Filing an Income Tax return is the duty of every citizen of the country. The tax that individuals pay on income falls under the category of direct taxation. A part of the income that they earn is delivered to the central government. The government levies taxes to bear expenditures to provide services such as education, infrastructure, health, subsidies, and other facilities. The government passes laws and regularly notifies the taxation rates on income from time to time. Income tax is generally paid by an individual, depending on their income. Companies must also deposit income tax yearly, irrespective of their financial status or income level. Filing income tax is essential, regardless of their liability to pay taxes. Therefore, filing the Income Tax Return (ITR) is imperative. Filing the ITR might seem to be a burdensome process, especially if they are young. However, it is not difficult, and it comes with many benefits.
Paying Income Tax Online
Before they file an income tax return online, an individual must pay their taxes. The employer deducts most of the tax liability for salaried employees from their salary. The deductions are made in the form of Tax Deducted at Source (TDS) and deposited to the government on behalf of the employees. If the employee is liable to deposit advance taxes, they must pay 90% of it before the 31st of March each financial year.
ITR can be filed after the completion of the financial year. The period to file ITR is available till the 31st of July of the respective assessment year. The due date to file the ITR may or may not be extended, and in case of an extension, the Income Tax department will release the information through notifications. The extension may happen as a result of various external factors. Generally, it is advisable to file ITR within the due date as the employee can avoid fines or late filing fees.
What is an Income Tax Form?
An IT return is a form that enables taxpayers to declare their income, expenses, investments, taxes and tax deductions. The IT Act of 1961 has made it mandatory for taxpayers to file an IT return for various scenarios. Generally, taxpayers file ITR and pay income tax to report their income for that financial year, carry forward losses, claim an income tax refund, claim deductions in tax, etc. The ITR has filed annually, and every individual working must submit the form for a private or public company or by themselves. However, they might be required to file an ITR without an income.
For whom is ITR mandatory?
The income tax law states that anyone with a total gross income above the lowest income tax slab is liable to file an ITR. The basic exemption limit is as follows – Rs 2.5 lakh for assesses below 60 years, Rs 3 lakh for assessees between 60-80 years, and Rs. 5 lakh for those more than 80 years of age. Apart from this, there are instances where people are liable to pay taxes even if their Gross Total Income is below the income tax slab.
ITR is mandatory if they fall under the following categories:
- If they have deposited an amount of Rs.1 Crore in their account
- If their electricity bill exceeds Rs.1 lakh for the financial year
- If they spend over Rs. 2 lakh on a foreign trip
- If they are a country resident and have an income source, assets or a signing authority outside the country
- If their Gross Total Income exceeds the basic exemption limit before they claim the deduction on capital gains incurred under any of the following sections- 54, 54B, 54D, 54EC, 54F, 54G, 54GB, or 54GA
Why Should A Salaried Employee File an Income Tax Return?
Most young salaried employees have common questions such as how tofile an ITR, why to file an ITR, who should file an ITR, etc. Filing an ITR proves to be very beneficial in many ways, such as:
- Loan processing is easier if they have filed an ITR. If they want to apply for a home loan or any other loan, the lender will ask them for proof of income, and in such cases, submitting an ITR will be an integral part of the process, only after which their loan will be sanctioned.
- They can easily claim to carry forward losses if they have filed an ITR. If there are any losses that they might have incurred under the heads of “Capital Gains” or “Profits and Gains from Business or Profession” and want the losses to be carried forward to the next financial year, they can do so by filing an ITR.
- By filing an ITR, they can claim deductions in TDS for that year. If their employer deducts their taxes at source, they can claim any refunds or deductions by filing an ITR. Refunds can be claimed if they are not required to pay taxes.
- They can apply for their visas or credit card if they submit their Income tax return status. If they are planning to go on foreign trips, submitting their ITR is necessary.
Apart from the above, paying taxes responsibly will contribute to the nation. The tax they pay is an essential source of revenue for the government that will be used to develop their country.
If they are a salaried employee working in a private or public company and wondering how to file an ITR online as a salaried employee, they will be well versed by the end of this blog.
Most young employees, who have not filed an ITR before, are faced with this question – How to file an ITR online for salaried employees? Salaried employees are those who work in a private or public company, drawing a monthly remuneration in the form of a salary. Filing an ITR online for salaried employees is much more accessible now since it involves a digital process compared to the traditional methods used years ago. They can complete the filing of ITR by visiting the Income Tax Department Portal and following a few steps quickly.
Before filing an ITR online, they must calculate their total income for the financial year. They can calculate their full payment from ‘Form 16’. Their employer will issue this form, and they can calculate their total income and determine how much taxes are deducted at the source. They must also calculate other payments, like income from house rent or capital gains, if they have any before they begin to file an ITR.
When they file an ITR, there are two forms – ITR-1 and ITR-2, among which they must choose one. For income less than Rs. Fifty lakhs p.a., ITR-1 should be selected. If their total income is more than Rs 50 lakh, choose ITR-2. To claim a deduction for expenses under the “Income from other sources” category, select the ITR-2 form.
When filing an ITR, there are certain forms the salaried employee should have kept ready mandatorily:
- Form 16AS and Form 16
- Proof of Investments
- Certificate of Interest Income
- In the case of a rented house, rental receipts to be furnished
- Interest certificate if you have an ongoing payment of housing loan
- House rental income
- Proof for other sources of income
How to File an ITR through form ITR-1
Log in to the Income Tax portal online using the credentials. If they are filing the ITR for the first time as a salaried employee, they must register, give their details and upload their Pan Card and Aadhar card details. Also, make sure their mobile number is linked to their Aadhar card.
Once they log in using their credentials through the portal:
- Go to the menu tab and select File Income Tax Returns under the E-filling tab.
- If they are filing ITR for the financial year 2020-21, select the Assessment Year (AY) as 2021-22. Select the online mode and proceed ahead.
- Select the ITR form – ITR1 or ITR2.
- Choose the option for filing a tax return in the list of reasons and click ‘Continue’.
Once the taxpayer clicks on Continue, they will go to a page with these five tabs that they should fill up and validate all the tabs:
- Gross Total Income
- Personal Information
- Total tax paid
- Total tax liability
- Total tax deductions
Personal Information
The first step requires them to validate and verify the “Personal Information” – such as Email address, mobile number, Date of birth, PAN, etc. Then, choose their nature of employment appropriately.
Gross Total Income
Moving ahead is the “Gross Total Income”, and here they need to choose the exemptions which are applicable in their specific case. The employer in Form 16 will capture the necessary details. Click ‘skip this process’ and click ‘Continue’.
Income from Other Sources
The next tab is “Income from other sources”, where they must fill in the details based on whatever applies to them, such as income in the form of rent from house property, interest income from bank deposits, and dividend income.
Total Deductions
Next comes the “Total Deductions”, where they must fill in details to claim tax deductions under sections – 80CCD, 80D and 80C. If such information is provided in Form 16, validation of the same will be required.
Tax Paid
The last tab is “Tax Paid”, which has pre-filled information as per self-assessment tax, advance tax, form 26AS with TDS, TCS, etc. Finally, the system works out the liability of tax.
Validation Process of the Information Submitted
Once all the details are confirmed in the ITR filing form, click ‘Proceed’. They will get a summary of tax that will highlight the liability of tax. In addition, the system will generate a request for a refund to their bank account in case the tax liability is lower than the tax already paid. Once the above steps are done, go through the return and submit it. Once submitted, complete the validation electronically through net banking or Aadhaar OTP.
Conversion of File to the XML Format
Once the validation process is completed, the following process converts the file to XML format. Select the option to ‘Generate XML’ button on the right side, which will convert the file into an XML file format.
Uploading of the file on the IT Portal
Once the user logs in to the portal of e-filing the income tax, the next step is to head to the income tax return under the e-file tab. Now, provide the necessary details such as ITR form number, PAN, submission mode and the assessment year. Move on to uploading the XML file under the submission mode option. Upload the XML file and submit it. Next, choose any verification mode — electronically, through Aadhaar or by sending a manually signed copy of the ITR to CPC.
Summing Up
Filing Income tax returns as a salaried employee has become a straightforward process like never before. It has become user-friendly and simple in recent times. An individual can do it on their own without even seeking any professional support. It will be beneficial if they file their IT return as a salaried employee.
If they regularly file ITRs, negotiating for a good rate of interest while applying for personal loan becomes easier. Opting for personal loans for big-ticket purchases, travel plans, higher education, and other purchases will help them become less dependent on your paycheck. The maximum limit for a personal loan is Rs. 35 lakhs and the interest rates start at a nominal 10.99%. They can enjoy flexible repayment options and choose a tenure which suits their long-term financial plans. While the loan eligibility conditions are easy-to-fulfill, they can also make the most of the instant application process. There are no penalty charges on part pre-payment of loans. Since personal loans for salaried employees are collateral-free, they can rest assured that their valuable assets are not prone to risk.
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02 February 2024
10 mins read
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