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.

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

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.

Things you must keep in mind while filing income tax returns this year

Reporting all your income, linking Aadhar card with PAN card, and having required documents are some of the do's one should keep in mind while filing ITR.

Business Standard : Tax filing may seem scary at first due to lack of adequate knowledge about required documents and the filing process, it actually is an easy and swift procedure if you know what you are doing. With all the hullaballoo around filing ITR, it’s easy to get confused, especially if you are a first-timer. Here is a simple list of do’s and don’ts you can follow for hassle-free ITR filing this season:

DO’s
Know which tax slab you fall under

For example, you are required to file ITR if:

You are below 60 years of your age and your total annual gross income exceeds Rs. 2,50,000

You are a senior citizen i.e. 60 years, but below 80 years, and your total annual gross income exceeds Rs 3,00,000

You above 80 years and the total income exceeds Rs 5,00,000

Have all the required documents

Some important documents that you may require are Form 16, rental agreement, sale deed and purchase deed (on sale of assets), transaction statements for shares/mutual funds, housing loan certificate, tax paid proofs, bank statements, proofs for taxes deducted by employer, TDS certificates, Investment details like LIC, PPF, NSC, NPS, Health Insurance, AADHAAR Card, PAN Card, bankers, tenants, purchaser of property, proofs for deductions, foreign tax return among others.

Choose the right ITR

The Income Tax Department of India has made some changes in the various ITR forms this year and hence it is necessary to read up on these changes and understand which ITR form fits the bill for you.

Report all your income
As a responsible taxpayer, you should take care to disclose all taxable income along with relevant details since there are multiple consequences of failing to file the same accurately.