Tax is a central element to the revenue generation system of the Indian government. Among the multitude of taxes present in the system, income tax is the one that deals with the taxation of the earning of every individual, firm or organisation in a financial year. The earning or income could be in the form of regular wages, interest, dividends, capital gains or any other profits.
What is Income Tax Return?
Income Tax Return is a proof that you have paid your income tax. It contains details about your annual income and the amount of tax you have paid. Every year, Indian citizens who earn taxable income have to file Income Tax Return (ITR). Filing ITR will help you in getting a refund in case you pay more tax than what you are required to pay. If you fail to file your ITR, you might have to pay penalty or face legal consequences.
Filing an Income Tax Return - Is it Necessary?
Currently (as of 2018), 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
Income Tax Returns Forms:
The various forms that are available for the purpose of income tax returns have the following functionality -
|ITR-1||Otherwise known as SAHAJ, deals with income of an individual with salary or pension or income from one house property or other sources (not including lotteries or race horses)|
|ITR-2||Applicable for individuals or Hindu Undivided Families having any income other than ‘Profits and gains of business or profession’|
|ITR-3||Applicable for individuals or Hindu Undivided Families having income sources from ‘Profits and gains of business or profession’|
|ITR-4S||Known as SUGAM, it is applicable to individuals and HUFs opting for presumptive taxation scheme under Section 44AD/44AE|
|ITR-4||Applicable for an individual or a HUF carrying out a proprietary business or profession|
|ITR-5||For entities being a firm, LLP, AOP, BOI, artificial juridical person, co-operative society and local authority. This, however, does not include trusts, political parties, institutions, colleges or entities who are required to file the return of income under Section 139(4A), 139 (4B), 139(4C) or 139(4B)|
|ITR-6||Applicable to companies other than the ones which claim a deduction under section 11|
|ITR-7||Applicable to all entities who should furnish a return of income under Section 139(4A), 139 (4B), 139(4C) or 139(4B)|
|ITR-V||The acknowledgement form of filing a return of income|
How to File Income Tax Return Online? - E-filing of Income Tax Returns
Further to the different forms available for filing tax returns, there are a few things that become a prerequisite to filing for an income tax return online. They are -
- Bank statements
- Form 16
- Copy of the previous year’s return
Having the documents ready, the following steps need to be observed to allow for a smooth filing of income tax return online. The URL that needs to be followed is e-Filling
The steps further to that are -
- Registration - The Permanent Account Number (PAN) is the user ID
- Tax Credit Statement (Form 26AS) - This needs to be checked for the previous financial year. This will list all the taxes deducted that are actually deposited with the Income Tax Department.
- The Tax Deducted at Source (TDS) of the Form 16 should tally with the ones in Form 26AS
- Tax Return for the current year - Under the ‘Download’ menu, click on Income Tax Return Forms and choose the current financial year. The appropriate ITR form should be downloaded. There is an option to complete the process on the portal itself, through the ‘Quick e-file ITR’ link
- Return Preparation Software - It is a spreadsheet that can be used through Microsoft Office, Open Office or other online spreadsheet applications and it should be filled in using the details from Form 16
- Find out the tax payable by clicking the ‘Calculate Tax’ tab. If applicable, pay the tax and fill in the details of the challan in the tax return
- Confirm all the information through the ‘Validate’ tab
- Generate an ‘XML file’ and save it on your local disk on the computer
- Upload Return - After selecting the current financial year in the ‘Upload Return’ link on the portal’s left hand navigation area, select the XML file that had been saved earlier. There might be an option to digitally sign the file. In case you have a digital signature, choose ‘Yes’ else ‘No’
- ITR - V - If the process of filing has been completed successfully, the website will flash an appropriate message and you will be able to download the acknowledgement form, the ITR-V
- A printed copy of the ITR-V needs to be signed by you and sent to the Income Tax Department office nearest to you through normal or Speed Post within 120 days of filing the return
Apart from the official site operated by the Government of India, there are many private portals that allow filing of returns and charge a specific fee depending upon the service level they offer.
How to e-File ITR offline?
To e-File ITR offline for 2018-2019, you have to
- Visit the website of the Income Tax Department of India and choose the option for e-filing.
- On selecting this option, you will be directed to another website where you can select the ITR form that is applicable to you.
- For 2018-2019, the IT Department has two utilities and you can download any one of them. These utilities are Excel Utility and Java Utility.
If you choose Excel Utility, then:
- After downloading the utility, open the file and fill the form.
- Validate the information, calculate the tax and click on Generate XML.
- Save the form and upload it on the e-filing website of the IT Department.
Once you have uploaded the form and attached all the documents, click on submit.
If you download JAVA utility, then:
- After downloading the utility, open it and click on ‘Prefill’.
- Enter User ID, Password, DOB/DOI and choose Prefill Address.
- Enter details, calculate the tax and save the XML file.
- Click on Submit.
You have to attach the following documents as well:
- Bank Statement.
- Copy of Previous Year’s ITR.
- TDS Certificates.
- Deductions or Savings Certificates.
- Interest Statement displaying that you had received interest during the financial year.
- Balance Sheet, Profit and Loss Account Statement and other Audit Reports (if applicable).
This process is the same for all the ITR forms.
Benefits of Filing Income Tax Return Online
Though it might be a tedious process to keep a track of every nifty detail needed in order to file the proper details for the Income Tax Return, it actually helps a lot when it is done in the earnest and ahead of time, preferably, online -
- Online filing of returns ends by July 31 or every financial year, and being a month or two in advance in filing the income tax returns actually ensures one encounters lesser traffic and the entire process goes much smoother.
- In case one has missed filing tax returns for the previous year, every additional day till July 31 increases the penal interest. Thus, filing a tax return in advance is very advisable.
- Creating a favourable financial history - Online filing of the income tax returns actually creates a history of your financial records with the tax department in a much faster and easier way. This history is favoured by a lot of organisations, be it financial or otherwise, whom you might have a business relationship with in the future.
- Proof of financial record - Having an ITR-V form is always handy, since one can readily furnish the same as a proof for any kind of financial liability or opening a line of credit.
What is to be done after the filing of ITR?
After an assessee has successfully filed his/her income tax returns online, a 15-digit acknowledgement number will be generated by the portal. The assessee will be required to verify the tax returns after this. This verification can be done using Netbanking.
ITR filing?due date for AY 2019-20
The due date for filing the Income Tax Returns (ITR) for the Assessment Year 2019-20 for salaried individuals and pensioners/Body of Individuals (BOI)/Hindu Undivided Family (HUF) /Association of persons (AOP) is 31st July 2019. However, persons whose accounts need to be audited must file their IT Returns by 30 September 2019. And persons who have been engaged in international transactions and are required to furnish a report from an accountant as mentioned under Section 92E of the Income Tax Act, 1961, must file their returns by 30 November 2019.
Taxpayers who can’t meet the deadline have to pay a huge penalty in A.Y. 2019-20. Penalty for late filing post the 31 July 2019 deadline ranges from Rs.1,000 (applicable to those earning under Rs.5 lakh) to Rs.5,000 in cases where the delay is within 31 December 2019. If the delay is beyond 31 December 2019, the taxpayer must pay a fine of Rs 10,000.
The final deadline for filing returns for Assessment year 2019-20 is 31 March 2020. However, the taxpayers will be allowed to file their IT returns only if the tax authorities permit them to do that under exceptional circumstances. In certain instances, the tax department will extend the last date to complete the process of filing an income tax return (ITR). Like for the previous Assessment Year 2018-19, the deadline to file ITR was extended till 31 August 2018.
Frequently Asked Questions:
I am a self-employed professional. My income this year is below the minimum income tax slab, but it was higher in the previous 2 years and I had filed ITRs then. Do I have to file a return this year?
A) 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.
If I have already paid advance taxes and have no dues or refunds, can I skip filing of income tax return?
A) 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.
Is an ITR useful to me in daily life?
A) 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.
How long do we need to wait to get income tax refund?
A) 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.
Best Way to File Income Tax Return:
Can I File Income Tax Return after Due Date?
How to Check the Status of Income Tax Return?
Income Tax Return for Salaried Individuals:
Income Tax Return Notice: