July 31 is the last date to file your income tax return (ITR) for FY 2018-19. By filing your ITR on time, along with certain benefits such as carry forward of losses, you will also avoid paying late filing fees. If you file your ITR after the deadline you will have to pay late filing fees of up to Rs 10,000.
Now, everyone has to file ITRs digitally except for super senior citizens (i.e., aged 80 years and above) who are allowed to file their ITR in paper format.
To file ITR electronically, one must be registered on the e-filing website of the income tax department.
Once you have registered yourself on the e-filing website, here is a step-by-step guide on how to e-file your ITR.
STEP-BY-STEP GUIDE TO FILE YOUR INCOME TAX RETURN (ITR)
1. Collect required documents such as TDS certificates (Form16/16A), capital gains statements
The first step is to collect all the documents you will need to file your ITR such as Form 16, salary slips, and interest certificates. The documents will help you compute your gross taxable income and will provide you the details of tax deducted at source (TDS) from your income in FY 2018-19.
Form 16 is a TDS certificate given by your employer, if tax is deducted from your salary income. Similarly, your bank is required to issue Form-16A for TDS deducted on interest payment to you on fixed deposits. Ensure that all the TDS certificates received by you from all the deductors are in the TRACES format.
TDS certificate received by you should be digitally signed. They will bear a check mark indicating that the signature is verified. Non-verified signatures on the TDS certificate will have a question mark over it. You will be required to verify it.
Similarly, if you have redeemed mutual fund units in FY 2018-19, you can ask the mutual fund to provide the transaction statement and capital gains statement for the same.
Remember this year, you will be required to pay tax on long-term capital gains from equity shares and equity mutual funds if the gains exceed Rs 1 lakh. The tax will be paid at 10 percent without any indexation benefit. Therefore, it is important to check if one has any capital gains and collect the capital gains statement to calculate the amount.
2. Download and check Form 26AS
Form 26AS is your tax passbook which consists of all the details of the tax that has been deducted from your income during the FY 2018-19 and deposited against your PAN. You must cross check your TDS certificates with Form 26AS to ensure that tax deducted from your incomes such as salary, interest etc is deposited with the government and against your PAN.
You can download Form 26AS from the TRACES website. To download it, login to your account on the e-filing website, click on ‘My Account’ tab and select ‘View Form 26AS’. The website will redirect you to the TRACES website to view and download the same.
3. Rectify the errors in Form 26AS, if any
If the amounts shown in the TDS certificates (Form-16, Form-16A etc.) and Form 26AS do not match, then you must take up the matter with your deductor to get the errors rectified. The deductor can be your employer, bank or others and request him to correct the details.
If the error is not rectified, then you will not be able to claim the credit on that tax which is deducted. Chartered accountants advise that one should keep track of your Form26AS during the financial year to avoid any discrepancies at time of filing ITR.
If your TDS is deducted but not deposited with the government and your deductor is not paying heed to your complaints, then the Central Board of Direct Taxes (CBDT) has issued certain circulars regarding the same. The circulars state that income tax officers must not harass the deductee.
4. Compute total income for the financial year
Once you have collected all the documents needed and verified all the taxes that are deducted from your income, you are required to compute the total income chargeable to tax.
Total income is computed by adding incomes from five different heads and claiming all the relevant deductions allowed under the Income-tax Act and setting off losses, if any.
Remember this year filling salary details in ITR is easier as they are information required can be easily found in Form-16. In additon to that, you are are requried to provide sourcewise bi-furcation of the incomes taxable under the head ‘Income from other sources’.
5. Compute your tax liability
After computing your total income, you have to calculate your tax liability by applying the tax rates in force for FY 2018-19 as per your income slab. The income tax slabs and rates have remained unchanged for FY 2018-19 as compared to previous year.
6. Calculate final tax payable, if any
Once you have computed your tax liability in the earlier step, deduct the taxes that have been already paid by you through TDS, TCS and Advance Tax during the year. Add interest, if any, payable under sections 234A, 234B and 234C.
This will tell you if all the taxes are already paid by you or any additional tax has to be paid or if you have paid any excess taxes and a refund is due to you.
If any additional taxes are due, individuals can be paid physically via cheque or online using challan ITNS 280. Income tax payments made after March 15 of the financial year for which return is to be filed are called payment of self-assessment tax. The same should get reflected in your Form 26AS within 2-3 working days from the date of payment which you should cross-check. However, this time period could be longer towards the end of the financial year as rush to deposit self assessment tax increases.
7. File income tax return after all taxes are paid
Once taxes, if any due, are paid by you, you can start the process to file your ITR. If you want to claim any refund from the tax department, you can do so only if you file your ITR. Therefore, you will have to file your ITR even if you are not mandatorily required to do so as per rules. While filing your ITR ensure that you are using the correct ITR form to file it. If you file your ITR using the wrong form, then it will be termed as a defective return and you will be required to file it again.
The income tax department notifies ITR forms for every assessment year. Assessment year is the year immediately following the financial year for which the return is to be filed. For FY 2018-19, the assessment year is 2019-20.
ITR can be filed by downloading the software in Excel or Java utility. However, taxpayers who are eligible to file ITR-1 and ITR-4 also have the option to file it online without downloading any software utility.
If you are eligible to file ITR-1, then you can use option ‘Prepare and submit online’ without downloading the excel software utility.
While filing your tax return, make sure you avoid these common mistakes.
8. Verification of ITR
The last step of ITR filing process is verification. There are 6 ways to verify your ITR. Out of this, 5 are electronic methods and one is physical verification.
If you want to verify your tax-return electronically, you will not be required to send any documents to the tax department. However, if you wish to verify your return physically, then you will be required to send a duly signed copy of ITR-V/Acknowledgement to ‘CPC, Post Box no. 1, Electronic City Post Office, Bangalore- 560100, Karnataka, India.’
Remember after you file your ITR, you have 120 days to verify it. If you do not verify your ITR, then it will be deemed as you have not file ITR. In case you forget to verify your ITR before the deadline, you can file a request to your assessing officer.
9. E-verification acknowledgement
If you verify your ITR using an electronic method, then you will immediately receive the confirmation from the tax department regarding verification of your ITR. If you have sent ITR-V via post to the I-T department, they will send you an email confirming that your ITR-V has been received by the I-T department, i.e., your return stands verified. The email will be sent to the email address you have registered in your e-filing account on the income tax department’s e-filing website.
10. IT department will process return after verification
After the return is verified, either via e-verification or physically, the income tax department will start processing your tax return to ensure that all the details filled by you are correct as per the Income Tax Act and also cross-check the details filled by you with other data available with it.
Once the return is processed, the I-T department communicates the same to you via email to your registered email ID. In case any discrepancies are found, they may ask you to explain further or correct the mistakes made while filing the original ITR.