written by Khatabook | July 1, 2021

How To File ITR (Income Tax Returns) Online – Income Tax E-filing Guide For FY 2020-21

Why is it important to know how to file IT returns? The Income Tax Act of 1962 requires all individuals with income above the exemption limit to file returns. You have to file an IT return if you meet the following criteria:

  • If you have foreign travel expenditure greater than Rs 2 lakh.
  • If your electricity consumption is above Rs 1 lakh 
  • If your deposits into the current account exceed a total of Rs 1 Cr in FY 2019-20 onwards.
  • If you have foreign assets or are a signatory to a foreign account.

What is income tax?

The income tax on your income is a fixed rate of your total income paid to the government. The taxpayer pays this based on the total income. Income tax applies to individuals, HUF (Hindu Undivided Family), partnerships, companies, etc. The tax slabs are announced yearly by the government in its annual budget. 

How to File ITR online?

To learn how to file Income Tax Return, you will first have to understand the components of income tax and how to fill them in. Employers deduct the tax liability of employees as TDS  from salary. It is paid to the government and reflected in your Form-16. If you are liable to advance tax, at least 90% of the payments have to be made before the 31st of March or the end of FY. 

The filing date is generally the 31st July of the assessment year and may get extended through IT Department notifications. You will be penalized if you do not file the ITRs by the due date with a late fee of Rs 5,000/-

Types of IT saving under the old/new tax regimes:

Tax planning and using online apps can help you learn how to file ITR and the ways to save tax on income. The Income Tax Act of 1962 has certain exemptions and deductions that you can avail of. It will help to make your total taxable salary lower and save taxes.

The tax saving heads and instruments are mentioned below:

  • Public Provident Fund (PPF): You can invest in the government’s tax-saving instrument with a term of 15- years and a tax-free interest rate of 8%. The interest is credited every quarter. It is available at post offices and banks. 
  • ELSS Mutual Funds: You can invest in these funds with equity up to 80% and a lock-in tenure of 3 years. Returns are chargeable to tax at LTCG (Long Term Capital Gains) tax @ 10% when they exceed the Rs.1 lakh exemption.
  • 5-year tax-saver FDs: They carry 7 to 8% taxable interest and are allowed a total tax deduction of up to Rs 1.5 lakh.
  • EPF payments: They are 12% of basic pay and is included under the total exemption limit of Rs 1.5 lakh U/S 80C.
  • Tuition fee payments: Fees of dependent children are exempt from tax up to Rs 1.5 lakh per year.
  • Premiums on Life Insurance: They are tax-exempt for term/endowment insurance policies, ULIPs etc when the cover amount exceeds 10 times premiums paid.
  • National Saving Certificate (NSC): It has a 5-year maturity period and earns about 8% fixed interest rate. It is part of the total exemption available under S80C.
  • NPS-National Pension System: It is accounted for u/s 80CCD and adds to the exemption limit of Rs 1.5 lakh. Such deductions are above the U/S 80CCD(1B) exemption of Rs. 50,000.
  • SCSS- Seniors Citizens Scheme Savings: It has a 5-year term and available post 60 years. The interest rate is 0.5 to 0.75% higher than normal and taxable.
  • SSY-Sukanya Samriddhi Yojana: It provides benefits for investing parents with girl child below 10 years old. Its 21-year tenure provides tax-free interest and continues till the girl marries/on reaching 18 years of age. 
  • Premiums on Health Insurance: It provides Rs 25,000 deductions U/S 80D for health insurance premiums over and above insurance premium limits. The senior citizens limit is Rs 50,000. Thus you can avail up to Rs 75,000 when paying premiums for yourself and senior citizens dependent on you.
  • NPS- National Pension System: The deductions available U/S 80CCD(1B) allows equity/ debt pension funds/ up to Rs 50,000 as tax exempt until the age of 60 years.
  • Rent deductions: The deductions are available when you pay rent. It can be deducted up to Rs 60,000 per year. If you get HRA, the whole amount can be deductible if you stay on rent. 
  • Repayments of Home Loan: Repayment is available for the Home Loan principal amount and is exempt up to 1.5 lakhs.
  • Home Loan Interest deduction: Deduction is allowed up to 2 lakh per year with an interest certificate from banks u/s 24 of IT Act.
  • Charitable donations: They have no upper limit. If donated to an NGO 50% or up to 10% of adjusted total income is exempt when the NGOs have an 80G certificate.
  • Savings account interest: It is tax-deductible up to Rs 10,000 per year U/S 80TTA. The exemption limit for senior citizens is Rs 50,000 including both FDs and SM account interest earned.

How to File Income Tax?

ITR can be filed either in offline or online modes. How to file IT return is explained below.  

Offline mode:

  • Login to the IT e-filing portal using your PAN as the User ID and enter the password and captcha. 
  • Choose tab “e-file” and head to “income tax return”.

  • Fill in details, and click on “prepare and submit online”.

 

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  • Choose to “save as draft” and verify using OTP on Aadhar-linked mobile/EVC to submit the return.
  • If verification fails for any reason, send a physical copy to the Central Processing Centre-CPC.

How To File Income Tax Return Online Step By Step 

  • Login to the IT portal at https://www.incometaxindiaefiling.gov.in/home. Download the ITR form as a Java utility or Excel zipped file.
  • Extract the files from the zipped file and save them in offline mode to fill up the form correctly as explained further below.
  • Save and validate as you move from form to form.
  • On completing all required filing just click on the tab to calculate tax, generate an XML file and save it for uploading to the IT portal.
  • Once you have uploaded the ITR you can use any of the 6 methods provided to validate and verify the returns and submit the ITR.

How to View and Download ITR?

To view, the ITR filed online and its acknowledgement in the pdf format, just follow these steps:

  • Log into the IT portal incometaxindiaefilling.com with your login ID and password.
  • Click Forms/Returns view.
  • Choose the assessment year and income tax returns to view the file of ITRs filed.
  • Click on the tab for the acknowledgement number or ITR-V for the ITRs required.
  • The ITR-V file can be opened and downloaded as a PDF file.
  • To file income tax, choose the right return and FY from the dropdown boxes. Ex: ITR1, ITR2 etc.

How To Fill ITR Online?

The returns form ITR-1 has seven distinct sections. Let’s see how you need to fill these sections.

Part A: This section contains the ‘General Information’ of the taxpayer. You are required to fill in the following information.

 

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  • Full Name is to be filled with no short forms. Ex: John Harry Smith and not JH Smith.
  • Address with pin code.
  • PAN number reflecting your full name and date of birth.
  • Mobile number Ex: 9516720211.
  • Aadhar number
  • Email address Ex: harry.smith@yahoo.com
  • Employment Nature Ex: Govt employee/Pensioner/PSU/Others

Part B: This section has four parts marked B1, 2, 3 and 4 and displays the gross total income in B4. 

 

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Part B1 requires you to fill in details of salary perquisites etc and arrive at the income chargeable under salaries. Fill in details like salary details, exempt allowances, perquisites etc under B1-a, b, c and ii to arrive at the net salary. Deduction u/s 16 needs to be filled under iv-a, b, c to arrive at the chargeable income under ‘salaries’ which is the Net Salary minus the Deductions.

Part B2 is all about the income from house property and starts with whether your house is let out or self-occupied to be tick marked. Fill in the details of B2 I, ii, iii, iv, v, vi, vii in the white portion ie. rent received, taxes paid to arrive at the Annual value which is I minus ii. Calculate 30% of the annual value and enter it in iv and v if applicable. Now enter the total income which is iii-iv-v. The limit here is Rs 2 lakh. If trying to carry forward/set off losses under the head you should use the ITR-2.

Part B3 allows you to choose from a drop-down box the other incomes and deductions u/s 16 if you receive a family pension.

Part B4 is for the Gross total income and is computed as [B1 B2 B3]. Here’s how Part-B looks.

Part C deals with deductions in Chapter VI-A to calculate deductions under the various heads and arrives at the Taxable total income. Deductions under various sections have a total limit in the IT Act 1962. You can claim deductions U/S 80C, CCC and CCD(1), (1B) and (2), 80DD, DDB, 80E, EE, EEA, EEB, 80GG, GGC and 80U to arrive at the value of the total deduction of C1. Then Total income is given by (B4 – C1). 

Also Read: Challan 280 : How To Pay Your Income Tax Online With Challan 280

 

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Part D is about the tax payable computation and has 14 entries like Total Income payable tax (D1), Rebate u/s 87A (D2), Tax after allowing rebate (D3), Cess applicable on (D3) (D4), Total cess and tax (D5), Relief u/s89(1) (D6), Interest U/S 234B, C at (D 8, 9) the fee under U/S 234 F D (10) and the total at D11 with total tax paid at D12. With the Amount payable being (D11-D12=D13) and the refunds at (D14). 

 

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Part E includes all other information like your bank account details, IFSC Code, and account to which refunds can be credited. Please fill it. 

 

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IT-Schedule provides details of IT, self-assessment payments and advance tax paid with BSR code, Challan numbers, date and tax paid amounts. 

TDS- Schedule has TCS/TDS details with TAN number of the deductor, name, gross payment, tax year, tax collected and TCS/TDS credits. 

Verification is the final part and requires you to enter your name, father’s name, capacity for filing, and PAN number. If you use a TRP then he will fill in the details too here. Sign it. 

Also Read: Guide For Uploading TDS Returns On The Income Tax Portal

Bottom Line

How to file IT returns online need not be a complex job if one understands the process of filing and does it in time. Basic salary calculations and tax calculations can be done on apps while employers can better organize employee salaries, tax deductions, leave registers etc on the KhataBook app.  

FAQs

1. Does pension get included as salary among the steps to file ITR?

Under income sources pension under salary is taxable. However, pensions from insurance policies are treated as other sources of income and are also taxable as income. The pension exemptions are 

  • For a government employee, UNO employees/ family members and armed forces the commuted pension is fully exempt. 
  • Uncommuted and monthly payment of pension are fully taxable as salary.
      When pension and gratuity are received, only one-third of the 100% commuted pension is exempt.
  • When a pension is not received, half of 100% of the commuted pension is exempt.
  • Family member pensions are exempt up to Rs 15,000/-, one-third of the uncommuted pension or 100% of commuted pension received as a lump sum.

2. What are the heads under income sources?

Total income considered in the how to file return online accrues not only from salary but from other sources as well. Here’s a list of incomes that are to be included under the total income head as your gross total income.

  • Salary income.
  • Loss/income from a profession like self-employed taxpayers.
  • Savings and FD accounts interest accrued.
  • House Property owned and rented/self-occupied.
  • Capital gains from the sale of mutual funds, property etc.

3. How are perquisites taxed?

Perquisites are covered U/S 3 of the IT Act, 1962 and can be exempt or taxable depending on their nature. Understand that CTC and take home salary are different as explained below.

CTC = [Salary per month] plus [benefits at retirement like gratuity, PF etc] plus [benefits like free meals, medical insurance, cab services, reimbursable phone bills etc.]

Take home Salary = [Salary per month] minus [exemptions like LTA, HRA etc] minus tax payable after accounting for S80 exemptions and deductions]

4. If my employer does not deduct taxes should she/he issue me a Form 16? 

The employer-deducted taxes statement is called Form 16. If he has not deducted taxes, he may not issue Form-16 but still has to issue a salary statement.

5. Are salary/ pension arrears taxable?

Yes. Salary/pension arrears are taxable, though some relief is available U/S 89.

6. I have losses from business and house property. Can I set it off against my income from salary?

House property losses can be set off against income from salary. But business losses cannot be set off as income from the business.

7. I have 2 salary incomes/employers in 2018. How to file Income Tax Returns? Can each income be used for the Rs 2.5 lakh basic exemption of salary income?

The total exemption is Rs 2.5 lakh. Sum up your 2 incomes and then claim basic exemption.

8. My income does not cross the basic exemption limit of both employers in 2019 and they did not deduct TDS. Should I pay tax?

The total income from both employers is to be summed and deductions claimed on this amount. If the amount reflected is taxable you must pay Self-Assessed Tax even if no TDS deductions are made.

9. Can I use a rental agreement with my wife to claim HRA? 

HRA is covered U/S 10(13A). A husband and wife cannot claim rent from each other and such attempts not in the spirit of the law under how to file tax returns, are treated as tax evasion. Rental agreement with parents is permitted though.

 

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