Few warm-up questions before start!
Q. I have a permanent account number (PAN). Do I still need to file I-T return?
A. Just having adoes not mean that you need to compulsory . As per Income Tax Act, you are required to file a “Return of Income”, if your taxable income exceeds Rs 2 lakh in a particular financial year. However, you need to have a PAN in order to file tax returns. It’s like having a driving licence does not mean that you have to compulsory drive but if you want to drive then you must have a driving licence.
Q. Who needs to file Income Tax return?
A. As seen above, everybody earning more than basic exemption limit need to file his or her return and till last year, two assessment years salaried taxpayers earning less than Rs5 lakh p.a. and having income from interest less than Rs10,000 p.a. were exempted from filing Income Tax return. This said exemption is not extended to this assessment year as seen in my previous article.
Q. What are the benefits of filing income tax returns (ITR)?
A. Filing returns or not has never been a choice as it’s a legal obligation and must be fulfilled by everyone who falls under the prescribed category. Though apart from a legal obligation, filing tax return is always helpful in the following situations:
- For availing loan facility like home, or personal.
- For visa and immigration processing
- You can use it as an income proof/ Net worth certificate
- For claiming excess tax paid via refund
- Applying for a higher insurance cover
- And last and most important is your peace of mind
Q. My tax is already deducted at source by my employer and paid to the government, then why do I need to file tax return?
A. Although tax has been deducted and there is no further liability to pay tax, you have to compulsorily file your income tax return if your income exceeds the basic exemption limit. It will work as a declaration to the government that you have derived only income from salary or any other source, for e.g. getting NOC from library on leaving college even though you had not stepped inside library once.
Q. I have not been able to submit mydetails for e.g. life insurance premium etc. to my employer and excess tax has been deducted. So can I still declare & claim the benefit?
A. Yes, you can claim these benefits while filing Income Tax returns and can submit your refund claim.
Know your situation!
First determine sources of your total income. Does your income comprise only salary and interest on savings bank account or you also earn rental income, capital gains or income from any other source? Let’s see different heads and “Sources of Income” as per the Income Tax Act:
- Rental income from house property
- Profit & gains from business or profession
- Capital gains on sale of shares or mutual funds or capital assets
- Other sources like bank interests etc.
So you need to add income under each “Head” and then compute your taxes. Don’t forget to include income received by your minor kid. A minor is not required to file a separate return of income but income arising on account of let’s say interest on FDs in the name of your minor kid needs to be clubbed in parents income.
What are the documents you need to arrange before you start filing?
Form No.16: Issued by your employer summarizing your income from salary and tax deducted at source.
Form No 16A: Issued by all the payers who have deducted tax while making payment to you during the year. For e.g. banks where you have FDs.
A/C statements: All your operating accounts during the year for arriving at interest income earned during the year.
Property details: If you have bought any property or put up existing property on rent then details for the rent received and receipts of municipal taxes paid during the year would be required. If the same is purchased through a loan then copy of loan certificates for interest & principal.
Contract notes: For sale and purchase of shares during the year for calculating capital gains.
Tax challan: Details of tax payments made during the year in case you have made advance tax orpayments.
Others: Any other documents for a financial transaction involving tax implications for computing your taxes.
Important Point: You don’t need to submit any of these copies to the I-T department at the time of filing and even originals are also not required to be given to your CA, if you are taking professional help. These documents are required to help you prepare your tax computation and you do need to keep these copies ready in your file/records in case if IT department asks you to furnish the same at a later stage.
If your income is more than Rs 5 lakh then you need to compulsory file your returns online and persons earning less than Rs 5 lakh have an option to file their return online or via physical mode. Manual filing can be done through the special desks set up by the I-T department. Let’s see how can you file your returns online by sitting at your home.
Step by step guide to file Income Tax returns online
1. You need to go to the I-T department’s
2. You can see an image at the centre “e-file your tax return” and a click button option: e-file>>, click on the same
3. If you are filing it for the first time i.e. you have never e-filed your returns you will need to register first, with the site and create a.
4. You will need your PAN card number for the same. Your address details are extracted from the PAN. You must enter personal details carefully.
By uploading XML File
5. Now select the appropriate ITR form
6. Download theSoftware (Excel Form) based on your sources of income.
7. Then fill up all the mandatory fields in the form, particularly ensure that you have written your PAN number correctly.
8. Then pressing the ‘Calculate Tax’ button/tab on the form tells you how much tax you need to pay or how much refund you will get.
9. If there is any tax to be paid then make an online payment and generate the challan counterfoil.
10. Then pressing the ‘Validate’ button on top of each form tells you whether you have filled up the forms correctly.
11. Once validated, press the ‘Generate XML’ button on the top right of the form and an XML version of the form gets created on your PC.
12. After checking the details of your ITR click on ‘Submit return’.
13. Select the XML file and click ‘Upload’. Once the uploading is successful it will be acknowledged on the screen.
14. Click on ‘Print’ to get a copy of the ITR-V form.
By 'Quick e-File ITR' or 'Quick e-File ITR-I and ITR-4S online'
1. Select 'ITR Form Name'
2. Select Assessment Year
3. Select appropriate circle in 'Prefill Address with'
4. Select YES/NO for 'Do you want digitally sign?' Then click submit.
5. Now read the Instructions carefully.
6. USE ARROW BUTTON to go forward or backward. Don't press Back/Forward button of your browser.
7. Always click 'Save Draft' button to save your work.
8. Fill every field carefully and click 'Submit' finally.
9. Download acknowledgement and open thiswith password as your pan no. and date ex. xxxxx9999x31121980 [PANNUMBER&DDMMYYY]
If the return has a digital signature then the filing process is complete upon the acknowledgement notification.
But if it does not have a digital signature then the ITR-V form needs to be printed. ITR-V is an acknowledgment as well as a verification form and all the details need to be filled in and verified. The taxpayer has to fill-up the verification part and verify the same.
A duly verified ITR-V form should be mailed to “Income Tax Department – CPC, Post Bag No – 1, Electronic City Post Office, Bangalore – 560100, Karnataka,
BY ORDINARY POST OR SPEEDPOST ONLY within 120 days after the date of transmitting the data electronically.
Mistakes to avoid while filing Income Tax return:
1. Selecting the wrong ITR form:
This is the first thing you have to be careful about as if you make a mistake in choosing the right form, the entire exercise of filling will be of no use. Please carefully select the form applicable to you.
2. Not filing online returns if you earn over 5 lakh:
The government has made it compulsory for the individuals with an income of more than Rs 5 lakh to file tax returns for the financial year 2012-13, so make sure that you file your returns if your gross total income is more than Rs5 lakh.
3. Providing incorrect details:
Since all the necessary information is communicated by the IT dept. via email or post, it is extremely important to enter these details correctly. For your physical address, it is always safer to give a permanent address instead of your rented accommodation. In fact, email is a preferred route for communication for the income-tax dept. Avoid giving your office email id; instead give a personal email account id, which you can continue to use even after changing your job and once your official mail id ceases to exist.
4. Not reporting all the sources of income:
Many taxpayers fail to report all the sources of their income. The most common is interest earned on a bank savings account & on FDs. Though for the current year interest up to Rs. 10,000/- on savings a/c is exempt from tax (not on FDs).
5. Declare both or multiple Form 16:
As seen in my previous article, please compute your taxes by including income from all the employers in case of change in job.
6. Not sending ITR-V before deadline:
You need to send ITR-V copy by ordinary post or Speed Post only to CPC Bengaluru within 120 days from the date of electronic filing in case you have e-filed your return without digital signature. The process of filing is complete only when you send ITR-V & it gets accepted at CPC office, Bengaluru.
Troubleshooting to get new password on incometaxefiling website
Last two years' relaxation from filing the return for salaried person is also caused a resulted the use of forget password option. Retrieval of new password is also easy as filing online return:-
1. Click on forget password Link
2. Enter your PAN on Screen which appears after above click, Captcha Image as shown on screen and Press OK.
3. Please select on of the three option which appears after the above click adjoining circle
- Enter Secret question answer
- Upload Digital Signature Cirtificate
- Enter e-filed Acknowledgement Number [only for last two assessment years] and Bank Account Number
4. Once you fill the required details as per the choice of option you opted you will be able to either reset of recover your password for your account on https://incometaxindiaefiling.gov.in/portal/index.do.
5. Under First two options you can reset the password online , while in 3rd option password will be mailed to your registered email id.
6. If you're not able to reset the password with any of the three options above, please send an email to -email@example.com with the following details:
PAN holder's Name
Date of Birth/Date of Incorporation
Registered PAN address
H.No. 8, XYZ Building, ABC Nagar, New Delhi, India
Your password will emailed you within 24 hours, in my case within two hours.
Few misconceptions about Income Tax:
I need a CA to file my returns as filing taxes is a complex process!
With technology becoming so advance gone are the days when you have to fill up the form manually and running from pillar to post to get the I-T dept. “Stamp”. Now you can easily file your returns online and that too free of cost through I-T dept’s website.
Maximum deduction for the interest which I pay on my home loan is only up to Rs. 1,50,000 p.a.!
This is correct but only for the house which is “Self Occupied” as for a property which is put up on rent, the entire interest paid on the loan can be claimed as a deduction from your income on house property without the restriction of Rs 1,50,000/-.
Benefit for reimbursement of Medical bills submitted to employer & Mediclaim (Health Insurance Premium) is same!
Medical reimbursement by your employer for an amount up to Rs15,000 p.a. is different from the amount of premium you or your employer pays towards mediclaim policies & deduction for the same is available under Section 80D. Both these exemptions are covered under different sections of the Income Tax Act and you can enjoy benefits for both.
I can avail benefits of section 80C only by making certain investments!
Apart from investing in saving options as listed u/s 80C you can also claim deductions for certain expenses like school or university tuition fees you pay for your children, repayment of principal on home loan and stamp duty & registration charges on buying a house.