Our Two Cents: Filing your own ITR
A small guide on end-to-end ITR Filing
A quick introduction before we begin: You will hear from us every Monday and Friday at 9 am on the dot. The newsletter has 2 segments- one covers all things personal finance and the other is a miscellaneous (read: chaotic) college-related collective. Monday’s newsletter, titled ‘Our two cents’, is dedicated to personal finance and this is where we divulge our college-centric take on the subject of saving, budgeting, investing, and the like. Friday’s newsletter, titled ‘In other news’, covers just about everything else- from research papers to student loans to so much more. And with that out of the way….
Hi there! Top of the morning to you. It’s that time of the week again. In today’s edition, we talk about what ITR is and how to file your income tax returns all by yourself. Without further ado, let’s dive into it.
📨 A little context
An ITR is basically a tax return form used by taxpayers to declare their income, assets and taxes paid to the Income Tax Department. It is mostly filled online, but there’s an option to manually file it too.
🔍The focus
#1 Who files ITR?
It’s not mandatory for all individuals to file ITR. However, the ones that check the below boxes must do so:
Income exceeding the exemption limit: The exemption limit for a regular taxpayer is ₹2.5 lakhs, ₹3 lakhs for senior citizens, and ₹5 lakhs for super senior citizens. Incomes above this limit are considered as taxable income.
Owner of foreign assets: An individual that owns assets outside of India and earns an income from the same must file ITR.
Electricity bill amount: A person who pays more than ₹1 lakh for electricity within the fiscal year must file ITR.
Bank deposits: An assessee depositing more than ₹1 crore in one or more bank accounts in a financial year should file ITR.
Overseas travel costs: One should file ITR if they spend more than ₹2 lakhs in overseas travel during a single financial year.
Claim Refund: Those who wish to claim a refund on excess tax paid must file ITR.
NRIs: NRIs who earn more than ₹ 2.5 lakhs in a financial year are also required to file IT returns.
#2 Why file ITR?
Apart from the fact that filing ITR is mandatory for certain categories of individuals as mentioned earlier, there are quite a few benefits of doing so as well:
Legal Document: Since it’s a record with the government, it could serve as both an identity and income proof.
Claiming Deductions: To reduce tax burden on taxpayers and encourage more people to pay their taxes, the government allows deductions on some investments. TDS and rebates can also be claimed back. But, in order to do this, one needs to file ITR.
Availing loans: When you apply for a home loan, a car loan, etc, the bank asks for your last three years’ ITR to assess your past and present financial situation.
Easy Visa Processing: ITR is considered to be legal proof of one’s income and tax compliance. It is often considered by numerous host countries during visa processing and does ensure the ease of obtaining a visa.
Losses carried forward: The Income-tax Act 1961 contains a couple of provisions for carrying forward losses from business, house property, etc of a particular year to the next assessment year. You need to file ITR to avail the same.
Avoiding penalties and late filing fees: Late fees up to ₹10,000 may be charged on late filing of ITR. This late fee is in addition to other penalties that may be levied under the Income Tax Act.
#3 How to file ITR online?
Resident individuals with an income of ₹50,00,000 or less (from salary, house property, pension or agriculture (up to ₹5,000)) can file ITR-1.
Step 1: Visit the Income Tax e-filing portal.
Filing of ITR-1 is available to registered users on the e-Filing portal. Log in to the website by entering your user ID or PAN, password, and captcha code. Go to the 'e-File' menu and click on 'Income Tax Return' to file your return. This will redirect you to the Income Tax Return Page.
Step 2: Enter your details.
Assessment Year: An assessment year is the financial year after the financial year in which income is earned.
ITR Form Number: You can file ITR 1 and ITR 4 online
Filing Type: You can select 'Original/Revised Return' under ‘filing type.’
Submission Mode: You can select 'Prepare and Submit Online' here
Mode of filing: Select ‘online’ here and proceed.
Step 3: Select your status (Individual, HUF, firm, etc) and form (it will be ITR-1 for most of us).
Step 4: ITR 1 has 5 sections in total:
Personal Information: This includes basic details such as your full name, PAN and Aadhar number, contact details and bank account details
Gross Total Income: Here, you need to enter and verify income from sources such as salary/pension, house property, and other sources (such as family pension). You will also be required to provide details of exempt income, if any.
Total Deductions: The Income Tax Act offers deductions under various sections (80C, 80D, 80TTA, etc) which need to be claimed. These must be added and verified while filing ITR in order to claim them.
Tax Paid: This section will reflect the tax paid by you from all sources such as TDS, Advance Tax, Self-Assessment Tax, etc in the previous year.
Total Tax Liability: This section will reflect the tax liability computed as per the previous sections filled by you. It will basically show you the tax payable (gross total income - total deductions - tax paid so far). If the amount is negative, you can claim it as refund. If it is positive, it needs to be paid as tax.
Step 5: Summary of tax computation.
The portal will show you a summary of your tax computation for the year as per the information filled by you. It will display whether you owe any tax or are eligible for a tax refund. You can either pay immediately or later if there is further tax liability. You can preview and submit your return by entering your place of residence.
Step 6: Validation.
Click the ‘Proceed to Validation’ option. If there are errors, you can check them. If not, you can move to verification. You can either e-verify immediately, within 120 days from ITR filing, or verify via speed post within 120 days from the date of filing.
If you opt to e-verify, you can complete the verification by generating the Electronic Verification Code (EVC) through your Bank’s ATM or One Time Password (OTP) through your Aadhar Card. You can also use a pre-validated Bank or Demat Account for e-verification.
Step 7: Submit the ITR.
Click on 'Submit' to submit the ITR. Once you successfully upload the Income Tax Return, you will receive an acknowledgement at your registered email address. And that’s it!
👋🏻 Bye-bye
………Aaand that’s a wrap. See you Friday :) Of course, we can correspond earlier if you have feedback or a topic you want us to cover. Feel free to use the comment section or write to us at witmeup.in@gmail.com. Alternatively, you can anonymously provide your valuable feedback here. Thanks, and toodles!