ITR 2019-20: A simple step-by-step guide to filing your income-tax return

Good news is that the income-tax department has extended the last date for filing ITR from July 31 to August 31, 2019.

Business Standard : Filing Income Tax Returns (ITR) can be a tedious task. Before filing ITR, you will need to create an e-filing account on the Income Tax website, incometaxindiaefiling.gov.in and register yourself. Registration will be completed after you click the activation link sent via e-mail and enter the provided one-time password (OTP) received on your mobile. Click on 'Registered User' if you have already registered yourself on the website.

Important note: The income-tax department has extended last date of filing ITR, which is now August 31.

Here's a step-by-step guide to filing Income Tax Returns (ITR):

A. Keep essential documents with you

Collect documents such as Form 16, salary slips, and interest certificates and Form 26AS. Keeping them handy will help you compute your gross taxable income and will provide you with the details of tax deducted at source (TDS) from your income in 2018-19.

B. Get Form 26AS: You can download Form 26AS from the TRACES website. To download it, login to your account on the e-filing website, click on 'My Account' tab and select 'View Form 26AS'.

C. Calculate total income for the financial year

Once you have verified all the taxes deducted from your income, you have to calculate the total income chargeable to tax. Total income is computed by adding income from five different heads and claiming all the relevant deductions allowed under the Income-tax Act and setting off losses, if any. In addition to that, you are required to provide source-wise bifurcation of the incomes taxable under the head 'Income from other sources'.

D. Calculate tax liability: Compute tax liability by applying tax rates according to your income tax slab.

E. Compute final tax payable: Now that you have calculated your tax liability, minus taxes that have already been paid for (through TCS, TDS, Advance Tax). Add interest, if any, payable under sections 234A, 234B and 234C.

What are TDS provisions, exemption thresholds and claim of credit?

TDS helps make sure the government knows the details of the recipient such as his PAN, and total income earned.

Business Standard : Tax Deducted at Source (TDS) was introduced by the government to crack down on the tax evaders. TDS is basically collecting tax at source. TDS can also be considered a prepayment of tax. As per the TDS concept, if the payment exceeds a defined threshold, then a company or a person making the payment (deductor) must deduct tax while making a payment. The deductor must then deposit the tax deducted into the account of the central government on behalf of the recipient of income. TDS is applicable at various rates as specified by the Income Tax Department. The person from whose payment tax is being deducted (deductee) is issued a TDS certificate by the deductor.

TDS Provisions

The person receiving income (like salaried individuals) faces TDS in the form of a tax deducted salary paid to them. TDS laws have given the authority to the payee or employer, to deduct tax prior to making the full payment to the employee.

TDS helps make sure the government knows the details of the recipient such as his PAN, and total income earned. Any TDS deduction also gets mapped to Form 26AS.

TDS Exemption Threshold

Tax has to be deducted by the deductor at the rates (specified below) if the amount payable is more than the threshold limit as given in the following table, the below rates are applicable for FY 2018-19:

There have been changes to the threshold in some the aforementioned section applicable from the FY 2019-20 onwards. For instance,

1. Under section 194A, the threshold of interest earned on bank/post office deposits has been raised from Rs 10,000 to Rs 40,000.

2. Tax deduction limit on rent under section 194I has also been increased from Rs 1,80,000 to Rs 2,40,000.

Claiming TDS Credit

A TDS deductor must issue TDS certificates to the deductee. This includes banks and employers. For instance, employers issue Form 16 to their employees annually, whereas a bank provides Form 16A quarterly to the deductees whose tax was deducted at source.

The TDS certificate states how much tax was deducted as TDS along with the income received from the employer/ deductor. You can view and download your Form 26AS by logging into TRACES through your PAN.

Filing out a tax return for the first time? Here are seven important tips

Individuals (residents and non-residents) need not pay taxes on income up to Rs 2.5 lakh. Beyond this limit, their income becomes taxable based on slab rates prescribed under the law.

There are many who find income tax calculation and filing to be a tough task. However, reading and learning about it can turn out to be a skill useful for a lifetime. Knowing this basic skill gives you the confidence to deal with your income and taxes. Here are a few important tips that are useful when filing income taxes, especially for first-time taxpayers.

Tips for first-time taxpayers

Tax payment period and related terms

Tax is calculated based on the income earned during the period from April 1 of the current year to March 31 of the following year. This period is called the financial year (FY) and the year in which the income is assessed is called the assessment year (AY).

For example, the income accrued during the financial year 2018-19 is assessed in the assessment year 2019-20.

Income tax slabs

Taxpayers must determine the income tax slab they fall under to determine their tax liability for a given financial year. The income tax slabs are designed based on the income range per annum.

Each category of income per annum will correspond to a certain percentage of tax. Additionally, a certain percentage of cess will also be applicable.

Individuals (residents and non-residents) need not pay taxes on income up to Rs 2.5 lakh. Beyond this limit, their income becomes taxable based on slab rates prescribed under the law. The basic exemption limit is increased to Rs 3 lakh for a senior citizen and to Rs 5 lakh for a super senior citizen.

Form 16

Form 16 is a TDS certificate provided by an employer for salaried individuals. This form includes all the salary details to be entered while filing income tax returns. The latest Form 16 is designed such that it can be directly used to report all the information to be entered in new ITR-1 form. It consists of information on the deductions you have claimed, the salary earned, and exemptions availed.

The employer should provide Form 16 by 15 June every year. Though, the due date for providing Form 16 has been extended to 10 July 2019.

Business Standard

A step-by-step guide to filling salary details in your income tax return

ITR-1 can be used to report income from salary, one house property, income from other sources, and agricultural income of up to Rs.5,000.

Business Standard : Salaried individuals can file income tax returns (ITR) using the forms ITR-1 or ITR-2. ITR-1 applies to individual resident taxpayers with a total income of up to Rs 50 lakhs. Whereas, ITR-2 applies to other individual taxpayers who do not have income from business or profession.

ITR-1 can be used to report income from salary, one house property, income from other sources, and agricultural income of up to Rs.5,000. The form ITR-2 can be filed by individuals having income from more than one house property, capital gains, holding directorship in any company, or unlisted equity shares.

The salary TDS certificate in Form 16 has been revised to provide for more detailed information on the various tax-exempt allowances and deductions provided under the income tax law. Part B of Form 16 has been revised to provide for details of the various exemptions and deductions allowed under the income tax law.

Filling up your ITR:

ITR-1

Taxpayers would have to fill in aggregate values of the broad components of salary:

Salary

Perquisites

Profits in place of salary

Furthermore, a complete break-up would need to be provided of all allowances exempt under section 10. For example:

House rent allowance

Leave travel allowance

Gratuity

Similarly, each of the deductions allowed under chapter VI-A from section 80C to 80U must be reported separately. For example:

Life insurance premium, tuition fees for children, and PPF investment under section 80C

Medical insurance premium under section 80D

Donations under section 80D

Here's how the new Form 16 will change income tax return filing this year

Under the new format, Part B has been amended to provide more details about the allowances exempt under section 10 and deductions allowed under Chapter VI-A of the Act i.e. section 80C to 80U.

Business Standard : Form 16 is issued annually, by an employer to an employee as a proof of salary paid and taxes deducted on it. It has two parts i.e., Part A and Part B as discussed below.

Tax returns of the salaried taxpayers for FY 2018-19 (AY 2019-20) can be filed in form ITR-1 or ITR-2. The details of income from salary, allowances exempt, deductions claimed, are in Part B of Form 16, while Part A contains the employer, employee and employment details such as PAN, address etc.

The Central Board of Direct Taxes (CBDT) has notified certain changes in Form 16. The new Form 16 is made effective from 12 May, 2019. Employers issuing Form 16 for the financial year 2018-19 will have to issue them in the new format.

1) Details under the new Form 16:

Under the new format of Form 16, Part B has been amended to provide more details about the allowances exempt under section 10 such as house rent allowance, leave travel allowance etc., and deductions allowed under Chapter VI-A of the Act i.e. section 80C to 80U.

2) Impact on ITR filing

2a) ITR-1

ITR-1 form can be filed by a resident individual taxpayer having total income up to Rs 50 lakh. Such individuals can report income from salary, one house property, income from other sources and agricultural income up to Rs 5,000 in the ITR-1 form.

The ITR-1 form requires broad details of the components of income from salary i.e., salary, perquisites and profits in lieu of salary. However, the form requires complete details of allowances exempt under section 10. Therefore breakup of exemption under each allowance such as HRA, LTA, gratuity etc must be separately reported. Each of the deductions under chapter VI-A must also be separately reported. After the notification of the new Form 16, these details would be available from the new Form 16 issued to an employee and thus facilitate the filing of the ITR. If you use an online platform to file your ITR, these details can be automatically populated to your ITR, minimising your effort and helping you e-file accurately.

2b) ITR-2

The form ITR-2 applies to taxpayers who are individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession. Also, taxpayers who have total income exceeding Rs 50 lakh and are not eligible to file ITR-1 can file ITR-2.

New ITR forms decoded: Know the changes and how to file returns with ease

Aadhaar and PAN must be linked for those who are eligible for an aadhaar.

Business Standard : The new Income Tax Return (ITR) forms were notified recently. As per the new forms, the taxpayer will have to provide additional details such as days of residency in India, holdings in unlisted shares and details of the buyer(s) of property in case of capital gains earned by a seller on the sale of immovable property.

Changes in ITR-1 form

ITR-1 form is applicable to resident individuals, except for the director of a company or the holders of unlisted equity shares. Total income must not exceed Rs 50 lakh. An additional row has been provided for claiming a standard deduction of Rs 40,000 for FY 2018-19.

The taxpayer is also required to furnish income-wise details, like interest income from savings account, bank deposits, income tax refund, family pension income and others, under ‘Income from other sources’ column of new ITR-1. If there are allowances, exempted from tax partially or fully, then their amount should be mentioned separately in ITR-1.

Changes in ITR-2 form

Individuals and Hindu Undivided Families (HUFs) who do not have income from profits and gains from business or profession can file their returns with ITR-2 form.

As per the newly notified ITR-2 form, taxpayers will be required to specify their residential status of the FY 2018-19. An individual can be considered as a resident, ordinary resident or non-resident in the financial year for income tax purposes. Detailed information regarding days present in India must be provided to satisfy residential status.

Additionally, in the column for 80G the amount must be segregated into cash and other modes of contribution.

Changes in ITR-4 form

Taxpayers with a cumulative income of up to Rs 50 lakh and those who are Resident, or Ordinarily resident of India can file ITR-4 form. Directors or those who held unlisted equity shares at any time during the financial year 2018-19 can no longer file returns with ITR-4 form; they have to file ITR 3 form.

The taxpayers having a business of plying, hiring and leasing goods carriages and have opted for presumptive taxation scheme (Section 44AE) will now have to provide details, such as registration no. of goods carriage, whether owned/leased/hired, tonnage capacity of goods carriage (in MT) etc.in new ITR-4.