Latest guidelines for filing your Income Tax returns in 2020
It is important to be regular with your Income Tax Returns (ITR) filing. As per the Income Tax Act, 1961, it is mandatory for individuals whose annual income exceeds the basic exemption limit to file the income tax return within the due date. The due date to file an income tax return for the current assessment year 2020-21 (the financial year 2019-20) has been extended to 10th January 2021. Though the deadline is extended, it is important to file the income tax return within the extended date to avail certain benefits such as carry forward of losses, claim tax refunds and to avoid the late filing penalties. If you file an income tax return after the due date, you would have to pay a late filing penalty of up to INR 10,000.
Income Tax Return (ITR) can be filed via online mode. Though the process to file an income tax return is quite simple, there are certain guidelines to be followed. E-filing of ITR is a simple process. Firstly, you need to register on the e-filing website of the Income Tax Department, to begin with, the ITR filing process.
It is important to prepare early for the filing of income tax returns. Here are certain prerequisites for the e-filing of income tax return
Collect and keep all the relevant documents ready
You need to collect all the necessary documents such as salary slip and Form 16/16A and keep them handy before you begin the income tax filing process. Generally, the following are the main documents that you need to collect –
- Form 16 (from your employer) – If you are a salaried individual, it is important to obtain Form 16 from your employer which helps to know your income from salary and any taxes deducted on that by your employer.
- Form 16A – This document helps to know the tax deducted at source by various entities such as banks and mutual fund houses on the investments held and it could also be for various payments made during the financial year 2019-20.
- Documents related to sale and purchase of assets
- Summary of all the bank accounts to access the extra earnings made during the year
- Credentials of any property owned such as rent receipts, loan documents and municipal tax payment receipts, etc.
How to e-file the Income Tax Return?
E-filing the income tax return is a simple, easy and quick process. Once you keep all the documents, you need to proceed with certain simple procedures. Here is a step-by-step guide to filing your income tax return –
Download and review Form 26AS
As an already registered taxpayer, you can log on to the official website of the Income Tax Department (e-filing portal) by using your login credentials (Permanent Account Number). Download your Tax Credit Statement or Form 26AS which contains every detail of tax credits and tax deducted from your income during the Financial Year 2019-20. You need to carefully cross-check each of these details with the documents that you have such as Form 16/Form 16A. If the details do not match, you need to contact the deductor and get the same rectified. It is important to get any errors in Form 26AS corrected in order to claim the credit.
Download the ITR form
There are four types of ITR forms which were introduced based on the nature of income earned by the taxpayer. Hence, you need to carefully choose the right ITR form. Click on the ‘Income Tax Return Forms’ and select the relevant financial year (Financial Year 2019-20 for the current Assessment Year 2020-21). Download the applicable ITR form.
Computation of total income
Before you fill in the ITR form, you need to compute the total taxable income for the Financial Year 2019-20. Computation of total taxable income is done by adding the incomes under various headers along with claiming the deductions allowed under the Income Tax Act, 1961 and setting of losses if any. Fill in all the details in the ITR form.
Computation of tax liability
After computation of total taxable income details of which will be filled in the ITR form, you need to compute your tax liability by applying the tax rates (applicable for your income slab) effective for the Financial Year 2019-20. You need to also take a look at the details of taxes already paid by you during the year such as advance tax, TCS and TDS. You need to deduct those taxes and add the interest payable under section 234A, 234B and 234C if any to arrive at the ‘final tax payable’ figure. While filling ITR online, you can use the ‘Calculate Tax’ tab to know the amount of tax payable. It is important to note that this year, the extension to pay self-assessment tax liability is given only for those taxpayers whose tax liability is INR 1 lakh or below. Taxpayers with self-assessment tax liability exceeding INR 1 lakh had to pay it before 31st July 2020 avoid penalties.
Payment of tax
Make the payment of tax (can be paid through cheque or via online) and fill in the challan details
File your income tax return
Once you fill in the form and make the payment of tax, if required, you can confirm all the data that has been provided and then ‘validate’. Once you validate the process, an XML file will be generated, soft copy of which needs to be saved. Then click on the ‘upload return’ tab to upload the saved XML file. You are required to digitally sign the file before you submit.
Once you complete the submission process, an acknowledgement form (ITR verification) will be generated. You can verify the same electronically. If you choose to verify it physically, take a print out of the ITR-V, sign it and mail it to the tax department CPC within 120 days of ITR e-filing to get it verified. You will receive an acknowledgement of verification via email that is registered in your income tax e-filing account.
Once the verification process is complete, your income tax return will be processed and discrepancies, if any will be brought to notice for explanations from you.
If you follow the simple guidelines and processes in ITR filing, you can avoid many common mistakes and smoothly file your return.