What is ITR?
Income Tax Return (ITR) is a form in which the taxpayers file details about his income earned and tax applicable to the I-T department. Every taxpayer should file his ITR before or on the specified date. The applicability of ITR forms differs depending on the annual income of the taxpayer, sources of income, more than one house property, etc.
To file ITR, you must register on the e-file website of the Income Tax Department. Below are the steps describing how to file an ITR.
- Collect the documents needed in the process
You have to collect all the documents required to file your ITR like Form 16/16A, interest certificates, and salary slips. These documents will help you in computing gross taxable income and will give you details of tax deducted source (TDS) for various transactions.
Form 16 is a TDS certificate given by your employer if tax is deducted from your income and Form 16A is a TDS certificate which bank issues when TDS is deducted from interest earned by you in FD (fixed deposits), or from insurance commission paid.
The TDS certificate received by you must be digitally signed. It will have a check mark indicating the verification of the signature. Non-verified signatures will bear a question mark over it. You will need to verify it. Similarly, if you have regained the mutual fund units in FY 2019-2020, you can ask for the transaction statement and a capital gain statement for the same from mutual funds.
- Download and check Form 26AS
Form 26AS is an annual combined tax credit statement which contains all the details about the tax that is deducted from your income during the FY 2019-20 and is deposited against your PAN. You must cross-check your TDS certificates with Form 26AS to ensure that the TDS deducted from your income, interest, etc is stored with the government against your PAN.
- Rectify the errors in Form 26AS, if any
If the amount displayed in TDS certificates(Form 16 / Form 16-A) and Form 26AS do not match, then you must go to the deductor and request him to correct the details. The deductor can be your employer, bank, etc.
If the error is not rectified, then you will not be able to claim the credit on the tax that is deducted. If the amount is deducted but not deposited with the government and the deductor is also not paying attention to your complaints then you must read the circular issued by the Central Board of Direct Taxes (CBDT).
- Compute the total income chargeable to tax
Once you have collected all the documents required and verified all the taxes deducted from your income, you need to compute the total income for the financial year. Compute the total income by adding the incomes under 5 heads based on your residential status and claiming all the applicable tax deductions, and setting off losses.
Remember to fill salary details in ITR, as information can easily be found in Form16. In addition to that, you have to provide source wise bifurcation of the incomes taxable under “Income from other sources”.
- Compute your tax liability
After computing your total income, you must compute your tax liability. Your taxable income minus your tax deductions is equal to your tax liability.
- Calculate final tax payable if any
Once you have calculated the tax liability in the previous step, deduct the taxes that have already been paid by you via TDS, TCS, and Advance Tax during the year. If there is any interest to be paid under sections 234A, 234B, and 234C, add it. If your self-assessment tax liability is more than 1 lakh this year, and you haven’t paid it before July 31, 2020, then penal interest will be increased.
This will show you the taxes that are already paid by you, any additional tax you have to pay, or if you have paid any excess tax then a refund is due for you. If any additional taxes are due, then you can pay them through physically, or online using challan 280.
- File Income Tax Return
If you have to retrieve the excess tax from ITR, then you have to file an ITR. Once you pay all the due taxes, you can start the process to file your ITR. While filing an ITR, make sure that you have a correct ITR form to file it because if you file the ITR against the wrong form, then it will be considered as a defective return and you will be required to file it again.
ITR can be filed by downloading the software in Java utility or Excel. However, taxpayers who are allowed to file ITR-1 and ITR-4 also have the option to file it without downloading the software. If you are allowed to file ITR-1, then you have the option of “Prepare and Submit Online” without the need to download any software utility.
- ITR Verification
It is the last step of ITR filing. There are 6 ways to file your ITR. Out of this, five are electronic methods and one is physical verification. If you want your tax-return verified electronically, then you don’t need to send any documents to the tax department.
However, if you desire to verify your return physically, then you have to send the duly signed copy of ITR-V/Acknowledgement to ‘CPC, Post Box no.1, Electronic City Post Office, Bangalore – 560100, Karnataka, India. After you file ITR, you have 120 days to check it. If you don’t verify it, then it will be considered as you have not filed it.
In case, you forget to verify your ITR, then you can request your assessing officer.
- E-verification acknowledgment
- If you verify your ITR through the electronic verification method then you will receive the confirmation from the tax department immediately.
- If you have sent ITR-V through a post, you will get an email from the Income Tax department confirming that your ITR-V has been received. The email will be sent to the email address you have registered in your e-filing account on the e-filing website of the I-T department.
After the department verifies your return, it will start processing your tax return ensuring that all the detail that has been filled by you is correct according to the Income Tax Act. The I-T department contacts you via email. If they found any discrepancy, they will ask you to explain further or correct the errors made while filing the ITR.
