ITR Filings

What is the meaning of income tax?

Taxes are of two types, namely, ‘Direct Tax’ and ‘Indirect Tax’. Taxes that are directly levied on the income is known as ‘Direct Tax’ For e.g. ‘Income Tax’.

The income earned is divided into the following ‘Heads of Income’-

1. Income from Salary,

2. Income from House Property,

3. Income from Business and Profession,

4. Income from Capital Gain, and

5. Income from Other Sources.

How is income tax calculated?

The Income Tax is calculated based on the ‘income tax slab rates’ as applicable during the respective Financial Year. Income tax slab rates (both old and new tax regime) as applicable for the Financial Year 2020-2021 (i.e., the Assessment Year 2021-2022) is briefed hereunder-

OLD TAX REGIME-

Tax slab for individuals-

Individual (resident or non-resident)	Resident senior citizen(i.e., age group 60 years or more but less than 80 years)	Resident super senior citizen(i.e., age group above 80 years)
Net Income	Tax Rates	Net Income	Tax Rates	Net Income	Tax Rates
Up to INR 2,50,000	NIL	Up to INR 3,00,000	NIL	Up to INR 5,00,000	Nil
INR 2,50,001 – INR 5,00,000	5%	INR 3,00,001 – INR 5,00,000	5%	INR 5,00,001 – INR 10,00,000	20%
INR 5,00,001 – INR 10,00,000	20%	INR 5,00,001 – INR 10,00,000	20%	Above INR 10,00,000	30%
Above INR 10,00,000	30%	Above INR 10,00,000	30%	–	–

Tax slab for HUF, AOP and BOI or any other artificial juridical person-

Net Income	Tax Rates
Up to INR 2,50,000	NIL
INR 2,50,001 – INR 5,00,000	5%
INR 5,00,001 – INR 10,00,000	20%
Above INR 10,00,000	30%

NEW TAX REGIME-

Tax slab for individual and HUF-

Total Income	Tax Rates
Up to INR 2,50,000	NIL
INR 2,50,001 – INR 5,00,000	5%
INR 5,00,001 – INR 7,50,000	10%
INR 7,50,001 – INR 10,00,000	15%
INR 10,00,001 – INR 12,50,000	20%
INR 12,50,001 – INR 15,00,000	25%
Above INR 15,00,000	30%

OTHER INCOME TAX SLABS-

• Partnership firm (including LLP) and the local authority are taxed at the rate of 30%.
• Domestic company-

Normal Rate	Special Rate
Particulars	Tax Rates	Particulars	Tax Rates
Turnover or gross receipts up to INR 400 Crores in the Financial Year 2019-2020	25%	As per section 115BA	25%
Others	30%	As per section 115BAA	22%
–	–	As per section 115BAB	15%

• Co-operative society-

Income	Tax Rates
Up to INR 10,000	10%
INR 10,001 – INR 20,000	20%
Above INR 20,000	30%

It is important to note that ‘Surcharge’ and ‘Health and Education Cess’ is applicable over and above the tax rates mentioned above.

What are the Income Tax Returns (ITRs) in India?

Income Tax Returns-

A Form has to be filed as a statement of income earned. It is arranged in such a way that calculating tax liability, scheduling tax payments, or requesting refunds for the overpayment of taxes has been made convenient for the taxpayers. They must, first, determine the type of Income Tax Return (ITR) Form they need to fill before actually filing their Returns. Which Form is to be filled, depends on the income that the taxpayer earns. Its purpose is to report our income and taxes paid thereon to the government. Basically, income tax returns (IT returns) is a form through which the annual income of the taxpayer is reported. Based on the income assessment group, the taxpayer will have to submit one of the following ITR forms-

ITR forms	Applicable to
ITR 1	Resident individual-Having income from ‘salary’, ‘one house property’, ‘other sources’; andHaving total income up to INR 50 Lakhs and agricultural income up to INR 5,000.
ITR 2	Individual and HUFs not having any income from profits and gains of business or profession
ITR 3	Individual and HUFs having income from profits and gains of business or profession
ITR 4	Resident individual, HUFs and Firms (not LLP)-Having total income up to INR 50 Lakhs; andHaving income from the business and profession computed under section 44AD, section 44ADA or section 44AE.
ITR 5	Any person other than-Individual,HUF,Company, andPerson filing return in ITR-7.
ITR 6	Companies (other than companies claiming exemption under section 11)
ITR 7	Any person (including company) who are required to furnish return under section 139(4A); or section 139(4B); or section 139(4C); or section 139(4D).

What is the last date for filing ITR for AY 2021-22?

As per the latest issued circular no. 17/2021 dated 9^th September 2021, the due dates for filing the ITR for the Financial Year 2020-2021 is extended. Original due date and extended due dates are tabulated hereunder-

Particulars	Original due date	Extended due date
ITR filing by the taxpayers not covered under tax audit	31st July 2021	31st December 2021
ITR filing by the taxpayers covered under tax audit	31st October 2021	15th February 2022
ITR filing by the taxpayers required to furnish report referred in section 92E	30th November 2021	28th February 2022

E-filing process F.Y. 2020-2021-

Recently, on 7^th June 2021, the Central Board of Direct Taxes launched the new e-filing portal www.incometax.gov.in.Despite many initial technical challenges, the new portal has certainly tried to make the ITR filing much easier.

ITR filing is possible in both online and offline modes. The basic steps to be followed for filing the ITR is summarized hereunder-

STEP 1 – Visit site https://www.incometax.gov.in/iec/foportal.

STEP 2 – Click the ‘Login’ icon available on the right-hand side.

STEP 3 – Enter ‘User ID’ and click Continue.

STEP 4 – Enter ‘Password’ and click Continue.

STEP 5 – Click ‘File Now’.

STEP 6 – Select Assessment Year 2021-2022 from the drop-down list.

STEP 7 – Select the mode of filing i.e. Online or Offline.

STEP 8 – Click Continue.

STEP 9 – Based on the mode of filing selected, fill up the required details and submit the return.

Advantages of tax filing

1. Processing of Loans & Visa: If you apply for any loans such as a home loan, car loan, etc., the eligibility and quantum of loan would depend on your income. This can be established through filed ITRs. ITR will help your lender to assess your repayment capacity.

If you plan to travel overseas, proof of earning is required. If you are salaried then a certificate from the employer will work. But if you are self-employed then income proof & details need to be submitted.

2. Claiming Refund: There could be some TDS cut on some investment. And you will have to file the ITR to claim a refund of the same. Or you may have paid excess tax on your income. To get this refund, you must file ITR.

Many salaried individuals don’t file ITR as they think that the tax on their income has already been deducted and they have Form 16. But your employer may have paid more tax on your behalf. Not taking into consideration your actual house rent, children’s school fees, tax-saving investments, or insurances. So, the filing of ITR will enable you to get a refund from the IT department.

3. Carry-forward Losses: As per Income tax rules, losses are allowed to be carried forward and set off against capital gains. But this applies only to those individuals who file ITR in the relevant assessment year. If you have incurred losses for a year and you have earned below the exemption limit. You must file your returns to be able to carry forward the losses you have incurred. And it gets balanced against future gains and income.

The capital losses can be carried forward for 8 consecutive years, as per the IT Act.

4. Establishing Income in Compensation Cases: Although the Motor Vehicles Act does not make it compulsory to present the ITR while calculating the compensation in case of accidental death or disability, the procedures approved by Delhi High Court mention the need for ITR for self-employed persons.

This helps to establish the income of the person to arrive at appropriate compensation.

5. Self-Employed Individual Filing for Tenders: Businessmen, consultants, and partners do not get any Form 16. For such self-employed individuals, ITR receipts become an important document. ITR is the only proof of income and tax payment for them, in all sorts of financial transactions. And if they want to take up some contract or tender, they may be asked to show their tax return receipts of the previous 3 to 5 years.

6. Being a Responsible Citizen: Staying on the right side of law helps. Similarly, keeping the income tax department informed about your income and taxability helps too. This is only possible when you file your ITR. Those who earn less than the prescribed slab of income can file returns voluntarily. Filing returns are a sign that you are a responsible taxpayer.

Penalties

Different penalties have been directed for various defaults committed by the taxpayer, under the Income Tax Act. Some of them are mandatory and a few are at the consideration of the tax authorities. Given below are the provisions relating to various penalties leviable.

• Incorrect Form

In case an incorrect form has been used to file the returns, then it will be treated as “defective” and the assessee will be asked to file a revised ITR using the correct form.

Now, the taxpayer gets some time to amend the mistake. And the return must be filed within 15 days from the date of receipt of the intimation, as per Section 139(9). This time limit may be extended by the assessing officer (AO) on an application by the assessee. If the defect is not corrected within the stipulated time, then it will be treated as an invalid return. That is the same as not filing a return at all.

Therefore, the person will be facing all the penalties prescribed to not filing ITR. As well as, interest will get charged, u/s 234A, for the delay.

• Under-reporting

If it is found that the actual income exceeds the income declared by the person, or when no return has been filed despite income exceeding the basic exemption limit. Penalty at 50% of tax payable on such under-reported income shall be payable.

200% of the tax will get if under-reporting results from misreporting of income.

• Late Filing

As per Section 234F of the Income Tax Act, if you file after 31st July (it was extended to 31st August for AY 2019-2020) but before December, a penalty of Rs. 5000 will be levied. For returns filed after December, the penalty will be Rs. 10,000.

However, to provide relief to small taxpayers, the IT department has stated a maximum penalty of only Rs. 1,000 will get levied. The condition is that your total income is less than Rs 5 lakh.

• Penalty for Default

In case a demand notice u/s 156, has been issued to the taxpayer for payment of tax (other than notice for payment of advance tax). Then such amount, as per section 220(1), shall be paid within 30 days of the service of the notice at the place and to the person mentioned in the notice. If the taxpayer defaults in payment of any tax due, then apart from other penal provisions, he is treated as an assessee in default. For an assessee in default, the penalty will get levied as decided by the AO. However, the penalty cannot exceed the amount of arrears in tax.

Before penalizing, the taxpayer is given a reasonable opportunity of being heard. No penalty is levied if the taxpayer can prove that the default due to a good and sufficient reason.

• Delay in filing the TDS/TCS statement

Every person liable to deduct tax at the source is liable to furnish the statement of TDS, as per Section 200(3). It is termed as TDS Return. And every person liable to collect tax at the source, as per Section 206C (3), has to file a statement in respect of TCS, i.e. TCS Return.

If a person fails to file the TDS/TCS return on or before the due date prescribed, then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day of the delay, as per Section 234E. This amount, however, shall not exceed the amount of TDS/TCS. A late TDS/TCS return cannot be filed this late fee.

• Penalty in case of income from undisclosed sources

The AO may make an addition to the income of a taxpayer as per Section 68, 69, 69A, 69B, 69C, or 69D if the explanation about the nature and source of his income is not satisfactory.

The AO is empowered to levy penalty at the rate of 10% of the tax payable if any addition is made. However, no penalty shall be levied if this income has been disclosed in the ITR and tax paid, u/s 115BBE, on or before the end of the relevant previous year.

• Fee for default in furnishing return of income

The taxpayer, who is required to furnish ITR u/s 139 failed to furnish a return of income within the due date as prescribed under section 139(1) then as per section 234F, he will be liable to pay penalty same as delayed filing.

That is:

• 5000 if ITR is filed on or before 31 December of the assessment year.
• 10,000 in any other case.

However, if the total income of the person is less than Rs. 5 lakh then the fee payable shall be Rs. 1000.

Frequently Asked Questions (FAQS)

1. What is the e-filing of income tax return?

Ans. E-filing of income tax return is a process through which the taxpayer has to submit their income tax return ‘online’.

2. How do I E-file my tax return?

Ans. Post ‘Login’ into the e-filing portal www.incometax.gov.in one can e-file the return using either online mode or offline mode.

3. What is the e-verification of income tax return?

Ans. E-verification is a process that helps to verify the identity of the return filers. It is mandatory to e-verify the ITR within 120 days of its filing. In case of failure, the return will be treated as null and void.

4. What is form 16 in Income Tax?

Ans. Form 16 is a certificate issued by the employer to salaried individual acknowledging that the TDS deducted is deposited with the Income Tax Department.

5. How is tax calculated on salary?

Ans. Tax is calculated on salary on the basis of the tax slab rates as applicable to the individual.

6. How can I reduce my taxable income?

Ans. Some basic steps to reduce the taxable income are-

• Use entire limit of INR 1.50 Lakhs available under section 80C.
• Contribute to the National Pension Scheme.
• Avail health insurance premium deduction.
• Claim deduction on rent paid and interest on home loan taken.
• Keep some money in saving bank account and avail interest deduction up to INR 10,000 under section 80TTA.

7. What income is tax free?

Ans. Income which are exempt from the scope of Income Tax are tax free incomes. Agricultural income, gratuity, provident fund income, amount received from insurance, gifts, etc. are some of the examples of tax free income.

8. What is taxable limit?

Ans. Any income above the exemption limit is taxable limit under income tax.

9. What is the exemption limit for very senior citizen age above 80?

Ans. Exemption limit for very senior citizen having age above 80 years for the Financial Year 2020-2021 is INR 5 Lakhs.

10. What are deductions for senior citizens AY 2020-21?

Ans. Following deductions are available to senior citizens-

• Deduction under section 80TTB up to INR 50,000 on interest earned on deposits,
• Higher deduction under section 80D up to INR 50,000 for payment of medical insurance premium.
• Higher deduction under section 80DDB up to INR 1 Lakhs for ailment of specific disease.

11. At what age do seniors stop paying taxes?

Ans. Seniors above the age of 60 years having income below exemption limit i.e. INR 3 Lakhs are not required to pay any income tax.

12. What is income tax slab for ladies 2021-2022?

Ans. Earlier the basic exemption limit of male and female were different. However, now common tax slab is applicable to both. Accordingly, income tax slab for ladies for 2021-2022 is also same as tabulated in article above.

13. How can women save tax?

Ans. Some of the tax saving ways are-

• Repaying home loan,
• Education loan,
• Investing in health insurance,
• Contributions to charity and relief funds.

14. What is the maximum limit of Section 80C for female?

Ans. Maximum limit available to female under section 80C is INR 1.50 Lakhs.

15. Can I save tax by investing in shares?

Ans. Yes, if planned properly, one can save tax by investing in equity shares.

16. What are the best tax saving investment?

Ans. Some of the best tax saving investments are-

• Public Provident Fund,
• Sukanya Samriddhi Yojana,
• Unit Linked Insurance Plan,
• National Savings Certificate,
• National Pension System,
• Senior Citizen Saving Scheme