Income Tax Return (ITR) is a self-declaration by the taxpayer about his/her income, assets, and tax paid. Though it is mandatory for some and voluntary for others, the benefits of filing income tax are many. Filing ITR can be a tedious process. However, the government has simplified the process of filing income tax returns over the years. Read to know the step-by-step process of filing ITR online and the documents required for e-filing.
Filing income tax has several benefits, and the following are some of them.
When filing income tax returns, you must submit various documents that act as proof of income, expense or investment. These documents will vary based on the source of income, such as salary, interest income, and dividend income. Following are the documents you will need for e-filing income tax returns.
A permanent Account Number, or PAN, is a unique 10-digit alphanumeric code that the government issues to each taxpayer. It is one of the most important documents to open a bank account, file an ITR, and claim an income tax refund.
It is a unique identity proof that contains the demographic and biometric details of an individual residing in India. The aadhar card is issued by UIDAI, a government agency and is a mandatory document for filing ITR. You will have to link your PAN and Aadhar together to verify your online ITR through OTP.
If you are a salaried individual and are under a company’s payroll, you will have to keep your month-wise salary slips ready to file ITR.
It is a document that proves that your employer has deducted tax or TDS (tax deducted at source) before paying you your salary. Form 16 contains details of salary, tax deducted and paid to the income tax department. As a salaried individual, it is important that you have your Form 16 to file ITR.
If you earn interest income from banks, fixed deposits or recurring deposits, then you will need Form 16A as proof that the banks have deducted TDS before paying interest. Form 16B is for individuals who buy land and property. So, if you sell land, then the buyer must deduct TDS and give you Form 16B. If you receive a rent of more than Rs 50,000, then your tenants will issue Form 16C after deducting TDS.
You will have to provide your bank details, including the account number and IFSC code of all your bank accounts, and select a primary account. The income tax department will use this to refund the additional tax you paid during the year.
You will have to upload your bank account statement for the authorities to check your interest income.
Certain investments qualify for tax deductions under the Income Tax Act 1961. Some of them are tax-saving mutual funds (ELSS), Public Provident Funds (PPF), and National Savings Certificates (NSC). Some expenses, such as insurance premiums, tuition fees, or donations, are also tax-free. All these will help reduce your tax liability, provided you submit proof of the same.
Form 26 AS can be downloaded from the income tax portal and will help claim a tax credit against the TDS deducted. It has details of tax deducted from your income against your PAN. You must ensure that the tax deducted against your PAN is reflected in this form. Else, you must get it rectified with the person who deducted it.
You must collect interest certificates from banks, post offices or other financial institutions. This will help disclose your actual income from interest, which will also act as a verification of the TDS deducted by the banks.
When you sell your shares, mutual funds, or property, the profit you make is called capital gains. These capital gains have to be disclosed to the income tax authorities. Capital gains statements can be downloaded from your demat account provider’s portal for shares and mutual funds. In case of capital gains for property, sale deeds will act as proof.
If you hold shares of unlisted companies, then you will need to disclose them to the income tax authorities.
Interest and principal amount on a home loan is tax deductible under Sections 80C and 24. To claim this deduction, you must provide a home loan statement given by the loan provider.
You must pay advance tax if your tax liability is more than Rs 10,000. If you are a salaried individual, then the TDS your employer, deducts is the advance tax you pay. But if you pay advance tax separately, the tax challan must be provided.
If you earn rental income, rent receipts must be provided to the income tax authorities. Also, you must provide rent receipts to claim HRA if you pay rent.
You will need to disclose if you earn dividend income from your shares or mutual funds.
If you are deployed to a foreign country by your employer and earn income there, you need to disclose it to the income tax authorities.
If your income exceeds Rs 2.5 lakhs per annum, then it is mandatory for you to file your income tax return. The limit is Rs 3 lakhs for senior citizens.
You can file your ITR without the help of a CA. As per the Income Tax Act 1961, there is no compulsion to hire a CA to file income tax returns. But a CA would have better knowledge about the current tax laws, can help you reduce your tax liability, and also help you in avoiding penalties.
If you want to file your ITR for the assessment year 2022-2023, then you are way behind the due date. You can still file it by paying a late penalty. However, if you want to file your ITR for the financial year 2022-2023, you will have to wait until the end of March 2023.
If you earn no income in a financial year, you can skip filing your ITR. However, you can also file your ITR with zero income.
Non-resident Indians (NRI) and Resident Not Ordinarily Resident (RNOR) cannot file income tax in India.
The income tax authorities levy a penalty of Rs 5,000 for late filing.
Any individual, irrespective of age, with an income above Rs 2.5 lakhs should file ITR.
Individuals and HUFs can file income tax online.
If you are an individual below 60 years, your threshold limit is Rs 2.5 lakhs. Hence it is mandatory for you to file ITR. If you are a senior citizen, the limit is Rs 3 lakhs, and you have to file ITR. For super senior citizens, the limit is Rs 5 lakhs, it is better to file an income tax return even in this case.