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Income tax return

 

Income Tax Return (ITR) is a form which a person is supposed to submit to the Income Tax Department of India. It contains information about the person’s income and the taxes to be paid on it during the year. Information filed in ITR should pertain to a particular financial year, i.e., starting on 1st April and ending on 31st March of the next year.

Income can be of various forms such as :

  • Income from salary

  • Profits and gains from business and profession

  • Income from house property

  • Income from capital gains

  • Income from other sources such as dividend, interest on deposits, royalty income, winning on lottery, etc.

 

Is it mandatory to file Income Tax Return?

As per the tax laws laid down in India, it is compulsory to file your income tax returns if your income is more than the basic exemption limit. The income tax rate is pre-decided for taxpayers. A delay in filing returns will not only attract late filing fees but also hamper your chances of getting a loan or a visa for travel purposes.

 

Who should file Income Tax Returns?

According to the Income Tax Act, income tax has to be paid only by individuals or businesses who fall within certain income brackets. Mentioned below are entities or businesses that are required to compulsorily file their ITRs in India:

  1. All individuals, up to the age of 59, whose total income for a financial year exceeds Rs 2.5 lakh. For senior citizens (aged 60-79), the limit increases to Rs. 3 lakh and for super senior citizens (aged 80 and above) the limit is Rs. 5 lakhs. It is important to note that the income amount should be calculated before factoring in the deductions allowed under Sections 80C to 80U and other exemptions under section 10.

  2. All registered companies that generate income, regardless of whether they've made any profit or not through the year.

  3. Those who wish to claim a refund on the excess tax deducted/income tax they've paid.

  4. Individuals who have assets or financial interest entities that are located outside India.

  5. Foreign companies that enjoy treaty benefits on transactions made in India.

  6. NRIs who earn or accrue more than Rs. 2.5 lakh in India in a single financial year.

 

Documents required to fill ITR

It is important to have all the relevant documents handy before you start your e-filing process.

  • Bank and post office savings account passbook, PPF account passbook

  • Salary slips

  • Aadhar Card, PAN card

  • Form-16- TDS certificate issued to you by your employer to provide details of the salary paid to you and TDS deducted on it, if any

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Interest certificates from banks and post office

  • Form-16A, if TDS is deducted on payments other than salaries such as interest received from fixed deposits, recurring deposits etc. over the specified limits as per the current tax laws

  • Form-16B  from the buyer if you have sold a property, showing the TDS deducted on the amount paid to you

  • Form-16C  from your tenant, for providing the details of TDS deducted on the rent received by you, if any

  • Form 26AS - your consolidated annual tax statement. It has all the information about the taxes deposited against your PAN

  • a) TDS deducted by your employer

  • b) TDS deducted by banks

  • c) TDS deducted by any other organisations from payments made to you

  • d) Advance taxes deposited by you

  • e) Self-assessment taxes paid by you

  • Tax saving investment proofs

  • Proofs to claim deductions under section 80D to 80U (health insurance premium for self and family, interest on education loan)

  • Home loan statement from bank

 

How to link Aadhar to Income Tax returns

it is compulsory for every individual taxpayer to quote their Aadhar number while filing income tax. He/she is also required to link their PAN (permanent account number) card to their Aadhar number. One cannot file a tax return either digitally or manually unless the Aadhar number is quoted. Senior citizens can file their tax returns manually but those below 80 years of age have to file it electronically.

To link your Aadhar number to your income tax return-

  • Type or write down the number in the additional spaces provided in the new ITR forms provided in the Income Tax website.

  • If you have applied for an Aadhar number but have not received it, you can use the 28 digit enrolment ID in place.

  • The Aadhar number gets automatically populated in the ITR forms if it has been electronically added before.

 

What's new in the ITR forms?

The new IT return forms include relief measures announced due to the COVID-19 global pandemic. These new tax return forms were recently notified by the Central Board of Direct Taxes.

The forms have the following features:

  • Wider scope of taxpayers: The tax net has been widened to include individuals, Hindu undivided families (HUFs) as well as partnership firms who have deposited more than Rs 1 crore in a bank, incurred personal travel expense of Rs 2 lakh plus or paid a power utility bill of more than Rs 1 lakh.

  • Separate schedule: A separate schedule called Schedule DI has been allotted in the new form to enable the tax payer to indicate the amount invested or spent on which he/she needs a tax rebate.

  • The earlier amendment prohibiting joint owners of a house from filing tax return, either with ITR-1 or ITR-4, has been done away with.

 

How to Download Income Tax Return?

It is important to how to file ITR on time, to avoid last minute stress and penalties. Once you have filed your ITR, the income tax verification form is generated by the IT department so that taxpayers can verify the validity and legitimacy of e-filing. These are applicable only if you have filed your returns without a digital signature.

 

The income tax return verification form can be downloaded in easy steps.

1.) Log in to the Income Tax India website https://portal.incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html?lang=eng

2.) View e-filed tax returns by clicking on 'View Returns/ Forms' option

 

Select option Income tax returns

Details of all the years for which returns are filed will be displayed

1.) Click on the acknowledgement numberto download the ITR-V.

2.) Begin the download by selecting 'ITR-V Acknowledgment'

3.) To open the downloaded document, enter your password to open the document. The password is your PAN number in lower letters along with your birthdate.

 

For example-

PAN - ASIJP2345P

Birthdate - 31/12/1980

Password - asijp2345p31121980

  • You need to send the printed and signed document to CPC Bangalore within 120 days of the e-filing.There is also an option of E verification of Income tax return by generating aadharotp, through net banking, through ATM etc

 

Why should I file my Income tax return?

A lot of individuals seem to think that filing tax returns is voluntary and therefore dismiss it as unnecessary and burdensome. As we will see, this is not a very healthy perspective on tax-filing.

Filing tax return is an annual activity seen as a moral and social duty of every responsible citizen of the country. It is the basis for the government to determine the amount and means of expenditure of the citizens and provides a platform for the assesse to claim refund, among other forms of relief from time to time.

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1. Filing returns is a sign you are responsible

The government mandates that individuals who earn a specified amount of annual income must file a tax return within a pre-determined due date. The tax as calculated must be paid by the individual. Failure to pay tax will invite penalties from the Income Tax Department.

Those who earn less than the prescribed level of income can file returns voluntarily.

Filing returns is a sign that you are responsible. Not just that, it also makes it easier for individuals and businesses to enter into subsequent transactions since their income is recorded by the tax department with applicable tax, if any, having been paid.

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2. Filing returns is mandatory in some cases

Even if your income level does not qualify for mandatory filing of returns, it may still be a good idea to voluntarily file returns. In most states, registration of immovable properties requires advancing as proof the tax returns of last three years. Filing returns makes it easier to register the transaction.

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3. Your loan or card company may want to see your return

If you plan to apply for a home loan in future it is a good idea to maintain a steady record of filing returns as the home loan company will most likely insist on it. In fact, you may even consider filing your spouse's returns if you want to apply for a loan as a co-borrower. Likewise, even credit card companies may insist on proof of return before issuing a card.

Financial institutions may insist on seeing your returns over the past few years before transacting with you. In fact, the government may make it mandatory for them to do so, thereby indirectly nudging individuals to file returns regularly even when it's voluntary.

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4. If you want to claim adjustment against past losses, a return is necessary

Filing returns on time has many advantages regardless of whether you draw the prescribed level of income necessary to file returns.

Various losses incurred by an individual or a business, both speculative as well as non-speculative, short term as well as long term capital losses and various other types of losses not recorded in the tax return in a financial year, cannot be shown for exemption in subsequent years for the purpose of tax calculation. So, it's best to file returns regularly, because you never know when you may want to claim an adjustment against past losses.

 

5. Filing returns may prove useful in case of revised returns

In case the assesse hasn't filed the original return, he cannot subsequently file a revised return, even when he really needs to. Under the Income Tax Act, non-filing of returns can attract a penalty of Rs 5,000. So while filing returns is a voluntary activity, there are times when it could hold legal implications for those who do not do so, especially if they must file a revised return in future.

 

What are the Advantages of filing Income tax return?

1. Prompt processing

The acknowledgment of Income Tax Return (ITR) is quick. More importantly, refunds, if any, are processed faster than paper-filed returns.

2. Better accuracy

E-filing software with built-in validations and electronic connectivity is seamless and minimizes errors considerably. Paper-filings can be prone to errors. Also, when any paper-based form is migrated to the electronic system, there is a possibility of human error in data entry.

3. Convenience

No time and place constraint in filing returns online. E-filing facility is available 24/7 and you can file anytime, anywhere at your convenience.

4. Confidentiality

Better security than paper filings since your data is not accessible to anyone either by design or by chance. With paper filings details of your income can fall in the wrong hands at your chartered accountant's office or in the income tax Department's office.

5. Accessibility to past data

You can easily access past data while filing returns. Most e-filing applications store data in a secure manner and allow for easy access at the time of filing subsequent returns.

6. Proof of receipt

You get prompt confirmation of filing, both at time of filing and subsequently, via email on your registered email id

7. Ease of use

E-filing is friendly and the detailed instructions make it easy even for individuals not very conversant with the internet

 

DISCLAIMER- These materials are public information and have been prepared solely for educational purposes. These materials reflect only the personal views of the author and are not individual legal advice.

It is understood that each case is fact specific and that the appropriate solution in any case will vary. Finally, the owner will not be accountable for any loses injuries or damages from the exposures or usage of this information

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