Pagar Khata -Staff Payroll & Attendance Management
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:
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.
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/-
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:
ITR can be filed either in offline or online modes. How to file IT return is explained below.
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.
Part B: This section has four parts marked B1, 2, 3 and 4 and displays the gross total income in B4.
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).
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).
Part E includes all other information like your bank account details, IFSC Code, and account to which refunds can be credited. Please fill it.
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.
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.
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
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.
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.
Pagar Khata -Staff Payroll & Attendance Management