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Income Tax E-Filing in India

Feb 05, 2020 | 2 months ago | Read Time: 4 minutes | By iKnowledge Team
Income Tax E-Filing in India

Income Tax in India

Benjamin Franklin had this to say regarding taxes, “In this world nothing can be said to be certain, except death and taxes”. Every person who earns an income, salary, property, business or investmentsis eligible to pay income tax. The Indian Governmentlevies Income Tax on individuals whose income during the preceding year is above a certain limit. The amount you pay as a tax depends on the income slab for which you are applicable.

Budget 2020 brought in a revamped direct tax regime applicable from financial year 2020–21 onward, aimed at providing individual taxpayers with some much-needed relief. According to the new system of taxation, the income slabs as well as the tax rates have been significantly modified. Here’s a short comparison that details the differences between the old system of taxation and the new tax model.

Income (in Rs.)Old tax ratesNew tax rates

 Up to Rs. 2.50 lakhs

No TaxNo Tax

 Rs. 2,50,001 to Rs. 5,00,000


5% No Tax

 Rs. 5,00,001 to Rs. 7,50,000

20%10%

 Rs. 7,50,001 to Rs. 10,00,000

20%15%

 Rs. 10,00,001 to Rs. 12,50,000

30%20%

 Rs. 12,50,001 to Rs. 15,00,000

30%25%

 Above Rs. 15,00,000

30%30%

In addition to reduced tax rates, the new tax regime shall also exclude from its purview 70 of the 100 or so deductions and exemptions currently available. This effectively means that individual taxpayers under this system would not be able to claim many of the existing deductions under the various sections of the Income Tax Act to reduce their taxable income. Since the new tax regime is entirely optional, taxpayers can choose to go with either the existing system or the new system.

Irrespective of the system of taxation you opt for, the process of e-filing of income tax returns remains the same.

What is Income Tax Return?

Income Tax Return is a tax form(s) you need to file with the Income Tax Department in a prescribed manner. Every year, the Income Tax Department issues different tax return forms for investors to submit based on their income sources.

Income Tax Return E-Filing

Income Tax Return E-Filing in India

With the income tax return e-filing option, you can file your taxes easily. Here are the steps you need to follow to file your income tax return online:

a) Register online

Go to the official website of the Income Tax Department Keep your PAN card handy to complete the registration quickly.

b) Choose how you wish to file your income tax returns

You can file your income taxes in two ways:

Visit the income tax department office and file your returns manually

E-filing your tax returns is a better option because it is easier compared to offline filing. E-filing does not involve tedious paperwork, and you can file your taxes from the comfort of your home. It is convenient, easy to use and minimises manual errors.

c) Pick the applicable income tax return filing form

You must select the applicable income tax return form to fill and submit based on your income sources. The applicable tax forms are:

ITR-1 is for individuals who earn income through salary, house property and other sources like interest income.

ITR-2 is for individuals and Hindu Undivided Families (HUFs) who do not carry out business or profession under proprietorship

ITR-3 is for individuals and HUFs who earn an income through business or profession under proprietorship

ITR-4 is for business professionals

ITR-5 is for firms, Body of Individuals (BOIs), Limited Liability Partnerships (LLPs), co-operative societies

ITR-6 is for companies that do not claim tax exemptions under Section 11 of the Income Tax Act

ITR-7 is for individuals who need to provide tax returns under Section 139(4A) or 139(4B) or 139(4C) or 139(4D) or section 139(4E) or section 139(4F) of the Income-tax Act. This is for trusts, colleges, institutions and political parties.

d) Documents Required for E-Filing Income Tax:

Following documents are required to E-File your Income Tax:

  • PAN Card
  • TDS Certificate
  • Form 16
  • Insurance & Home Loan Documents.

Keep these documents handy to complete the process quickly.

e) Upload the form

Fill in the necessary details in the form and upload it to the website.

Steps to upload ITR

Step 1: Log in to the e-filing website with your user ID, password and CAPTCHA code provided on the webpage. If you are a new user, you must create an account. Your Permanent Account Number (PAN) will be your login ID.

Step 2: Go to the quick link menu and open Form 26AS. Here you will find all the taxes you have paid during the year. This includes Tax Deducted at Source (TDS), advance tax and self assessment tax.

Step 3: Download the appropriate ITR form and fill in details such as:

  1. Name,
  2. PAN
  3. Address
  4. Date of birth
  5. Mobile number
  6. E-mail ID
  7. Investments
  8. Other taxable income
  9. Bank details

Step 4: Click on validate button for all sheets

Step 5: Click on calculate tax

Step 6: If any tax is payable, ensure to pay it immediately

Step 7: Click on generate XML. Save XML sheet on your desktop

Step 8: Go to your online IT account and click on Upload Return

Step 9: Select the appropriate ITR, assessment year and upload the XML file that you have saved previously on your desktop and submit.

Next steps to be followed after income tax e-filing

Once you finish uploading your ITR form, you will receive an acknowledgement number from the website in case you submit the form with a digital signature. However, if you submit without a digital signature, you will receive the ITR-Verification (ITR-V) form on your registered e-mail address. Verify this form online or mail it to the Income Tax Department Centralized Processing Centre (ITDCPC) in Bangalore within 120 days from filing the return to complete the process.

Conclusion

It is mandatory for all individuals who earn income (above a certain limit) to pay tax and file their income tax returns in India. The IT department provides a certain time limit for taxpayers to file their income tax returns. In case you don’t file your returns within this window, you are liable to pay the penalty for late filing of tax returns. You can avoid this by e-filing your ITR.

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