Need to file your Income Tax Return online but puzzled how to go about it? Don't worry, Jar has got you. We've got a step by step guide to clear out all your confusion.
Income Tax E-filing refers to, as the name suggests, the process of filing Income Tax returns electronically using the Income Tax Department portal. It is no longer a hassle and as time-consuming as it used to be.
Long lines and the stress of missing the tax-filing deadline are no longer an issue. Online filing allows you to file returns from the comfort of your own home or workplace and on short notice.
Let's start with:
Who should file Income Tax Return?
In India, Income Tax applies to everyone who earns or receives a salary. (Whether you are a permanent resident of India or an NRI.)
But, you need not to worry about it if you are:
a) Less than 60 years of age & your annual income is less than ₹ 2,50,000.
b) In between 60 to 80 years of age (senior citizen) & your annual income is less than ₹3,00,000.
c) Above 80 years of your age & your annual income is less than ₹ 5,00,000.
Why should you file Income Tax Return?
There are plenty reasons why you should file Income Tax Returns on time:
1, Avoid Penalty
Every financial year, all eligible Indian nationals must pay taxes. A penalty of up to Rs. 50,000 may be imposed if taxes are not paid.
2. Request a Refund of your Taxes
The taxpayer receives a tax refund if he or she has overpaid the government. By filing an Income Tax return, you can get a refund for the extra tax you paid.
3. Proof of Income & Address
The government accepts your Income Tax Return as one of the documents used to verify your address and income. As a result, it can prove useful at many places where such a need arises. The e-filing site allows you to keep track of all of your financial transactions in one convenient location. It is safer and more adaptable. For any banking or associated purposes, you can utilise the e-filing record as proof of income.
4. Getting a Loan Is Easy
Major banks and lending institutions may ask for a copy of your Income Tax Return if you apply for a vehicle loan (2 wheeler or 4-wheeler) or a home loan, since this will help in the quick acceptance of your loan application.
5. Losses will be carried over
Do you want to recoup your business losses from the previous year? You're all set once you've filed your Income Tax Return.
6. Visas are issued quickly
When applying for a visa, most embassies and consulates may need you to submit Tax Returns for the previous two years. Keep your tax return documents available to ensure a smooth visa application procedure.
7. Funding for Startups
Do you want to raise money from VCs or angel investors? You must have all of your Income Tax Returns up to date. Many investors look at your business income tax return to assess its scalability, profitability, and other cost aspects.
What are the benefits of Filing Income Tax Return Online?
You can file your Income Tax Return both online or offline, but E-filing is much easier and faster than the paper filing process. The process of filing Income Tax Returns on paper used to be tedious and time-consuming.
E-filing has turned out to be a huge boon to taxpayers. Even the processing of tax refunds has become significantly faster and they can be filed from anywhere, anytime.
Here are some of the benefits of paying your taxes online:
- An individual becomes eligible to apply for all bank loan applications
- Filing an IT return aids in the processing of Third Party Insurance claims.
- Filing an IT Return provides importance to a person's immigration profile when they apply for a visa outside of India.
- For the purpose of getting LIC/GIC or other government agencies or public/private sector undertakings.
- When a person files an IT Return, he or she can easily obtain startup finance.
- To be eligible for government tenders and to be included on panels.
What Documents do you need to File ITR?
Apart from your wage slips, bank savings account passbook, Aadhar card, and PAN card, you will need the following papers to begin the process of completing your Income Tax return:
- Form 16: This document is provided by your employer and contains information about your salary as well as the tax deducted at source (TDS) on it.
- Form 16A: This form contains information on the TDS deducted on interest received from fixed or recurring bank deposits.
- Form 16B: When you sell a property, TDS is applied to the amount received from you by the buyer, which is detailed on this form.
- Form 16C: This form records the TDS details of the rent paid to you by your tenant.
- Form 26AS: This is your comprehensive tax statement for your PAN number. TDS by your employer, bank, or any other entity that has made a payment to you is included.
Advance taxes or self-assessment taxes paid, as well as proof of tax-saving investments such as deductions as prescribed in Sections 80C to 80U, like - a life insurance policy or a term plan, are all listed.
Which ITR form do I have to file?
For various categories of individuals and sources of income, there are seven different types of ITR forms. Depending on the type of income generated, the Income Tax Department provides different forms for each taxpayer:
- ITR – 1: ITR – 1: This form is only for residents (not for NRIs, HUFs, or other entities) with a total income of up to ₹50 lacs. The income should come from the following categories:
a) Income from Salary/Pension; or
b) Income from One house property
c) Income from Other Sources
- ITR – 2: Individuals and HUFs who are not entitled to submit ITR-1 and have income from sources other than business or profession should use the ITR-2 form.
- ITR – 3: This form is for people and HUFs who earn money from a business or profession.
- ITR – 4: This form is for all resident individuals, HUFs, and firms (other than LLPs) with total income of up to Rs 50 lacs and income from the following categories:
a) Income from business or profession computed on presumptive basis under section 44AD or 44AE or 44ADA
b) Income from Salary/Pension
c) Income from One House Property
d) Income from Other Sources
- ITR – 5: Individuals, HUFs, Companies, and Persons Filing Form ITR 7 do not need to fill out the ITR-5 form.
This form should cover all partnership firms, LLPs, AOPs, BOIs, AIJPs, Co-Operative Societies, and Local Authorities. Investment funds, business trusts, estates of the deceased, and insolvents all employ this form.
- ITR – 6: This form is for all companies except the ones who claim exemption under Section 11.
- ITR – 7: This form is for individuals and businesses who are required to file a return under section 139(4A), 139(4B), 139(4C), 139(4D), 139(4E), or 139(4F) (4F). Religious and charitable trusts, political organisations, scientific research associations, and universities and colleges are all included in this.
How to File an Income Tax Return online for Salaried Employees?
Finally, let's go over how to file ITR online for a salaried employee now that you're familiar with different aspects of filing Income Tax Returns. Just follow these instructions:
Step 1: Go to the Income Tax Department's e-filing portal.
Step 2: Enter your user ID (PAN), password, and Captcha code to access the platform. If you aren't registered, you can create an account using your Permanent Account Number (PAN), which will function as your user ID.
Step 3: In the e-file section, select the appropriate assessment year from the drop-down box and click 'Income Tax Return.' At this stage, you must select and download the proper Income Tax return (ITR) form. ITR-1, ITR-2, and ITR-3 are the options for salaried employees.
Step 4: If you are not filing a revised return, choose 'Original' as the filing type.
Step 5: Select 'Prepare and Submit Online' as the submission mode and click 'Continue.'
Step 6: Complete the proper ITR form with all pertinent information about your earnings, deductions, exemptions, and investments. Then you must enter information about tax payments made through TDS, TCS, and advance tax. However, make certain that all information is correct.
Step 7: Calculate and pay the tax due. Then, in your tax return, insert the challan information. (If you don't owe any money in taxes, you can skip this step.)
Step 8: Double-check the information you entered in the form. Then press the 'Submit' button. Done!
This is how a salaried employee can file an ITR online. A message appears on your computer screen at this moment, indicating that e-filing was successful. Following that, an acknowledgement form is generated.
You must now validate your return using one of the following methods:
- Aadhaar OTP
- Bank account number
- Demat account number
- Registered mobile number
- Net banking
- Bank ATM
- Sending a physical copy of the acknowledgement to the Centralised Processing Centre (CPC) in Bengaluru via post
When should I file my Tax Return?
The deadline for filing an Income Tax Return is July 31st (after the end of each financial year for which it has to be filed). The Income Tax Department has the authority to extend this deadline.
As a result, the deadline for the fiscal year 2020-21, which concluded on March 31, 2021, has been extended until December 31, 2021.
What if you miss the deadline or wish to file a Tax Return after the Income Tax Return Filing Deadline has passed?
Even if you miss the deadline, you can still file a Late/Belated Return. Before three months before the relevant assessment year, a late income tax return can be filed.
You have until December 31, 2021 to file your ITR for the fiscal year 2020-21, which has been extended until March 31, 2022.
Now that you know whether or not you are required to file an ITR, you must ensure that you finish the process each year before the deadline. (You don't want to jump on the wrong side of the law, right?) Start making your Income Tax files cleaner and stronger.
File accurate income tax returns; and if you require any assistance, do not hesitate to contact a professional.