Income Tax Return Filing

Income Tax Act was formulated by the Indian Government wherein if the income of a person crosses the threshold under IT slabs, they must pay their due taxes. The facility is available both offline and online, including that for income tax returns (ITR). This helps people in income tax filing in a hassle-free way. Generally, the due date for income tax return filing is July 31st. As filing tax is crucial but complex, here is a quick guide to familiarize you with its elements and return process.

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Income Tax in Brief

Tax is the main element for the government to generate revenue. Income tax usually applies to the yearly earnings/income of every Indian citizen, organisation, firm in a fiscal year. 

The earnings eligible for tax could be from salary, dividends, interest, capital gains or other profits. In this regard, an income tax return is the only legitimate way to justify one’s income.

What is Income Tax Return?

An income tax return is proof of your paid taxes for a particular assessment year. The tax return proof contains the details of your annual earnings and the tax amount you have paid. This makes it easier for every taxpayer to calculate the tax liability, schedule tax payments, and refund requests for over payment of tax. 

To complete the income tax return process effortlessly, you should know about the various ITR (Income Tax Return) forms related to the entire process. The Central Board of Direct Taxes (CBDT) notify these forms every year.

ITR Forms

To file an income tax return, the required forms are as follows:

Form Applicable to
ITR-1 For the salaried persons, house property owners, those who earn interests and with the total income up to INR. 50 lakh
ITR-2 HUFs and individuals not having an income out of proprietorship
ITR-3 HUFs and individuals having income from a business or profession under a proprietorship
ITR-4 For HUF, individual or Firm opting for tentative taxation scheme
ITR-5 For LLP or Limited Liability Partnership, firms, AOP (Association of Persons), Artificial juridical person, BOI (Body of Individuals), Registered societies, Private Discretionary Trust, Local authority, Cooperative society. However, an individual who is eligible under ITR-7 will not utilise this form to file income tax return
ITR-6 For companies who are not claiming tax exemption under section 11
ITR-7 Individuals and companies required to produce income tax returns under sections 139(4E), section 139(4F), 139(4D), 139(4C), 139(4B) and 139(4A) of Income Tax Act 1961

ITR Filing Due Date AY 2022-23

Those who need to be audited must file ITR before 31 October 2022. For individuals, the ITR filing due date is 31 July 2021. There are no extensions announced for AY 2022-23 to date.

What are the Advantages of Filing ITR?

Income tax filing is a legitimate way to prove one’s income. It is an important document and more elaborate than Form 16, which is proof of your salary and tax deduction by the current employer. However, ITR indicates the income from other sources along with Form 16 elements. 

You can file ITR online at your convenience. To file ITR online, the taxpayer has to visit the official website of the income tax department, navigate through the ITR filing option, and pay the eligible taxes.

The benefits of income tax filing are:

  1. Helps in Applying for Loans

    Having filed ITR on time will help the person applying for a home loan or vehicle loan. Most Indian banks ask for an income tax return copy as one of the important documents to sanction a loan. 

    For instance, SBI asks the applicants applying for a vehicle loan for the latest salary slip stating all deductions, TDS certificate/ copy of ITR/ Form 16 from at least two previous financial years. Moreover, it also comes in handy when a loan application is being rejected. 

  2. Helps in Claim Refund

    With an ITR in place, a tax refund is impossible. While the taxpayers may mainly be investing in FDs, the tax is deducted at source for such investments at a 10% rate. If the total taxable amount is less than Rs 2.5 lakhs, you can file tax returns and claim a full refund.

  3. Carry Forward Capital Losses

    To carry forward capital losses, income tax filing is important. This way one can adjust the capital gains made in the following year. The loss incurred in a long-term capital gain can be carried forward for eight following years instantly. These losses are adjusted only against a long-term capital gain, including the losses incurred in the short term.

  4. ITR Receipt

    ITR receipt is an important document, which can be used for many purposes. It is detailed proof that entails your income and taxation amount along with the income from other sources.

  5. Useful as Address Proof

    When you file ITR online or offline, the ITR receipt is sent to the registered address, which can be further served as proof of address.

  6. Important for Visa Processing

    ITR receipt is also useful in visa processing. If you are travelling abroad, the foreign consulates may ask for a copy of the ITR of previous years, especially at the time of the visa interview. ITR copy is key if you are travelling to the US, UK, Canada or any European country. Despite the purpose of your foreign visit, you must keep your ITRs up to date.

  7. Avail High Life Cover

    With accidental death increasing rapidly, buying life coverage for higher sum assured has become essential. People prefer going for life coverage with Rs 50 lakh to 1 crore for maximum financial assistance to the family in case of the sudden demise of the insured. These covers can be availed against the copy of ITR. 

    Various life insurance companies like LIC ask for an ITR copy at the time of documentation. Even the coverage offered under a life or term insurance plan depends on certain factors and one of them is the income of the policyholder.

  8. Useful for Self-employed

    When Form 16 is cannot be used, ITR is the only document that proves their source of income. The only condition is that the annual income should exceed the basic exemption limit of Rs. 2.5 lakh. 

    With ITR proof, businessmen can perform all financial transactions with ease. It is a legitimate document of tax payment for the self-employed.

  9. Government Tender

    When you file for a government tender, it is essential to show ITR receipt of the previous years. This is proof of the financial status of the applicant, which indicates if he/she is competent to bear the payment compulsion.

    However, it is not mandatory. It may differ depending on the rules and regulations of the State or Central government.

Income Tax Slabs for Assessment Year (AY) 2022-23

  1. Individual and HUF below 60 years

    Income Slab (Rs) Payable Tax (%)
    Up to 2.5 lakh Nil
    2.5-5 lakh 5
    5lakh-10 lakh 20
    More than 10 lakh 30
  2. For Senior Citizens

    Income Slab (Rs) Payable Tax % (60 - 80yrs) Payable Tax % (above 80yrs)
    Up to 2.5 lakh Nil Nil
    2.5-5 lakh 5 Nil
    5lakh-10 lakh 20 20
    More than 10 lakh 30 30

    Note: Tax is subject to changes in the tax laws

Who Can File Income Tax Returns Online? 

Individuals falling under the following categories are eligible to file ITR:

  • Those earning Rs. 5 Lakhs and above

  • Individual/HUF dweller with possessions positioned outside the country

  • A firm (falling under guidelines of section 44AB), Cooperative Society, BOI, AOP, Artificial Juridical Person, and Local Authority (ITR 5)

  • An assesse responsible for producing returns U/S 139 (4B) (ITR 7)

  • Resident of India with signing authority of any account that you are holding outside India

  • If you claim relief under sections 90 or 90A or the deductions were claimed as per section 91

  • All companies

To submit the proof, you need to prepare a comprehensive report of audit under sections 10(23C) (via), 10(23C) (VI), 10(23C) (v), 10(23C) (IV), 10A, 12A (1) (b), 44AB, 80IA, 80IB, 80IC, 80ID, 80JJAA, 80LA, 92E or 115JB.

According to Section 11(2) (a), the return filer needs to give notice to the assessing officer.

Ways of Filing Income Tax Returns Online

  • Digital Signature Certificate (DSC) for income tax filing online. A chartered accountant is required in case you wish to file IT forms with the help of a Signature Certificate (DSC).

  • For online tax filing without using DSC, an ITR V form is formed. This form needs to be printed and signed. Then after completing the formalities you need to submit it to CPC, Bangalore. You can do this through speed post or even speed post but make sure it reaches within 120 days from filling your form.

  • While income tax return filing online there is no compulsion to file it using an E-return Intermediary (ERI) or you can do so without digital signature certificate DSC.

Things to Know Before Filing ITR Online

Choosing the right form to file an income tax return online can be confusing. You must select your Tax Return forms according to the categories you fall in. These categories are listed in the tabular form below:

  1. Look at tax credit - Form 26AS vs Form 16

    Before initiating the online income tax return filing make sure to look at Form 26AS. This form depicts the total tax that gets deducted from your income and this is deposited by your employer to the IT department.

    Make sure that the tax deducted depends on Form 16. This also has to match with the facts in Form 26AS. In case you fail to file your income tax returns online without any errors, the IT department sends you a notice.

  2. Claim 80G, certificates for savings and several other deductions

    Extra deductions can be claimed in case you have not claimed them. Deductions can also be claimed under section 80G if you have made donations to charitable institutions.

  3. Interest statement – Interest paid on savings accounts and fixed deposits

    A deduction for about Rs 10,000 is permissible with the best of the interest earned on your savings accounts. On the other hand, the interest levied on bank deposits is a division of the taxable income.

    Including the elements mentioned above, make sure that you keep the following documents handy:

    • Bank Account statements

    • Certificates for Tax Deducted at Source (TDS)

    • Profit and Loss Account Statement, Audit Reports, Balance Sheet 

Documents Needed for Income Tax Returns Filing Online

Mentioned below is the list of documents that you need for the online filing of income tax returns:

  1. General Details

    • Details of your Bank account

    • PAN Number 

  2. Reporting Salary Income

    • Rent receipts to claim HRA

    • Payslips

    • Form 16

  3. Reporting House Property Income

    • Residential Address of your property

    • Credentials of the co-owners along with their PAN credentials and their shares

    • Interest levied on home loan

    • Submit the date of completion of an under-construction property

    • Name of your tenant and the income from the rent for rented property

  4. Reporting Capital Gains

    • You need to submit the purchase details plus the statement of stock trading in case if selling the shares while income tax return filing online.

    • If you sell any house or property, you need to give the details of the selling price, purchase price, registration details and the monetary profit gained while filing an online income tax return.

    • Submit all the details such as your mutual fund statement, debt funds, ELSS, sale and purchase of equity funds, and SIPs.

  5. Reporting Other Income

    • If you have some deposit in the savings account, the interest accumulated from the money from the savings account needs to be reported.

    • If you have a source of income from interest on corporate bonds and tax savings bonds while filing an online income tax return, you must report them.

    • If you have deposits in the post office, you need to report the income earned from the deposit. 

  6. Recommended

Steps to File Income Tax Returns Online

You can download the XML sheet from the official IT website. After filling its columns, you can then upload it back on the portal to file ITR. You can even prepare and submit your ITR 1 online. Income tax returns eFiling online is to remove the complexities of the income tax filing process. 

You need to follow these steps mentioned below to e-file ITR:

  • Visit IncomeTaxIndiaeFiling[dot]gov.in login to the website.

  • Your Permanent Account Number (PAN) is supposed to be your user ID.

  • Look at your tax credit statement or even Form 26AS.

  • The TDS according to Form 16 must match with the details of Form 26AS.

  • You need to click on the income tax return and pick out the financial year.

  • The next step is to download the ITR form that suits you. For instance, if your exempt income is more than Rs 5,000, you need to select ITR-2.

  • Make us the software for return preparation such as Open excel utility and make use of Form 16 to fill out the details of your form.

  • Click on the tab that says 'calculate tax’ to know the taxable amount.

  • Pay tax (if any) and enter your challan details.

  • Click on the 'validate' tab to confirm all the details mentioned above.

  • Pick up an XML file and save it on your computer.

  • On the portal’s panel you need to find out 'upload return' and there you can upload the XML file you saved.

  • You will get a pop-up asking you to sign the file digitally. If you have a digital signature, then select ‘Yes’. In case you do not have a digital signature, select 'No'.

  • This will generate ITR-V Form that needs to be downloaded.

  • Take out a printed copy of form ITR-V and do signatures on it using the blue ink.

  • You need to send it to the Income-Tax Department-CPC, Post Bag No. 1, Electronic City Post Office, Bangalore, 560 100, Karnataka. You are allowed to use speed post or ordinary post but it must reach just in 120 days of income tax return filing.

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