The Income tax return is filed to declare the annual income of a taxpayer. There are various reasons for filing an income tax return such as claiming tax deductions, tax refund, declaration of income for a particular financial year, and carrying forward the losses of a particular financial year. It is a form enabling the declaration of investments, income, and expenses, taxes, tax deductions, etc. As per the Income Tax Act 1961, taxpayers must file an income tax return every year. You can easily file it online through the e-filing facility provided by the Income Tax Department. However, it is essential to collect all the mandatory documents for calculating data before filing an ITR.
Collect required documents
The first step to file an income tax return is to collect all the important documents required to file an ITR. This makes the process fast and easy. You can easily compute your gross taxable income and details of the TDS (Tax deducted source) from your total income. The list of documents include:
- Form-16
- Interest certificates from bank and post office
- Form-16A/Form-16B/Form-16C/Form-16D
- Documents related to income proof commonly including- Public Provident Fund (PPF), Life Insurance Premium, Mediclaim Premium, Employer’s Provident Fund (EPF), National Pension System (NPS), and Investments in equity-linked savings schemes (ELSS), Home loan principal repayment, Tuition fees paid for children, National Saving Certificate (NSC), Mutual funds, etc.
- Salary slips
- Interest certificates
- Form 26AS
- Bank account details
- Aadhar Card details
- Pre validation of bank account for ECS refund
- Capital gains- Income earned through the sale of a property/mutual funds/equity shares.
Download and check Form 26AS
Form 26AS is a consolidated annual tax statement that includes the details of all taxes deposited against your PAN. It includes-
- TDS deducted by banks, employers, and any other organizations through payments made to your account.
- Self-assessment taxes payment made by you
- Advance tax deposit during the particular financial year.
You can easily download Form 26AS from the TRACES website.
Rectify the errors in Form 26AS, if any
Login to your account on the e-filing website www.incometaxindiaefiling.gov.in After login, click on View 26AS (Tax Credit) under the “My Account” tab. It will redirect you to the TRACES website for downloading the form. You need to ensure that all the taxes deductes for any particular year is reflecting against your PAN in the Form-26AS. If you find any error, request the deductor to rectify it or you will be unable to claim the tax credit for TDS deduction.
Compute total income for the financial year
As per the Income Tax laws, a taxpayer should calculate his/her income applicable on their income. The calculation includes income from all the sources including salary, freelancing, capital gains, and income from rent and interest. Total income is calculated by adding different incomes under the five heads and claiming the relevant deductions as per the Income Tax Act and setting off any kind of losses. Additionally, details related to filing salary details are easily available through Form-16.
Compute your tax liability
After calculating total income, compute your tax liability by applying tax rates in force for the particular financial year as per your income tax slab. Taxpayers should consider any TDS, TCS, or any advance tax paid by them. Besides, they can claim the deductions available from tax-savings investments as applicable under Section 80C and others. After calculating all the taxes, file for the final income tax return. If extra tax is paid, it will be returnes by the Income Tax Department within a few weeks of filing an ITR.
Calculate final tax payable, if any
Once the tax liability is calculate, deduct the taxes paid through various sources during that year. Add any interest payable under sections such 234A, 234B, and 234C. If the tax liability is not cleared within the due date, a penalty is levies. For example, if your income is Rs. 1 lakh for FY19-20 and the tax is not cleares before July 31, 2020, a penalty is applicable. In case any additional taxes are due, they can be paid individually via cheque or online by using Challan ITNS 280.
Verification of ITR It is the last step of filing an ITR. There are 6 methods to verify your ITR amongst which 5 are electronic methods and one is the physical verification method. In the case of filing an electronic ITR, you don’t need to send any documents to the Income Tax Department however in case of physical ITR, a duly signes copy of ITR-V/Acknowledgement needs to be sent to ‘CPC, Post Box No. 1, Electronic City Post Office, Bengaluru- 560100, Karnataka, India.’ You have a minimum of 120 days to verify an ITR and in case you have missed the deadline you can again place a request to your assessing officer.
