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Income Tax Return (ITR) – What is it? Benefits, Slabs, Process, Due dates, Penalties.

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A tax return is a form or forms filed with a tax authority that reports income, expenses, and other pertinent tax information. Tax returns allow taxpayers to calculate their tax liability, schedule tax payments, or request refunds for the overpayment of taxes. 

#What Is Income Tax Return?

Income Tax Return (ITR) is a form which is supposed to be submitted to the Income Tax Department of India by an individual, a Hindu Undivided Family or any taxpayer other than companies. It contains information about the person’s income and the taxes to be paid on it for a specific Financial Year (FY). Example: 1 April, 2019 to 31st March, 2020.

Everyone who earns or gets an income in India is subject to File income tax return on income received. This  income could be salary, pension or could be from a savings account that’s quietly accumulating a 4% interest. To understand the base of Income tax return the Tax Department divided sources of income into five heads:

Category name of Income

Nature of Income covered

Income from Salary

Income from salary and pension are covered here

Income from Other Sources

Income from savings bank account interest, fixed deposits, winning prize money from any contest for example KBC.

Income from House Property

This is rental income mostly or any property is given on lease

Income from Capital Gains

Income from the sale of a capital asset such as mutual funds, shares, house property

Income from Business and Profession

This is for self-employed people, whoever work as a freelancer or contractor or run a business. Like: Life insurance agents, chartered accountants, doctors and lawyers who have their own practice, tuition teachers, etc.

# Why Do We File an Income Tax Return?

“Income Tax Return gives you a detailed picture of your total income earned during a year and taxes paid on it.” If you reached the income tax slab and comes under Tax liability as per government guidelines you should file income tax return for few more reasons:

  1. Build Financial Documentation -Your Tax Return documents are proof of your financial investments and useful when you apply for a loan or a visa.
  2. Carry Forward your losses- You can carry forward losses against house property and depreciation.
  3. Tax Refund – You can claim tax refund; the earlier you file the sooner you will get the refund.
  4. Avoid Late fees – It is good to file a return to avoid late fees under 234F and a penalty.
  5. Avoid Tax Notices -Taxpayers are often served notices from the IT department for delayed & missed return submissions. By filing on time you can get relief from Tax notices.

# Benefit of Filing ITR?

Filing your ITR on time not only making you responsible and good about yourself, but also benefit you in more ways:

  1. Easy Loan Approval – Filing the ITR will help individuals when they have to apply for Loan like vehicle loan (2-wheeler or 4-wheeler), House Loan etc. Most of the banks require you to submit IT returns for the past couple of years (Generally 3 years) at the time of Loan application. This document gives the assurity and proof of your income which indicates that you can pay back the loan amount.
  2. Claim Tax Refund – If you have a refund due from the Income Tax Department, you should file your Income Tax Return on time to receive the refund as early as possible.
  3. Income & Address Proof – Income Tax Return can be used as a proof of your Income and Address, which is  mandatory in many legal processes.
  4. Quick Visa Processing – Most embassies and consulates require you to submit IT returns for the past couple of years (Generally 3 years) at the time of the visa application.
  5. Carry Forward Your Losses – If you file the income tax return within the due date, you will be able to carry forward losses to subsequent years. This can be used to set off against income in the coming years.
  6. Avoid Penalty and prosecution – The income tax department can initiate late fees and penalties if you don’t file your ITR. 

# Check If You Have To File A Tax Return? (ITR Slabs)

if your income exceeds the minimum threshold limit you must file an income tax return in India. You must also file a tax return if excess TDS has been deducted and you want to claim a refund.  Income tax is levied on the income earned by all the individuals, HUF, partnership firms , LLPs and Corporates as per the Income tax Act of India. In the case of individuals, tax is levied as per the slab system.

What are income tax slabs ?

The law prescribes the rate at which income should be taxed which is divided into slabs. Slab system means different tax rates are prescribed for different ranges of income. The tax rates keep increasing with an increase in the income of the taxpayer. For this Income tax has been classified in three categories such as:

  • Individuals (aged less than of 60 years) including residents and non-residents (NRI)
  • Resident Senior citizens (60 to 80 years of age)
  • Resident Super senior citizens (aged more than 80 years)

What are the Income Tax Slabs 2020 & Income Tax Rates for FY 2020-21?

The new Tax regime is optional, taxpayers has an OPTION to choose either :

-To pay income tax at lower rates as per New Tax regime on the condition that they forgo certain permissible exemptions and deductions available under income tax, Or

-To continue to pay taxes under the existing tax rates.The assessee can avail rebates and exemptions by staying in the old regime and paying tax at the existing higher rate.

Income tax slab rate applicable for New Tax regime – FY 2020-21.

(Applicable for All Individuals & HUF)

Slab RangeTax Rate (in %)
Rs 0.0 – Rs 2.5 Lakhs NIL
Rs 2.5 lakhs- Rs 3 Lakh 5% (tax rebate u/s 87a is available)
Rs. 3.00 lakhs – Rs 5 Lakhs 5% (tax rebate u/s 87a is available)
Rs. 5 lakhs- Rs 7.5 Lakhs 10%
Rs 7.5 lakhs – Rs 10 Lakhs 15%
Rs 10 lakhs – Rs. 12.50 Lakhs 20%
Rs. 12.5 lakhs- Rs. 15 Lakhs25%
> Rs. 15 Lakhs
30%

NOTE:

  • Please note that the tax rates in the New tax regime is the same for all categories of Individuals, i.e Individuals & HUF upto 60 years of age, Senior citizens above 60 years upto 80 years , and Super senior citizens above 80 years. Hence no increased basic exemption limit benefit will be available to senior and super senior citizens in the New Tax regime.
  • Individuals with Net taxable income less than or equal to Rs 5 lakh will be eligible for tax rebate u/s 87A i.e tax liability will be nil of such individual in both – New and old/existing tax regimes.
  • Basic exemption limit for NRIs is of Rs 2.5 Lakh irrespective of age.
  • Additional Health and Education cess at the rate of 4 % will be added to the income tax liability in all cases. (increased from 3% since FY 18-19)
  • Surcharge applicable as per tax rates below in all categories mentioned above:

    10% of Income tax if total income > Rs.50 lakh

    15% of Income tax if total income > Rs.1 crore

    25% of Income tax if total income > Rs.2 crore

    37% of Income tax if total income > Rs.5 crore

Income tax slab rate for Old Tax regime -FY 2020-21

Income Tax Slab Tax Rates for Individual & HUF Below the Age Of 60 Years & NRIs

Slab RangeTax Rate (in%)
Up to Rs 2.5 lakhs NIL
Rs. 2.5 lakh -Rs. 5Lakhs 5%
Rs 5 .00 lakh – Rs 10 lakhs 20%
> Rs 10.00 lakh 30%

Income Tax Slab Tax Rates for Senior citizens aged above 60 Years & Less than 80 Years

Slab RangeTax Rate (in %)
Rs 0-.00- Rs. 3.00 lakh NIL
Rs 3.00 lakh- Rs 5.00 Lakh 5%
Rs 5.00 lakh – Rs 10 Lakh 20%
> Rs 10 Lakh 30%

Income Tax Slab Tax Rates for Super Senior Citizens (Aged 80 Years And Above)

Slab RangeTax Rate (in%)
Rs 0.00 – Rs 5.00 LakhNIL
Rs 5.00 lakh – Rs 10 Lakh 20%
> Rs 10 Lakh 30%

NOTE:

  • An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
  • Surcharge applicability::

    10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

    15% of income tax, where the total income exceeds Rs.1 crore.

    Invest Now & Save Upto ₹ 46,800 on Taxes

# Documents Required For Income Tax Return?

Collating all your documents ready is one most important aspect of Income Tax Return Filing. Have a look on the list of document required for ITR filing:

1. Choosing the applicable ITR form – Taxpayers have to choose the ITR form applicable to them.

2. Link Aadhaar with PAN – It is mandatory for taxpayers to link Aadhaar with PAN on or before the filing of income tax returns.

3. For Salaried Employees – If you are a salaried employee, gather these documents to e-file your income tax returns in India:

  • PAN, Aadhar Card, Address Proof
  • Form-16 issued by your employer
  • Month wise salary slips
  • From the AY 2019-20, it is essential to gather the information on all taxable allowances received and the amount claimed exempt out of such allowances e.g., house rent allowance, leave travel allowance etc and disclose the same in the IT return.

4. Documents related to interest income – Bank statement/passbook for interest on savings account.

  • Interest income statement for fixed deposits.
  • TDS certificate issued by banks and others.

5. Form 26AS – Form 26AS is a summary of taxes deducted on your behalf and taxes paid by you. This is provided by the Income Tax Department. It shows details of tax deducted on your behalf by deductors, details on tax deposited by taxpayers and tax refund received in the financial year. This form can be accessed from the I-T Department’s website.

How to access your Form 26AS?

  • Go to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
  • Go to the ‘My Account’ menu, click ‘View Form 26AS (Tax Credit)’ link.
  • Read the disclaimer, click ‘Confirm’ and you will be redirected to TDS-CPC Portal.
  • In the TDS-CPC Portal, Agree the acceptance of usage. Click ‘Proceed’.
  • Click ‘View Tax Credit (Form 26AS)’
  • Select the ‘Assessment Year’ and ‘View type’ (HTML, Text or PDF)
  • Click ‘View / Download’

6. Section 80 Investments – Section 80C investment documents. Investment made under PPF, NSC, ULIPS, ELSS, LIC qualify for deductions under Section 80C.

7. Documents to Claim the Expenses as Deductions – Keep these documents at hand to claim the following expenses as deductions –

  • Your contribution to Provident Fund
  • Your children’s school or tuition fees
  • Life insurance premium payment
  • Stamp-duty and registration charges
  • Principal repayment on your home loan
  • Equity Linked Savings Scheme/Mutual funds investment

    NOTE: The maximum amount that can be claimed under Section 80C is Rs 1.5 lakhs.

8. Other Investment Documents –

  • Interest paid on housing loan: Interest on housing loan is eligible for tax saving up to Rs 2,00,000. This is for a self-occupied house.
  • Education loan interest payments.

The fact is, no documents or proofs are required to be attached with the returns. The Income Tax Act specifies obtaining certificates and proofs to claim deductions, which makes it ambiguous for the taxpayers as to whom they must handover those certificates and proofs. You must preserve those certificates and receipts for future references and need not attach or send it to anyone. In case an assessing officer (AO) sends a notice asking for documents or clarification about the transactions mentioned in the returns, you will have to submit the proofs to the AO.

# Process Of Income Tax Return Filing

  1. Check if You have to File Tax Return or not
  2. Gather All required documents
  3. Login on www.incometaxindiaefiling.gov.in by entering user ID (PAN), Password
  4. Upload Form 16
  5. Claim Deductions
  6. Pay tax if due
  7. Recheck all information you filled and submit
  8. Get Acknowledgement
  9. Send ITR-V
  10. Track refund

# How to File Income Tax Return Easily?

You can file the Income Tax Return (ITR) in two ways:

ONLINE

Enter the relevant data directly online at the e-filing portal and submit it. You can file ITR 1 and ITR 4 online.

1. Go to the Income Tax e-Filing portal, www.incometaxindiaefiling.gov.in Login by entering user ID (PAN), Password, Captcha code and click ‘Login’.Click on the ‘e-File’ menu and click ‘Income Tax Return’ link.

2. On Income Tax Return Page: PAN will be auto-populated > Select ‘Assessment Year’ > Select ‘ITR Form Number’ > Select ‘Filing Type’ as ‘Original/Revised Return’ >Select ‘Submission Mode’ as ‘Prepare and Submit Online’ > Click on ‘Continue’ > Read the Instructions carefully and Fill all the applicable and mandatory fields of the Online ITR Form.

Note :To avoid loss of data/rework due session timeout, Click on ‘Save Draft’ button periodically to save the entered ITR details as a draft. The saved draft will be available for 30 days from the date of saving or till the date of filing the return or till there is no change in the XML schema of the notified ITR (Whichever is earlier).

3. Choose the appropriate Verification option in the ‘Taxes Paid and Verification’ tab.

4. Choose any one of the following option to verify the Income Tax Return:

  • I would like to e-Verify (On Choosing ‘I would like to e-Verify’ option, e-Verification can be done through any of the following methods by entering the EVC/OTP when asked for EVC generated through bank ATM or Generate EVC option under My Account, Aadhaar OTP, Prevalidated Bank Account, Prevalidated Demat Account.)

Note:.The EVC/OTP should be entered within 60 seconds else, the Income Tax Return (ITR) will be auto-submitted. 

  • I would like to e-Verify later within 120 days from date of filing.
  • I don’t want to e-Verify and would like to send a signed ITR-V through normal or speed post to “Centralized Processing Center, Income Tax Department, Bengaluru – 560 500” within 120 days from date of filing.

(On Choosing the other two verification options, the ITR will be submitted but the process of filing the ITRs is not complete until it is verified. The submitted ITR should be e-Verified later by using ‘My Account > e-Verify Return’ option or the signed ITR-V should be sent to CPC, Bengaluru)

5. Click on the ‘Preview and Submit’ button, Verify all the data entered in the ITR.

6. ‘Submit’ the ITR.

The submitted ITR should be verified later by using ‘My Account > e-Verify Return’ option or by sending signed ITR-V to CPC.To view the uploaded ITRs ​​

What is ITR-V?

ITR-V is a 1-page document that you receive after e-filing your income tax return. You must print, sign and send it to the Income Tax Department within 120 days from e-filing your tax return.

OFFLINE

Download the applicable ITR Form, fill the form offline, save the generated XML file and then upload it. To e-File the ITR using the upload XML method, you must download either of the following ITR utility:

  1. Excel Utility
  2. Java Utility

Follow the steps to download the Java Utility or Excel Utility, then to generate and Upload the XML:

1. Go to the Income Tax e-Filing portal www.incometaxindiaefiling.gov.in

2. Download the Appropriate ITR utility under ‘Downloads > IT Return Preparation Software’.Extract the downloaded utility ZIP file and Open the Utility from the extracted folder. (For more information and prerequisites, refer to the ‘Read me’ document).

3. To Enable Macros in Excel Go to > File > Options > Trust Centre > Trust Centre Settings > Macro Settings > Enable All Macro > Click ‘OK’ button twice to save these settings. Fill the applicable and mandatory fields of the ITR form.

NOTE: Pre-filled XML can be downloaded post login to the e-Filing portal from ‘My Account > Download Prefilled XML’ and can be imported to the utility for prefilling the personal and other available details.Validate all the tabs of the ITR form and Calculate the Tax.Generate and Save the XML.Login to e-Filing portal by entering user ID (PAN), Password, Captcha code and click ‘Login’.Click on the ‘e-File’ menu and click ‘Income Tax Return’ link.

4. On Income Tax Return Page: PAN will be auto-populatedSelect ‘Assessment Year’ > Select ‘ITR form Number’ > Select ‘Filing Type’ as ‘Original/Revised Return’ > Select ‘Submission Mode’ as ‘Upload XML’

5. Choose any one of the following option to verify the Income Tax Return:

  • Digital Signature Certificate (DSC). Aadhaar OTP. EVC using Prevalidated Bank Account Details. EVC using Prevalidated Demat Account Details. Already generated EVC through My Account  Generate EVC Option or Bank ATM. Validity of such EVC is 72 hours from the time of generation. (On choosing, DSC as verification option, Attach the signature file generated from DSC management utility. Aadhaar OTP as verification option, Enter the Aadhaar OTP received in the mobile number registered with UIDAI. EVC through Bank account, Demat account or Bank ATM as verification option, Enter the EVC received in the mobile number registered with Bank or Demat Account respectively.)
  • I would like to e-Verify later. Please remind me.I don’t want to e-verify this Income Tax Return and would like to send signed ITR-V through normal or speed post to “Centralized Processing Center, Income Tax Department, Bengaluru – 560500″Click ‘Continue’ > Attach the ITR XML file. (Other verification options, the ITR will be submitted but the process of filing the ITRs is not complete until it is verified.)

6. The submitted ITR should be e-Verified later by using ‘My Account > e-Verify Return’ option or the signed ITR-V should be sent to CPC, Bengaluru.Submit the ITR.To view the uploaded ITRs

Offline Return or e-filing of income tax?

If your income is greater than Rs 5 lakh, or you are seeking a refund, you must file your income tax return online. An exception is made when the individual taxpayer is 80 years or older.

# Due Date of ITR Filing?

The Income Tax Department had extended the due date for filing the ITR, to simplify the tax-filing process for assesses.

The Individual taxpayers now have time until 10th January, 2021 to file their return of income, earned between April 1, 2019 to 31st March, 2020. For Companies the due date will be 31st January, 2021

# What is Late Filing Fees u/s 234F?

A late filing fee will be applicable for filing your returns after the due date 31st December, 2020 under section 234F. 

  • If the total income Exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 10,000.
  • There is a relief given to small taxpayers – the IT department has stated that if the total income is below Rs 5 lakh, the maximum penalty levied for delay will be Rs 1000.

Frequently Asked Questions:

# Why do you have to file income tax returns?

Whether you are a resident Indian or an NRI, filing an income tax return is compulsory, if your total Indian income exceeds the minimum threshold limit. Even if you don’t meet this threshold, it’s a good practice to file or e-file your income tax return. An income tax return is an important document, as it reflects your financial discipline and prosperity..

# How can I file an income tax return in India?

You can file your income tax returns either offline or online on the income tax department’s website.

# Can I file income tax returns for previous years?

Yes, you can file income tax returns for the years you have missed. However, you can file previous year returns manually after contacting your Assessing Officer. Example: For F.Y 2017-18, you can only e-file the income tax returns up to 31 March 2019. No past years’ returns can be e-filed. You cannot file income tax returns online for years before 2017. From 2017-18 onwards, you can only e-file income tax returns

# How can I get an acknowledgement number of ITR filing?

Once you’ve filed your tax return online, you will see a 15-digit acknowledgement number on the screen confirming your submission. You must then verify your tax return, which you can do from your Netbanking accounts.

# Which income tax return should I select for e-filing?

There are nine forms – ITR 1, 2, 2A, 3, 4, 4S, 5, 6 and 7 for each type of tax situation. Honestly, choosing the correct income tax form is a lot of work. You can contact your CA or accountant for more information.

# My company deducts the TDS. Do I still have to file my tax return?

Yes, deducting TDS and filing a tax return are two different things. In fact, you file a tax return to show that you’ve paid all the tax you needed to pay.

# How do I pay tax to the government?

You can pay tax to the government directly on the Income Tax Department website using your netbanking account with challan 280.

# Can I file ITR-1 with exempt agricultural income?

You can file ITR 1 if the agricultural income is up to Rs 5,000. For agricultural income exceeding Rs 5,000, you have to file ITR 2.

What is ITR-2?

Income tax Department has categorized taxpayers on the basis of income, source of income and many other factors to ensure easy compliance. Taxpayers having incomes from different categories, thus, have to download and fill different Income Tax Return forms. For instance, the ITR-2 Form is for individuals and HUFs not carrying any profession or business. Thus persons having income from following sources are eligible to file Form ITR 2:

  • Agricultural Income more than Rs 5000
  • Income from Salary/Pension
  • Income from House Property(Income Can be from more than one house property)
  • Income from Capital Gains/loss on sale of investments/property (Both Short Term and Long Term)
  • Income from Other Sources (including winning from Lottery, bets on Race Horses and other legal means of gambling)
  • Foreign Assets/Foreign Income
  • Resident not ordinarily resident and a Non-resident

# Is it necessary to attach any documents along with the return of income?

There is no requirement to attach any document (like proof of investment, TDS certificates, etc.) along with the return of income (whether filed manually or filed electronically). However, these documents should be retained by you and should be produced before the tax authorities when demanded in situations like assessment, inquiry, etc.

# If I have paid excess tax, how will it be refunded to me?

The excess tax paid can be claimed as a refund by filing your Income-tax return. It will be refunded to you by crediting it in your bank account through ECS transfer.

Note: Don’t make mistakes in mentioning bank details such as account number,IFSC code etc in the ITR form.

# Is it necessary to file a return of income if I don’t have any income?

You must file your return before the due date, if you have sustained loss in the financial year and if you want to carry forward it to the subsequent year for adjustment against subsequent years positive income. Loss can be carried forward only if you have filed the return claiming such loss before the due date.

# Can someone else do e-filing on my behalf?

You can seek the help of chartered accountants and agencies dedicated to ITR filing. It is wiser not to allow anyone to have your PAN and password in order to prevent any kind of fraud. Also you can always take assistance from CA to file IT returns.

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