Many people, especially new taxpayers, find filing their Income Tax Return complicated. But it’s necessary to file your return. If you’re entitled to a tax refund, filing your return will help you get it back and if you have taxes due you can pay them. You wouldn’t want to delay paying your taxes and risk getting into trouble, would you?
We thought we’d make things a little easier for you by putting together a few important things you should know before you file your Income Tax Return.
Additional Reading: The Dummy’s Guide To Income Tax Returns
Firstly, for salaried individuals whose taxable income is more than Rs. 5 lakh, it is mandatory to e-file their Income Tax i.e. mandatory to file their ITR online. Now there are various options available to file your ITR:
Visit government website (https://incometaxindiaefiling.gov.in/) and file your ITR yourself for free.
Find a reputed tax consultant online with a user-friendly website. They charge a filing fee ranging from around Rs.250 to Rs.1500 (depending upon the complexity of your case) but will help you thoroughly with the process.
Visit any tax consultant personally and disclose all your income, expenses and saving details. Then they can assist you with filing your IT return. Their fee usually ranges from Rs.100 to Rs.500 for salaried depending upon your case.
Additional Reading: File Your ITR And Submit ITR-V Online Through Your Bank Account
Things you should know before filing your ITR:
Difference between AY (Assessment Year) and FY (Financial Year)
In India, the accounting year (financial and assessment year) starts from 1st April and ends on 31st March. The Form 16 and other financial/income related documents are also presented for the same dates i.e. from 1st April to 31st March.
The year in which you have earned income is called the Financial Year (FY). And the year in which that income is assessed or evaluated i.e. the year immediately following the financial year is called the Assessment Year (AY).
For instance, if you have earned income in the year starting 1st April 2016 – 31st March 2017, then 2016-2017 is the Financial Year (FY) and the year immediately following this Financial Year i.e. 2017-18 is the Assessment year (AY). Moreover, if you are filing an ITR in July 2017 that means you are assessing or evaluating your income earned in the previous year (2016-17). So, when filing your ITR on the Income Tax (Government of India) website, you should select AY 2017-18 if you have earned income in FY 2016-17.
Your TDS details and Form 26AS
You can now find details of TDS (Tax Deducted at Source) already paid to the government on your behalf by your employer, bank, self or any other party, online. To avoid the possibility of errors, you must always check your TDS details before filing your ITR. The TDS details are disclosed under Form 26AS. You can verify your TDS either via net banking through your bank account under an option called “Form 26 AS”/ “Tax Credit” / “TRACES” / “TDS Details” or through the Directorate of Income Tax (Government of India) website at https://incometaxindiaefiling.gov.in/. You’ve got to click on ‘View your Form 26AS’ and then the website directs you to the TDS-CPS website. Here’s the link (https://services.tdscpc.gov.in/serv/tapn/welcome26AS.xhtml). You can view your Form 26AS (Tax Credit) over here.
Understanding the different ITR Forms
Before filing your ITR, you should know the ITR form applicable to you. Here is the list of all the ITR Forms and to what kind of incomes they are applicable:
Any exempt income
Income from one house
Other sources (excluding race horses & lottery)
Agricultural income more than Rs. 5,000
Everything from ITR-1
Income from lottery and race horses
Income/loss from more than one house
Everything from ITR-2A
Loss on sale of investments or property/capital gains
Everything from ITR-2
Profit share from a partnership firm
Everything from ITR-3
Income generated from proprietary professions
Everything from ITR-1
Income from presumptive business
This should help you choose the right ITR form. The final form should, however, be selected after reading all the instructions related to that specific ITR form. These detailed instructions are available here (http://incometaxindia.gov.in/) along with each form type.
ITR-V, what’s that?
Once you file your ITR online, you automatically get your Return Form i.e. ITR-V which is a receipt or acknowledgement of your ITR. And once e-filing is done (without a digital signature), your ITR- V (or Income Tax Return Verification Form) needs to be sent to CPC (that’s the Central Processing Centre of the Tax Department) by post within 120 days of filing the ITR. You should print two copies of your ITR-V, one of which should be sent to CPC and the other one should be retained with you for your records. The signed return form should be sent by ordinary post or speed post (and not courier) to the following address:
Post Bag No. 1, Electronic City Office, Bengaluru–560100 (Karnataka).
You can, of course, avoid sending the ITR-V Form by post if you do an e-verification. You can choose to e-verify your returns using your bank account even without a digital signature. This also needs to be done within 120 days of filing your return.
The little details
When filing your ITR make sure that you enter the correct details. And remember to give YOUR mobile number and email ID to your tax consultant to input in the system as the Income Tax department uses this contact information for any future communication. For example, confirming the receipt of your return form and processing the refunds. Also, ensure that you provide your correct bank details and IFSC code. Your bank account information is used by the government to process refunds, if any.
Some major changes that have been brought in are:
- Quoting of Aadhaar or the Enrolment ID of Aadhaar application form has been made mandatory for filing tax return from 1st July, 2017
- Corrections need to be made in case of a data mismatch of PAN and Aadhaar
- Some of the things that were introduced last year as mandatory, like international trips and dormant bank accounts have been removed
- If you have cash deposits exceeding Rs 2 lakh between November 9 and December 30, 2016, you’ll have to enter the details
- Section 10 (38) has been introduced for exempt Long-term Capital Gains Tax
- Also, Section 10 (34) has been added for exempt dividend disclosure from Indian companies
- In case you have an immovable property exceeding Rs. 50 lakh, it needs to be mentioned in Section 19 C
Are you required to furnish your return of income?
Every individual whose total income, before allowing deductions under Chapter VI-A of the Income Tax Act, exceeds the maximum amount which is not chargeable to Income Tax, is obligated to furnish their return of income. The maximum amount not chargeable to Income Tax for different categories of individuals (for FY 2016-17) is as follows:-
|TAX||MEN and WOMEN||SENIOR CITIZEN(Between 60 yrs to 80 yrs)||For Very Senior Citizens(Above 80 years)|
|10% tax||250001 to 500000||300001 to 500000||–|
|20% tax||500001 to 1000000||500001 to 1000000||500001 to 1000000|
|30% tax||above 1000000||above 1000000||above 1000000|
|Surcharge||10% of the Income Tax, where total taxable income is more than Rs. 1 crore|
|Education Cess||3% on Income-tax plus surcharge.|
You can save on paying taxes!
In order to promote the habit of saving among the general public, the Government of India announces several tax savings schemes/instruments every year. The total of the deductions allowable is limited to the amount of gross total income. Here are some deductions available to an individual/ HUF not carrying out any business or profession:
Some of the major items for deduction under this section are:
– Amount paid towards Life Insurance
– Contribution to Provident Fund set up by the Government
– Recognised Provident Fund
– Contribution to an approved superannuation fund
– Subscription to National Savings Certificates
– Tuition fees
– Payment/repayment for the purpose of purchase or construction of a residential house
These are just some of the investments that can be made. For the full list, please refer to Section 80C of the Income-tax Act.
(ii) Section 80CCC
Deduction in respect of contributions to certain pension funds.
Deduction in respect of contributions to the pension scheme of the Central Government.
Deduction with respect to employer’s contributions to pension scheme of Central Government.
Please note: As provided in section 80CCE, the aggregate amount of deduction for the FY 2016-17 under section 80C, 80CCC and 80CCD(1) shall not exceed Rs.1.5 lakh.
Deduction with respect to an investment made under an equity savings scheme.
Deduction with respect to Medical Insurance premium and contributions to the Central Government Health Scheme (CGHS).
(v) Section 80DD
Deduction with respect to maintenance including medical treatment of a dependent who is a person with disability.
(vi) Section 80DDB
Deduction with respect to medical treatment, etc.
(vii) Section 80E
Deduction with respect to interest on a loan taken for higher education.
(viii) Section 80EE
Deduction with respect to interest on a loan taken for a residential house property.
(ix) Section 80G
Deduction with respect to donations to certain funds, charitable institutions, etc.
(x) Section 80GG
Deduction with respect to rent paid.
(xi) Section 80GGA
Deduction with respect to certain donations for scientific research or rural development.
(xii) Section 80GGC
Deduction with respect to contributions given by any person to political parties.
(xiii) Section 80QQB
Deduction with respect to royalty income, etc. of authors of books other than textbooks.
(xiv) Section 80RRB
Deduction with respect to royalty on patents.
(xv) Section 80TTA
Deduction with respect to interest on deposits in Savings Accounts.
(xvi) Section 80U
Deduction in the case of a person with a disability.
So, those are some key points that you should be aware of before you file your ITR. It’s a lot to take it, we know! But by giving you every minute detail involved in the process, we hope to have simplified things for you. Whether it’s your first time or even if you’re quite familiar with this process of filing your IT return, these guidelines will definitely help you. So, this year, instead of coming up with new excuses, you’ll file your Income Tax Returns without fail, won’t you?