How to File Income Tax Return

A date that every Indian taxpayer should mark on their calendar is 31 July. This is the annual deadline for filing income tax returns (ITR). Filing ITR on time is compulsory for all citizens earning Rs 2.5 lakh per year. File after the deadline, and you could face a penalty of up to Rs 10,000. Besides, you can now e-file your returns quickly and conveniently by logging in to the e-filing website of the Income Tax Department (ITD).

ITR e-filing: Gather your documents

Here’s what you will need:

  • Your PAN and Aadhaar cards, as well as your bank account details.
  • Documentary proofs to support your income sources—for example, salary slips for salaried employees and rent receipts for landlords.
  • Documents showing tax deducted at source (TDS)—for example, Form 16 provides proof of TDS deducted by employers of salaried individuals.
  • Documents showing capital gains—collect a transaction and capital gains statement if you redeem any mutual fund units or sell shares, for instance. Long-term and short-term capital gains tax may apply. Your demat and trading accounts should provide the necessary information.

Download Form 26AS

You can download the form from the e-filing website. Form 26AS carries details of TDS deducted from your income and deposited against your PAN. Double-check the figures with your TDS documents. If you find a discrepancy, contact the party that deducted the TDS for rectification. This could be your employer or the bank, for example.

Compute total income and tax liability

When computing your total income, include all income sources. Then work in the tax deductions and exemptions available to you. For instance, if you possess a life insurance policy or have invested in an equity-linked savings scheme (ELSS), these investments may be eligible for deduction from your gross taxable income as per Section 80C of the Income Tax Act.

Next, check your tax liability by placing your taxable income under the applicable income tax slab. If you have paid TDS or advance tax, subtract these from your tax burden for the year. Also, include any interest penalties payable under Sections 234A, 234B, and 234C.

If you still have tax to pay, either issue a cheque or pay online using challan ITNS 280. To collect any tax refund, you have to file your ITR.

File ITR

After clearing any pending taxes, proceed with the ITR e-filing. There are seven ITR forms which apply to different taxpayer categories. Make sure to fill up the right one. Otherwise, your ITR will be rejected and you will have to file all over again.

Verification of ITR

Electronic verification gets done right away. But you could also choose the physical verification route and send a copy of your ITR-V to ‘CPC, Post Box no. 1, Electronic City Post Office, Bangalore- 560100, Karnataka, India.’ Upon receiving your document, the ITD will send you an email confirming that the verification is complete. Only, make sure to complete your verification within 120 days of filing ITR. Otherwise, your ITR will be deemed invalid.

ITR processing

The ITD will now go through your ITR details and check for discrepancies. If they find one, you may have to either submit an explanation or rectify the error.

Final word

It is best to file your ITR well in advance. The ITR also serves as a record of your financial transactions and as a proof of income should you ever need a loan or a visa. An early start to e-filing ensures that you miss the last-minute rush.