Income Tax Return or ITR is the process of filing your tax returns at the end of a financial year. Earlier, it could be done offline but now the entire process is completely online. E-filing of income tax can be done through the official website of the Income Tax Department.
What is Income Tax Return?
A form that is used to declare the net tax liability, claiming of tax deductions, and to report the gross taxable income is called Income Tax Returns. It is mandatory for individuals who earn a certain amount of money to file ITR. Firms or companies, Hindu Undivided Families (HUFs), and self-employed or salaried individuals must file ITR to the Income Tax Department. Income tax filing can be defined as the procedure by which ITR is filed. The process by which taxpayers file their returns online is called e-filing and it can be completed on the Income Tax Department website.
What are the different types of Income Tax Returns forms?
Depending on the type of income that is generated by the taxpayer, the form that must be submitted will be different. The various forms can be downloaded from the official website of the income tax department https://www.incometaxindia.gov.in/pages/downloads/income-tax-return.aspx. The different types of ITR forms that are available are mentioned below:
|ITR-1||The form must be used by individuals who make an annual income of less than Rs.50 lakh via pension or salary and from only one house property.|
|ITR-2||The form must be used by shareholders of private companies, Directors of Companies, Non-Resident Indians (NRIs), or individuals who make an income via capital gains, from two or more house properties, and from foreign sources. However, the income of the individual must be more than Rs.50 lakh.|
|ITR-3||The form must be used by individuals who run a proprietorship or are professionals in India.|
|ITR-4||Individuals who are under the presumptive taxation scheme must use this form. In order for individuals to join the scheme, they must earn less than Rs.50 lakh from professional income or less than Rs.2 crore from business income.|
|ITR-5||In order for association and body of individuals, Limited Liability Partnerships (LLPs), and partnership firms to report their income and tax computation, this form must be used.|
|ITR-6||Companies that are registered in India must use this form.|
|ITR-7||In case entities are claiming an exemption as universities or colleges, scientific research institutions, political parties, and religious or charitable trusts, this form must be used.|
How to Download Income Tax Return(ITR) Form?
Here is a step-by-step procedure to download the ITR forms:
- Visit https://www.incometaxindiaefiling.gov.in/home and click on ‘IT Return Preparation Software’ under the ‘Download’ section
- Select the assessment year.
- Next, download the required ITR form which can be found under the ‘Microsoft Excel’ column.
What is Form 16? Why is it important?
The Form 16 or the Tax Deducted at Source (TDS) certificate, is the base of the Income Tax Returns (ITR) filing system. The form is important because it has all the information in regards to the taxes that have been deducted by the employer and paid on behalf of the assessee to the tax department. In this process, all the factors of salary including the basic pay, allowances, and deductions are taken into consideration. The form 16 is to be collected from the employer.
Is it possible to file Income Tax Returns (ITR) without Form 16?
Yes, it is possible to file Income Tax Returns (ITR) without Form 16.
How to file Income Tax Returns (ITR) without Form 16?
Although Form 16 is one of the most important documents required to file Income Tax Returns (ITR) for salaried individuals, it is possible to file the returns without Form 16 as well. There might be circumstances where the assessee might not get a Form 16. The possible reasons behind that can be the employer closing the business or the assessee quitting the job without the completion of the prescribed exit formalities. Either way, not receiving the Form 16 cannot stop an individual from filing their returns. There a number of other documents which can be used as a reference while filing the returns. The following steps are to be followed to file Income Tax Returns (ITR) without Form 16:
- Step-1 - Computation of Income from Salary: The first and foremost step is to calculate the Income from Salary. The computation of the salary can be done with the help of salary slips, which will act as the main source of reference for the salary earned by the individual during the financial year. Thus, it is important to collect all the salary slips from all the employers for whom an individual has worked during the year. For the returns filed from this year, that is financial year 2017-18, an individual is required to furnish the complete breakup of his/her salary in the Income Tax Returns (ITR). Some of the fields that are needed to be furnished are income from salary or pension, allowances which are not exempted, deductions that are claimed under Section 16, profits arising from salary, and the monetary value of perquisites received by the assessee. Nevertheless, quite a few companies do not furnish the monetary value of the perquisites and the amount of profits arising from salary. In such cases, the assessee should get in touch with the Human Resource (HR) or the concerned accounts department of the company to get the above details. Other than the factors mentioned above, the allowances provided by the employer, contributions made towards provident fund (PF), and the tax deducted at source (TDS), etc. are furnished on the salary slips. It is also recommended to furnish and use the allowances provided by the employer to lower the tax liability. Allowances may include House Rent Allowances (HRA), Leave Travel Allowances (LTA), Transport Allowances (TA), etc. However, it is to be kept in mind that certain allowances are fully exempt under the act while others are partially exempt.
- Step-2 - Tallying the Tax Deducted at Source (TDS) with Form 26AS: The Form 26AS is the form which contains the details of all the taxes that have been deducted from the salary of the assessee as well as any other source of income. Before proceeding to the filing of returns, the assessee should make sure that the figures reflecting on Form 26AS are in correspondence to the Tax Deducted at Source (TDS). In case the figures do not match and the returns are filed, the assessee will be receiving a notice from the Income Tax Department (ITD). Thus, in case of discrepancies, it is recommended to get in touch with the deductor of the tax to get a clear picture of the deduction.
- Step-3 - Computation of income from house property: In the event where an assessee receives a rent by letting a house property owned by him/her, he/she would be required to report the income under the ‘Income from house property’ head. In addition to that, if the assessee has availed any housing loan (on the let out property or on the self-occupied property) and is paying interest on such advances, then he/she will be eligible to get deductions under the same head for the interests being paid. Further, if the assessee is the owner of 2 or more than 2 house properties, then he/she needs to check the deemed let-out concept. In case of rental income being earned, an assessee can claim a deduction of 30% as well as a deduction of the municipal taxes paid from the rental income.
- Step-4 - Computation of income from capital gains: An assessee will be eligible to claim exemption on the gains earned from the sale of equities or equity-oriented mutual funds, provided they were held for more than a year and sold on or before 31st March of the respective financial year. However, as a document of proof, the summary statement of the equities or equity-based mutual funds has to be collected by the assessee from the broker. In case of gains arising from the disposal of land or building, the assessee should have the purchase and sale deed with him/her to refer to it and have the accurate amounts for calculation.
- Step-5 - Computation of income from other sources: The income from other sources is also required to be furnished in the Income Tax Returns (ITR). Income from other sources include incomes such as interests earned on different bank accounts (including savings account, recurring deposits account, fixed deposits, etc.), interest earned on income tax refunds, dividends received, income from rented machinery, plant, or furniture, income from pension or annuity, etc. The details in regards to interest earned on income tax refund can be found in Form 26AS. The details pertaining to the income from interest from bank accounts can be found in the respective bank passbook.
- Step-6 - Computing and claiming available deductions: The next most important step for an assessee would be to figure out all the available deductions that can be claimed by him/her. As per the provisions of the Income Tax Act, there are various sections under which an individual can claim deductions. These sections are Section 80C, 80D, 80CCC, 80CCD, etc. The most common deductions such as life insurance, equity-linked savings schemes, Provident Fund (PF), Public Provident Fund, repayment of principal amount of home loan, etc. fall under Section 80C. Medical insurance premium, on the other hand, falls under Section 80D. The Income Tax Act has a prescribed limit based on which the claims for deductions can be made. For example, under Section 80C, deductions can be claimed to the extent of Rs.1.5 lakh. Thus, it is necessary for an assessee to calculate all the deductions that he/she can avail in order to save on tax payment.
- Step-7 - Computation of total taxable income: Once all of the above steps are completed, an assessee can figure out his/her total taxable income. To ascertain the total taxable income, all the deductions have to be subtracted from the total income arising from various sources. The end result is the total taxable income.
- Step-8 - Calculation of income tax liability: For an assessee, it is also important to ascertain the total income tax liability that he/she has. There are a number of third-party websites on the public domain that offers the option to ascertain the income tax liability with the help of income tax calculator. These income tax calculators can be used by an assessee to find out the final income tax liability.
- Step-9 - Making payment for additional tax liability: After finding out the final income tax liability, if the amount of tax paid as per the figures reflected in Form 26AS is less than the actual liability, the taxpayer will be required to pay the balance amount of tax to the Income Tax Department (ITD). However, if the amount reflected in Form 26AS is sufficient or more than the actual tax liability, the assessee is not required to make any extra payment.
- Step-10 - Filing the Income Tax Returns (ITR): This is the final step of e-filing without Form 16. Once all of the above steps are successfully carried out, the assessee can login to his/her profile on the e-filing portal and file his/her Income Tax Returns (ITR). However, it is important to e-verify the returns within 120 days from the date of e-filing.
The steps mentioned above can be followed to e-file Income Tax Returns (ITR) without Form 16. Keeping all the documents listed above handy will make the process of e-filing easier and hassle-free. It is also important to file the returns before the due date to avoid late fees under Section 234F.
Filing an Income Tax Return - Is it Important?
Currently( FY 2018-19 ) , is mandatory for one to file income tax returns in India if the following conditions are applicable -
- If the gross total annual income (before deductions under 80C to 80U) is Rs. 2,50,000 (for ages less than 60 years), Rs. 3,00,000 (for ages 60 years but less than 80 years) and Rs. 5,00,000 (for ages 80 years and above)
- If it’s a company or firm, irrespective of the profit or loss made in a financial year
- If a tax refund needs to be claimed
- If a loss under a head of income needs to be carried forward
- If being a resident of India, one has an asset or financial interest in any entity located outside India
- If being a resident of India, one is a signing authority in a foreign account
- If one receives income derived from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust
- If one is applying for a loan or a visa
If an NRI derives any or all of his/her income through sources in India, that income is liable to be taxable in India, and income tax returns for the same will be necessary.With the implementation of e-filing of Income Tax Returns, the following cases will require an e-filing of Income Tax:
- In case a refund is required
- In case the gross total annual income exceeds Rs. 5,00,000
- In case an income tax refund is required
- ITR-3, 4,5,6,7 have to be mandatorily e-filed
Penalties for not filing ITR
The last date for filing returns for the FY 2018-2019 is 31 July 2019. In case the returns are not filed by the due date, huge penalties are levied on the taxpayer. Apart from penalties, there could be other inconveniences and consequences that the individual would face in case the returns are not filed. Depending on when the returns are filed after the due date, individuals could face penalties between Rs.1,000 and Rs.10,000. Given below is the penalties that are levied for a delay in filing ITR:
|Date of filing ITR||Income below Rs.5 lakh||Income above Rs.5 lakh|
|31 July 2019||Nil||Nil|
|From 1 September 2019 to 31 December 2019||Rs.1,000||Rs.5,000|
|From 1 January 2019 to 31 March 2019||Rs.1,000||Rs.10,000|
Apart from penalties, in case taxpayers are eligible to receive a refund, there will be a delay in case the ITR is filed late. Taxpayers will also have to pay a 1% interest on the pending amount in case the returns are not filed on time.
Frequently Asked Questions:
Ideally, if your income is below the minimum slab, you do not need to file your income tax return. But if you have been filing it previously, it would be better if you file a return this year declaring low income. This is because the Income Tax Department may construe your non-filing as a delay or non-compliance because of your past record of filing ITR. They might send you a notice. In case you do not want to file ITR, be prepared to reply to the income tax notice if it comes into your mail box.
No, you have to file your ITR especially if you have paid the taxes. It is not an optional activity. An ITR gives the government a complete record of how your income is distributed – assets, total income, tax liability, tax paid and refunds. This helps them monitor people for tax fraud of any kind. If you fail to file ITR, you are liable to pay penalty or face scrutiny and prosecution.
Of course, yes. You’ll find a duly-filed ITR very useful as a proof of income when you have to apply for a bank loan, when you have to make accident claims in third party insurance, for immigration and visa, for appointment in judicial and class 1 jobs, for winning government tenders, for registration in professional panels, for seeking funding for a startup, etc.
Refunds are disbursed only after your ITR is processed. This may take up to 1 year after you file your return. It is also possible that even if you are claiming refund, the taxman may have ascertained that you are not liable for a refund for various reasons such as a calculation error on your part. If you think your calculations are right and you have to get a refund, then you can write to the I-T Department again. Sometimes, you do not get a refund because of wrong PAN or bank account number on the ITR, or the cheque not reaching you because of wrong address or you not being at home when the postman reached. If you filed your ITR online, you can check the status of your refund through your Income Tax e-filing account.
There are multiple ways of filing Income Tax Return. You can file your ITR yourself or take the help of a chartered accountant. The easiest way is to file your tax online yourself. You can do so on the website of the Income Tax Department. All you have to do is fill the relevant columns on the ITR form and submit it. You can also choose to file your ITR using any third-party e-filing website as well. If you find it difficult to file your ITR yourself and need expert advice, then it is best to take the help of a chartered accountant.
Yes, you can file your Income Tax Return after the due date. Due to unavoidable circumstances sometimes people are unable to file their ITR by the due date. In such cases, they have the option of filing a belated return under Section 139 (4) before the end of Assessment Year or before the Assessment is completed (whichever is earlier)
Once you file your Income Tax Return, you can check the status of Income Tax Refund on the website of the Income Tax Department of India. You can check the status after 10 days, starting from the date the refund is sent by entering your Permanent Account Number and selecting the Assessment Year.
Individuals who earn income from salary and interest have to fill and submit ITR 1 (SAHAJ) form while filing their Income Tax Return.
If you do not file your Income Tax Return in an Assessment Year, then you may receive a notice from the Income Tax (IT) Department. The IT Department keeps a track on financial transactions and activities of individuals who are identified as non-filers. If there is a discrepancy with the amount of tax that you have declared in your ITR, then you may receive a notice from the IT Department. You may also receive a notice if the department wants to review any documents related to the ITR that you have filed.
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