If an individual’s gross taxable income within a given fiscal year exceeds the maximum amount not subject to tax.
The Income Tax Return filing date for Financial Year 2020-21 has been extended to July 31, 2022 for persons [not subject to tax audit requirements under the Income-Tax Act of 1961 (‘the Act’)]. The inauguration of a new income-tax portal this year has resulted in major changes in the tax filing process. As a result, it is critical to select the correct ITR form and put in the correct information when completing the ITR.
Who needs to file an ITR?
If an individual’s gross taxable income [calculated before eligible exemptions available for long-term capital gains on listed securities up to Rs 1 lakh and other deductions under Chapter VI-A of the Act] during a particular FY exceeds the maximum amount not chargeable to tax, he or she is required to file an ITR in the prescribed form.
For the fiscal year 2020-21, an individual’s total income up to Rs 2.5 lakh is tax-free. A resident senior citizen (60 years or more) and a resident super senior citizen (80 years or more) have income thresholds of Rs 3 lakh and Rs 5 lakh, respectively.
- Deposit in one or more current accounts of a sum or combination of amounts exceeding Rs 1 crore;
- Expended a sum, or an accumulation of amounts. In excess of Rs 2 lakh for travel to a foreign country for yourself or anyone else;
- Expended an amount, or an accumulation of amounts, in excess of Rs 1 lakh on energy consumption.
To begin, income under each head of income must be calculated separately according to the provisions of the corresponding income head. The gross total income should then be deducted from the brought forward/current year losses.
After assessing gross total income, deductions under Chapter VI-A of the Act may be claimed to arrive at total taxable income. To calculate the total tax due on such taxable income, the corresponding slab rates of tax should be used.
In lieu of renouncing mandated exclusions and deductions. The Finance Act of 2020 proposed a new optional tax regime for taxpayers with modified tax slabs and rates. One can weigh the benefits of the new tax regime vs the previous tax regime and choose the most advantageous option. After claiming credit for prepaid taxes and foreign tax credit of taxes paid outside India.
An overview of the ITR filing process.
Except for super senior people submitting ITR-1, everyone is required to file their return electronically.
In general, the procedure for filing a tax return electronically is as follows:
- If you haven’t already done so, you should register and log in to the income-tax e-filing system.
- Obtain and validate an online tax credit statement to support taxes deducted at source by the employer/any other deducted. Advance taxes paid during the year, and any other relevant information.
- Prepare income (including claiming exemptions and deductions) and tax computations.
- Taxpayers who want to seek overseas tax relief should fill out Form 67 ahead of time and submit it with supporting papers.
- Alternatively, you can download a pre-filled ITR and fill out the required fields on the corresponding income tax return form offline. Then generate an xml file and upload it to the e-filing portal. Double-check the information on the pre-filled ITR and make any necessary adjustments for income not reported on the tax return.
- An acknowledgement of the tax return filed (Form ITR-V) will be generated after the return is submitted. To finish the filing procedure, which can be authenticated online or through physical signatures within the time range specified.
In summary, while the entire ITR filing procedure has become nearly entirely computerized. The taxpayer must be diligent in using the relevant forms, reporting the correct details of income/deductions, and so on. As any non-reporting or mis-reporting has a variety of repercussions under the Act.