Income Tax - IT Returns, e-filing, Tax Slab for FY 2019-20 Last Updated : 27 Jan 2020

How to file ITR

With the due date for ITR filing just round the corner, here is all you need to know about how to file ITR online. Before you file your taxes, you will need your Form 16, provided by your employer, and any proof of investment. Using that you can compute the tax payable and refunds, if any, for the year. You can download the IT preparation software from the IT department’s website. Once you have all the documents ready, you can start the filing process.

efiling Income Tax

e-Filing Income Tax Return, TDS return, AIR return and Wealth Tax Return online through this link https://incometaxindiaefiling.gov.in. e-filing your return has obvious advantages like the fact that you won’t have to deal with the hassle of paperwork and waste time sorting through it all. You can simply log on to the secure website and e-file your return.

This government website also has provisions for you to submit returns, view forms 26AS, outstanding tax demand, CPC refund status, rectification status, ITR – V receipt status, online application tools for PAN and TAN, e-pay your tax and even has a tax calculator.

Income Tax

Income tax is defined as the tax charged on the annual income earned by a person. The amount of tax applicable to you will depend on how much money you earn as income over the course of a financial year. Taxpayers can make their income tax payment, TDS/TCS payment, and Non-TDS/TCS payments online as well. All relevant details must be filled by taxpayers in order to make these payments. The process to make the payments online is simple and can be completed quickly.

Income tax for FY 2019-20 is applicable to all residents whose annual income exceeds Rs.2.5 lakh p.a. The highest amount of tax an individual could pay is 30% of their income plus cess at 4% if their income is more than Rs.10 lakh p.a.

Income Tax Department

A government agency that undertakes the direct collection of tax in India is the Income Tax Department. All operations of the department are handled by the Central Board for Direct Taxes (CBDT). Individuals can get various details such as international taxation, tax laws and rules, organisational setup, etc., on the official website of the department.

Income Tax Act

Passed in 1961, the Income Tax Act of India handles all income tax provisions as well as any tax deductions that may be applicable. Since its introduction, there have been many changes to the law because of economic situations and inflation.

Income Tax Rules

The legislature enacts the Income Tax Act, 1961, to administer and govern income tax in the country, but the Income Tax Rules, 1962, were created in order to help in the application and enforcement of the law constituted in the Act. Moreover, the Income Tax Rules can only be read in conjunction with the Income Tax Act. The Income Tax Rules are within the framework of the Income Tax Act are not allowed to override its provisions.

Who should pay Income Tax in India?

The amount of tax that must be paid depends on the individual’s age and the income they make. The entities listed below?are required to pay tax and file their income tax returns.

  • Artificial Judicial Persons
  • Corporate firms
  • Association of Persons (AOPs)
  • Hindu Undivided Families (HUFs)
  • Companies
  • Local Authorities
  • Body of Individuals (BOIs)

Important Dates to Remember when Paying Income Tax

The important dates to remember for individuals who fall under the bracket to pay Income Tax for the year (FY 2019-20 & AY 2020-21) is mentioned in the table below:

Important Due Dates The task that must be completed
Before January 31 Individuals must submit their proof of investment
Before March 31 It is deadline before which any investments under Section 80C of the Income Tax Act, 1961 must be made
Before 31 July Due date to file income tax return
Between October and November Tax returns must be verified by this time

Income Tax Collection

Taxes are collected by the government in three primary ways:

  1. Voluntary payment by taxpayers into designated banks, like advance tax and self-assessment tax.
  2. TDS (Taxes Deducted at Source) which is deducted from your monthly salary, before you receive it.
  3. TCS (Taxes Collected at Source).

Under the Department of Revenue of the Ministry of Finance, the Income Tax Department (IT Department) is responsible for monitoring the collection of Income Tax, Expenditure Tax, and various other Financial Acts that are passed every year in the Union Budget. The Central Board of Direct Taxes (CBDT) regulates the policy and planning of taxes. CBDT is also responsible for administering the direct tax laws through the IT Department. In addition to the collection of taxes, the IT department is also involved in prevention and detection of tax avoidance.

Income Tax Calculator

Income tax calculation can be done either manually or by using an online income tax calculator. The income tax rate applicable to you will depend on the tax slab under which you fall. For salaried employees, income from salary includes the basic pay plus House Rent Allowance (HRA) plus Transport Allowance plus Special Allowance plus any other allowance. However, certain components of your salary are tax exempt, like Leave Travel Allowance (LTA), reimbursement of telephone bills, etc. In case HRA is part of your salary and you reside in a rented?house,?you are eligible to claim exemption on the HRA. Apart from these exemptions, there is a standard deduction of up to Rs.50,000.

Online Income Tax Payment

Taxpayers can pay direct taxes online by using the e-Payment facility. In order to avail the online tax payment facility, taxpayers must have a net-banking account with an authorised bank. The Permanent Account Number (PAN) or Tax Deduction and Collection Number (TAN) will have to be provided for validation as well.

Income Tax Slabs for FY 2019-20

The income earned individuals will determine the income tax slabs under which they fall. The lower the income, the lower the tax liability, and those who earn less than Rs.2.5 lakh p.a. are exempt from tax.

Depending on the age of the individual, the three categories that resident individual taxpayers are divided into are mentioned below:

  • Individuals who are less than the age of 60 years old.
  • Senior citizens who are above 60 years old and below 80 years of age.
  • Super senior citizens who are above 80 years old.

Here is the income tax slab for individuals who are less than 60 years old:

Income Tax Slab Tax Rate
Up to Rs.2.5 lakh Nil
Rs.2.5 lakh to Rs.5 lakh 5% of the amount exceeding Rs.2.5 lakh
Rs.5 lakh to Rs.10 lakh Rs.12,500 + 20% of the amount exceeding Rs.5 lakh
More than Rs.10 lakh Rs.1,12,500 + 30% of the amount exceeding Rs.10 lakh

*An additional cess of 4% will be applicable to the tax amount calculated above.

Income tax is only of the direct means of taxation like capital gains tax, securities transaction tax, etc., and there are many other indirect taxes that we pay like sales tax, VAT, Octroi, service tax, etc.

The income tax you pay every month or upon every contractual earning is what forms a large part of the revenue for the Government of India. These revenue functions are managed by the Ministry of Finance, which has delegated the responsibility to managing direct taxes (like income tax, wealth tax, etc.) to the Central Board of Direct Taxes (CBDT).

ITR Forms

If an individual needs to claim income tax refund, he/she will need to first file his/her income tax return. Depending on the income assessment group, the individual will need to submit one of the ITR forms listed below:

ITR Form Name Description
ITR-1 For Individuals having Income from Salaries, One house property, Other sources (Interest etc.)
ITR-2 For Individuals and HUFs not having Income from Business or Profession
ITR-2A For Individuals and HUFs not having Income from Business or Profession and Capital Gains and who do not hold foreign assets
ITR-3 For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship
ITR-4 For individuals and HUFs having income from a proprietary business or profession
ITR-4S Presumptive business income tax return
ITR-5 For persons other than, - (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7
ITR-6 For Companies other than companies claiming exemption under section 11
ITR-7 For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)
ITR-V The acknowledgment form of filing a return of income

In order to file the ITR, an individual will require producing the bank statement, Form 16, and a copy of previous years' return. The individual will need to visit the Income Tax Department's website - https://incometaxindiaefiling.gov.in/ to register and file the returns.

Income Tax Refund

In case you have paid more tax than your actual tax liability, you will be eligible to claim an income tax refund of the extra money you have paid. For example, if your TDS liability for FY 2018-19 was Rs.35,000 and your employer deducted Rs.40,000 instead, you can claim a refund for the additional Rs.5,000 that was deducted. You can also claim an income tax refund in case you forgot to declare your tax-saving investments and tax has been charged to you without taking your deductions into consideration. Individuals can check the status of the refund on the official website of Income Tax Department

Income Tax Saving Investments

Declaring investments - From HRA, Life Insurance Premiums, National Savings Certificate, Leave Travel Allowance to Fixed Deposit (minimum of 5 years), ELSS Tax Saving Mutual Funds, and more, by ensuring that you have declared all your investments, you can achieve more deductions on tax. The following options can be considering for saving on income tax:

  1. Investment options
    • Mutual funds such as Equity Linked Savings Schemes (ELSS) can be claimed for tax deduction under Section 80C. Compare to fixed deposits and PPF’s, the ELSS offers shorter lock-in period and more benefits when it comes to making money.
    • Unit Linked Insurance Plans (ULIP) are insurance schemes that are linked to the market. The investment made under ULIP qualifies for tax deductions.
  2. Insurance
    • Life insurance and health insurance - The money paid towards life insurance and health insurance policies are considering for tax deductions under Section 80C
  3. Loans
    • When we take a loan for buying a house or for renovation purpose, we are eligible for tax deductions up to Rs.1.5 lakh for a financial year.

You can also consider the following options for reducing tax amount on your income:

  • Fixed Deposits (FD) - An FD with a lock-in period of five years can help you save on tax while earning the interest on the deposited amount.
  • National Saving Certificate (NSC) - The NSC offers a safe and reliable method of investing money. You can deposit as low as Rs.100 for a 5-10 year lock-in period. The investments made under NSC are eligible for tax deductions.
  • Provident Fund (PF) - You can also choose to invest more amount towards your PF account that will help you reduce your taxable amount.

Advance Tax

The calculation of tax liability before-hand and paying the taxes to the government accordingly is called advance tax. There are certain deadlines for the advance tax payments. These deadlines are listed below:

Due Date Advance Tax Payable
On or before 15th June 15% of advance tax
On or before 15th September 45% of advance tax
On or before 15th December 75% of advance tax
On or before 15th March 100% of advance tax

Calculation of advance tax:

  • Step – 1: An individual will be required to find his/her estimated total income by finding out the sum of all the invoices which have been received along with the future payments which he/she will be receiving till the end of the financial year, i.e. 31 March.
  • Step – 2: The direct expenses related to the business and the investments under Section 80C are to be deducted from the estimated total income to derive the total taxable income.
  • Step – 3: The next step is to determine the total tax liability for the financial year.
  • Step – 4: The TDS or tax deducted at source should be deducted from the total tax liability.
  • Step – 5: In case the amount of tax liability after deducting the TDS is more than Rs.10,000, the individual will be required to pay advance taxes on the basis on or before the due dates which are mentioned above.

Income Tax deductions

Deductions for your taxable amount are available under various sections of the Income Tax Act, 1961. Deductions will have to be mentioned in the relevant ITR form at the time of e-filing income tax returns.

Section 80C:

Deductions under this section are only available to individuals and HUF. This section allows for certain investments like NSC, etc. and expenditures to be exempt from taxation up to the amount of Rs.1.5 lakh

Section 80CCC:

Deductions under this section are on payments made to LIC or any other approved insurance company under an approved pension plan. The pension policy must be up to Rs.1.5 lakh and be taken for the individual himself out of the taxable income.

Section 80CCD:

Deductions under this section are for contributions to the New Pension Scheme by the assessee and the employer. The deduction is equal to the contribution, not exceeding 10% of his salary.

The total deduction available under Section 80C, 80CCC and 80CCD is Rs.1.5 lakh. However, contributions to the Notified Pension Scheme under Section 80CCD are not considered in the Rs.1.5 lakh limit.

Section 80D:

This is the section that deals with income tax deductions on health insurance premiums paid. In the case of individuals, the insurance policy can be taken to cover himself, spouse, dependent children – for up to Rs.15,000 and parents (whether dependent or not) – for up to Rs.15,000. An additional deduction of Rs.5,000 is applicable if the insured is a senior citizen. In the case of HUF, any member can be insured, and the general deduction will be for up to Rs.15,000 and an additional deduction of Rs.5,000.

A total of Rs.2.0 lakh can be claimed as deductions whether the assessee is an individual or a HUF.

Section 80DDB:

This section is for deductions on medical expenses that arise for treatment of a disease or ailment as specified in the rules (11DD) for the assessee, a family member or any member of a HUF.

Section 80E:

This section deals with the deductions that are applicable on the interest paid on education loans for an education in India.

Section 80EE:

This section deals with tax savings applicable to first time home-owners. Applies for individuals whose first home purchased has a value less than Rs.40 lakh and the loan taken for which is Rs.25 lakh or less.

Section 80RRB:

Deductions with respect to income by way of royalties or patents can be claimed under this section. Income tax can be saved on an amount up to Rs.3.0 lakh for patents registered under the Patents Act, 1970.

Section 80TTA:

This section deals with the tax savings that are applicable on interest earned in savings bank accounts, post office or co-operative societies. Individuals and HUFs can claim a deduction on an interest income of up to Rs.10,000.

Section 80U:

This section deals with the flat deduction on income tax that applies to disabled people, when they produce their disability certificate. Up to Rs.1.0 lakh can be non-taxed, depending on the severity of the disability.

Section 24:

This section deals with the interest paid on housing loans that is exempt from taxation. An amount of up to Rs.2.0 lakh can be claimed as deductions per year, and is in addition to the deductions under Sections 80C, 80CCF and 80D. This is only for self-occupied properties. Properties that have been rented out, 30% of rent received and municipal taxes paid are eligible for tax exemption.

Frequently Asked Questions - Income Tax

Who is required to pay income tax?

Any individual or artificial body or group of individuals that earns more than the basic exemption limit are expected to pay income tax. Under the Income Tax Act, the persons liable to pay income tax include individuals, Association of Persons, Hindu Undivided Families, Body of Individuals, companies, artificial judicial persons, firms and local authorities.

Where should I invest to save income tax?

There are various instruments in which you can invest to save tax. Some of the most common options available to you include PPF, National Savings Certificate, National Pension System, ELSS schemes, etc.

Is the due date for filing tax returns the same for all taxpayers?

All individuals and assessees who do not require their accounts to be audited will have to file their income tax returns by July 31. However, companies, individuals and working partners of firms whose accounts must be audited are required to file their income tax returns by September 30. Assessees who are required to submit a report under Section 92E of the Income Tax Act must file their returns by November 30.

News About Income Tax

  • Government considering personal income tax rate cuts

    The Finance Minister, Nirmala Sitharaman, stated that the government is working on rationalisation of personal income tax rates as one of the measures to boost the economy. This is in response to a growing demand for cuts in personal income tax rates which could boost consumption by leaving more disposable income in the hands of people, thus reviving the economy as well. The Finance Minister stated that there is no objective of harrasing taxpayers but there would be simplification of tax systems with perhaps removal of tax exemptions as well. The system of faceless assessment of direct tax, which has been recently implemented, will soon be applied to indirect tax as well in order to eliminate any harassment of taxpayers.

    10 December 2019

  • How to disclose foreign assets or income in annual income tax returns

    When filing annual income tax returns, resident Indians should disclose all sources of income, which includes income from foreign assets or income sources. In order to prevent black money being parked in foreign assets or being routed abroad, the reporting of income from foreign sources has now been made more detailed and comprehensive. All assets should be disclosed in the returns even if no income is being earned from them. Any Indian resident will have his global income too come under the taxation laws of India. In the case of Non Resident Indians (NRIs), only their income arising from the country will be taxed. If the NRI has already paid tax on their income that has been earned abroad, then their tax liability will be determined as per the rules of the Double Tax Avoidance Agreement (DTAA). Any income that has been earned abroad which falls under the category of capital gains, house property, salary, or any other sources listed in ITR2 under Schedule FSI should be mentioned. Along with this, other details such as the taxpayer identification number, name of the foreign country in which income is earned, the tax amount already paid in that country, tax reliefs under the DTAA, and tax payable in India under the regular provisions. Failure to report such details or inaccurate reporting will attract Rs.10 lakh as penalty. This is apart from the tax at the flat 30% rate. In case the income tax department finds that assets have not been reported, it can even reopen cases as much as 16 years old.

    6 December 2019

  • Income tax rate likely to be cut in upcoming Budget

    As per the Budget proposals that will be submitted by Nirmala Sitharaman, the Finance Minister, in February 2020, middle-class taxpayers may likely have to pay lower income tax rates on their income. According to various reports, the proposal is likely to be implemented. The changes in income tax rates are likely to be done on the tax slabs and are likely to be made in personal income tax rates for lower- and middle-class salaried individuals. According to various sources, individuals who are earning between Rs.2.5 lakh and Rs.10 lakh will likely be charged a 10% tax and individuals who are earning between Rs.10 lakh and Rs.20 lakh will likely be levied a 20% tax.

    However, the tax exemption base will remain the same at Rs.2.5 lakh. The main aim of the move is to provide relief to middle-class salaried individuals who did not get any relief during the stimulus measures announced by the government in September. The new proposal is also designed on the recommendations that were submitted by the New Direct Tax Code in August. The report that was submitted is still being considered. Currently, individuals who are earning between Rs.2.5 lakh-Rs.5 lakh, Rs.5 lakh-Rs.10 lakh, and above Rs.10 lakh are taxed 5%, 20%, and 30%, respectively.

    5 December 2019

  • Delhi government to use AI to fight tax evasions

    The Delhi government is slated to rope in machine learning and artificial intelligence tools to identify fake firms and fight tax evasions. Through the plugging of such leaks in the system, the government hopes to recover Rs.300 crore on an annual basis. In order to do this, the AI tools will analyse the Value Added Tax (VAT) returns which were registered between 2012 to 2017 in Delhi. Machine learning tools in future will perform a similar scrutiny on Goods and Services Tax (GST) returns data. By doing this, the tax administration aims at preventing the incidence of tax fraud amounting to $15 to $45 million dollars on an annual basis.

    2 December 2019

  • BPO industry in quandary over tax refunds paid on inputs

    The business process outsourcing (BPO) industry in India is in a plight as the refunds for taxes paid on inputs stay impeded for want of clarification from the government. A directive had been sought previously to get clarity on what constitutes exports and thus, should not be subjected to the Goods & Services Tax (GST) of 18%. However, due to the revenue outgo, the matter is being examined freshly and perhaps, may land before the law committee of the GST Council. A government official aware of the matter has said that more clarification is needed on the definition of markets which will help in the identification of whether an entity is intermediary or not. In a ruling by the Maharashtra Appellate Authority for Advance Ruling (AAAR), it was held that the back-office support services were not eligible as ‘export of service’ and hence, fell under the ‘intermediary services’ category which is liable to pay GST.

    29 November 2019

  • Income tax on gifts: What you need to know now

    Gifts received in cash or kind are exempt from income tax if they don’t exceed Rs.50,000 in a year. If it exceeds Rs.50,000 in total, then income tax has to be paid on the amount that is in excess of Rs.50,000. This is taxed under the head of ‘'Income from other sources’'. The taxation will be dependent on the income slab of the individual. If the gift is for a significant amount, you could pay up to 30% of tax on it. This would be excluding the surcharge and cess amount. However, there are exceptions that can make your gifts tax-free. The gifts that are exempt from tax, no matter what the amount, are those received through an inheritance or as wedding gifts. Gifts received through a will or bequeathed by someone who is dying is also exempt from tax. Other gifts that are exempt from tax are those received from a spouse, siblings, siblings of spouse, and lineal descendants or ascendants of self or spouse. Individuals below 60 years of age who have an income that is above the basic exemption limit (which is Rs.2.5 lakh) are required to disclose the gifts in their income tax returns.

    29 November 2019

  • Government considers changes to dividend distribution tax

    In a bid to revive returns for investors, the government is considering a change in the dividend distribution tax. This could be tax dividends after they are paid to the shareholders rather than the company paying the levy. This would make it easier for individuals to claim refunds from their home jurisdictions. This is among the tentative recommendations from a panel that was appointed by the government. Of the dividends declared, 15% is the tax to be paid by Indian companies which increases to 20% when surcharges are also added. Investors are also taxed on the earnings. The exchequer gets around Rs.60,000 crore from dividend distribution tax on an annual basis.

    19 November 2019

  • Government seeks suggestions on tax and duties

    For the first time ever, the Finance Ministry of India has asked for suggestions for changes in regard to direct and indirect taxes for the purpose of formulating the next budget. The ministry has asked industries and trade associations to come up with suggestions which will help in formulating the upcoming budget. The Finance Minister Nirmala Sitharaman will be presenting the annual budget for the financial year 2020-21 on 1 February 2020. The Department of Revenue has issued a circular for the first time asking for suggestions in regard to the changes in income tax rates for individuals as well as corporates along with other indirect taxes. It should be noted that the pre-budget consultations are held with representatives from different sectors and stakeholders.

    18 November 2019

  • The Income Tax department will refund your fee in case of error

    The Income Tax department has admitted that there have been errors while processing income tax returns (ITR) of partners of firms whose accounts are liable to be audited. The department has assured that it will rectify the error on its own and remove the late fee charge. The clarification of these errors came by the department after a series of tweets that were posted by the people who were subjected to the error. According to some, it was a technical problem, whereas, for a few experts, this was Suo-moto rectification while processing the ITRs.

    Section 234F was introduced by the Income Tax department to ensure timely filing of returns of income. The ITR utility levied the fees of the partners in partnership firm whose due date for ITR filing was linked to the firm. To rectify the error, the IT department has decided to remove the penalty charged under the section. The reversal of the late fee under the section will be in the computation of the amount payable or refund due on account of processing the return. All persons including Individual, HUF, company, partnership firms, etc. are liable to pay late filing fees under Section 234F, if the ITR is filed after their respective due dates. If the ITR is filed after the due date but within 31 December are charged Rs.5,000 and the penalty increases to Rs.10,000 January onwards.

    14 November 2019

  • Option to pay income tax through credit card may be available soon

    The government might soon offer the option to pay income tax using a credit card, prepaid wallet, or Unified Payments Interface (UPI). Currently, only bank account transfers or debit cards can be used to pay income tax. The use of credit card would be without any additional charges when paying taxes. The government is exploring other avenues of digital payment for paying income tax which will be more user friendly and also increase tax compliance, especially among the urban youth. Digital payments also help to reduce the costs involved in providing facilities for tax payments.

    11 November 2019

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