Income tax return needs to be filed when income becomes more than the exemption limit prescribed by the income tax department. By filing income tax return, a taxpayer offers information about his/her income, appropriate deductions and the amount of tax payable to the Government. To file Income Tax Return online, one must register on the e-filing website of the income tax department. Once you have registered yourself on the e-filing website, following is the step-by-step process to e-file your Income Tax Return.
Step 1 – Get essential documents like TDS certificates (Form16/16A), capital gains statements - The first step includes collecting all the documents that are required to file your Income Tax Return such as salary slips, Form 16, and interest certificates. The documents will help you calculating your gross taxable income and will provide you with the details of tax deducted at source (TDS) from your income in Financial Year 2019-20. Form 16 is a TDS certificate offered by your employer, if tax is deducted from your salary income. Likewise, your bank should issue Form-16A for TDS deducted on interest payment to you on fixed deposits.
It is recommended to certify that all the TDS certificates obtained by you should be in the TRACES (TDS Reconciliation Analysis and Correction Enabling System) format. TDS certificate obtained must be digitally signed. They are supposed to bear a check mark showing that the signature is verified. Non-verified signatures on the TDS certificate will include a question mark upon them. It is necessary to verify it. Likewise, if you have redeemed mutual fund units in Financial Year 2019-20, it is important to get the transaction statement and capital gains statement for the same. You need to pay tax on long-term capital gains from and equity mutual funds and equity shares if the gains are more than Rs 1 lakh. The tax will be paid at 10% without any indexation advantage (Indexation helps investors in long-term debt funds for saving taxes).Therefore, it is essential to see if one has any capital gains and collect the capital gains statement for calculating the amount.
Step 2 - Download and check Form 26AS - Form 26AS is your tax passbook that includes all the details of the tax that has been deducted from your income during the Financial Year 2019-20 and deposited against your PAN. It is recommended to cross check your TDS certificates with Form 26AS in order to ensure that tax deducted from your incomes such as interest, salary and others is deposited with the government and against your PAN. Form 26AS can be downloaded from the TRACES website.
Step 3 – Remove the errors in Form 26AS, if any - If the amounts appeared in the TDS certificates (Form-16, Form-16A and others) and Form 26AS do mismatch, then it is recommended to take up the matter to the deducting authority to rectify the errors. The deducting authority can be your employer, bank or others and request should be forwarded to the same to correct the details. If the error is not rectified, then it will not be possible to claim the credit on that tax that is deducted. As par the chartered accountants, one must keep track of Form 26AS during the financial year to prevent any discrepancies at the time of filing Income Tax Return.
If TDS is deducted but not deposited with the government and the deducting authority is not observing your complaints, then certain circulars concerning the same has issued by the Central Board of Direct Taxes (CBDT). According to the circulars, the individual who encountered deductions should not be harassed by Income Tax Authority.
Step 4 - Total income for the financial year should be computed - Once all the essential documents are collected and verified, all the taxes are deducted from income, you need to compute the total taxable income. Total income is computed by adding incomes from five different heads and all the relevant deductions are claimed that are allowed under the Income-Tax Act and losses are set off, if any. Filling salary details in ITR is easier as information required can be easily found in Form-16.
Step 5 - Compute Tax Liability – Once total taxable income is computed, it is important to calculate tax liability by applying the tax rates for Financial Year 2019-20 according to income slab. The income tax slabs and rates remain unchanged for Financial Year 2019-20 rather than the previous year.
Step 6 - Final tax payable, if any should be calculated - Once your tax liability is computed in the earlier step, taxes should be deducted that have been paid by you through TDS, TCS and Advance Tax already during the year. Interest should be added if any, payable under sections 234A, 234B and 234C. This will show if all the taxes are already paid or any additional tax needs to be paid or any excess taxes have been paid by you and a refund is due to you.
If any additional taxes are due, individuals can be paid through cheque or online using challan ITNS 280. Income tax payments made after March 15 of the financial year for which return is to be filed are known as payment of self-assessment tax. The same must be shown in Form 26AS within 2 to 3 working days from the date of payment that you should cross-check. Though, this time period could be longer towards the end of the financial year because of the enhanced rush to deposit self assessment tax.
Step 7 - Filing of income tax return after all taxes are paid - Once due taxes, if any, are paid, the process can be started for filing your ITR. If any refund is to be claimed from the tax department, it is possible to do so only if you file your ITR. So, you need to file your ITR even if you do not need to do so compulsorily according to rules. While filing ITR, this should be affirmed that you are using the right ITR form for filing it. If ITR is filed using the wrong form, then it will be considered as a defective return and you will need to file it again. For every assessment year, the income tax department notifies ITR forms. Assessment year is immediately following the financial year for which the return is to be filed. The assessment year is 2020-21 for financial year 2019-20. Filing of ITR can be performed by downloading the software in Excel or Java. However, taxpayers can file it online without downloading any software provided that they are eligible for filing ITR-1 and ITR-4.
Step 8 - Verification of ITR - The last step of ITR filing procedure includes verification. There are 6 ways for verifying the Income Tax Return. Out of this, 5 are online methods and one is physical verification. If tax-return needs to be checked online, there is no need to send documents to the tax department. If you want to confirm your return physically, then it is important to send a properly signed copy of ITR-V/acknowledgement to 'Centralized Processing Centre, Bangalore- 560100, Karnataka, India.'
As soon as filing of ITR is done, 120 days are there for its verification. If ITR is not verified, then it will be deemed as ITR is not filed. If you forget to verify ITR by the deadline, a request can be filed to your assessing officer.
Step 9 - e-Verification acknowledgement - If ITR is verified using online method then a confirmation will be obtained immediately from the tax department about verification of ITR. If you have sent ITR-V through post to the Income Tax department, they will send you an email confirming that the ITR-V has been obtained by the Income Tax department, i.e., the return stands verified. The email will be sent to the email address which is registered in the e-filing account on the e-filing website of the income tax department.
Step 10 - Return will be processed by IT department after verification - Once the return is verified, either through e-verification or physical, the income tax department will start processing tax return to make sure that all the details filled are correct according to the Income Tax Act and also cross-check the details filled with other data available with it.
As soon as the return is processed, the Income Tax department informs the same via registered email ID. If any discrepancies arise, they may ask to give explanation further or rectify the mistakes made while filing the ITR.