The Income Tax Act, 1961 mandates the filing of an income tax return (ITR) for each financial year from 1st April to 31st March by an assessee, under certain situations. The income tax return facilitates an assessee to report income under various heads like salary, profits and gain from business and profession, other sources, capital gains and house property. Additionally, the return as a form, enables carry forward of losses, refund claim, allowance of expenditure as eligible deductions, declare exempted incomes, investments and compute tax liability etc.
The income tax (I-T) department provides convenient electronic or e-filing facility with paper filing being allowed only for certain eligible assessees. The following are the broad steps involved in e- filing the Income Tax return.
1. Determine the income, the income tax payable, the eligible deductions with necessary supporting documents
The assessee needs to be aware of the tax provisions and recent amendments applicable to his/her income, the income classification, the suitable ITR and the available deductions as per the Budget clauses for the relevant Assessment year. It would be useful to collect the necessary documents to validate the entries and ensure completeness of the information in the ITR. Broadly the following documents may be kept handy:
Permanent account number (PAN) card
Form 16 and Form 16A
Tax deducted at source (TDS) certificates
Details of investments eligible for deduction under ChVI-A
Home loan documents
Details of asset and liabilities in case of income exceeding Rs50 lakh
Other documents depending on the heads of income
2. Creation of online e-filing account
It is mandatory to have an account created with the income tax e-filing portal www.incometaxindiaefiling.gov.in
in order to e-file one’s ITR. Thus, one needs to obtain a login (PAN is the login id) and password. First-time filers need to sign up and create a login using their PAN, Aadhaar number, mobile number and address.
3. Compute TDS from certificates and match entries with Form 26AS
To ensure smooth processing of the IT return, the IT Department has facilitated the form 26AS facility, whereby the assessee can check the TDS deducted during the financial year and report any discrepancies. After summarising the TDS amount from the TDS certificates obtained for the four quarters of the financial year, one can compare with the entries in the Form 26 AS. One can refer the Form 26 AS from the I-T e-filing portal by logging in with one’s credentials.
4. Selection of the applicable ITR and ITR preparation
The Income tax authorities allow online and offline mode of filing I-T returns. However, offline mode is permitted only for ITR 1 and ITR4S, not for other ITR categories.
The ITR preparation software can be downloaded from the income tax website, which is available as an offline utility. The utility can be used to compute the final tax liability or refund claim. The assessee needs to enter relevant details in the green cells in the utility.
The white cells with red colour text need to be mandatorily filled in.
The income tax i.e. self-assessment tax may be paid online, and the challan details filled in the IT form. The IT return data may then be converted into XML format by clicking on validate and then Generate XML and saved to be uploaded in the Income Tax e-filing portal.
5. e-filing of the IT return Uploading of the XML of the income tax return and filing
After generation of the XML format of ITR, the assessee can log into the e-filing portal.
Upon clicking on the e-file tab and selecting the Income Tax return option, the assessee would have to complete details of Assessment year, ITR form type and mode of submission.
After attaching the ITR XML file, the assessee needs to hit submit. One may choose to mode to verify the return, which may be done immediately or at a later point of time, before the due date of filing the IT return.
Filing Income Tax return is the responsibility of every citizen whose cumulative annual income from various sources i.e. salary, house property, capital gains, business or profession and other sources is above the slab limit.
The direct taxes are used for nation building activities and there is a notice served and penalty payable in case of failing to file the Income Tax return.
Additionally, the IT return also serves to disclose the source of income and its associated legality. Further, being a mandatory requirement, filing IT return helps obtain loans and in registration of immovable property by being a legitimate income proof.
It is prudent to file one’s IT return before the due date (31st July for individuals for FY18-19) to avoid falling on the wrong side of law and to enjoy peace of mind!