According to a report published in the Economic Times, the Income Tax department of India recorded an all-time high number of 49 lakh 29 thousand income tax returns filed on a single day on 31st August 2019. This year also witnessed a 4% rise in the total number of ITRs filed from FY2018. This was in response to the 1.8 Crore emails sent out by the IT department requesting individuals to file their IT returns on time. Thus, it can be safely concluded that more Indians are becoming aware of the importance of filing ITR and declaring their gross taxable income for a financial year.
Quick look into ITR filing in India
- 5.65 Crore – Total number of ITRs filed till August 31st 2019, marking a rise from previous year’s 5.42 Crore ITR filing.
- 1.5 Crore – Total number of ITRs filed in the last 5 days of August 2019.
- Rs. 11.5 Lakh Crore – Total estimated revenue collected for the fiscal year 2018-19.
- 2.86 Crore – Total number of taxpayers, constituting of about 79% of the total number of the same, who have opted for e-verification of their ITRs through Aadhaar OTP.
For those unfamiliar with filing ITR, the process might seem complicated at first. But it is crucial to learn the process of filing of income tax returns because failing to declare your taxable income can attract legal consequences in the form of penalisation and hefty fines.
Additionally, ITR is also required as a proof of tax returns to avail various financial services and products like home loans, business loans, etc.
For instance, the ITR-V generated after successful filing of returns is one of the most important documents required for home loan approval.
Following is, thus, a guide of how to file income tax returns to simplify the process for first-timers.
Who should file ITR?
Anyone with a gross taxable income above the basic tax exemption limit is required to file ITR. According to the IT department of India, following are the latest income tax slabs and tax rates for FY 2019-20.
Individuals with an income of up to Rs. 2.5 Lakh and below 60 years of age are exempt from income tax. For individuals above 60 years, the income of up to Rs. 3 Lakh is exempt from taxation. Individuals with an income above Rs. 2.5 Lakh are liable for taxation according to their applicable income slabs.
These taxation slabs are different for those between the ages of 60 and 80 years and above. Thus, individuals under the requisite taxation slabs are required to file their income tax returns.
Following are some tips that can assist them income tax return filing.
- Keep the relevant documents ready
There are a few documents that an individual must keep ready while filing for their income returns. These are –
- Form 16, which declare you’re the tax deduction at source or TDS by your employer.
- Form 26AS, which gives your tax credit statement.
- Aadhaar card.
- PAN card.
- Housing loan certificate.
- Statements for share trading.
- Various investment details like PPF, LIC, Health Insurance, etc.
Form 16 and 26AS are the two most important documents for filing ITR as an individual’s entire ITR is processed based on these two documents.
- Choose the right form while filing ITR
The type of income tax return form should be chosen based on your income and the type of assessee you are. There are 4 types of ITR forms, among which ITR-1 and ITR-2 are the most important. Individuals with gross annual income below Rs. 50 Lakh can file their returns through ITR-1 while those with above Rs. 50 Lakh have to file their returns through ITR-2.
- Include interest and all other income
For e-filing income tax, individuals must disclose their accurate income and interest earned from savings account/s and such other investments, whose records are not with the Income Tax Department. Failing to declare every income can lead to the imposition of heavy penalties.
- Follow the steps below to file your ITR
- Fill in your ITR form available at the official website for income tax returns.
- After filling the form, fill in the requisite income details and verify the information by providing requisite documents.
- After submitting income details, the website will automatically calculate your tax liability.
- After this amount is calculated, a tab will display the amount you have already paid, the amount to be paid and your refund amount. In this step, you will also have to fill out the details of your financial institution.
- Next, check and verify the details provided and upload it.
- After uploading the details, the ITR-V will be generated and will be sent to your email ID. ITR-V is the document that verifies if your ITR filing is successful.
The ITR-V is an extremely important document you need for home loans and other advances from financial institutions in India. For instance, if you want to avail a high value loans of up to Rs. 3.5 Crore from Bajaj Finserv, you will need to submit this document during the application process.
Therefore, to avail this advance and more, make sure that you clear your tax payments and file your tax returns before 31st August. Failing to do so within the stipulated date can lead to penal charges and land you with a hefty fine.