The Income Tax (I-T) Department announced a new form for filing updated income tax returns (ITR) this year. The new concept of updated ITR was introduced in Union Budget 2022. The new provision allows taxpayers to rectify errors or omissions on their ITRs within two years of filing the returns, albeit with payment of additional taxes. If a taxpayer files an ITR and later realises that he/she did not record any income, then he/she has up to two years from the end of the relevant assessment year to amend their return, according to tax rules.
The Central Board of Direct Taxes (CBDT) notified the ITR forms for the financial year (FY) 2021-22, assessment year (AY) 2022-23 in March this year and has also facilitated the filing option for ITR-1, ITR-2, and ITR 4 forms through its website. The taxman has also broadened the scope of taxpayers required to file income tax returns. Thus, an individual taxpayer should know which ITR form is applicable to him/her.
Here is a ready referral explainer on How to file income tax returns, deadline for filing ITR, documents required, relevant forms, etc.
How To File Income Tax Return?
Every salaried individual whose pay exceeds a specific income slab is required to pay tax to the government annually. Income tax is imposed based on a slab system, which means, different tax rates are applicable to different income ranges. Tax rates keep rising with an increase in a taxpayer’s income. Since the majority of earning individuals file the ITR-1 form, it is important for them to know about the essential documents they must keep handy during the ITR filing.
Income tax has categorised three classifications of “individual “taxpayers such as:
• Individuals (aged less than 60 years) including residents and non-residents
• Resident senior citizens (60 to 80 years of age)
• Resident super senior citizens (aged more than 80 years)
New Income Tax Slabs For Financial Year 2021-22 And Assessment Year 2022-23
|Income Tax Slab||Tax Rates (As Per New Regime)||Tax Rates (As Per Old Regime)|
|Rs 0 - Rs 25,000||Nil||Nil|
|Rs 2,50,001- Rs 5,00,000||5%||5%|
|Rs 5,00,001 - Rs 7,50,000||Rs 12,500 + 10% of total income exceeding Rs 5,00,000||Rs 12,500 + 20% of total income exceeding Rs 5,00,000|
|Rs 7,50,001 – Rs 10,00,000||Rs 37,500 + 15% of total income exceeding Rs 7,50,000||Rs 62,5000 + 20% of total income exceeding 7,50,000|
|Rs 10,000,001 – Rs 12,50,000||Rs 75,000 + 20% of total income exceeding Rs 10,00,000||Rs 1,12,500 + 30% of total income exceeding Rs 10,00,000|
|Rs 12,50,001 – Rs 15,00,000||Rs 1,25,000 + 25% of total income exceeding Rs 12,50,000||Rs 1,87,500 + 30% of total income exceeding Rs 12,50,000|
|Above Rs 15,00,000||Rs 1,87,500 + 30% of total income exceeding Rs 15,00,000||Rs 2,62,500 + 30% of total income exceeding Rs 15,00,000|
Who Can File Income Tax Returns Through ITR-1 Form?
Earning individuals with an annual income of up to Rs 50 lakh from salary, one house property and other sources can file their income tax returns using the ITR-1 form. However, the ITR-1 form cannot be used by a person who is either a Director in a company or holds equity shares in an unlisted company. It can also not be used in cases where tax has been deducted at source (TDS) on specific cash payments or if the income tax is postponed on Employee Stock Option Plans (ESOPs) or on agricultural income above Rs 5,000.
In order to make the filing of income tax returns easier, the I-T department has been making efforts to improve the process. The department has done this by offering pre-filled ITR forms. The individuals can file their ITR returns either online or offline. The form can be filled and submitted online or in partially online and partially offline mode as well.
How To File Income Tax Return In Partially Online And Partially Offline Mode
In order to file income tax returns through the ITR-1 form in a partially online and partially offline mode, the taxpayer needs to download the pre-filled JASON file and use the JSON utility to fill in one’s income details for FY22. After this, the taxpayer needs to upload the filled JASON form on the income tax e-filing portal - incometax.gov.in – to complete the ITR filing process.
How To File Income Tax Return Using ITR-1 Form In Complete Digital (Online) Mode?
Login at the official income tax website – incometax.gov.in with your credentials using your PAN/Aadhaar number as your user ID.
Follow the below-mentioned step-by-step process: -
1. Go to E-file, select Income Tax Returns, click on 'File Income Tax Return' from the menu
2. Click on Financial Year 2021-22
3. Select ‘Online’ on mode of filing option
4. Choose ‘Individual’ in application status and ITR-1 form on the landing page
5. Click on “Let’s get started’
6. Select the applicable reason for filing the income tax return and click on ‘Continue’ option
7. You will see 5 tabs under ‘Let’s validate your pre-filled data’. These tabs are – personal information, gross total income, Total deductions, Tax paid and total tax liability. Fill and validate all 5 tabs
8. Go to Return Summary option, check if all 5 tabs are reflected as ‘Confirmed’ and then click on ‘Proceed’ to tax summary tab
9. Tax Summary tab – In this tab taxpayer can view his/her tax summary (nil payable/refund)
10. Declaration tab – Once the taxpayer fill all details in the ITR-1 form, he/she is required to fill requisite information in the declarations verifying that all details provided in the return are correct and complete. Following this, click on ‘Preview Return’ option
11. You can confirm the personal details, income details and taxes paid in the preview version. Once verified, click on ‘Proceed to Validation’ option. If there is an error in the details entered, you can correct the information by selecting the ‘Edit’ option
12. Once the income tax return is filed, an SMS/e-mail intimation verifying the ITR filing is sent by the Income Tax department to the taxpayer. After successful submission, the tax department sends the acknowledgement (ITR-V) to taxpayer’s registered email id. You can also retrieve it manually from the income tax portal.
13. After successfully validating your ITR, you would need to verify your tax return either electronically through net banking, Aadhaar OTP etc., or you can take a print out of your ITR-V (acknowledgement), sign it and send it via post to CPC, Income Tax Department, Bengaluru, within 120 days of e-filing of the income tax return.
Note: the signature on ITR-V has to be in blue ink. The ITR-V can only be sent through speed post or normal post and not via courier or registered post.
Last Date To File Income Tax Returns
The last date for filing the income tax returns for FY2021-22 and the Assessment Year (AY) 2022-23 is July 31, 2022. For those taxpayers whose accounts are not required to be audited, the last date of filing the income tax return is also July 31, unless the date is extended by the government.
Which ITR Form Is Applicable To You For FY 2021-22?
• ITR-1 (SAHAJ) – Applicable for Individual qualifying as Ordinarily Resident
. Having a total income of up to Rs 50 lakh
. Having income from salaries, one house property, income from other sources (interest etc.) and agricultural income up to Rs 5,000
. In case of clubbing of income, an individual can file ITR-1 if the income of the other person (whose income the individual is reporting in his ITR) is from sources as mentioned above.
• ITR-2 - Applicable for Individual and HUF - Not having Income under the head Profits and Gains of Business or Profession
. Having a total income of more than Rs 50 lakh
. Director in a company
. Holding investments in unlisted equity shares
. Having income from the following sources: salaries, more than one house property, capital gains and income from other sources
. Having income from sources outside India and holding assets outside India
• ITR-3- Applicable for Individual and HUF - Having Income under the head Profits and Gains of Business or Profession
. Partner of a Firm
• ITR-4 (SUGAM) – Applicable for individuals, HUF and firms (other than LLP) having total income up to Rs 50 lakh.
. Having business income/ income from profession computed on a ‘presumptive basis’
• ITR- 5 - Any person except individual or HUF or company. For example - Firms/ LLPs/ Association of Persons (AOPs)/ business trusts/ investment funds.
• ITR-6 - Companies other than those filing ITR-7
• ITR-7 - Persons including companies which are a charitable or religious trust, political party, research association, news agency or similar organisations specified in the Act.
Documents Required To File Income Tax Return
Below mentioned is the list of documents one must keep handy while filing his/her income tax returns this year: -
- Form 16 – It is a Tax Deducted at Source (TDS) certificate provided by the employer of the taxpayer. Form 16 includes details such as taxes deducted, and deposited during the financial year as well as salary paid. It is obligatory for an employer to issue Form 16 if taxes have been deducted. The form has two parts – Part A and Part B. the employee can check if Form 16 has been digitally signed or not and all the details in both parts of the form are correctly filed by the employer. An employee can download Form 16 Part A and Part B from the TRACES portal of the Income Tax department. The pre-filled information in ITR forms, under the head ‘Income from Salary’, is in accordance with the details available in Part B of Form 16. Meanwhile, the last date for issuing Form 16 by an employer is June 15.
- Form 16 A, Other TDS Certificates – Besides Form 16, earning individuals must also collect other TDS certificates applicable to them. In case of interest earned on fixed deposits (FDs) in FY2021-22 crosses Rs 40,000 (Rs 50,000 for senior citizens), the banks will deduct tax on it. Moreover, the bank will also be required to issue Form 16A to the individual for the tax deducted. For the dividends paid during FY 2021-22, mutual funds and companies issue Form 16A for the tax deducted, provided the amount exceeds Rs 5,000. Likewise, individuals getting monthly rent of Rs 50,000 or more, should collect Form 16C (TDS certificate) from their tenants. According to the current income tax laws, tenants giving monthly rent of Rs 50,000 or more have to deduct tax from the annual rent amount paid. Meanwhile, people who sold land, or property during 2021-22 should ask their buyer to provide Form 16B for tax deducted on the amount. TDS is obligatory if the property or land is sold for more than Rs 50 lakh.
- Interest Income, Other Interest Certificates – Income tax return forms ask individuals to furnish a break-up of the interest income they get from various sources such as fixed deposits, savings accounts, etc. An interest certificate summarises the interest credited or debited on an account.
Banks issue these certificates against accounts held by customers, so that they can determine how much interest they have made on their balances in their current and savings accounts, recurring deposits, fixed deposits, etc. Thus, it is important to get interest certificates from the post offices, banks, and other financial institutions and fill in accurate income details in ITR forms as well as claim tax exemptions and deductions.
In case the interest certificate is not available, then an individual must ensure to update and check the bank passbook/s. An individual can claim a deduction of Rs 10,000 under Section 80TTA for interest gained on the savings account. Meanwhile, interest made from recurring deposits, fixed deposits, RBI taxable bonds etc. is taxable in the hands of an individual. Although Public Provident Fund (PPF) interest is exempt from tax, an individual has to report it.
This year the income tax return forms require individuals to furnish details of interest earned from EPF accounts in case the annual contribution surpasses Rs 2.5 lakh. Those who have paid home loan/education loan EMI during FY 2021-22 need to collect repayment certificates from their respective banks/financial institutions in order to claim tax exemption as well as deductions. A deduction for a maximum of up to Rs 2 lakh on the interest paid on home loan EMI can be claimed under Section 24. An individual can claim a deduction under Section 80E for the interest paid on the education loan during FY 2021-22.
- Annual Information Statement – The Income Tax department launched the Annual Information Statement (AIS) in November 2021. It is a statement that contains information about a taxpayer’s financial transactions in a particular financial year. AIS includes details such as a taxpayer’s income, tax details, financial transactions, income tax proceedings, etc.
The statement also imbibes information regarding the tax deposited against an individual’s Permanent Account Number (PAN) with the government. One must download and double-check the financial transactions from the AIS to make sure that all the incomes stated in the statement are reported in the income tax return form as applicable to an individual.
- Form 26AS – This contains annual-tax-related information about an individual. An assessee must download Form 26AS from the new income tax portal. This is a statement which is like a tax passbook that includes information regarding the taxes deducted and deposited against one’s PAN with the government. One must cross-check the details given in Form 26AS with the information available in TDS certificates and interest certificates. The reason for this is that it may happen that the TDS deducted doesn’t reflect in an individual’s Form 26AS because of the wrong assessment year, wrong PAN etc. An individual will not be able to claim credit for the tax deducted if it doesn’t reflect in his/her Form 26AS.
- Capital gains from sale of mutual funds, property, shares – taxpayers have to disclose capital gains earned from the sale of shares, mutual funds, or property at the time of filing their income tax returns. Individuals who have capital gains cannot file tax returns using ITR-1, instead, they are required to file returns either in ITR-2 or ITR-3. To calculate capital gains (long-term or short-term) on the sale of land, building or house property, one would require the sale deed of the property. A taxpayer can get a capital gains statement from mutual fund houses or the registrar’s office. Furthermore, gains from bitcoins are also required to be reported for FY 2021-22.
This year the income tax return forms ask the taxpayers for varied information pertaining to the sale of building, which contains:-
A. Details of the year in which money spent on improvement
B. Information regarding the cost of acquisition and indexed cost of acquisition
C. Date of purchase and sale of land/building
D. Buyer details are required in the ITR form if the property located outside India is sold
Other Key Documents To Keep Handy
• Tax saving investment, expenditure proofs if you opt for the old tax regime at the time of filing ITR
• Dividend income received from investments in shares or mutual funds. A taxpayer can get them from the broker statement or the Demat account summary
• Details of investment in unlisted shares using ITR-2 form
• Bank account details - bank name, account number, account type and IFS code. This also includes the information regarding all closed accounts, during FY 2021-22
• Aadhaar and PAN number
• Rental income – Taxpayers need to preserve their rent receipts as such income needs to be furnished in the ITR
• Form-16A/ Form-16B/ Form-16C: Form 16A, B and C showing TDS deducted
• Salary slips in case of salaried individuals
What If A Taxpayer Gets Late In Filing ITR Or Doesn’t File It?
If the income tax return is not filed by the last date, which is currently July 31, 2022 (for salaried individuals), the penalty ranges from Rs 1,000 up to Rs 5,000. This penalty has to be paid even if the tax liability is nil. Moreover, in case of late filing of the income tax return, taxpayers will also not be able to carry over specific losses for set-off in the future years. Furthermore, in order to be eligible to go for the new concessional tax regime, a taxpayer needs to file his/her income tax return on or before July 31, 2022. If a taxpayer does not file his/her tax return within the stipulated timelines under the Income-Tax Act, he/she can now file an updated ITR under Section 139(8A) of the Act within two years from the end of the relevant assessment year.
The revised ITR can be filed if a taxpayer meets the terms mentioned in the aforementioned section. However, a taxpayer would need to pay an additional income tax of 25 per cent or 50 per cent on sum total of income tax and interest payable, as applicable. This income tax will be in addition to the regular income tax, interest and applicable fee payable for late payment of taxes and/or filing of the income tax return.