31st March, 2017. However, he/she will be liable to pay interest due to the delay.
ITR-1 Form is made up of the following sections:
- Part A: Personal and identifiable details of the taxpayer such as name, PAN number and address
- Part B: Total income for the financial year
- Part C: Details of all deductions and total taxable income
- Part D: Details of tax calculations and status
- Schedule IT: Information regarding payments made towards self-assessed tax and advance tax paid.
- Schedule TDS1: Information regarding TDS deducted from salary and mentioned in Form 16 provided by the employer
- Schedule TDS2: Information regarding TDS deducted from “Income other than salary” and as mentioned in Form 16A provided by the deductor.
- Supplementary schedules of tax deducted at source and Income Tax which are to be used after exhausting the line items in the main portion of the form.
There are two modes for submitting the income tax returns: Offline and Online:
- By furnishing ITR in the physical or paper form
- By furnishing ITR in a bar coded return form
- Filing return electronically with a digital signature;
- By submitting the data in the return form electronically and subsequent to that submitting the signed copy of the Return Form ITR-V
Post financial year 2013-14, taxpayers with annual income above Rs. 5 lakhs are required to furnish their income tax returns in an electronic format i.e. the online mode as mentioned above.
Procedure for Completing ITR 1 Form Offline
An assessee whose annual income is less than Rs.5 lakhs can file their ITR offline. He/she would need to either collect the form from the Income Tax Office or can download the same from the income tax website (www.incometaxindia.gov.in)
Subsequent to furnishing all the required details in the form, it needs to be submitted to the concerned Assessing Officer or to designated helpdesks known as “Aaykar Sampark Kendra”.
Along with the ITR form, he/she also needs to fill out the acknowledgement form, which has the summary of the ITR. A stamped copy of the acknowledgement form is given back to the assessee subsequent to making the submission.
Procedure for Completing ITR 1 Form Online
In order to fill the ITR 1 Form online, the taxpayers need to create an account on the website of the Income Tax Department. This is a one-time activity and the login details can be used for subsequent years.
In addition to the regular excel utility, the IT Department has also released a new Java-based utility with many new features including direct upload, smoother interface, etc.
Post creation of account and logging in to the system, the taxpayer can choose to either submit the details by:
Using excel/java utility
- Login to the website (https://incometaxindiaefiling.gov.in/) and select ITR 1 Form
- Download the ITR Java or excel utility and provide all the required details into the same. It is important to verify the details as mentioned in Form 16 or Form 16A or Form 16B, as applicable and Form 26AS.
- Once completed and verified, the taxpayer can login to the IT (Income Tax) website and directly upload the return through the Java Utility. Else, the taxpayer can create an Xml version of the return form and upload the same on the website.
- Post successful submission and upload, an Acknowledgement message get displayed on the screen. The ITR V also gets generated which is to be e-mailed by the taxpayer to the IT Department’s email mentioned on the form.
Not using excel/java utility
Filing of income tax return can be done online even without downloading the Excel/Java Utility software;
- Log into the account on website (https://incometaxindiaefiling.gov.in/)
- Go to “E-File – Income Tax Return- Prepare and submit online”
- The taxpayer would need to furnish all the required details
If the taxpayer had not used “Digital Signature” while filing the return, then the ITR V copy sent on the registered mail ID needs to be signed by the taxpayer and sent back to the IT (Income Tax) department within a period of 120 days’ post filing the return. Since 2014-15 FY, the government has also provided an option to link the ITR Form with the taxpayer’s Aadhar card. Once linked, the taxpayer is not obligated to send across the signed copy of the ITR V Form to the officials. As of the assessment year 2017-2018, it is mandatory to link Aadhaar with PAN in case of all tax payers.
The designated e-filing website, which is the managed by the IT department, has changed the way taxes are filed in India. These simplify the process for the taxpayer, resolve queries, demystify jargons and help in filing the returns. Many of them offer basic e-filing services complimentary to the taxpayers while others charge depending on the total income as well as the sources of income of the taxpayer.
Advantages of Online Mode:
Apart from the ease of filling up the form which can be done at a time as well from a location that is convenient for the taxpayer, there are also some other benefits:
- In the online mode, certain information, for example address, personal details, contact details, etc. are automatically filled by the software, based on the data entered by the taxpayer in the previous year’s ITR or as stored against the PAN in the Income Tax Department’
- There is also a system in place in which the software prevents the form from getting submitted and prompts the taxpayer about any missing information in the mandatory fields. It also calculates tax payable or the refunds due based on income and deductions filled in the ITR. This reduces chances of incorrect calculations made by the tax payer.
For taxpayers who chose to submit their returns via the electronic or online mode, the acknowledgement copy is mailed by the IT Department on their registered mail ID. They can also download the same from the Income Tax website. Taxpayers who use the physical form to submit their returns, receive their acknowledgement copy from the IT Department after the submission of the form.
- Form 16: In case the taxpayer was employed with multiple employers in the previous year, he/she will need to keep all the Form 16 that he/she would have received.
- Form 16A: If the taxpayer has received any interest income or pension from banks or other institutors, they would have issued with the tax certificate or Form 16A. This also will prove as a helpful document while filling the tax returns.
- Form 26AS: This form can be downloaded from the TRACES website. It contains comprehensive information regarding the amount of tax deducted and deposited on the taxpayer’s behalf by all the deductors in a particular financial year. One should verify that the TDS mentioned in Form 16 /Form 16 A matches with the amount of TDS as reflected in Part A of Form 26AS.
- Bank statements or passbooks: These are needed to check and provide complete details of the interest earned on Savings account and time deposits such as Fixed Deposits, Recurring Deposits, etc. The total amount of interest should get reflected under the category “Income from Other Sources”, irrespective of the TDS.
- Supporting documents for investments or exemptions: If there are any investments that have been made post submission of proofs to the employer, but before the end of the financial year or if the taxpayer was unable to submit proof of certain exemptions or deductions (such as HRA allowance or Section 80C or 80D deductions) on time.
- PAN card
- Advance Tax
- Self-Assessment Tax Payments
- Notice Number
- Revised Return
- Annexure Less Return