The Finance Minister has extended the deadline for income tax returns filing for the assessment year 2019-20 to August 31, 2019. Although the deadline has been extended, it is better to not delay tax filing and avoid the last-minute scramble.
If you are planning to file it yourself, here's a step-by-step guide to help you through the process.
There are three ways to file ITR
With the help of third parties, such as e-filing portals, chartered accountants, tax return preparers (TRPs) appointed by the income tax department to assist small and medium taxpayers.
You can file it by yourself via the income tax department’s website Incometaxindiaefiling.gov.in
If you are over 80 years of age, you are allowed to file ITR manually. You can either download the relevant documents from the I-T department’s website or get it directly from the income tax office. After you fill it, you should submit it at the applicable jurisdictional income-tax office.
How to file ITR online by yourself?
1) Gather all the required documents
The first step is to collect documents such as TDS certificate (Form 16/16A), capital gains statement, salary slips. These documents will help you calculate gross taxable income and will help you ascertain the details of tax deducted at source (TDS) from your income for FY 2018-19.
Form 16 is a TDS certificate given by your employer regarding the tax deducted from your salary income.
Form 16A is given for the TDS on 'Income Other than Salary'. For example, interest that you receive from the bank for your fixed deposits, insurance commission, house rent, etc.
Make sure all the TDS certificates you have received from all the deductors are in TRACES format.
TRACES is the website for TDS reconciliation and correction enabling system. The website enables easy filing of TDS correction statements by deductors.
Also, keep in mind that you will be required to pay tax on long-term capital gains from equity shares and mutual funds if the gains exceed Rs 1 lakh. Capital gains is a profit that you get from the sale of an investment. So, check if you have any capital gains and collect the statement to calculate the amount.
2) Keep your Form 26AS ready
It is a form which indicates that the tax that was deducted has been received by the Government. The Form 26AS contains details of tax deducted on behalf of the taxpayer (you) by deductors (employer, bank etc.).
You can download Form 26AS from the TRACES website.
To download it, you will have to log on to your account on the e-filing website, go to 'My Account' and select 'View form 26AS.' On clicking that, you will automatically be redirected to the TRACES website, where you can download the form.
TDS deductions that are given in Form 16/Form 16A can be cross-checked using Form 26AS. If the amounts that are shown in the TDS certificate and Form 26 AS differs, you should contact the deductor and get the errors fixed. If the error is not rectified, you will not be able to claim the credit on the tax that has been deducted.
3) Calculate the total income for the financial year
Once you have collected all the required documents and verified all the taxes that have been deducted from your income, you should compute the total taxable income.
The total income is computed by adding your dearness allowance (DA), house rent allowance (HRA), transport allowance (TA), special allowance (SA) to your basic pay. Then deduct the exemptions of HRA, professional tax and standard deduction from the gross salary. The figure that you arrive at will be the total taxable income.
4) Know your ITR forms:
While filing your returns, make sure you choose the correct ITR form. There are several forms available, out of which only a few are applicable to individuals. If you file your taxes using the wrong form, it will be considered invalid, then you will have to re-file it.
ITR-1: For resident individuals whose primary source of income is salary. It can also be used if there is income from one house property and income from other sources.
This form is NOT suitable for:
Hindu Undivided Families (HUF).
Individuals who are a director in a company
Individuals who have invested in unlisted equity shares
Those having foreign assets and financial interests outside India
Agricultural income exceeding Rs 5000
Those who get income from capital gains
Those who get income from business
People who receive income from more than one house property
Individuals whose income exceeds Rs 50 lakh
ITR-2: For individuals and HUFs who do not have income from a business or profession. It can be used by individuals having income from capital gains, more than one house property, income from other sources, etc.
ITR-3: For individuals, HUFs having income from profit and gains of business or profession.
ITR-4: For Individuals, HUFs and firms who are resident having total income up to Rs 50 lakh and having income from business and profession which are computed under sections 44AD, 44ADA or 44AE.
This form IS applicable for
Business income under section 44AD or 44AE
Income from profession calculated under section 44ADA
Salary/pension having income up to Rs 50 lakh
Income from One House Property having income up to Rs 50 lakh (excluding the brought forward loss or loss to be carried forward cases under this head)
Income from Other Sources having income up to Rs 50 lakh (Excluding winning from lottery and income from horse races).
Professionals such as freelancers can also opt for this scheme if their gross receipts don’t exceed Rs 50 lakhs.
5) How to file online?
Login to income tax e-filing website. If you already have an account, use the same credentials to login or create a new account using your PAN number.
Once you login, click on 'Filing Income Tax Returns' tab and fill the necessary details. Make sure you choose the appropriate ITR form and select 'Continue' and you will be taken to the 'Instructions' page. Read through it once and click on the next tab 'Part A General Information.'
In this page, your personal details will already be filled since you have given your PAN card number. Verify the details once and make changes if necessary. If you don't work on the page for more than five minutes, the page will session out and there are chances of you losing your data. So once you are done, don't forget to click on 'Save Draft' option at the bottom of the page.
Now, click on the next tab 'Computation Of Income And Tax.' Calculate your total salary as mentioned above under 'Calculate The Total Income For The Financial Year' section. Now enter the gross total income amount in the 'Salary as per section 17(1)' slot. Once you enter the amount, all the computations will be done automatically. If there are any other deductions, i.e., insurance policies, equity funds, bank loans, house rent, investments, etc. enter those in the next section 'Part C - Deductions And Taxable Total Income.'
The final computed tax amount will automatically reflect in the last slot 'Total Tax, Fee And Interest.' Once you are done, hit on 'Save Draft' then move on to the next tab 'Tax Details.'
If you are a salaried individual, the amount of tax deducted by your company will be pre-filled. Go through it once and if that is fine, copy the tax amount mentioned under 'Col 5' and paste it in 'Col 6.' Now, hit on 'Save Draft' and move to the next tab 'Taxes Paid and Verification.'
In this tab, you will find the due tax amount/ tax refund in the respective slot. You have an option to e-pay pending taxes, if any.
In case of refunds, you will have to furnish your bank details in the next section 'Part E - Other Information.' Click on 'Add' fill the details of the bank account in which you would like to receive your refund. If you have already added the account last year while filing tax, then the bank details will automatical reflect in that section, In that case, you just have to select the bank account by clicking on the checkbox on the left-hand-side corner.
6) Verify your ITR
The last step of ITR filing is verification. There are six ways to verify your ITR, out of which five are electronic methods and one is physical verification. You can verify via Aadhaar-based OTP, Electronic Verification Code (EVC) via net banking, EVC via bank account, Demat account, bank ATM or send signed ITR-V/Acknowledgement receipt to I-T department directly.
Remember, after you file your tax returns online, you have 120 days to verify it. If do not verify your ITR, it will be deemed as you have not filed it. In case you have forgotten to verify your ITR, you can raise a request to your assessing officer.
7) IT department will process the return
Once you verify the returns, the I-T department will start processing your tax return to ensure all the details you have furnished is correct as per the Income Tax Act. Once the process is finished, the taxmen will drop you an email regarding the same. In case they spot any discrepancies, they may ask you to explain further or fix the mistakes made while filing the ITR.
Make sure you file the tax before August 31
In case you did not file the tax before the deadline, you will have to pay a penalty at the time of filing returns. If you file your returns after the due date but before 31 December 2019, you will have to pay a penalty of Rs 5000 and if you file it between January 1 and March 31, 2020, you will have to pay a fine of Rs 10,000.
Apart from paying the penalty, you will be charged an interest amount of 1 per cent per month on the tax amount outstanding. The interest will be calculated from the due date till the date that you actually file your return. For example, if your total tax outstanding for the current accounting year is Rs 1 lakh and if you are filing it 10 months past the deadline, then the interest will be calculated as:
Rs 1,00,000 x 1/100 = Rs 1,000 per month
Hence, Rs 1000 x 10 = Rs 10,000
Therefore, you will have to pay a tax of - Rs 1,00,000 + interest of Rs 10,000 = Rs 1,10,000.
So hurry up! Do not wait till the deadline. File your returns before the due date.