INCOME TAX RETURN

Introduction

Here is all you need to know about how to file ITR online. Before you file your taxes, you will need your Form 16, provided by your employer, and any proof of investment. Using that you can compute the tax payable and refunds, if any, for the year. You can download the IT preparation software from the IT department’s website. Once you have all the documents ready, you can start the Income tax return filing process.

For MSMEs and professionals, the next generation common IT form has been introduced; if their cash receipts are less than 5%, presumptive tax limitations have been raised to Rs 3 crore (turnover) and Rs 75 lakh (income), respectively

E-Filing Income Tax

e-Filing Income Tax Return, TDS return, AIR return, and Wealth Tax Return can be completed online on https://incometax.gov.in. E-filing your return has obvious advantages like the fact that you won’t have to deal with the hassle of paperwork and waste time sorting through it all. You can simply log on to the secure website and e-file your return.

This government website also has provisions for you to submit returns, view form 26AS, outstanding tax demand, CPC refund status, rectification status, ITR – V receipt status, online application tools for PAN and TAN, e-pay your tax and even has a tax calculator.

Income Tax Calculation

Income tax calculation can be done either manually or by using an online income tax calculator. The amount of tax that must be paid will depend on the tax slab under which you fall. For salaried employees, income from salary includes the basic pay, House Rent Allowance (HRA), Transport Allowance, Special Allowance and any other allowances.

However, certain components of your salary are tax-exempt, like Leave Travel Allowance (LTA), reimbursement of telephone bills, etc. In case HRA is part of your salary and you reside in a rented house, you are eligible to claim exemption. Apart from these exemptions, there is a standard deduction of up to Rs.50,000.

Income Tax Payment Details

Taxpayers can pay direct taxes online by using the e-Payment facility. In order to avail the online tax payment facility, taxpayers must have a net-banking account with an authorised bank. The Permanent Account Number (PAN) or Tax Deduction and Collection Number (TAN) will have to be provided for validation as well.

About Income Tax Department India

A government agency that undertakes the direct collection of tax in India is the Income Tax Department. All operations of the department are handled by the Central Board for Direct Taxes (CBDT). Individuals can get various details such as international taxation, tax laws, and rules, organizational setup, etc., on the official website of the department.

Income Tax Act

Passed in 1961, the Income Tax Act of India handles all income tax provisions as well as any tax deductions that may be applicable. Since its introduction, there have been many changes to the law because of economic situations and inflation.

Income Tax Rules in India

The legislature enacts the Income Tax Act, 1961, to administer and govern income tax in the country, but the Income Tax Rules, 1962, were created to help in the application and enforcement of the law constituted in the Act. Moreover, the Income Tax Rules can only be read in conjunction with the Income Tax Act. The Income Tax Rules are within the framework of the Income Tax Act are not allowed to override its provisions.

Income Tax Collection

Taxes are collected by the government in three primary ways:

• Voluntary Payment by taxpayers into designated banks, like Advance tax & self-assessment tax.
• Taxes Deducted at Source (TDS) which is deducted from your monthly salary, before you receive it.
• Taxes Collected at Source (TCS).

Under the Department of Revenue of the Ministry of Finance, the Income Tax Department (IT Department) handles monitoring the collection of Income Tax, Expenditure Tax, and various other Financial Acts that are passed every year in the Union Budget. The Central Board of Direct Taxes (CBDT) regulates the policy and planning of taxes. CBDT is also responsible for administering the direct tax laws through the IT Department. Besides to the collection of taxes, the IT department is also involved in the prevention and detection of tax avoidance.

Income Tax Deduction Section List

Deductions for your taxable amount are available under various sections of the Income Tax Act, 1961. Deductions will have to be mentioned in the relevant ITR form at the time of e-filing income tax returns.

Section 80C: Deductions under this section are only available to individuals and HUF. This section allows for certain investments like NSC, etc. and expenditures to be exempt from taxation up to the amount of Rs.1.5 lakh

Section 80CCC: Deductions under this section are on payments made to LIC or any other approved insurance company under an approved pension plan. The pension policy must be up to Rs.1.5 lakh and be taken for the individual himself out of the taxable income.

Section 80CCD: Deductions under this section are for contributions to the New Pension Scheme by the assessee and the employer. The deduction is equal to the contribution, not exceeding 10% of his salary.The total deduction available under Section 80C, 80CCC and 80CCD is Rs.1.5 lakh. However, contributions to the Notified Pension Scheme under Section 80CCD are not considered in the Rs.1.5 lakh limit.

Section 80D: This is the section that deals with income tax deductions on health insurance premiums paid. In the case of individuals, the insurance policy can be taken to cover himself, spouse, dependent children – for up to Rs.15,000 and parents (whether dependent or not) – for up to Rs.15,000. An additional deduction of Rs.5,000 is applicable if the insured is a senior citizen. In the case of HUF, any member can be insured, and the general deduction will be for up to Rs.15,000 and an additional deduction of Rs.5,000.A total of Rs.2.0 lakh can be claimed as deductions whether the assessee is an individual or a HUF.

Section 80DDB: This section is for deductions on medical expenses that arise for treatment of a disease or ailment as specified in the rules (11DD) for the assessee, a family member or any member of a HUF.

Section 80E: This section deals with the deductions that are applicable on the interest paid on education loans for an education in India.

Section 80EE: This section deals with tax savings applicable to first time home-owners. Applies for individuals whose first home purchased has a value less than Rs.40 lakh and the loan taken for which is Rs.25 lakh or less.

Section 80RRB: Deductions with respect to income by way of royalties or patents can be claimed under this section. Income tax can be saved on an amount up to Rs.3.0 lakh for patents registered under the Patents Act, 1970.

Section 80TTA: This section deals with the tax savings that are applicable on interest earned in savings bank accounts, post office or co-operative societies. Individuals and HUFs can claim a deduction on an interest income of up to Rs.10,000.

Section 80U: This section deals with the flat deduction on income tax that applies to disabled people, when they produce their disability certificate. Up to Rs.1.0 lakh can be non-taxed, depending on the severity of the disability.

Section 24: This section deals with the interest paid on housing loans that is exempt from taxation. An amount of up to Rs.2.0 lakh can be claimed as deductions per year, and is in addition to the deductions under Sections 80C, 80CCF and 80D. This is only for self-occupied properties. Properties that have been rented out, 30% of rent received and municipal taxes paid are eligible for tax exemption.

 

FAQs on Income Tax

Who is required to pay income tax?

Any individual or artificial body or group of individuals that earn more than the basic exemption limit are expected to pay income tax.

Why is income tax collected?

Income tax is collected by the government for a host of reasons which include paying off the salaries of the state and central government employees and meeting infrastructural expenses. The income tax collected by the government acts as a source of income based on which the development of the nation is taken care of.

What type of tax is income tax?

Income tax is a direct tax. That is, income tax is a tax that is paid by the liable entity directly to the entity which imposes the tax. In the case of income tax, the imposing party is the government while the liable party is the one who is drawing an income against which the tax liability arises.

Where should I invest to save income tax?

There are various instruments in which you can invest to save tax. Some of the most common options available to you include PPF, National Savings Certificate, National Pension System, ELSS schemes, etc.

Do you have to pay taxes if you earn income in cash?

Yes, income tax is charged even on income which is earned in cash. However, if the cash credit is unexplained, the tax is charged at a flat rate of 60% and no other tax benefits in terms of exemption are applicable. On top of that, there is a surcharge of 25% along with which a penalty of 6% is charged.

How much is tax free income in India?

There are two different tax regimes which are currently used in India to file income tax returns. However, the tax-free income is different for both the new and old regime. The annual income of up to Rs.2.5 lakh is tax free if you have chosen the old tax regime, while for the new tax regime, the annual income of up to Rs.3 lakh is tax free.

Is the due date for filing income tax returns the same for all taxpayers?

All individuals and assessees who do not require their accounts to be audited will have to file their income tax returns by 31 July However, companies, individuals and working partners of firms whose accounts must be audited are required to file their income tax returns by September 30. Assessees who are required to submit a report under Section 92E of the Income Tax Act must file their returns by 30 November.

In income tax, what is TDS?

The tax amount that is deducted by the employer and deposited to the IT Department is TDS. The TDS that will be deducted will depend on the individual’s salary. 

Do I have to pay tax in case my income is less than Rs.3 lakh?

No tax needs to be paid in case your income is less than Rs.3 lakh in a year under the new tax regime.

What is the taxable income?

Taxable income or gross income includes salaries, wages, bonuses, etc.