Nina has recently joined a company. For the last few days, she has heard a lot of buzz about filing the tax returns. As this is Nina’s first job, she is a bit clueless about why returns are filed. She is not aware of the process either. She decided to ask Gaurav, who is a chartered accountant. Let’s see what Gaurav had to say about tax returns and how to file them.
Before we proceed ahead, let’s see why returns are filed. ITR is a statement of from different sources, tax liabilities, income tax paid and the refunds provided by the government. ITR serves as proof of legal and disclosed income.
The income tax department has laid out the procedure for filing the returns. Returns are filed using the Income Tax Return of ITR Forms. Failure to file the returns can result in penalties from the IT department.
Who can file ITR?
As per the current law, income tax returns have to be filed mandatorily in the following circumstances:
- As an individual, the gross total income (before deductions under section 80C to 80U) exceeds Rs 2.5 lakhs in FY 2018-19. If you are a senior citizen (above 60 years and below 80 years), this limit is Rs 3 lakh. If you are above 80 years, the limit is Rs 5 lakh. This is also applicable to NRIs.
- As a company or a firm. The profit or loss during the financial year is immaterial.
- If you want to claim an income tax refund;
- For carrying forward a loss under a head of income
- If you are a Resident individual and have an asset or financial interest in an entity located outside of India or have signing authority for a foreign account.
- As a foreign company who wants to take treaty benefit on a transaction in India
Returns have to be filed even if the income is received from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust.
Please note that the eligibility for filing ITR is subject to notification from the government. Ensure that you are abreast with the requirements of the relevant financial year. Gross total income is only one of the criteria of eligibility. Check if any other criteria apply to you. Failure to file ITR attracts penalties.
How to download Form ITR-1
As seen above, the eligibility to file ITR is based on the age (in case of individuals) and source of income. To make the process easier, the IT department has tax payers based on the amount of income. ITR-1, referred to as Sahaj Form, is to be filed if the income is up to Rs. 50 lakhs and who has income under the following heads:
(a) Income from Salary/ Pension; or
(b) Income from One House Property; or
(c) Income from Other Sources.
If the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, ITR-1 can be used only if the income being clubbed falls into the above income categories.
This form is available on the Income Tax Department website. Follow these steps to download Form ITR-1 in a few minutes:
Step 1: Log on to https://www.incometaxindiaefiling.gov.in/home
Step 2: Under the Download tab, click “Offline Utilities.”
Step 3: Click “Income Tax Return Preparation Utilities”
Step 4: Select your Assessment Year
Step 5: Click “Excel Utility” for filling the details by hand under the ITR 1 column and download the file
Step 6: Extract the downloaded file and fill in the details
Dates for filing ITR-1 form
The Income Tax department has specified the last date for filing Form ITR-1. Duly completed Form ITR-1 should be submitted by 31st July. The form filed relates taxes paid in the previous year. For example, if the income were earned anytime between April 1, 2018, and March 31, 2019, the assessment year for the same would be 2018-19. In this case, the ITR-1 Form needs to be submitted on or before 31st July 2019.
It is important to stick to deadlines. Many people put off this activity until the last minute. Post the deadline; tax returns can be as a “Belated Return” any time before 31st March 2020. But be prepared to pay the penalty.
If the tax returns are filed after the due date, a maximum penalty of Rs 10,000 will be imposed. If the return is filed after the due date, but before December 31, a fine of Rs 5,000 shall be paid. If the return is filed after December 31, the fine would be Rs. 10,000. If your total income does not exceed Rs 5 lakh, the maximum amount of penalty to be paid is Rs. 1000.
As they say, the early bird catches the worm. To avoid paying an additional penalty, stick to the timelines prescribed.
Structure of ITR-1
There are four sections of Form ITR-1. The contents of each section are set out below:
Part A: This section requires personal information on the taxpayer. PAN number is a must.
Part B: This section shows the total income for the financial year. The total income will include salary, allowances which are not exempt, the value of perquisites, profits instead of salary and deduction allowed under Section 16 of the Income Tax Act.
Part C: This section includes the details of all deductions and total taxable income. Common deductions permitted are:
- Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.
- deduction in respect of contribution to pension scheme of Central Government
- deduction in respect of investment made under an equity savings scheme
- deduction in respect of interest on loan is taken for higher education
In addition to the above, there are schedules to Form ITR-1:
- Schedule IT: This schedule includes the information regarding payments made towards self-assessed tax and advance tax paid.
- Schedule TDS1: This schedule is for the TDS deducted from salary and mentioned in Form 16 provided by the employer
- Schedule TDS2: This schedule is for TDS deducted from “Income other than salary” and as mentioned in Form 16A provided by the deductor.
- Supplementary schedules of tax deducted at source and Income Tax. Supplementary schedules are used in addition to the line items of Form ITR-1.
How to fill Form ITR-1
The steps to fill Form ITR-1 are very simple. The sections of the form are self-explanatory. However, time is spent in arranging the right documents. If the documents are in order, you can fill the form with ease. This is a brief primer on the documents you need for filling out Form ITR-1:
Form 16: If you are a salaried person filing form ITR-1, the most important document is Form 16. Form-16 is a TDS certificate issued to you by your employer. The form provides the details of the salary paid to you and TDS deducted on it if any. If your employer has deducted TDS, it is mandatory to issue you Form 16. In case the TDS is not deducted, you can request your employer to issue Form 16.
The government has also revised the Form-16 format. The new format provides a detailed breakup of the tax-exempt allowances paid to the employee as well as the tax breaks claimed by him via his employer. If you have received any transport or medical allowance/reimbursement, the same is taxable by you for FY 2018-19. This is indicated in Form 16.
Aadhar Card: As per the latest notification from the government, aadhar details are mandatory for filing ITR. In case you have applied for aadhar but not yet received it, the enrolment ID should be mentioned.
Bank account details: You have also to report all the bank accounts held by you in your returns. Please ensure that the following details are handy: bank name, bank account, account number, account type and IFSC code. The IFSC code is important in order to receive the refund if any. Make sure you have the latest IFSC code as several banks have undergone mergers recently.
Tax saving investment proofs: Deductions are claimed based on several tax saving investments. These deductions have to be reported in ITR-1. It is important to have documentary proof of investments made.
How to file ITR-1 Offline
It is possible to ITR-1 through a physical mode. For the AY 2019-20, every taxpayer will need to file the income-tax return electronically except a super senior citizen (who is above 80 years).
If you want to file ITR-1 through an offline or physical process, follow the steps given below:
- The form should be collected from the Income Tax Office. It can be also downloaded from the income tax website incometaxindia.gov.in
- Once you fill in the details, submit the form to the Assessing Officer concerned or to designated helpdesks known as “Aaykar Sampark Kendra”.
- An acknowledgement form, which contains the summary of the ITR, should be submitted along with the ITR
- A stamped copy of the acknowledgement form is given back to the assessee after the submission.
Offline form of submission is helpful for the super senior citizens as they may not be very familiar with the online process. Earlier, there was an option for taxpayers earning less than INR 5 lakhs to file ITR physically. This option has now been withdrawn. Physical filing of returns is also helpful if you have relatively simpler tax calculations. However, online filing of the returns has its own share of benefits.
How to file ITR-1 Online
Unless you are a super senior citizen, it is mandatory for you to file your returns electronically follow the steps below for filing the returns:
- You need to create an account on the website of the Income Tax Department.
- The login details received can be used for subsequent years.
- The I-T Department has a java utility and an excel utility. Both of these portals help the taxpayer to file the returns smoothly. The Java-based utility has additional features like direct upload, smoother interface, etc.
- Taxpayers have the option to submit the details by either using excel/java utility or without it.
So what steps should you follow if you intend to use java/excel utility?
- Login to the website (https://incometaxindiaefiling.gov.in/) and select ITR-1 Form.
- Download the ITR Java or excel utility and provide all the required details. Please verify the details which are mentioned in Form 16, Form 16A, Form 16B and Form 26AS.
- Once the form is filled and verified, you can log in to the Income Tax website and directly upload the return through the Java Utility. You also have the option to create an XML version of the return form and upload the same on the website.
- Once the return is successfully submitted and uploaded, you will receive an acknowledgement.
- The ITR-V is also e-mailed to the email mentioned on the form.
If you are not following the above:
- Log in to the account on website https://incometaxindiaefiling.gov.in/
- Click on “E-File – Income Tax Return- Prepare and submit online.”
- Fill in all the details and submit the returns online.
FAQs
Do I need to report exempt LTCG in ITR-1?
If LTCG is exempt under Section 10(38), you can mention the same in ITR. In case LTCG is taxable, use the other forms as applicable. Also, it is mandatory to e file tax returns for those who are LTCG exceeds Rs 2.5 lakhs even if your income is below taxable limit. If your LTCG exceeds Rs.2.5 lakhs, but your income is below the taxable limit, you would still need to file ITR.
Can I file ITR-1 with exempt agricultural income?
If your agricultural income does not exceed Rs 5000, you can file ITR-1. In case the agricultural income is more than Rs 5,000, Form ITR 2 should be filled.
Do I need to report bank accounts in ITR-1?
As indicated above, the details of all the savings and current accounts held at any time during the previous year must be provided. If you have any dormant accounts which are not operational for more than three years, you don’t have to report those in ITR-1.
You also need to disclose the account number in the specific section of Form ITR-1
What is the difference between ITR-1 and ITR-2?
ITR-2 is to be filed by individual or HUF:
a) Who is not eligible to file ITR 1 Sahaj; and
b) do not have any income from Business or Profession.
Do I need to include dividend income from Mutual Funds?
Dividend income from mutual funds is exempt under sec 10(35). It is to show in Part D of ITR-1.
How do I disclose the investment details made in unlisted companies?
If you hold shares in an unlisted company, then, disclosure of the holdings must be filed through ITR-2. The following details have to be provided:
- name of the company,
- PAN of the company,
- number and cost of acquisition at the beginning of the year,
- number of shares,
- face value, issue price (or purchase price) and date of purchase of shares acquired during the year,
- Number and sale consideration of shares transferred during the year, number and cost of acquisition of shares held at the end of the previous year.
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