Income Tax is a tax levied by government on all earners. In India, Income Tax is a mandatory one as it contributes much to the revenue of Government of India. Whether it is a salary or pension or savings, Income Tax is applied for all kind of incomes. In many ways, the Income tax which we pay for the government helps for the prosperity of the society. Income tax is calculated every year. Let us see in detail about Income Tax.
Income Tax Return (ITR)
In order to file Income Tax Return, you have to fill necessary Income Tax Return form. According to your income, you need to fill any one of the required form.
- ITR1: For Individuals having income from salaries, one house property and other sources.
- ITR 2: For Individuals and HUFs not having Income from Business or Profession.
- ITR2A: For Individuals and HUFs not having Income from Business or Profession and Capital Gains and who do not hold foreign assets.
- ITR 3: For Individuals or HUFs being partners in firms and not carrying out business or profession under any proprietorship.
- ITR 4: For Individuals and HUFs having income from a proprietary business or profession.
- ITR 4S: For Individuals or HUF having income from presumptive business.
- ITR 5: For persons other than (i) individual, (ii) HUF, (iii) company and (iv) person filing ITR-7.
- ITR 6: For companies other than companies claiming exception under Section 11.
- ITR 7: For persons including companies required to furnish return under Section 139(4A) or Section 139(4B) or Section 139(4C) or Section 139 (4D) or Section 139 (4E).
- ITR V: An acknowledgement form for filing income tax returns.
Documents required for filing Tax Return
- A copy of last year’s tax return.
- Bank statement.
- Form 16.
- TDS certificates.
- Savings certificates/Deductions.
- Interest statement showing interest paid to you throughout the year.
- Balance sheet, P&L Account statement and other Audit Reports wherever applicable.
Income Tax e-Filing
Income Tax Login:
One can claim for Income Tax Return in online hassle-free. It is less time-consuming as it avoids the usual form filling procedure. To file Income Tax Return in online, follow the steps below.
- Visit the site 'https://incometaxindiaefiling.gov.in'.
- In the home page, click ‘Filing of Income Tax Return’ under Quick Links.
- If you are a new user, then click ‘Register’.
- Then select the user type and click ‘continue’.
- Enter your basic details and then fill the registration form.
- Once the verification process is completed, your registration is successful.
- To login, enter your registered user ID and password and then enter the captcha code.
- Once logged in, select ‘Prepare and submit online ITR’ from the ‘e-File’ tab.
- In the new page, enter your PAN number, and select the assessment year and ITR form name. And then pick your address either from the PAN database or from previous return file. Also, you have option to provide your new address.
- If you want to sign digitally, then click ‘yes’. You will be asked to upload your signature which is to be registered already at the Income Tax website.
- After filling the above said details, click ‘Submit’. This will take you to the page where you have to fill the form selected by you.
- Then fill in the necessary details in the Sections- general information, income details, tax details and taxes paid. Make sure that the tax payable in the online form and your calculations equalize.
- Check well the details to avoid errors. Before making final submission, you can preview your form once by clicking ‘Preview and Submit’ button.
- After submission of form, your claim for tax return will be uploaded and you have to validate your return with any one of the available options.
- At last, during your submission of ITR, you need to upload your registered digital signature. With this, the tax return filing process concludes and after that no other validation is required.
- In case you failed to upload your digital signature during filing of return, you can validate your return claim by electronic means using Aadhaar OTP or Electronic Verification Code method or by sending your signed copy of ITR V within 120 days of e-Filing to CPC, Bengaluru.
- Once your filing of tax return is uploaded successfully, you will receive ITR V to your registered email Id. Also, you can download it from your account in the e-Filing site.
- After your verification of ITR is completed, it will be processed by the Income Tax department. You will be informed about the ITR process through email or else through message.
How to Check Income Tax Return Status?
Once the ITR is verified by the tax payer, it will be processed by the income tax department. After verification, the ITR status will appear ‘Successfully Verified/e-Verified’. If the process gets completed, the status will be ‘ITR Processed’. You need to check your return status frequently in order to know at which stage your ITR is. There are two ways one can check their ITR status either by using or without using login ID.
ITR Status without login ID
- Access into the site 'https://incometaxindiaefiling.gov.in'.
- In the home page, click ‘ITR Status’ under the Quick Links.
- It will navigate you to the new page where you have to enter your PAN number, acknowledgement number and captcha code. Then click ‘submit’.
- Once submitting the details, your ITR status will appear on the screen.
ITR Status with login ID
- Enter the site 'https://incometaxindiaefiling.gov.in'.
- Login using your user id and password.
- On the dashboard option, click ‘View Returns/Forms’.
- This will redirect you to the page where you have to select income tax returns and then select the assessment year. Click ‘Submit’.
- Once submitting the details, the ITR status will show either as ‘Successfully e-Verified’ or ‘ITR processed’.
Income Tax Refund
In case if you have paid excess tax amount to the government during the past financial year, you can make claim for the refund of the paid tax amount. Tax refund is possible if you have paid excess tax amount than the actual tax charge. It occurs mostly when the taxpayer’s advance tax, self-assessment tax and TDS deduction is greater than the total tax charge. Under Section 80C and 80D, particular type of investments are exempted from tax. From the annual income, one can claim less than Rs.1,50,000 as investment amount under Section 80C. Under Section 80D, one can claim for tax reduction of less than Rs.25,000 on medical insurance per financial year. By using Form 16, one can claim for Income Tax Refund. Some of the elements to be incorporated in Form 16 are life insurance premium amount, House Rent Allowance (HRA), mutual fund investment, fixed deposit, equity, tuition fare, etc.
Under Section 80C of Income Tax Act, tax deductions are applicable for certain kind of investments which are very much useful for the taxpayers. Below is the list of valuable tax deductions.
- Stamp duty and house registration charges under Section 80C.
- Home loan – Principal amount under Section 80C and interest imposed under Section 24.
- Profit of Rs.50,000 for first time house-owners under Section 80EE.
- HRA (House Rent Allowance) for salaried persons.
- Whether you are a salaried person or not, you can appeal for tax reduction of rent under Section 80GG, in case you cannot get HRA.
- Life Insurance Premiums under Section 80C
- Medical Insurance Premium under Section 80D
- Preventive Health check-ups under Section 80D
- Medical cost (Only for salaried persons)
- Public Provident Fund (PPF) under Section 80C
- Employees’ Provident Fund (EPF)
- Pension Funds under Section 80CCC
- Senior Citizen Savings Scheme 2004 (SCSS) under Section 80C
- 5-year Post Office Time Deposit Scheme (POTD) under Section 80C
- 5-year Fixed Deposits (FD) under Section 80C
- Equity Linked Savings Scheme (ELSS) under Section 80C
- National Savings Certificate (NSC) under Section 80C
- Sukanya Samriddhi Scheme under Section 80C
- Children’s tuition fees
- Interest on educational loan for Higher education of self, spouse or dependent children under Section 80E
- NABARD Rural Bonds under Section 80C
- Donations for Scientific and Rural development under Section 80GGA
- Donations granted to Political parties under Section 80GGB and Section 80GGC
- Donations given for specific charitable trusts under Section 80G
- Disabled individual under Section 80DD
- Any Disabled family member under Section 80U
How to claim Tax Deductions?
- The easiest way to claim tax deduction for salaried employees is by means of income tax investment declaration statement. It is a record which has details of your investments and expenses which are tax deductible. The investment declaration statement has to be submitted to the employer at the beginning of every financial year.
- If you are not a salaried employee or else failed to submit your investment proofs, you can claim tax deduction directly during ITR filing. They can avail only Section 80 related tax deductions.
Income Tax Forms
Some of the important income tax forms with income tax rules are listed below.
Form No. 3CA: Audit report under Section 44AB of the Income-tax Act, 1961 in a case where the accounts of the business or profession of a person have been audited under any other law
Form No. 3CB: Audit report under Section 44AB of the Income-tax Act, 1961, in the case of a person referred to in clause (b) of sub-rule (1) of rule 6G
Form No. 3CD: Statement of particulars required to be furnished under Section 44AB of the Income-tax Act, 1961
Form No. 3CEB: Report from an accountant to be furnished under Section 92E relating to international transaction(s)
Form No. 10A: Application for registration of charitable or religious trust or institution under Section 12A(1)(aa) of the Income-tax Act, 1961
Form No.10B: Audit report under Section 12A(b) of the Income-tax Act, 1961, in the case of charitable or religious trusts or institutions
Form No.15CA: Information to be furnished for payments, chargeable to tax, to a non-resident not being a company, or to a foreign company
Form No. 15CB: Certificate of an accountant
Form No.15G: Declaration under sub-Sections (1) and (1A) of Section 197A of the Income-tax Act, 1961, to be made by an individual or a person (not being a company or a firm) claiming certain receipts without deduction of tax
Form No. 5H: Declaration under sub-Section (1C) of Section 197A of the Income-tax Act, 1961, to be made by an individual who is of the age of sixty years or more claiming certain receipts without deduction of tax
Form No.16: Certificate under Section 203 of the Income-tax Act, 1961 for tax deducted at source from income chargeable under the head "Salaries"
Form No. 6A: Certificate under Section 203 of the Income-tax Act, 1961 for tax deducted at source
Form No. 26AS: Annual Tax Statement under Section 203AA
Form No. 35: Appeal to the Commissioner of Income-tax (Appeals)
Form No.36: Form of appeal to the Appellate Tribunal
Form No. 49A: Application for allotment of Permanent Account Number under Section 139A of the Income-tax Act, 1961
Form No. 49AA: Application for Allotment of Permanent Account Number [Individuals not being a Citizen of India/Entities incorporated outside India/ Unincorporated entities formed outside India]
Form No. 49B: Form of application for allotment of Tax Deduction and Collection Account Number under Section 203A of the Income-tax Act, 1961
Form No. 60: Form of declaration to be filed by a person who does not have a permanent account number and who enters into any transaction specified in rule 114B
The income tax is collected by the government in three ways,
- Advance Tax
- Self-Assessment Tax
- Tax Deducted at Source (TDS) is a kind of tax indirectly collected by the government at source from the income.
- TDS is deducted by the employer according to the information provided about you. In case you failed to state the investments made by you or if you failed to produce the rent slip of the house you reside; the department has no other option other than deducing tax based on your CTC (Cost to Company).
- In order to avoid such problems, you need to submit your investment proofs within time.
- Banks will deduct 10% tax before handing over the interest, as they are unaware about your work or your dependency on fixed deposits. If you come under the category of 20% or 30%, you need to pay the rest of the tax. This is the reason behind the payment of tax during filing of ITR.
- Ensure whether banks have your PAN number or not. 20% will be deducted if banks have not your PAN number.
Tax paid in advance i.e. before deadline, is termed as advance tax.Individuals who are self-employed must calculate the tax by their own and should pay to the government every quarter.
To calculate tax,
- Add together all the bills along with the future expense you will have until March 31.
- Make deductions on expenses and investments which come under Section 80C.
The tax paid in extra during filing of ITR is termed as Self-Assessment tax. Self-Assessment tax is nothing but the tax that is paid after deadline.