Filing Income Tax Returns in India

Last Updated at: October 09, 2020
7441
income tax return

Income tax is a major source of income for any government across the world. It is a crucial duty of the corporates, salaried employees, businesses and other profit-making enterprises to pay income tax and file the tax returns on time. But there is a difficulty in finding out if all citizens have declared their income and paid the tax.

One of the main sources of income for any government is income tax. Corporates, individuals and other profit-earning enterprises are all required to pay income tax and, therefore, file an income tax return. Now, why is this so?

If you’re looking for specific legal services related to tax registration or startup business,,
you might want to browse the services below to see how our team of experts that assures you to
run the business smoothly.

The reason is simple: It is terribly difficult to assess whether anyone is paying their entire tax liability. Even in today’s meticulous tracking system, with computers and PAN Cards, it is tough to say, with certainty, whether citizens are declaring all of their income.

With an Income Tax Return, however, the Income Tax Department can check the declared income against the tax that has already been paid. This makes it easier to check whether any tax is owed or excess tax has been paid.

File Your ITR Right Now.

What is an Income Tax Return?

An income tax return is a form where taxpayers must list the income they have earned in a financial year (including salary or profits, interest from deposits, dividends, etc) and the taxes that they have paid on the same, as indicated in Form 16. An income tax return must be submitted to the Income Tax Department by 31st July, though this is often postponed by a week or two.

For each type of income tax return, there are different income tax forms, all available on the Income Tax of India website.

Steps for eFiling Income Tax Return

Filing your taxes online is easy, requiring no more than an hour of your time if you have all the documents in order.

Here’s what you need to get started:

Bank Statements for Current Financial Year: An income tax return is basically an assessment of whether you’ve paid tax on all that you owe. Your bank statements are a register of all credits and debits of money going in and out of your account and are, therefore, necessary to complete this exercise.

Form 16: Your Form 16 is a record of the tax deducted by your employer in a given year. This form must be issued by your employer by May 31, or two months after the end of the fiscal year. In case you have not recceived Form 16, you can proceed with Form 26A, which can be generated on the website.

Previous year’s IT returns: Before filing the return, you must check whether your taxes from the previous year have been paid fully. Your previous year’s returns must tally with Form 26A.

PAN: All payments are tracked to your PAN or Permanent Account Number. If you can’t find your PAN Card, do have a look at your Form 16. Your PAN will be mentioned there.

Now that you have what you need, let’s get started by going to the Income Tax India website.

Account Registration: This step requires a PAN CARD number, since it will be your User ID. On the home page of the URL, click ‘Register now’. It will take you to the following page:

ITR1

User Type: Select the User Type from the given page, and go on to fill the details, as requested. It will ask for your name, PAN number and date of birth.

Form 26 A: Once you are registered, check the previous year’s statements, the tax paid for previous year, to conform if there is any outstanding tax to be paid. Now, check the TDS of Form 16, the details of tax generated at source. The TDS and the Form 26 A should tally with each other.

ITR1

Current Year’s Return: From the ‘Services’ menu on the home page, click ‘Submit Returns/FORMs’ and choose the current financial year to download the ITR form for the present year. One can file the Tax immediately, by clicking the ‘Quick e-file ITR’ link.

Prepare Returns: The portal will generate a spreadsheet, called ‘Return Preparation Spreadsheet’, which can be used through Microsoft office. You can fill in all the details from your Form 16 in this spreadsheet.

Need Help? If you need any help to generate the amount of tax payable for the current year, and would like to tally it with the Form 16, click on the menu for ‘Tax Calculator’.

ITR3

Enter Challan Details: If there is any outstanding tax to be paid, pay the tax online, and once you get the challan, enter all the details of the challan in the tax returns. The ‘Validate’ tab will confirm all the information before paying the tax.

Save as XML: The receipt and the confirmation can be stored as an ‘XML’ file. It can be downloaded from the website. Once it is prepared, zip the file.

Upload Return: Login into the tax filing page again, and click Upload Return. Select the current financial year (for which you are paying the tax) and upload the filled XML file. Select the option for digital signature as ‘yes’ or ‘no’, depending upon its availability.

Collect Receipt: The last stage is to collect the receipt, in the form of ITR-V. If you have filed your tax successfully, you can download the acknowledgement form, the ITR-V. Fill in the necessary details to download the acknowledgement. This acknowledgement is essential proof that you have filed the returns. A signed copy of this form (ITR-V) is to be sent by speed post, to the Income tax Department, within 120 days of filing the tax returns through online medium.

Finally, a signed copy (signed in blue ink) of this form (ITR-V) is to be sent by speed post, to the Income tax Department, within 120 days of efiling the tax returns through. This is a mandatory requirement, and your filing of IT returns will not be complete without the submission of this form.

The ITR-V needs to be sent to the below mentioned address:

Income Tax Department (CPC)
Post Box no: 1
Electronic City post office
Bengaluru – 560100

Receipt for ITR-V: Once the Income Tax department receives the ITR-V receipt, they will send an email acknowledgement to your registered email id or an SMS to your mobile.

e-Verification of ITR-V: Now, it is possible to verify your ITR–V without sending the receipt by speed post. The Income Tax Department will now e-verify ITR through a unique electronic verification code with digital signatures or through a one-time password generated by linking PAN and AADHAR card.

ATM verification system of ITR-V: From this year on, the Income Tax Department has introduced an ATM-based verification system, through which one can generate the electronic verification code by pre-validating the ATM of the bank where the taxpayers have an account. For now, only State Bank of India has implemented this feature.

ITR4

Who Must File an Income Tax Return?

It is mandatory for most Indians with an income to file a tax return. If you fall under any one of the following categories, you must file your returns:

1. If your income is taxable before any deductions (that is, Rs. 2.5 lakh is you’re under 60 years, Rs. 3 lakh if between 60 and 80 years and Rs. 5 lakh is over, you must file your income tax returns. If your income exceeds Rs. 5 lakh, e-filing of returns is mandatory.

2. If you need to claim a tax refund.

3. If you’re running a company or firm, regardless of whether it was profitable for the financial year.

4. If, as an Indian resident, you have a financial interest outside India. Even if it’s simply as a signatory in a foreign account.

5. If a loss under a head of income needs to be carried forward.

6. If being a resident of India, one is a signing authority in a foreign account.

7. In case you receive income from property that is held under a trust, research organisation, news agency, trade union, hospital or infrastructure debt fund.

8. If you are applying for a visa to go abroad

9. If you are applying for a loan

Income Tax Forms

[table file=”https://vakilsearch.com/advice/wp-content/uploads/2016/08/ITsupersenior-1.csv”][/table]

Advantages of efiling income tax returns

One of the most essential benefits of filing tax online is its speed and convenience. If you know your details and have everything in hand, you can do it anytime.

Another important advantage is that whenever you file tax online, you are creating a financial record online, which can be checked anytime you require.

The ITR-V can be downloaded anytime you need, making it a good storage place for income tax history. This can be used for any other financial transactions, such as applying for a home loan.

FAQs on Income Tax Returns

What if I have no taxable income after making 80C investments?
If you earn over Rs. 2.5 lakh, but, after making tax exempt investments, you fall below any income tax slab, you may think it unnecessary to file your taxes. This is, however, not the case. You can always show that your earnings are less than the slab specified and, therefore, that the tax liability is nil. Download Form 26 A, the appropriate ITR form from the website, and file your tax returns as soon as possible.

What if you have paid excess tax?
Well, there are provisions made by the Income Tax Department through which you can avail of a tax refund. Whatever excess is paid to the government will be refunded to you through a separate procedure. Although the refunds may take some time to reach you or get credited in the specified bank account, you can be assured that it will be done so, within a few months’ time.

What if I there is a spelling error in my ITR form?
India is a vast nation and, with millions of people filing returns every year, it becomes extremely difficult for the authorities or the income tax department to keep track of such errors. If you have filed tax under different initials, even by mistake, you will be considered a separate individual.

My employer has not provided me with Form 16. How will I pay my taxes?
As mentioned earlier, it is possible to file taxes without Form 16. You can register yourself at the portal and generate Form 26 A. This form will give you the details of tax deducted at source and the TAN of the employer. You can go on to file the tax using the above-mentioned steps.

Income Tax Returns for Corporates

The Income Tax Act requires every company to furnish income tax returns annually. The due date for filing of return is September 30 of the Assessment Year. The Assessment Year is the year in which the salary was earned. Any financial year begins from April 1 of every year and ends on March 31 of the subsequent year.

The consequences of late submission range from penal interest, penalty, cancellation of certain deductions, and, in case of losses, reported few losses cannot be carried forward.

In the return the details of high value transactions need to be compulsorily stated, which are ordinarily reported through the annual information return (AIR) and these details are cross checked and matched with the data in the AIR.

How to Compute Corporate Tax

All income – Losses, Expenses, & Allowable Exemptions = Gross Total Income

Gross Total Income – Allowable Deductions = Total Income

Total Income * Tax rate – Relief & Rebates = Tax Payable

Gross Total Income

For the purpose of tax computation total gross income is the aggregate of the income from various sources, after excluding qualifying exemptions, grouped under the following heads:

1. Income from house/property
2. Capital gains
3. Profits and gains of business or profession
4. Income from other sources such as foreign dividends, interests etc. Income from other sources including interest on securities, winnings from lotteries, and also, income of other persons may be included in the income of the company.
5. The income is adjusted for ‘current and brought forward losses’ and qualifying exemptions to arrive at the Gross Total Income, which should be adjusted allowable deductions to arrive at the net income

Allowable Deductions

In computing taxable total income, Gross Total Income should be adjusted for allowable deductions to arrive at the net income, several deductions are allowed which include the following.

1. Capital Allowances – expenses on R&D, mergers & acquisitions qualify for deduction.

2. Depreciation – available at specific percentage depending on the nature of the asset and depreciation not set off against current year’s income can be carried forward for set off against any future income for an unlimited period.

3. Stock/Inventory – valuation at market value or cost whichever is lower.

4. Interest – Interest paid on the borrowings.

5. Losses – can be set off against any other income in the same Assessment Year and against business profits in subsequent assessment years subject to certain conditions.

6. The net income thus arrived is the chargeable income which is subjected to tax  to determine the tax accrued from which the tax rebates and credits are deducted to arrive at the actual tax payable.

To summarize, income tax return is something wherein tax payers should claim the income they earn in a year including profits, salary, dividends, deposits, etc. as indicated in Form 16 and pay the right amount of tax respective of this amount before the deadline specified by the department of income tax. Make sure you aren’t reluctant to pay taxes as it will avoid paying a huge penalty later.

0

Filing Income Tax Returns in India

7441

Income tax is a major source of income for any government across the world. It is a crucial duty of the corporates, salaried employees, businesses and other profit-making enterprises to pay income tax and file the tax returns on time. But there is a difficulty in finding out if all citizens have declared their income and paid the tax.

One of the main sources of income for any government is income tax. Corporates, individuals and other profit-earning enterprises are all required to pay income tax and, therefore, file an income tax return. Now, why is this so?

If you’re looking for specific legal services related to tax registration or startup business,,
you might want to browse the services below to see how our team of experts that assures you to
run the business smoothly.

The reason is simple: It is terribly difficult to assess whether anyone is paying their entire tax liability. Even in today’s meticulous tracking system, with computers and PAN Cards, it is tough to say, with certainty, whether citizens are declaring all of their income.

With an Income Tax Return, however, the Income Tax Department can check the declared income against the tax that has already been paid. This makes it easier to check whether any tax is owed or excess tax has been paid.

File Your ITR Right Now.

What is an Income Tax Return?

An income tax return is a form where taxpayers must list the income they have earned in a financial year (including salary or profits, interest from deposits, dividends, etc) and the taxes that they have paid on the same, as indicated in Form 16. An income tax return must be submitted to the Income Tax Department by 31st July, though this is often postponed by a week or two.

For each type of income tax return, there are different income tax forms, all available on the Income Tax of India website.

Steps for eFiling Income Tax Return

Filing your taxes online is easy, requiring no more than an hour of your time if you have all the documents in order.

Here’s what you need to get started:

Bank Statements for Current Financial Year: An income tax return is basically an assessment of whether you’ve paid tax on all that you owe. Your bank statements are a register of all credits and debits of money going in and out of your account and are, therefore, necessary to complete this exercise.

Form 16: Your Form 16 is a record of the tax deducted by your employer in a given year. This form must be issued by your employer by May 31, or two months after the end of the fiscal year. In case you have not recceived Form 16, you can proceed with Form 26A, which can be generated on the website.

Previous year’s IT returns: Before filing the return, you must check whether your taxes from the previous year have been paid fully. Your previous year’s returns must tally with Form 26A.

PAN: All payments are tracked to your PAN or Permanent Account Number. If you can’t find your PAN Card, do have a look at your Form 16. Your PAN will be mentioned there.

Now that you have what you need, let’s get started by going to the Income Tax India website.

Account Registration: This step requires a PAN CARD number, since it will be your User ID. On the home page of the URL, click ‘Register now’. It will take you to the following page:

ITR1

User Type: Select the User Type from the given page, and go on to fill the details, as requested. It will ask for your name, PAN number and date of birth.

Form 26 A: Once you are registered, check the previous year’s statements, the tax paid for previous year, to conform if there is any outstanding tax to be paid. Now, check the TDS of Form 16, the details of tax generated at source. The TDS and the Form 26 A should tally with each other.

ITR1

Current Year’s Return: From the ‘Services’ menu on the home page, click ‘Submit Returns/FORMs’ and choose the current financial year to download the ITR form for the present year. One can file the Tax immediately, by clicking the ‘Quick e-file ITR’ link.

Prepare Returns: The portal will generate a spreadsheet, called ‘Return Preparation Spreadsheet’, which can be used through Microsoft office. You can fill in all the details from your Form 16 in this spreadsheet.

Need Help? If you need any help to generate the amount of tax payable for the current year, and would like to tally it with the Form 16, click on the menu for ‘Tax Calculator’.

ITR3

Enter Challan Details: If there is any outstanding tax to be paid, pay the tax online, and once you get the challan, enter all the details of the challan in the tax returns. The ‘Validate’ tab will confirm all the information before paying the tax.

Save as XML: The receipt and the confirmation can be stored as an ‘XML’ file. It can be downloaded from the website. Once it is prepared, zip the file.

Upload Return: Login into the tax filing page again, and click Upload Return. Select the current financial year (for which you are paying the tax) and upload the filled XML file. Select the option for digital signature as ‘yes’ or ‘no’, depending upon its availability.

Collect Receipt: The last stage is to collect the receipt, in the form of ITR-V. If you have filed your tax successfully, you can download the acknowledgement form, the ITR-V. Fill in the necessary details to download the acknowledgement. This acknowledgement is essential proof that you have filed the returns. A signed copy of this form (ITR-V) is to be sent by speed post, to the Income tax Department, within 120 days of filing the tax returns through online medium.

Finally, a signed copy (signed in blue ink) of this form (ITR-V) is to be sent by speed post, to the Income tax Department, within 120 days of efiling the tax returns through. This is a mandatory requirement, and your filing of IT returns will not be complete without the submission of this form.

The ITR-V needs to be sent to the below mentioned address:

Income Tax Department (CPC)
Post Box no: 1
Electronic City post office
Bengaluru – 560100

Receipt for ITR-V: Once the Income Tax department receives the ITR-V receipt, they will send an email acknowledgement to your registered email id or an SMS to your mobile.

e-Verification of ITR-V: Now, it is possible to verify your ITR–V without sending the receipt by speed post. The Income Tax Department will now e-verify ITR through a unique electronic verification code with digital signatures or through a one-time password generated by linking PAN and AADHAR card.

ATM verification system of ITR-V: From this year on, the Income Tax Department has introduced an ATM-based verification system, through which one can generate the electronic verification code by pre-validating the ATM of the bank where the taxpayers have an account. For now, only State Bank of India has implemented this feature.

ITR4

Who Must File an Income Tax Return?

It is mandatory for most Indians with an income to file a tax return. If you fall under any one of the following categories, you must file your returns:

1. If your income is taxable before any deductions (that is, Rs. 2.5 lakh is you’re under 60 years, Rs. 3 lakh if between 60 and 80 years and Rs. 5 lakh is over, you must file your income tax returns. If your income exceeds Rs. 5 lakh, e-filing of returns is mandatory.

2. If you need to claim a tax refund.

3. If you’re running a company or firm, regardless of whether it was profitable for the financial year.

4. If, as an Indian resident, you have a financial interest outside India. Even if it’s simply as a signatory in a foreign account.

5. If a loss under a head of income needs to be carried forward.

6. If being a resident of India, one is a signing authority in a foreign account.

7. In case you receive income from property that is held under a trust, research organisation, news agency, trade union, hospital or infrastructure debt fund.

8. If you are applying for a visa to go abroad

9. If you are applying for a loan

Income Tax Forms

[table file=”https://vakilsearch.com/advice/wp-content/uploads/2016/08/ITsupersenior-1.csv”][/table]

Advantages of efiling income tax returns

One of the most essential benefits of filing tax online is its speed and convenience. If you know your details and have everything in hand, you can do it anytime.

Another important advantage is that whenever you file tax online, you are creating a financial record online, which can be checked anytime you require.

The ITR-V can be downloaded anytime you need, making it a good storage place for income tax history. This can be used for any other financial transactions, such as applying for a home loan.

FAQs on Income Tax Returns

What if I have no taxable income after making 80C investments?
If you earn over Rs. 2.5 lakh, but, after making tax exempt investments, you fall below any income tax slab, you may think it unnecessary to file your taxes. This is, however, not the case. You can always show that your earnings are less than the slab specified and, therefore, that the tax liability is nil. Download Form 26 A, the appropriate ITR form from the website, and file your tax returns as soon as possible.

What if you have paid excess tax?
Well, there are provisions made by the Income Tax Department through which you can avail of a tax refund. Whatever excess is paid to the government will be refunded to you through a separate procedure. Although the refunds may take some time to reach you or get credited in the specified bank account, you can be assured that it will be done so, within a few months’ time.

What if I there is a spelling error in my ITR form?
India is a vast nation and, with millions of people filing returns every year, it becomes extremely difficult for the authorities or the income tax department to keep track of such errors. If you have filed tax under different initials, even by mistake, you will be considered a separate individual.

My employer has not provided me with Form 16. How will I pay my taxes?
As mentioned earlier, it is possible to file taxes without Form 16. You can register yourself at the portal and generate Form 26 A. This form will give you the details of tax deducted at source and the TAN of the employer. You can go on to file the tax using the above-mentioned steps.

Income Tax Returns for Corporates

The Income Tax Act requires every company to furnish income tax returns annually. The due date for filing of return is September 30 of the Assessment Year. The Assessment Year is the year in which the salary was earned. Any financial year begins from April 1 of every year and ends on March 31 of the subsequent year.

The consequences of late submission range from penal interest, penalty, cancellation of certain deductions, and, in case of losses, reported few losses cannot be carried forward.

In the return the details of high value transactions need to be compulsorily stated, which are ordinarily reported through the annual information return (AIR) and these details are cross checked and matched with the data in the AIR.

How to Compute Corporate Tax

All income – Losses, Expenses, & Allowable Exemptions = Gross Total Income

Gross Total Income – Allowable Deductions = Total Income

Total Income * Tax rate – Relief & Rebates = Tax Payable

Gross Total Income

For the purpose of tax computation total gross income is the aggregate of the income from various sources, after excluding qualifying exemptions, grouped under the following heads:

1. Income from house/property
2. Capital gains
3. Profits and gains of business or profession
4. Income from other sources such as foreign dividends, interests etc. Income from other sources including interest on securities, winnings from lotteries, and also, income of other persons may be included in the income of the company.
5. The income is adjusted for ‘current and brought forward losses’ and qualifying exemptions to arrive at the Gross Total Income, which should be adjusted allowable deductions to arrive at the net income

Allowable Deductions

In computing taxable total income, Gross Total Income should be adjusted for allowable deductions to arrive at the net income, several deductions are allowed which include the following.

1. Capital Allowances – expenses on R&D, mergers & acquisitions qualify for deduction.

2. Depreciation – available at specific percentage depending on the nature of the asset and depreciation not set off against current year’s income can be carried forward for set off against any future income for an unlimited period.

3. Stock/Inventory – valuation at market value or cost whichever is lower.

4. Interest – Interest paid on the borrowings.

5. Losses – can be set off against any other income in the same Assessment Year and against business profits in subsequent assessment years subject to certain conditions.

6. The net income thus arrived is the chargeable income which is subjected to tax  to determine the tax accrued from which the tax rebates and credits are deducted to arrive at the actual tax payable.

To summarize, income tax return is something wherein tax payers should claim the income they earn in a year including profits, salary, dividends, deposits, etc. as indicated in Form 16 and pay the right amount of tax respective of this amount before the deadline specified by the department of income tax. Make sure you aren’t reluctant to pay taxes as it will avoid paying a huge penalty later.

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A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.