The first step in filing one’s Income-tax Return (ITR) is selecting the right tax return form. The applicable tax return form depends on the residential status of an individual and total income earned from various sources during the Financial Year (FY) 2020-21.
Who can use ITR-1 form
Many salaried individuals have to use ITR-1 form to file their tax returns. A resident individual having total income up to Rs 50 lakh from salary, one house property and income from other sources can file his return of income using Form ITR-1. It cannot be used by any taxpayer who is either a non-resident or has capital gains or profits/gains from business or profession.
Also, ITR-1 cannot be used by an individual who is either a Director in a company or has invested in unlisted equity shares or in cases where TDS has been deducted on certain cash payments or if income-tax is deferred on employee stock options (ESOPs).
Choosing tax regime in ITR 1
Do keep in mind that an option to choose the concessional tax regime (under section 115BAC of the Income-tax Act, 1961) has been introduced in ITR-1 form, which allows a taxpayer to change the tax regime vis-à-vis the one they would have already declared to their employer at the time of deduction of tax at source on salary payment or adopted while computing advance tax payable during the course of FY 2020-21.
ITR filing mode
A taxpayer may choose to fill the Form ITR-1 in either online mode or offline mode. In the offline mode, one needs to use the JSON utility to fill the details before uploading the same on the income tax website to complete the filing process.
Form ITR-1 comes with certain pre-filled information such as personal details of the taxpayer along with details of salary income, dividend income, interest income, capital gains, etc., and the form can be downloaded from either the government’s income tax e-filing portal or from other tax filing websites. However, with glitches in the new income tax portal, individuals should re-verify the same (pre-filled information in the ITR form) before proceeding to submit it to the tax authorities.
Documents/papers needed to file ITR
It would be prudent for the taxpayer to have all documents pertaining to his/her income/specified investment, expenditure/pre-paid taxes etc. handy. These include Form 16 and 16As, investment proofs not submitted to employer, rent receipts for property given on rent, interest on housing loan certificate, bank interest details, other interest details Form no. 26AS etc.
Step by Step guide to filing ITR-1
Go to http://www.incometax.gov.in and login with your credentials.
1. Go to E-File > Income Tax Returns -> ‘File Income Tax Return’ to be selected from the menu.
2. Select the Assessment Year, applicable status and ITR Form on the landing page and click on “Let’s get started”.
3. Select the applicable reason for filing the return of income as shown below and select ‘Continue.’ Here we have selected ‘Taxable income is more than basic exemption limit’.
4. On the next page, the taxpayer would see 5 tabs under ‘Validate Return’. These 5 tabs are: Personal Information, Gross total income, total deductions, tax paid and total tax liability. Once all the tabs are validated, one needs to confirm the return summary, verify and submit the ITR.
- Personal Information Tab: Personal details of taxpayer (for example name, address, PAN, Aadhaar, Date of birth, mobile number, email address etc.) will get pre-filled in this tab. These details are captured from the taxpayer’s e-filing account, out of which few fields are editable. Also, nature of employment as applicable to the taxpayer needs to be selected.
Next, the taxpayer is required to select filing section and whether he/she wishes to opt for the new tax regime. Thereafter, he/she is required to confirm bank accounts held in India during FY 20-21 and select the bank account to receive the refund (in case more than 1 bank account is reported). Even if a bank account has been closed during FY 2020-21, it must be reported. Upon confirming bank account details, click on Confirm as shown below:
- Gross Total Income: In this tab, the taxpayer is required to select the eligible salary exemptions (for e.g. House Rent Allowance, Leave Travel Allowance, children education allowance etc.) and click on ‘Continue’ to verify all incomes as applicable to the individual. Taxpayer also has an option to skip these questions and the ITR form would capture the exemption details from Form 16 directly, however, if any exemption has not been claimed via taxpayer’s payroll, then it would have to be specifically mentioned under respective question.
In the next tab, the following details will be pre-filed:
– Income chargeable under the head ‘Salary’. This data will be pre-filled from Form 16, thus, individual should verify that all the tax-exemptions from salary income applicable to him/her have been claimed;
– Details of house property – rental income, interest on housing loan will be pre-filled basis the Form 16 (if declared to the employer), last year’s filed return of income and Form 26AS. However, it is advisable to validate the details before proceeding further.
– Income from other sources – Interest from fixed deposits etc. and/or dividend income (if tax is deducted at source). Further, dividend income is required to be reported quarter-wise as shown below:
You need to check your bank statement to see how much dividend you have received in every quarter from companies and mutual funds.
- Total Deductions: Chapter VI-A deductions claimed through employer (already forming part of your Form 16 as well) would be auto-filled herein like deduction under Section 80C towards provident fund, life insurance premium etc., Section 80D towards medical insurance premium. Also, if any such deduction was not claimed through employer, then it can be claimed directly in the return of income by providing requisite details therein. Do keep in mind that these deductions can be claimed only if you have opted for old tax regime in the first tab. If you have opted for new tax regime, then you cannot claim any deductions except for deduction under Section 80CCD(2).
- Tax Paid: Details in this tab would be pre-filled from Form 26AS with TDS, TCS, advance-tax and Self-Assessment Tax (SAT), if any, paid by the taxpayer.
- Total Tax Liability: This tab automatically computes the details of tax payable by, or refund due to, the taxpayer basis the details furnished in the ‘Tax Paid’ tab.
5. Return Summary: It is the summary of all tabs and taxpayer should ensure that all tabs are reflected as ‘Confirmed’ and select ‘Proceed’ to Tax summary tab
6. Tax summary: In this tab, taxpayer can view the tax summary (Nil payable / refund) of the tax return.
7. Declaration tab
Once all the details in the form have been entered, the taxpayer is required to fill requisite details in the declaration confirming that all details provided in the return are accurate and complete and click on ‘Preview Return’.
8. Preview and submit
Taxpayer can quickly verify the personal information, income details and taxes paid in the preview version. Upon verification, he/she should click on ‘Proceed to Validation’ if details entered are correct. In case any errors are noted, taxpayer should click on ‘Edit’ to make the necessary corrections in the relevant tab/section.
Once return of income is filed, an SMS/e-mail intimation confirming the filing is sent by the tax department to the taxpayer. Post successful submission, the acknowledgement (ITR-V) is sent to taxpayer’s registered email id. One can also choose to retrieve it manually from the income tax website.
After successful validation, taxpayer may proceed to verification of tax return either electronically through net banking, Aadhaar OTP etc. or can sign it manually and send it to the CPC, Income Tax Department, Bengaluru within 120 days of e-filing of the return of income.
In summary, while many parts of the ITR-1 form are pre-filled it is important to carefully verify every aspect and modify the same as necessary before the tax return is uploaded on the income tax website.
(The writer is Partner and Head, Global Mobility Services – Tax, KPMG in India.)