What is Income Tax?

The Income Tax Department, headed by the Central Board of Direct Taxes (CBDT), collects taxes in India. Income Tax (IT) is a direct tax levied on the income of Indian citizens by the government. The Central government proposes amendments to the Income Tax Act, 1961, which come into force once they are signed off by the President of India.

When it is said that your income is taxable, it doesn’t only refer to money earned from salary. It includes income from house property, profits from business, gains from professional bonuses, capital gains income, and income from other sources like agriculture. Since income tax is a vast and crucial topic, use this section as your go-to guide to know everything about filing income tax in India.

Income Tax E-Filing Due Dates for FY 2020-21 (AY 2021-22)

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:

Taxpayer Category

Due Date for Tax Filing (FY 2020-21)

Individual / HUF/ AOP/ BOI

(books of accounts not required to be audited)

September 30, 2021

(extended from July 31, 2021)

Businesses (Requiring Audit)

November 30, 2021

(extended from October 31, 2021)

Businesses (Requiring TP Report)

December 31, 2021

(extended from November 30, 2021)

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

Filing TDS return for Quarter 4 of FY 2020-21

July 15, 2021

(extended from June 30, 2021)

Furnish the TDS Certificate to employees in Form No. 16

July 31, 2021

(extended from July 15, 2021)

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.

Income Tax Structure: New vs Old

With the Union Budget 2020, the Finance Ministry of India released a new income tax structure that came into effect from April 1, 2020. 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:

Annual Income

New Income Tax Regime

Old Income Tax Regime

Up to ₹2.5 Lakhs

Exempt / Nil

Exempt / Nil

Between ₹2.5 Lakhs and ₹5 Lakhs

5%

5%

Between ₹5 Lakhs and ₹7.5 Lakhs

10%

20%

Between ₹7.5 Lakhs and ₹10 Lakhs

15%

20%

Between ₹10 Lakhs and ₹12.5 Lakhs

20%

30%

Between ₹12.5 Lakhs and ₹15 Lakhs

25%

30%

Above ₹15 Lakhs

30%

30%

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.

Annual Income for Senior Citizens

New Income Tax Regime

Old Income Tax Regime

Up to ₹2.5 Lakhs

Exempt / Nil

Exempt / Nil

Between ₹2.5 Lakhs and ₹3 Lakhs

5% (tax rebate u/s 87a is available)

Exempt / Nil

Between ₹3 Lakhs and ₹5 Lakhs

5% (tax rebate u/s 87a is available)

Between ₹5 Lakhs and ₹7.5 Lakhs

10%

20%

Between ₹7.5 Lakhs and ₹10 Lakhs

15%

20%

Between ₹10 Lakhs and ₹12.5 Lakhs

20%

30%

Between ₹12.5 Lakhs and ₹15 Lakhs

25%

30%

For taxpayers who decide to follow the new income tax regime, know that you will no longer benefit from the various deductions and exemptions offered under different sections of the Income Tax Act. We have explained these income tax deductions and exemptions in detail.

Benefits of the New Income Tax Regime

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 Finserv MARKETS.

Filing Income Tax Returns (ITRs)

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.

Documents Needed to File ITR

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.

Steps to File ITR Online

Whether you are a salaried employee or a self-employed individual, follow the steps below to file your income tax returns online on the new income tax portal:

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

How to File ITR Online Step 1

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

How to File ITR Online Step 2

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

How to File ITR Online Step 3

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

How to File ITR Online Step 4

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’.

How to File ITR Online Step 5

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

How to File ITR Online Step 6

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.

How to File ITR Online Step 7a

  • 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 Finserv MARKETS.

How to File ITR Online Step 7b

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

How to File ITR Online Step 8

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

How to File ITR Online Step 9

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.

How to File ITR Online Step 12

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.

How to File ITR Online Step 13

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:

How to File ITR Online Step 14

  • 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.

How to File ITR Online Step 15

How to File ITR Offline

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:

You can visit Finserv MARKETS to understand how to file ITR offline in detail.

Types of ITR Forms

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:

ITR Form

Taxpayer (Who Needs to File ITR)?

ITR 1

Applicable to the vast majority of tax-paying resident Indians. It’s for everyone whose annual income from salary and other sources is less than ₹50 Lakhs.

ITR 2

Applies to people whose annual income is more than ₹50 Lakhs. People whose income is supplemented by capital gains and from foreign sources also need to fill this ITR form.

ITR 3

Applicable to business owners and firm partners. Anyone with a presumptive income over ₹50 Lakhs needs to fill this ITR form.

ITR 4

Applies to businesses with an annual income below ₹50 Lakhs.

ITR 5

This form is relevant to the following parties:

  • Firms

  • Limited Liability Partnership (LLP)

  • Association of Persons (AOPs)

  • Body of Individuals (BOIs)

ITR 6

This form is applicable for companies that are not claiming exemptions under Section 11 of the Income Tax Act, 1961.

ITR 7

People and/or companies who fall under the following sections of the Income Tax Act qualify for this form:

  • Section 139 (4A)

  • Section 139 (4B)

  • Section 139 (4C)

  • Section 139 (4D)

How to Check ITR Status Online?

The ITR status facility is available in two ways:

  • Pre-Login

  • Post-Login

We have discussed the steps you need to follow for both these facilities in detail below.

Steps to Check ITR Status (Pre-Login)

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.

ITR Status Pre Login Step 2

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

ITR Status Pre Login Step 3

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

ITR Status Pre Login Step 4

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

ITR Status Pre Login Step 5

Steps to Check ITR Status (Post-Login)

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’.

ITR Status Pre Login Step 2

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

ITR Status Pre Login Step 3

How to Download Your Filed ITR form?

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):

Download ITR Form

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.

View Field Returns

Rules for Filing ITR

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

Benefits of Filing ITR Online

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.

Start Your Tax Planning Today!

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 Finserv MARKETS. The investment options available on our platform not only allow you to save on tax but also secure your financial future. Visit Finserv MARKETS today!

FAQs on Income Tax

  • ✔️Who is supposed to pay Income-tax?

    Sometimes income tax terms can be confusing. According to tax laws, every person has to pay income tax. ‘Person’ as per the law includes natural as well as artificial entities. For the purpose of charging Income-tax, the term 'person' includes Individuals, Hindu Undivided Families [HUFs], Association of Persons [AOPs], Body of individuals [BOIs], Firms, LLPs, Companies, Local authority and any artificial juridical person not covered under any of the above.
  • ✔️What is exempt income and taxable income?

    Tax exemptions are among the various tax benefits provided by the government. If an income is tax-exempt, it will not be considered for the computation of income tax. On the other hand, the incomes which have to be considered for taxation purposes are known as taxable income.
  • ✔️What is the period for which a person’s income is considered for the purpose of Income-tax?

    In India, the period between April 1 and March 31 is considered to be the financial year, which is used for all purposes of accounting and budgeting by the government. Taxes are an important source of government revenues and hence the financial years is used for purposes of Income Tax. The financial year is further classified into ‘Previous Year’ and ‘Assessment Year’. The year in which the income is earned is known as the previous year, while the year in which the tax is computed is known as the assessment year. For instance, the previous year 2019-20 will be the income earned between April 1, 2019, and March 31 2020. The tax on the income earned in the previous year 2019-20 will be computed in the assessment year 2020-21.
  • ✔️Who is required to pay income tax?

    Income tax is levied on both people and organizations. Tax on individuals To maintain strong demand in the economy, the government tries to create a tax regime that doesn’t hurt people’s purchasing power. Therefore, those with an income below ₹2,50,000 have zero tax liabilities. People with an income upto ₹5,00,000 have to pay 5% of their total taxable income as taxes - but they can claim it back in rebates. Individuals with an income over 5 lacs have a tax liability of upto 20% of their annual taxable income. Individuals with an income over 10 lacs have a tax liability of upto 30% of their annual taxable income. Income from your salary, pension corpus, securities market, mutual funds, etc. are all included in your annual taxable income. Tax on organizations Corporations need to pay taxes on their annual revenue. The government changes the tax rate for corporations to incentivize particular kinds of economic behavior. For instance, in 2019, the government cut the corporate tax rate by 10% to push the business community toward new investments. Similarly, different tax rates exist for domestic and foreign corporations. To make domestic firms competitive against their bigger foreign competitors, the government imposes a lower tax rate upon domestic corporations.
  • ✔️What income is not taxable?

    Certain income does not fall under the income tax ambit and is exempted entirely. Such sources of income are:

    • Scholarship or Awards

    • Agricultural Income

    • Income from Gratuity

    • Allowance for Foreign Services

    • Amount received from voluntary retirement

    • Receipts from an HUF (Hindu Undivided Family)

    • Shared from partnership firm

  • ✔️What are the tax benefits?

    Tax laws that help in reducing the tax liability of eligible entities are known as tax benefits. Tax exemptions and deductions are some of the examples of tax saving investment benefits. The quantum of tax savings depends on the type of tax benefit sought as there are various forms of tax savings. Some of the tax-saving investment benefits are:

    • Income Tax Exemption

    • Income Tax Deduction

  • ✔️How can you save tax?

    The primary tool for tax saving is Section 80C of the Income Tax Act, 1961. You can claim a deduction of up to Rs. 1.5 lakh per year under section 80C for certain investments. A variety of investments are eligible for tax benefits, but fixed deposits, PPF, ULIP and ELSS are some of the popular options. One should, however, not make an investment based solely on tax savings, but keep the financial goal in mind. For instance, if the aim is to ensure a regular income with low investment risk, you should choose FD or PPF. On the flip side, if you seek high returns and have a slightly high-risk tolerance, ELSS is an ideal choice for you.
  • ✔️What are the tax benefits available on health insurance?

    Health insurance has become a necessity and the government gives a variety of tax benefits to promote its adoption. The premiums paid for medical insurance are eligible for tax benefits under Section 80C and 10(10D) as applicable.

    • Section 80C: A deduction of Rs. 1.5 lakh can be claimed from your total income for health insurance premiums.

    • Section 10D: Under Section 10D, any benefit received through an insurance policy will be exempted from tax (*subject to fulfilment of certain conditions)

  • ✔️What is ITR e-Filing?

    ITR e-Filing or electronic filing is a digital method of submitting your income tax return online. There are two ways in which you can file your ITRs, i.e. online or offline. Previously, taxpayers had to visit the IT Department’s office to physically file their returns. The e-Filing process has made it easy for taxpayers to file their ITRs from the comfort of their homes.

  • ✔️I am a salaried employee, and my company deducts TDS. Do I still have to file my ITR?

    Yes. TDS and ITR filing are two different components of the overall taxation process. Filing ITR shows that you have paid all your tax dues. Moreover, ITR is also a useful document when applying for a loan or a visa.

  • ✔️What is ITR-V?

    ITR-V is a one-page document that taxpayers receive after e-Filing their returns. If you have not e-verified your ITR filing, print and sign the ITR-V and send it to the tax department within 120 days of filing your returns.

  • ✔️How to calculate income tax?

    You can use the income tax calculator available on Finserv MARKETS to determine your total tax liability in a given financial year.

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