What is ITR (Income Tax Return)?
ITR is a form using which an individual can file his tax returns (if return is applicable) for every financial year in India.
Why to file ITR?
In India if you fall under below conditions you have to file ITR.
- Gross annual income is > 2,50,000 and age is < 60 years
- Gross annual income is > 3,00,000 and age is between 60 and 80 years
- Gross annual income is > 5,00,000 and age is > 80 years
- More than one source of income like house rent, other investment profits etc.,
- If you wanted to take a loan
What ITR contains?
ITR will have all your salary details, investment details, HRA (House Rent Allowance)/ Housing Loan details, Tax paid, balance tax to be paid/return.
Types of ITR – ITR1, ITR2, ITR3, ITR4, ITR5, ITR6, ITR7.
We are going to see detailed information on ITR1 and difference between ITR1 and ITR2 and who can choose these categories.
Difference between ITR1 and ITR2
ITR1 to be chosen when below conditions are applicable for you
- Gross annual income is < 50 Lakhs
- Other income sources
- One house property
ITR2 to be chosen when below conditions are applicable for you.
- Gross annual income is < 50 Lakhs
- Other income sources
- More than one house property
- Income from foreign income/assets
What is Financial Year?
Generally a year is considered from January to December.
But when it comes to any organization/ company, the financial year refers to the accounting closure period, and usually it’s from April 2018 to March 2019.
Our ITR filing is also for this period only. You will receive your Form 16 for financial year April 2018 to March 2019, in June 2019 or July 2019. Using which you have to file your ITR on or before July 31st every year. (This due date might vary based on the government announcement)
What is Assessment Year?
Assessment year is a year in which you will be filing your ITR for the previous financial year.
If you are filing ITR for Financial year 2018 – 2019, then your assessment year would be 2019 – 2020.(you are filing ITR by July 2019 – which falls under assessment year as mentioned above).
NOTE: if you missed to file your ITR in current assessment year, then you have to/ will be filing it in next assessment year.
What is Taxable income?
Let me explain with an example. Say Mr.X gross salary is 9, 00,000 p.a.
As per government norms, up to 2, 50,000 there is no tax.
So reduce it from 9, 00,000 – 2, 50,000 = 6, 50,000 <- Current Value
You are eligible to invest 1,50,000 under 80C categories like – Provident Fund, Public provident fund, Fixed deposits, Tax Saving Mutual Funds, Life insurance premium, Post office time deposit scheme, etc.,
So you can reduce 80C amount from your Current Value. 6,50,000 – 1,50,000 = 5,00,000
As part of medical bills reimbursement 40,000 is exempted from gross salary. So 5,00,000 – 40,000 = 4,60,000 <- Current Value
HRA (House Rent Allowance) or Housing Loan can be shown for tax exemption. Both limit varies for each individual and organization.
Hence your final Taxable income would be = 4,60,000 – (HRA or Housing loan)
You will fall under different tax slabs based on the taxable income(this is considered as your annual income)
If your Annual income is less than or equal to 2,50,000 – no tax
If your Annual income is between 2,50,001 and 5,00,000 – 5% tax
If your Annual income is between 5,00,001 and 10,00,000 – Rs. 12,500 + 20% tax
If your Annual income is above 10,00,000 – Rs. 1,12,500 + 30% tax
NOTE: You will be able to use this 80C deduction only when you have a valid proof of the investment and submit it. These proofs can be submitted in your organization itself before mid of December every year. You might ask what about the rest of the 3 months – Jan, Feb and Mar. How to submit the investment proofs for these 3 months if I submit it in Dec itself for that financial year? Well the answer for the above question would be complicated if you are trying to do investment on monthly basis, where in you will get your bills for every month after you pay. For this situation, you can submit the bills during the ITR filing and get the excess tax as returns if applicable.
Now let’s dive into the steps of filling ITR1. Follow these steps to get your tax returns easily.
Prerequisites for filing ITR
- Get your FORM 16 from your employer. Make sure it have both Part A and Part B. (Usually you will receive Form 16 from your employer before June end or July 1st week.)
- Go to ClearTax website using following link -> https://cleartax.in
- Register in Government e-Filing website using following link - https://www.incometaxindiaefiling.gov.in/home and get the login details for yourself
- Get your Aadhar card linked with your mobile number (not mandatory but would be easy for e-verify your return filing)
How to File ITR1 using ClearTax ?
Login into ClearTax with your username/email and password.
Have your Form 16 pdf ready and click on “Upload Form 16 PDF” as seen below.
As seen below, click on “Choose File” button and select your form 16 pdf file that you have.
NOTE: Form 16 pdf will contain both PART A and Part B in same pdf. There are chances where you can have 2 PDF’s one for PART A and one for PART B. If there are 2 PDF’s then upload Part A first and then it will ask for PART B, then upload PART B next.
Enter your date of birth in following format – DD/MM/YYYY
As seen below your Form 16 PDF name can be seen after uploading.
Click on “Proceed” button.
You will see a screen to enter the PDF’s password. After entering the password, click on “Continue” button.
NOTE: The password of Form 16 PDF will be provided by your employer. Usually it will be either your PAN Number or your Date of Birth.
You will see below screen after uploading your form 16 and entering its password.
Under “A.PERSONAL INFO” section, your personal details and address details will be there.
NOTE: Few of your details will be auto populated in the screen from your Form 16, you can check and modify if any of the information is not there/ incorrect.
After entering/verifying the personal info, click on “Save” button. You will see the ADDRESS details section automatically.
After entering/verifying ADDRESS section click on “Save” button.
After Step 5, you will see below screen for “Income Source” details.
NOTE: If you have worked for more than 1 organization in a financial year, then you have to get FORM 16 from each employer. (Mostly when you leave an organization, they will send you form 16(Part A and Part B. If not you have to get it without fail)
If you have worked for more than one organization/company, then you can upload your other Form 16 by clicking on “Add another salary” button as seen in below screen.
After uploading your 2nd form 16, you will see both the details as seen below. You can edit your salary details if required using “Edit Salary Details” button.
NOTE: If you are working in same organization in that financial year, then you will have only 1 form 16(part A and Part B). Then you will not see multiple salary details as seen in below screen.
Under “B. OTHER INCOME”, you can add the details of other incomes if you have, otherwise leave it blank, and click on “Save” button.
Similarly under “C. HOUSING PROPERTY”, “D. CAPITAL GAIN”, “E. BUSINESS & PROFESSION” enter the details that are applicable for you otherwise leave it blank and click on “Save” or “Go to Next” button.
NOTE: All the fields are self-explanatory, hence not giving detailed info on those. If you scroll down, you can even see more boxes where you can fill in the details. Clicking on “Save” button will redirect you to the next page.
“DEDUCTIONS” will have all the details of the amount that are reduced from your taxable income.
Check the details that are auto populated, or enter the correct details under “A. SECTION 80 DEDUCTION”, “B.MORE DEDUCTION”, and “C.OTHER DEDUCTION”.
NOTE: All sections are auto explanatory so we are not going in depth details of each section.
“TAXEX PAID” section will contain the details of the tax that you paid already or that you have to pay before filing.
Under “A.TDS” will show you the tax amount that already deducted from your salary by your employer, and your annual income as seen below.
NOTE: TDS means Tax Deducted at Source.
Under “B. SELF TAX PAYMENT” you can pay the balance tax amount if there are any pending amount to be paid as tax from your end. After this go to next section.
NOTE: In below screen, you can see 2 details under “TDS on Salary Income”. This is because I have uploaded two Form 16(switched to another company in same financial year. So 1st Form 16 from my previous employer and 2nd Form 16 from my current employer/ my current company in which I am working)
“TAX FILING” section contains your bank details and tax amount information.
Under “A. BANK INFO” you have to enter/verify your bank details. This is mandatory if you have paid any excess tax and you have to get it returned. The excess tax amount will be credited to your account after filing and e-verifying your ITR.
NOTE: The excess tax amount will be returned to your account based on the government processing time.
If you have no tax due to pay, you will see a screen like below.
If you have any return amount, i.e., tax return from government – this will be in case when employer deducted excess tax from you or when you have valid investment proof and not submitted to your employer in December.
You will see a screen like below with refund amount calculated.
If you have any tax due to be paid, you will see a screen as seen below.
Click on the “Click Here to Pay your Tax Due” button and follow the instruction in that.
After successfully payment, click on “Proceed to e-filing” button.
NOTE: If you don’t have any tax due to pay, then directly click on “Proceed to e-filing” button.
Once you click on “Proceed to e-filing” button, you will be asked for entering your mobile number.
Enter your mobile number to get OTP.
Enter the OTP that you received in your mobile and click on “Validate OTP”.
After verifying with OTP, you will see a screen as seen below.
Acknowledge your ITR by selecting the box “I have read and I agree to the terms and conditions” and click on “Efile my Income Tax Return” button.
You will see the processing "efiling successful" message. Now you can close your ClearTax website and follow the below steps for e-Verifying your ITR.
Open e-Filing government website as seen below and login into it using your username and password.
Goto “My Account” and click on “e-verify Return” as seen below.
Now you will see a table containing a row with the details of the ITR that you just did for the current financial year using “ClearTax”.
Click on “e-Verify” link as seen below.
NOTE: You might see multiple records if you have filed ITR for any previous years respectively, but those are not e-verified yet. You can file ITR for previous years as well using the above procedures, provided that financial year ITR should be open for filing through online(this will be indicated when you try uploading your Form 16 itself)
Now select either of the option among 3 as seen below.
NOTE: EVC is nothing but “Electronic Verification Code” this code will be generated and send to you mobile/email.
Select Option1 or Option2 if you are comfortable with EVC. Otherwise choose Option3 and get your OTP instantly and enter that and submit.
Finally after entering the OTP for e-verification, on successful submission, you will see the below screen
Now if you go back to your “e-Verify return” page, you will see a screen that says “No returns pending for everification”. Which means there are not pending ITR for e-verification. Now your ITR filing is successfully completed.
That’s it. You are done with your ITR filing. Good Luck !!!