It is tax season and taxpayers are preparing to submit their annual income tax return (ITR) for 2016-17 to the Income Tax Department. The last date to submit your ITR is July 31 for financial year 2016-17 or assessment year 2017-18. For some the process can be daunting and for other too complicated. Here is a simple step-by-step guide to help you file your ITRs.
Everyone who has an annual income over the income tax exemption limit has to file income tax returns. The individuals who have income which is not taxable are also advised to do so, but it isn’t mandatory for them.
Important things to note before starting your tax filing process:
# The first step to filing an ITR is assessing your finances and jotting down your direct and indirect earnings whether taxable or tax exempt. If you are a salaried employee, then you will need to obtain the Form 16 document from your employer which gives details of your salary and tax deductibles from the salary.
#The income tax department has different forms to file ITRs for different kinds of taxpayers like self employed professionals, businesses, salaried employees, freelance workers etc. Choosing the wrong form will render the process invalid and the IT department will not accept your ITR filing.
You can e-file your tax returns either from the Income Tax department website or with the help of CAs and credible tax filing portals. If you are an individual with annual income less than Rs 5 lakh without tax refunds or you are super senior citizens, you have the option to submit the ITR manually or via e-filing. For the rest, the process is via e-filing. Here is a simple guide to file your ITR from the IT department’s website on your own:
How to file you returns:
1. The first step is to register yourself for e-filing of your tax returns. Register yourself at the IT department’s tax filing portal (www.incometaxindiaefiling.gov.in). Submit your permanent account number (PAN), name, date of birth, choose a password and save your profile. Proceed to register your account with personal details and then follow the activation process via email and phone. Third and most important part of the registration is submission of Aadhaar. According to government regulations, it is mandatory to link Aadhaar with PAN and submit Aadhaar details while filing ITR. Once you submit Aadhar details then you can proceed further.
2. Now, you have to choose how you want to do the e-filing. There are two ways. You can either download the required form for filing returns and fill it offline. You can then submit them back on to the site. You can also install a free software available on the IT department website to prepare your tax returns offline. The second option is to complete the process through the quick e-file option wherein you do the process online.
3. How to choose the correct form:
For salaried employees the return forms notified for the financial year 2016-17 and assessment years 2017-18 are ITR-1 or SAHAJ. This can be used by individuals with income up to Rs 50 lakh and earning from salary, or one house property, bank interests, pension etc except lottery income or earning from horse races, income taxable under section 115BBDA or Income of the nature referred to in section 115BBE.
ITR-2: Choose this form if you earn capital gains. ITR-2A form applies for those that have more than two houses but no capital gains. This form is applicable if the income of spouse, minor child etc is required to be clubbed with the assessee’s income. However, it cannot be used by those who earn from proprietary business or profession.
ITR-3, ITR-4 and ITR-4S: Choose these forms if you are professionals and business owners.
4. Documentation process
You will have to keep you PAN, Form 26, TDS, interest statements, investment proofs and details, insurance and home loans ready with you. Now, download Form 26A available from the website that has the summarised details of taxes paid against your PAN. You can then use Form 26AS for validation of your tax return and also to check your tax liability.
If your earnings are over Rs 50 lakh, you will have to fill the additional column titles AL or assets and liabilities. Here you will have to fill out the value of your assets and also the liabilities on you. Asset declaration has to be done at cost.
5. Now, after the process is done, you have to generate an XML file. If you have filled the return forms offline after downloading the forms, click on generate XML. After that, you will have to upload that XML file from your profile by clicking on the ‘upload XML button’.
6. Finally, you have to complete the verification. After the ITR form is submitted, the system generates an acknowledgement number. Keep this number with you safely for future reference. If you have submitted the return forms without including a digital signature, the system sends an ITR-V to you on your registered email ID. To complete the entire process, you must verify ITR-V. Until this is done, the ITR filing process is incomplete and invalid. For the verifications, you can do it electronically or you can mail the signed ITR-V form within 120 days of your filing to the department’s processing centre in Bengaluru.