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Business News/ Money / Calculators/  Tax filing gets faster, easier, better
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Tax filing gets faster, easier, better

A guide to the forms to be filled while filing returns, how to file both offline and online, the new rules and more

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It is time again to evaluate all your earnings of the previous financial year (FY)—1 April 2015 to 31 March 2016—and file your income tax returns (ITR) accordingly. If there are any taxes left, after taking into account tax deducted at source (TDS) and advance tax paid, those, too, have to be paid. Similarly, if excess tax was deducted, make sure you claim a refund. To do all this work, you have till 31 July—almost a month. However, it is better to do the needful as early as possible. By now, salaried employees would have received their Form 16 from the employer, apart from income and TDS proof from other sources. As per the income tax rules, an employer has to give employees their Form 16 by the end of May. Filing tax returns can be an easy process if you know what to do. Read on to find the details that are relevant to you—which forms to fill, how to file offline and online, and more.

Types of ITR forms

After you have understood what your income was in the previous year, it’s time to file the tax returns so that you can pay any taxes that may still be due, or claim for refund, or neither of these two. The first step would be to find which form you need to use to file the tax return. There are different types of ITR forms applicable to income tax assessees, based on the nature of income one has. (See table: Which ITR form is for you.) For instance, if during the previous fiscal, your income source was only salary, then you need to file return under form ITR1. If you generated income from sources besides salary, say, from a house through rental income, or as interest from a fixed deposit, then also you can use ITR1. If, along with salary income, you earned from capital gains, you need to file your returns using ITR2.

Therefore, before you jump into filing your tax return, identify the sources of income and accordingly choose the relevant ITR form. If you use the wrong form, the return will be rejected. In order to identify your incomes, or even to file your return, you need to have various documents (See table: Checklist of documents). Once you have all the necessary documents, you can think about how to file.

Over the years, most income tax related work has become electronic—be it filing returns, paying taxes, obtaining TDS certificates or getting access to various types of information. However, the offline format has not been stopped so that even those with low incomes can file their tax returns offline.

Filing returns offline

Only those with a taxable income less than 5 lakh in the previous financial year can file their tax returns offline; all others have to mandatorily e-file their income tax returns. Also, irrespective of the amount of income, anyone who is eligible for a tax refund has to file returns online.

If an eligible assessee decides to file her return offline, she can either download the relevant ITR form from the income tax website or she can collect it from the nearest income tax office. She has to write down all the details required in the form, and then submit it to the assessing officer concerned or to the help desk (these are called Aaykar Sampark Kendra). Along with the ITR form, she also has to fill up the acknowledgement form, which includes a summary of the ITR filed. The stamped copy of the acknowledgement form is given back to the assessee.

While a person with taxable income less than 5 lakh can choose between filing return online or offline, the former is easier. The online process not only makes things simpler by providing forms with pre-filled personal details, based on the previous year’s ITR and Permanent Account Number (PAN), it also helps you maintain documents and allows you to access these through the e-filing account. Moreover, if you miss out on some information, the online software warns you about it. It also calculates the tax payable or any refund due based on the income and deductions filled in the return. Therefore, the chances of wrong calculation are minimised.

Filing returns online

You can e-file your return either directly on the income tax website (https://incometaxindiaefiling.gov.in/) for free, or you can use a private service provider’s platform. The non-government sites offer different packages and plans, depending upon the number of income sources they cover and the process involved.

How to e-file using the government website: Over the years, the government website, too, has evolved. Earlier, the process was only partially online; now it is fully so, but you can do both. In the partial online process, you first need to download the relevant ITR form, and save it on your desktop. Fill the details offline, save it, generate an XML file and save that on the desktop. Then, if you don’t already have a user ID and password, get these using your PAN. Once you have created an account, log in and click on the relevant form on the left panel and select ‘Submit Return’. Browse to select the XML file that you had generated earlier, and click on ‘Upload’. After you upload the XML file, acknowledgement details would be displayed on the screen.

In the fully online process, you don’t have to download the form and fill it offline. You can directly login to the e-filing website with your user ID and password, fill the relevant form online and upload it.

How to file through a service provider: Till a few years back, most online return filing portals catered only to salaried individuals. However, now many of them offer to file all types of tax returns, be it related to income from salary, business or profession. If you want to use a service provider’s platform, get clarity on the cost and features offered before making a choice. A simple ITR, for which all the information is available in a Form 16, can be filled with ease; little manual work is needed. You need to upload a PDF copy of the Form 16 and the software picks up the relevant details and fills the ITR form for you. While there are do-it-yourself options on private portals, if you need assistance, there will be a cost attached. For instance, if someone has income only from salary and wants to file tax returns on her own, ClearTax.in offers free-of-cost use of its platform. But if the user needs an expert’s help, she has to pay 499. TaxSpanner.com has plan which is free of cost. It also has a plan where it charges 249 for someone who wants to file returns on her own, and 499 for assisted filing.

Before zeroing in on a service provider, look at the quality of the content on its website and whether it is authorised by the income tax department. You must remember that when you file your returns online, you are sharing important personal financial details, such as your income, savings and investments, bank account details, and so on. So, it is important to check the ‘confidentiality and privacy policy’ of the service provider. Choose a service provider after you are assured that your information will not be shared with others.

New points to consider

While most assessees would provide information of relevant expenses and investments to their employer, you may have missed out on some. It may be the expenses and investments took place within the financial year but after you had provided documentary proofs to your employer. For example, a preventive health checkup may have been done on 15 March and you were not able to include bills as the last day to submit investment proof was 25 February. Such details that could not be included earlier, can be mentioned when you file your tax return. So, you should be aware of the new tax deduction rules.

In 2015 Budget, a few deduction limits were increased and some new ones were introduced. Tax deduction under section 80D of the Income-tax Act, 1961, against health insurance premium or preventive health check-ups was increased from 15,000 to 25,000. For senior citizens, this went up from 20,000 to 30,000. An additional deduction of 50,000 was introduced under section 80CCD for investments in National Pension System (NPS). This was over and above the standard limit of 1.5 lakh under section 80C.

“The new ITR forms provide a specific space to claim the deduction under investment made in NPS. Take note of that space while filing tax returns if you have made this investment," said Homi Mistry, partner, Deloitte Haskins & Sells LLP.

Also, whether filing on your own or with the help of a service provider, don’t forget to claim tax collected at source (TCS), if any. “TCS at the rate of 1% is collected from taxpayers when they purchase jewellery in cash exceeding 2 lakh in value. Credit of TCS can be claimed against the total tax liability," said Archit Gupta, chief executive officer and founder, ClearTax.in. “Credit for TCS can now be claimed via ITR-1, ITR-2 and ITR-2A. Earlier, it was not present in these forms," he added.

Complete the process

Filing the tax return itself does not mean the process is over. Don’t forget to verify the form. If you have a digital signature, use that and submit the form. Even if you don’t have a digital signature, you can verify the form online through a one-time password (OTP) generated using Aadhaar, Internet banking or even your ATM card. However, as of now, only State Bank of India offers OTP generation through ATM; more banks are expected to follow soon.

Once you e-verify the return, take a printout of the acknowledgement. The process is now complete. Save a copy for your record. If the return is not digitally signed, then generate the ITR-V Form, sign it and mail it to the income tax processing centre in Bengaluru, either by ordinary post or speed post, within 120 days of e-filing the return.

The process of tax filing has become easier over the years—online processes have been introduced; you no longer need to attach documents to the ITR; and many documents are available online. Now you have about a month’s time to make use of these features and file your income tax return.

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Published: 03 Jul 2016, 11:52 PM IST
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