Any individual who has a total income which falls within the threshold limit prescribed by the government is required by law to file an Income Tax Return (ITR).
An ITR doubles up as a proof to validate your source of income whenever you’re looking to apply for a loan or even procure a VISA in the future.
Besides being a mandatory requirement, filing your returns is imperative for a host of other reasons which include:
1. To claim an income tax refund especially if you have a lot of TDS deductions.
2. If you have suffered any losses in the financial year and you wish to carry forward a loss under any head of income.
Over the past few years, the online tax filing process has become quite streamlined and simplified owing to rapid advances in the ITR website which, in turn, has made it very convenient for individuals to file their ITR.
However, that being said, for quite a few individuals, the prospect of filing an ITR on their own can be daunting, to say the least.
Whether you’re an experienced professional or about to file tax returns for the first time, here’s a quick checklist that will guide you in successfully navigating any hurdles you might face while filing a tax return and get everything right.
Step 1: Ensure you have all the necessary documents ready:
First and foremost, before you start with the ITR filing process, you need to get all the required documents together.
Additionally, it must be pointed out that the documents you would need to put together would vary depending on the types of income you have.
In that regard, do confirm that you ascertain and select the appropriate ITR form as per the categories listed as under:
|ITR form type,Categories|
|ITR 1 (SAHAJ),Individuals with income from salary and interest|
|ITR 2,Individuals and Hindu Undivided Families (HUF) not having income from business or profession|
|ITR 3,Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship|
|ITR 4,Individuals and HUFs having income from a proprietary business or profession|
|ITR 4S (SUGAM),Individuals/HUF having income from presumptive business|
Period for tax calculation
First things first – Those who are going to file their ITR for the first time must know the difference between calendar year and financial year.
The calendar year begins on 1st January of every year and ends on 31st December of every year whereas the financial year starts on 1st April of every year and ends on 31st March of every year.
The tax is calculated at the end of every financial year.
1. Keep your PAN & Aadhaar Card ready.
2. Take Form 16 from your employer.
Get hold of Form 16 from your employer as it contains complete details of your income (salary), the amount of tax deducted at source (TDS) for each month along with the total tax payment.
In case you happened to switch jobs in the last financial year, then Form 16 must be collected from both, your current employer as well as your former employer
3. Use Form 26AS
Form 26AS is the annual tax credit statement that shows all the taxes deposited under your name paid by you or on your behalf (by the employer, bank, etc.).
This form can be downloaded from the e-filing website of Income Tax department.
4. Keep a copy of the previous financial year’s tax return handy.
5. Report all interest income
Maker certain that you report all interest income you might have earned in the previous year.
A lot of people overlook or forget to report accrued interest earned on fixed deposits, recurring deposits, or even interest earned on savings bank account.
Interest up to ₹10,000 is exempt from tax as per section 80TTA.
6. Download bank statements
Download all your latest bank statements as you will be required to enter all your bank details in the ITR form.
However, you don’t need to include any dormant bank account details (Dormant, in this case, are considered to be bank accounts that have not been in operation for two years or more).
7. Gather investments proofs
If for whatever reasons, you didn’t declare your investments to your employer, they won’t show up in the Form 16.
For any eligible investments made earlier than 31st March of the current assessment year, you can claim a deduction that will reduce your taxable income. So, if you have made any investments, make certain to include them now while filing the returns.
Additionally, in case you have any foreign assets held, you should make it a point to provide all relevant details.
Always make it a point to file your ITR’s within the prescribed due date in order to avoid any interest or penalties.
Timely filing your return also ensure faster processing of ITR along with the quick processing of refunds if applicable in your case.
8. Collect details of your assets if your income exceeds ₹50 lakh
If your income exceeds ₹50 lakh after all the deductions, you need to provide some additional details on your income tax return.
Details about the value of the movable asset, immovable asset, cash in hand, jewellery and liabilities (if any) need to be declared in Schedule AL of your ITR.
Step 2: Prerequisites and Other Tips Before Filing The Return:
Before we begin, here’s a point which needs to be given due consideration – During the Financial year (FY) 2016-17, if at all you’ve had income exceeding the exempted limit, you will be required to file an ITR.
Thereon, if your income was under the prescribed taxable limits, but you deposited a substantial amount of cash in your bank account during demonetisation, it’s mandatory to file a tax return in this scenario.
1. Before filing your ITR, you need to create a profile on the Income Tax department tax filing website i.e. http://incometaxindiaefiling.gov.in.
2. To authenticate your profile, you need to ensure that you have a valid email id and a mobile number as well. Further, you will be required to furnish your Aadhaar details so confirm that you have a valid Aadhaar card.
Your login ID would be your PAN card number. On the login screen, you will also have to input a randomly generated CAPTCHA code as displayed on the screen below.
Alternatively, you have an option to login through an OTP code which would be sent to your mobile number. So make certain to enter the correct mobile number while registering.
3. Do ascertain that you’re filing your ITR by making use of the appropriate form.
Failure to choose the right form might lead to your ITR being treated as a defective return under section 139(9) which means you will have to file ITR again within the stipulated time.
As per the above table, in the case of salaried individuals, the form you should be filling is the ITR 1- SAHAJ.
This form is applicable for individuals having an income from salary, one house property and other sources of income such as dividends, interest income, income from winnings, etc. up to Rs. 50 lakhs.
4. Next, you will be presented with a dashboard screen which is where all the action happens. This is your centre console and all important details will be showcased on this screen for your perusal.
5. You also need to ascertain & confirm the total amount of tax to be paid by you before filing your ITR. Once you have managed to determine the total amount of tax payable by you, you need to subtract any TDS paid during the course of the year from this total and pay the balance.
6. E-filing of your ITR can be done either online or offline. Accordingly, you are presented with an option to download a soft copy and fill it manually offline or you can opt to fill the form online as well.
In both cases, however, you will be required to submit the form along with all the relevant documents required for Income Tax Filing (Form 16).
Thereon, if you opt to submit it offline, you will be required to upload XML versions of all the listed documents.
7. Any exempt income needs to be disclosed in ITR even though no tax is required to be paid on the same like dividends, PPF interest etc.
8. Always double-check and confirm that you file your ITR’s within the prescribed due date in order to avoid any interest or penalties.
Further, by timely filing your return, you not only ensure faster processing of ITR but also quick processing of refunds if any.
9. Your tax liability can be verified and reviewed by clicking on the ‘calculate tax’ button. After you’re done reviewing and satisfied with the tax amount displayed, you can proceed to fill the challan in the ITR.
10. Next, you need to verify the uploaded return as your ITR won’t be considered ‘Valid’ until it is verified by you. You can either opt for physical verification or choose to e-verify your return by utilising the Aadhaar OTP (on your mobile phone) or through net-banking & other alternate methods.
11. Last but not the least, once you have filed your ITR, you need to collect the form ITR- V, which is generated immediately after you have e-filed. ITR-V denotes verification.
Download this form as it’s required to verify the summary as displayed in the form. This acknowledgment can also be downloaded by login in to your account on the e-filing website.
Thereon, you will have to print this form & send it to the Central Processing Centre of the Income Tax Department within 120 days of filing your ITR.
Non-submission of the signed ITR-V form within the specified time-frame makes your ITR invalid which entails that you have to repeat the process.
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