Easy steps to file Income Tax Return Online

With the end of the  financial year 2013-14 (Assessment Year or AY 2014-15) on 31 March 2014, taxpayers are gearing up for filing their tax return on or before the due date (31 July for individuals who are not required to get their accounts audited), as prescribed under the Indian tax laws. The government has over the past few years simplified the process of filing returns through use of technology. Gone are the days when the return filing process included a collation of documents and attaching the same with a tax return form. These days, taxpayers have to file their returns online, without attaching any supporting documents.

e-filing. This is a system for submitting income tax return to the tax authorities using the online medium. The introduction of e-filing has revolutionised the tax filing return process. It is not very complex. An individual can get all the necessary forms from a single source or portal with easy-to-understand guidelines in order to e-file the return.

For AY2014-15, e-filing of returns is mandatory for some individuals:

■ All persons having total income of Rs 5 lakh and above;

■ Individual or Hindu Undivided Family (HUF), being resident, having assets located outside India;

■ Person claiming relief under the double taxation avoidance agreem-ent (DTAA) India has with other countries, or, claiming foreign tax credit under Income Tax Act, 1961.

Before a taxpayer initiates the tax return filing process, it is prudent to keep all the documents required for preparation of the income tax return ready and handy. Some of the common documents required by an individual for preparing the income tax return are:

■ Form 16 for tax deduction at source (TDS) on income from salary

■ Form 16A for TDS on income other than salary

■ Form 26AS, an annual consolidated tax statement issued by the tax authorities

■ Home loan interest certificate for claiming deduction for interest paid on home loan

■ Bank statements for the year to ensure that no income or deduction is left out while filing the tax return

■ Details of immovable and movable properties

■ Broker contract notes: Bills for sale and purchase of shares

■ Mutual fund summary of sale and purchase of mutual fund units and dividend earned during the year

■ Investment details or expenses made to claim required deduction, such as school tuition fees for children, payment of principal on home loan and others

■ Receipt of medical insurance

■ Tax payment challan

■ Details of assets owned out of India (for individuals qualifying as resident and ordinarily resident): It includes details of bank accounts, financial assets, immovable assets owned out of India.

In order to file an e-tax return correctly, the taxpayer should refer to the below steps.

Registration into the income tax web portal. To start with, one has to create an account with the inco-me tax web portal by logging in to https://incometaxindiaefiling.gov.in and entering the permanent account number (PAN) and other basic details. That done, the website will furnish a mobile PIN and activation link on the email address mentioned while creating the account. Using the same, one can access the account for the return filing process.

Choose the correct ITR form. There are two income tax forms which are applicable for salaried individuals, i.e., those who do not derive any income under the head  profits and gains from business or profession. ITR-1 is for those who are having their income from salary,

one house property, pension or interest on fixed deposits or bank balance. Further, the individuals using ITR-1 should not have exempt income more than Rs 5,000. On the other hand, ITR-2 is applicable for individuals having income from salary, interest and income from capital gains, house property and other residual income (except income from business or profession).

Use of return preparation software or utilities. Individuals filing the income tax return in an e-form can download the income tax return utilities or software from the income tax web portal. The utilities or software are java files that requires an individual to fill in the personal details as well as financial information from documents, such as TDS certificates or Form 16/16A, Form 26AS, bank statements, investments made and bank interest statements and are available for each ITR form. But, with the pre-fill feature available with the utility, all personal data from the previous year’s tax returns or as per PAN details and the taxes details from 26AS automatically get uploaded up in the ITR Form, which saves time and also make the data entry more accurate.

Generating an XML file. After filling in the relevant information and other basic details and ensuring that the balance tax liability is paid, recheck the return form for accuracy. Once satisfied that everything is in order, a taxpayer needs to click on the ‘generate XML’ button appearing on the return form utility in order to convert the tax return in XML format and save this XML file on the hard drive of the computer.

Login into the account with income tax web portal. After registering successfully, enter the user ID (PAN), date of birth and password to login. Click on the relevant form on the left panel and select ‘submit return’ from the options available.

Upload XML. Browse into the computer to select the XML file which was generated and saved in the hard drive of the computer in Step 4. Click on the ‘upload’ button on the webpage to upload the file.

Acknowledgement or ITR V. After the XML file is successfully uploaded, an acknowledgement or the ITR V Form will be generated and displayed. The password for the ITR V will be the PAN and date of birth (without any space in between). Using this password, the ITR V form can be opened. Take a printout and keep it for record.

Use of digital signature. If the income tax return is signed digitally, then no further paperwork or visit to the income tax office is required.

Without digital signature. If the tax return is not signed digitally, then an individual has to take a printout or acknowledgement form of ITR V. This has to be signed in black ink and sent by ordinary or Speed Post to income tax department, CPC, post bag No-1, Electronic City post office, Bengaluru- 560100, Karnataka, within 120 days of filing the e-return to complete the process.

Individuals who desire and are eligible to submit their tax returns manually may download the pdf forms from the income tax portal. The forms need to be printed, filled manually and signed before submitting to the local income tax office. See Steps To File Income Tax Online for better understanding the process of filing the e-return. Also note that the taxpayer should ensure that any balance taxes are deposited with the government treasury before filing of the tax return. ITNS 280 challan is the relevant challan for paying taxes through self-assessment before filing of the return of income.

An individual should make sure that he or she selects the correct assessment year, PAN details, completes all the mandatory fields and, the amount of taxes with proper bifurcation of tax, interest or penalty. The challan so generated after payment of taxes should be kept for filling the necessary details in the tax return form. After paying the due taxes, one can file the income tax return. This concludes the compliances on the part of an individual taxpayer.

That said, there are some common mistakes that taxpayers tend to make while filing their tax return, which may lead to their ITRs being classified as ‘defective’. Further, the errors made while filing the tax return may also lead to inability on the part of the tax authorities to process the refund. Therefore, a taxpayer must follow some simple steps to ensure that there are no mistakes while filing a tax return.

■ Include salary from all employers (irrespective of Form 16 being issued by an employer) under the head ‘Income from Salary’

■ Include income, such as bank interest and interest on fixed deposits

■ Report exempt income, such as interest on Public Provident Fund (PPF) and any dividend received. Excluding any exempt income while filing the return could lead to needless questioning by the tax authorities at a later stage

■ Do not make any error in claiming deductions,

such as claiming them  under the wrong head or without complete information on the same

■ Ensure that correct personal and bank details and are inserted in the tax return form

■ Reconcile the details of tax deducted at source (TDS) with form 26AS to avoid issuance of any demand notice by the authorities at a later stage

■ Dates of deposits should be entered in the dd/mm/yyyy format only and not in any other format such as mm/dd/yyyy format

■ The contact details, such as email id and mobile number should be mentioned correctly. These are used by the tax authorities for communication with the taxpayer

■ A very common mistake on the part of the taxpayer is the failure to dispatch ITR V on time. Any delay in the same can make the legitimate tax return void

Filing income tax returns on time has many advantages associated with it, such as carry forward of losses, processing of home, educational or other loans, processing of visa application and so on. From a social perspective also, it is ethical to pay the taxes as well as file the return of income on a timely basis. Filing the returns provides legal sanction to the income whether or not the taxpayer is liable to pay taxes for that financial year. Filing of return of income on time also lends peace of mind as non-filing of tax return may have penal implications.

Therefore, taxpayers, as responsible citizens of India, must comply with their moral and legal duty to file the tax return on time and submit accurate information to the tax department.

So, happy return filing to all!!!