Income Tax

Income Tax is a type of tax imposed on individuals and entities earning income or profits that cross the threshold. To calculate your tax liability, you need to multiply the income tax rate by your taxable income.

Note: Tax rates may vary depending on the type of taxpayer and the type of income. Hence, it is imperative to ascertain the tax slab you belong to.

Since income tax is a vast and crucial topic, use this section as your go-to guide to know everything about income tax in India.

Here’s a list of entities responsible for paying tax and filing income tax returns.

• Artificial Judicial Persons

• Corporate firms

• Association of Persons

• Hindu Undivided Families

• Companies

• Local authorities

• Body of Individuals

The Income Tax (IT) Department sets due dates for different activities each Assessment Year. You need to file your Income Tax Return (ITR) for the previous Financial Year before the deadline set by the IT Department or risk attracting a penalty.

Note: Financial year is the year in which income was earned, while Assessment Year is the period in which the returns were filed, i.e. the subsequent year. Both start and end on April 1 and March 31, respectively.

Considering the current situation surrounding the pandemic, the government has extended the due dates for filing income tax returns for Assessment Year 2021-22. The revised income tax extension dates are as follows:

Additionally, the government has also extended the Tax Deducted at Source (TDS) return as well. These are as follows:    

Also, following the second wave of COVID-19 in India, the government has extended the PAN-Aadhaar linking deadline to September 30, 2021. The reason to link your Aadhaar Card with PAN is that it allows the IT Department to meticulously detect any form of tax evasion and make the ITR filing process considerably simple.

The Income Tax (IT) Department sets due dates for different activities each Assessment Year. You need to file your Income Tax Return (ITR) for the previous Financial Year before the deadline set by the IT Department or risk attracting a penalty.

Note: Financial year is the year in which income was earned, while Assessment Year is the period in which the returns were filed, i.e. the subsequent year. Both start and end on April 1 and March 31, respectively.

Considering the current situation surrounding the pandemic, the government has extended the due dates for filing income tax returns for Assessment Year 2023-24. The revised income tax extension dates are as follows:

With the Union Budget 2023, the Finance Ministry of India released a new income tax structure that came into effect from April 1, 2023. However, this new income tax regime is optional and taxpayers have the liberty to either opt for it or continue using the old income tax structure at the start of each financial year (FY).

The following table gives a brief overview of the tax slabs under the two income tax regimes:

On the other hand, taxpayers above the age of 60 years and less than 80 years are considered as senior citizens as per the Income Tax Act, 1961. The following table gives an overview of the income tax slabs (old and new) for senior citizens.

Calculating your tax liability beforehand and paying your taxes accordingly is called advance tax. However, if you want to follow advance tax, here are a few important dates you must remember:

When filing online income tax returns under the new regime, not only will you benefit from the lower rates but even expect the process to be simple and hassle-free. This way, you may not have to seek help from a chartered accountant (CA) or any other expert for filing your ITR.

The new income tax regime allows taxpayers to save on taxes without investing in different financial instruments under Section 80C or 80D, like Life Insurance, Public Provident Fund (PPF), or Medical Insurance, among others. This further simplifies the tax calculations and the ITR filing online process.

In case you need help calculating your total tax liability for the current Financial Year, you can use the income tax calculator available on Bajaj Markets.

The income tax return is a form that every individual must submit to the Income Tax Department. This form includes details about the income earned during the financial year, its sources, and thus the payable tax amount. Information provided in the ITR form must concern a particular financial year, i.e. April 1 to March 31 of the subsequent year.

Every taxpayer has required assistance in understanding how to file ITR. Continue reading the article to understand how to file income tax returns.

It is mandatory to file ITR if one’s annual income exceeds ₹2.5 Lakhs. The ITR helps taxpayers report their gross taxable income from all sources and mention the different tax deductions/exemptions to declare their net tax liability. This, in turn, helps the government refund any excess tax deducted at source and make the taxation process transparent.

There are two ways in which taxpayers can file their ITR:

1. File Income Tax Return Online

2. File Income Tax Return Offline

    

We have discussed the steps to file online income tax returns and offline process in detail below. Before that, let us understand the different documents needed when filing ITR.

You can either calculate income tax manually or use an online income tax calculator. The amount of tax payable to the government depends on the tax applicable to you. For salaried individuals, their income from salary includes multiple components like House Rent Allowance (HRA), Transport Allowance, Children Education Allowance (CEA), and more.

Moreover, a few components of a salary like HRA, CEA, Leave Travel Allowance, etc., are exempt from tax. So, while calculating TDS on salary, it is imperative to ensure you have subtracted relevant tax exemptions from your total income. Along with the exemptions, salaried people can also avail a standard deduction of Rs. 50,000.

Here’s a list of documents that you have to keep handy when filing your income tax returns online or offline.

• Form 16, also known as the TDS certificate

• Salary slips for the financial year in question

• Form 26AS, also known as the Annual Consolidated Statement

• Form 16A

• PAN card

• Aadhaar card

• Proofs of investment to claim exemptions/deductions under sections of the Income Tax Act

• Capital gain statement

   

Now, let us proceed to understand how to file ITR online in detail.

Following are the dos and don’ts of filing ITR online.

Dos

• Choose the right ITR form when filing your return

• Verify the ITR using EVC/DSC/Aadhaar OTP

• Mention mandatory details in the ITR

• File ITR before the set deadline

• Use strong password to access your e-Filing account

• Use a secure internet security software

• Stay aware and cautious of malicious activities and links

Don’ts

• Avoid confusion between AY and FY when filing your ITR

• Do not make a mistake when entering TAN, bank account, or email ID

• Do not forget to claim the relevant deductions applicable to you

• Avoid filing your ITR on a public Wi-Fi network

• Do not ignore software updates (if any)

• Do not revert to fraudulent emails, phone calls, and SMSes related to filing ITR online. Do not share your personal details with anyone

You can pay direct taxes online using the e-Payment tool. However, you must have a net-banking account with a recognized and authorized bank to avail the online income tax payment option. Additionally, you will have to provide your Permanent Account Number (PAN) or Tax Deduction or Collection Number for validation.

The Income Tax Department is a government agency that undertakes the duty of collecting direct tax in India. Every operation of this department is handled by CBDT (Central Board for Direct Taxes). You can visit their official website to garner information on international taxation, tax laws, and rules, organizational setup, etc.

Introduced in 1961, the Income Tax Act of India manages all income tax provisions and tax deductions applicable for each individual. The Act has witnessed countless changes and amendments to tackle various economic crises ever since it was passed.  

The Income Tax Act, 1961 was enacted to administer and govern income tax in the country. However, the Income Tax Rules, 1962 were created to effectively enforce the law legislated by the Act. Furthermore, the Income Tax Rules can only be read along with the Income Tax Act. These rules complement the Income Tax Act and do not override its provisions.

The government collects taxes in three primary ways:

• Voluntary payment by the individual into designated banks using methods like Advance Tax and Self-Assessment Tax

• Tax Deducted at Sources (TDS), which is deducted from your monthly salary or income even before you receive it

• Tax Collected at Source (TCS)

   

The Income Tax Department monitors the collection of income tax, expenditure tax, and other Financial Acts introduced in the Union Budget every year. The Central Board of Direct Taxes is responsible to regulate policies and planning of taxes. It administers the laws of direct tax along with the Income Tax Department. Along with collecting taxes, the IT department also focuses on preventing and detecting tax avoidance.

If you want to claim an income tax refund, you will first have to file your income tax returns. Filing your ITR will help you gauge and prove the amount of tax you have paid in excess. Based on the income assessment group you belong to, you will have to submit one of the following ITR forms:

Note: You will have to furnish a copy of the previous year’s ITR, bank statement, and Form 16 while filing the ITR.

If the tax you have paid exceeds your tax liability, you are eligible to claim an income tax refund of the excessive payment. For example, if your payable TDS on salary during the financial year 2019-2020 was Rs. 40,000, however, your employer deducted Rs. 45,000, you can claim a refund of Rs. 5,000. You are also eligible to claim a refund if you forgot to exclude your tax-saving investments from the taxable income.

Income-Tax-Saving Investments

Declaring investments like HRA, life insurance premiums, tax-saving FDs, ELSS, and more can help you achieve a lower tax liability. Here are a few tax-saving investments that you can consider to avail tax exemptions and deductions.

Investment Options

Most of us have a hard time saving our income. Here’s an incentive for you: saving and investing in the right financial products can help you reduce your tax liability. Mutual funds such as Equity Linked Savings Schemes, tax-saving fixed deposits, and PPFs enable you to claim tax deductions under Section 80C. You could also consider ULIPs (Unit Linked Insurance Plans), insurance schemes linked to the market to avail income tax benefits.

Insurance

Money paid towards life insurance and health insurance premiums is eligible for tax deduction under Section 80C.

Home Loans

When you seek a loan to purchase a house or renovate your home, you are eligible for income tax deductions up to Rs. 1.5 lakh for a financial year. However, you must note that tax exemptions are not applicable on personal loans.

Here are a few more options to increase your savings and reduce your taxable income:

Fixed Deposits

You can save a fortune on tax with 5-year FD schemes as well as earn interest on the principal amount.

National Saving Certificate

The National Saving Certificate is a secure and reliable way of investing your money. It enables you to deposit as low as Rs. 100 for a tenor of 5-10 years. Investments made under this scheme are eligible for tax deductions.

Provident Fund (PF)

 You can also choose to invest more money towards your PF account to reduce your tax liability.

There are multiple sections under the Income Tax Act, 1961 that provide tax deductions on your total income. However, you will have to mention all the relevant deductions (with proof) in the appropriate form at the time of filing income tax returns.

Let’s explore the sections that provide tax deductions:

Section 80C

Section 80C of the Income Tax Act provides tax deductions for individuals and HUFs only. It offers tax exemption of up to Rs. 1.5 lakh on certain investments like fixed deposits, ELSS, NSC, etc. as well as expenditure.

Section 80CCC

Section 80CCC of the Income Tax Act enables deductions on payments made to LIC and other approved insurance companies under an approved pension plan. The stipulated limit for income tax deduction under this pension policy is Rs. 1.5 lakh. Additionally, you must take it for yourself out of your total income.

Section 80CCD

Section 80CCD of the Income Tax Act provides deductions for contributions made by the assessee and the employer to the New Pension Scheme. However, the deduction is equal to the contribution, provided it does not exceed 10% of the salary.

The total income tax deduction offered under Section 80C, 80CCC, and 80CCD is Rs. 1.5 lakh. However, contributions to the Notified Pension Scheme of Section 80CCD are included in the said threshold.

Section 80D

Section 80D of the Income Tax Act focuses on deductions related to health insurance premiums. You can take an insurance policy to cover yourself, your spouse, dependent kids for up to Rs. 15,000. Additionally, you can also get your parents covered (whether dependent or not) for up to Rs. 15,000. If the insured is a senior citizen, you are eligible for an additional income tax deduction of Rs. 5,000. In the case of a HUF, every member can be insured. The assessee can avail a general deduction of up to Rs. 15,000 along with an added deduction of Rs. 5,000. Assessees, whether an individual or HUF, can claim a sum of Rs. 2,00,000 as income tax deductions.

Section 80DDB

Section 80DDB of the Income Tax Act deals with deductions related to medical expenses arising due to a certain disease or an ailment. This section specifies the type of diseases applicable for an income tax deduction.

Section 80E

Section 80E of the Income Tax Act provides deductions on the interest paid on education loans for education in India. You can avail tax benefits under this section once loan repayment has commenced.

Note: It offers income tax deductions only on the interest component.

Section 80EE

Section 80EE of the Income Tax Act offers income tax benefits to first-time homeowners. It is applicable for individuals whose first purchased home values less than Rs. 40 lakh and the loan taken for the same is Rs. 25 lakh or less.

Section 80RRB

Section 80RRB of the Income Tax provides deductions on income earned as royalties or patents. You can save up to Rs. 3 lakh on patents registered under the Patents Act, 1970.

Section 80TTA

This section enables you to avail tax benefits on the interest earned in saving bank accounts, post office, or cooperatives societies. Individuals and HUFs can claim an income tax deduction of up to Rs. 10,000 on an interest income.

Section 80U

Section 80U of the Income Tax Act provides a flat deduction on tax that is applicable for disabled people. However, it is mandatory to produce the disability certificate to avail this benefit. The stipulated threshold under this section is up to Rs. 1 lakh based on the severity of the disability.

Section 24

This section allows an income tax deduction on the interest paid on housing loans. You can claim up to Rs. 2 lakh as a deduction per financial year. Deductions under Section 24 are in addition to deductions provided under Section 80C, 80CCF, and 80D.

Note: This is applicable for self-occupied properties only. If you have rented out your house, 30% of the rent received and municipal taxes paid are exempt from tax.

Filing your income tax return does not have to be a tedious task. With the new ITR eFiling portal, we believe the entire process to be easy and time-efficient, even for first-time taxpayers. Additionally, those who were claiming the deductions (that are excluded from the new income tax regime), should continue filing their ITRs with the old income tax structure. It allows them to enhance their investment portfolio while also reducing their taxable income. Investing allows them to save money on tax as well as create wealth over the long term.

You can also browse through the various tax saving investments available on Bajaj Markets. The investment options available on our platform not only allow you to save on tax but also secure your financial future.

2. On the dashboard, select ‘e-File’ > ‘Income Tax Returns’ > File Income Tax Return.

3. Select the Assessment Year as 2021-22 and continue.

4. Select the Mode of Filing as ‘Online’ and select Proceed.

5. If you have started the filing process before and it is pending for submission, select ‘Resume Filing’. If you plan to file a new return, select ‘Start New Filing’.

6. Select Status that is applicable to you and click Continue to proceed.

7. Next, you will have two options that will help you file your Income Tax Return.

• For those unsure of which ITR form to choose, select ‘Help me decide which ITR Form to file’ and select proceed. The system will help you determine the correct ITR form to fill.

• For those who are sure of which ITR form to file, select the applicable ITR form from the dropdown list - ITR 1, ITR 2, ITR 3, and ITR 4. You can read about how to fill each of these forms in detail on Bajaj Markets.

8. Once you have selected the applicable ITR form, proceed to note down the list of documents you will need.

9. In the next step, select the checkboxes applicable to you and click on continue.

10. For the next few steps, you will be required to review the necessary ITR form you selected. Ensure that you verify the details auto-filled by the portal before submitting the returns.

11. Upon reviewing these details, select ‘Preview Return’ to submit your ITR.

12. On the next page, enter the Place and select the declaration checkbox and proceed to validation. If you have not included a tax return preparer or TRP when filing your returns, leave the textboxes related to it blank.

13. Once validation is complete, click on the ‘Proceed to Verification’ button. If there are any errors in your ITR filing, you have to go back and rectify them. If there are no errors, you can proceed to e-Verify your ITR by clicking Proceed to Verification.

14. Next, select your preferred way of verification and click on continue. Note that it is mandatory to verify your ITR and there are three ways in which you can do so:

• e-Verify Now:

It is also the recommended option and the easiest way to verify your ITR. The process is quick, paperless, and secure as compared to signing ITR-V and sending it to a Centralised Processing Centre (CPC) via post.

• e-Verify Later:

With this option, you can submit your returns but need to verify it within 120 days.

• Verify via ITR-V:

Here, you need to send a signed physical copy of your ITR-V to CPC via normal/speed post within 120 days.

15. Once the verification is done (assuming you opted to ‘e-Verify Now’), a success message is displayed along with the Transaction ID and Acknowledgement Number. You will also receive a confirmation message on your registered mobile number and email ID.

Any taxpayer who intends to file ITR offline (rather than online) needs to use the Offline Utility available on the new income tax portal. You can then file your ITR by uploading the utility-generated JSON:

• Post login to the new ITR e-Filing portal (www.incometax.gov.in/iec/foportal/), or

• Directly through the offline utility

   

You can visit Bajaj Markets to understand how to file ITR offline in detail.

The Income Tax Department offers seven different ITR forms for the different types of taxpayers in India. Refer to the table below to find the form that’s right for you:

The ITR status facility is available in two ways:

• Pre-Login

• Post-Login

   

We have discussed the steps you need to follow for both the

Follow the steps below if you opt for pre-login facility to check your ITR status online:

1. Go to the new ITR e-Filing portal (www.incometax.gov.in/iec/foportal/).

2. On the homepage, select Income Tax Return (ITR) status.

3. Enter your Acknowledgement Number and registered mobile number to continue.

4. You will receive a six-digit OTP on your registered number. Enter it and select ‘Submit’.

5. On successful validation, you will be able to view your ITR status online.

Follow the steps below if you opt for post-login facility to check your ITR status online:

1. Log in to the new IT e-Filing portal (www.incometax.gov.in/iec/foportal/) using your credentials.

2. Select the option ‘e-File’ > ‘Income Tax Returns’ > ‘View Filed Returns’.

3. On the ‘View Filed Returns’ page, you will be able to view all the returns you have filed historically.

Please note that once you file your ITR and successfully verify the same, you will be given an option to download the filed ITR (as seen on the screenshot below):

Additionally, you can log in to the new IT e-Filing portal (www.incometax.gov.in/iec/foportal/) using your credentials. Select the option ‘e-File’ > ‘Income Tax Returns’ > ‘View Filed Returns’. On the ‘View Filed Returns’ page, you will get an option to download the form.

Following are the dos and don’ts of filing ITR online.

Dos

• Choose the right ITR form when filing your return

• Verify the ITR using EVC/DSC/Aadhaar OTP

• Mention mandatory details in the ITR

• File ITR before the set deadline

• Use strong password to access your e-Filing account

• Use a secure internet security software

• Stay aware and cautious of malicious activities and links

Don’ts

• Avoid confusion between AY and FY when filing your ITR

• Do not make a mistake when entering TAN, bank account, or email ID

• Do not forget to claim the relevant deductions applicable to you

• Avoid filing your ITR on a public Wi-Fi network

• Do not ignore software updates (if any)

• Do not revert to fraudulent emails, phone calls, and SMSes related to filing ITR online

• Do not share your personal details with anyone

Due to its efficiency and convenience, the new Income Tax e-Filing portal has gained a lot of popularity. Besides being user-friendly and quick, the new e-filing has some additional advantages that filing in person does not. These are as follows:

• Ability to Track Application Status

Those who file their income tax returns online can easily track the status of their claims. Previously, too, claim statuses could be tracked but it was time-consuming as updates were sent via post. Thus, e-filing allows taxpayers to assess the status of their tax claims with ease.

• Quicker Refund Process

With e-filing, receiving tax refunds is not only simpler but also faster. In the past, the refund process was carried out through post, making it inconvenient and time-consuming. Now, taxpayers simply have to update their bank details online and the refund, if applicable, would be processed.

• Fewer Errors

When computing income tax returns earlier, one did not have the accuracy of online systems that calculate your returns error-free. Hence, calculation errors were common. With digitisation, mechanisms exist to compute ITRs through algorithms that significantly reduce errors.

• Online Verification

With online ITR filing, the application verification also happens online. Earlier, the verification process took longer as applications would be sent to CPC in Bangalore.

• Convenient

The biggest advantage of e-filing is its convenience. It takes less time and can be carried out from the comfort of one’s house. Comparatively, the process of filing returns in the past was tedious as one had to visit the Income Tax Department. E-filing makes filing returns easy, so a growing number of people are starting to file their tax returns each year.

• Better Access to Documentation

Those who file tax returns online have to upload digital copies of the required documents. At any point in time, tax-payers who e-file can assess these documents for cross-checking. This option was not available with the manual tax filing process.

• Aggregation of Data

Manual tax filing required individuals to fill multiple forms. As different forms required the same information, the process would get repetitive. This tediousness is no longer experienced when filing tax returns online. All data entered by the taxpayer is aggregated and automatically saved. Hence, the ITR filing process is shorter and simpler.

• Cost-Effective

Usually, those who file their income tax returns manually hire a professional to accurately calculate their returns. However, hiring a professional costs money. This cost can be avoided through e-filing of tax. Since computers do the calculations for you, you do not need to spend money on filing your tax returns.

• Receipt of Proof of Filing

Those who file their income tax returns online get a digital receipt stating that they have completed the taxation process for that fiscal year. If any situation arises wherein taxpayers need to prove that they have filed their claims for a particular, they have convenient access to this receipt.

• Net Banking

When filing tax returns online the process of paying and receiving a refund is simpler than before because of net-banking. Payment of taxes is carried out today through one’s debit card. To receive a refund, one can use a direct deposit. Investors also have the option to file returns at one time and make the payment on a separate date. They can choose the day they would prefer for the payment to be made.

Filing your ITR does not have to be a tedious task. With the new ITR e-Filing portal, we believe the entire process to be simple and seamless, even for first-time taxpayers. Additionally, those who were claiming the deductions (that are excluded from the new income tax regime) should continue filing their ITRs with the old income tax structure. This allows them to enhance their investment portfolio while also reducing their taxable income. Investing allows them to save money on tax as well as create wealth over the long-term.

You can also browse through the various tax-saving tools available on Bajaj Markets. The investment options available on our platform not only allow you to save on tax but also secure your financial future. Visit Bajaj Markets today!