This article provides Income Tax Overview and how to file Income Tax Returns. The filing of income tax return is a legal obligation of every person whose total income and wealth tax during the previous year exceeds the maximum amount which is not chargeable to income tax under the provisions of I.T. Act, 1961. Under the Income tax Act every person has the responsibility to correctly compute and pay his due taxes.The return should be furnished in the prescribed form on or before the due date(s).

Income tax assessment comprises of following stages:

• Computation of total income.
• Deducting valid deductions.
• Determination of the tax payable thereon.
• Paying the tax.
• Filling Income Tax Return Form.

The income tax returns need to filed every year. Each year there are some modifications. The financial year is not the same as calendar year. So let’s start with some definition of Financial Year , Previous Year, Assessment Year

Financial Year, Previous Year, Assessment Year

Calendar year starts on January 1 and ends on December 31 but a Financial year (FY) is from April 1 to March 31. As per the Income Tax Act, income earned in a financial year (FY) is taxed in the next Financial Year. FY to which the income belongs is called the Previous year (PY) and the FY in which the income is taxed is called the Assessment year (AY).

Our article  What is Financial Year and Assessment Year, Difference, ITR, Fiscal Year of World covers it in detail

Important Tax Dates For Individual for Income Tax

Income Tax Slabs

What is Total Income in Income Tax

The gross total income is the sum of all sources of income that an individual has or the total income he earns in a financial year. It can fall into one of the five heads:
1. Income from Salary:
2. Income from House Property: Any residential or commercial property that you own will be taxed. Even if your piece of real estate is not let out, it might be considered earning rental income and you will need to pay tax on it. If you have taken a home loan, then claiming Interest on Loan also comes under this category. Our article Tax and Income from House property discuss it in detail.
3. Income from Profits and Gains of Business or Profession: Income earned through your profession or business is charged under the head ‘profits and gains of business or profession.’ The income chargeable to tax is the difference between the credits received on running the business and expenses incurred
4. Income from Capital Gains: Any profit or gain arising from the sale of a capital asset held as investments are chargeable to tax under the head capital gains. The gain can be on account or short- and long-term gains.

• Capital Gain Calculator from FY 2017-18 with CII from 2001-2002
• How to Calculate Capital gain Tax on Sale of House or property?
• Short Term Capital Gains of Debt Mutual Funds, Tax, ITR
• Long term Capital Gains of Debt Mutual Funds, Tax and ITR
• Budget 2018: Long Term Capital Gain on Stocks & Equity Mutual Funds

5. Income from other Sources

ITR : Types of Income

Tax Deductions

Tax Deduction is a legal way to reduce the income hence the tax that one needs to pay. One can claim the reduction under different heads  given in table below.

Ref:Finotax:Deductions Allowable under various sections of Chapter VIA of Income Tax Act,NiftyPredictions:INDIA INCOME TAX ACT- TAX DEDUCTIONS, TAX EXEMPTIONS 80C 80D 80DD 80E 80GG 24 80G

Verify Tax Deducted at Source

Tax deducted at Source or TDS is a certain percentage deducted at the time of payments of various kind such as  salary, commission, rent,  interest on dividends  etc and deducted amount is remitted to the Government account.  This withheld amount can be adjusted against tax due. The person/organization deducting the tax is called as Deductor while the person from whom the tax is deducted is called Deductee. 

Deductee can know his TDS details through online Form 26AS. Those who wish to view their TDS details can register their names with PAN no in Income Tax website or view it directly if they have bank account with selected banks. This helps to eliminate the mismatch and the above changes also help to avoid the mismatch in form 26AS and in Form 16A.The Tax Credit Statement or Form 26AS is generated when valid PAN has been reported in the TDS statements.

Basics of Tax Deducted at Source or TDS explains about TDS.

Documents needed for filing Income Tax

The various documents that one need for income tax calculation other than the bank account statements are as follows. Earlier the documents were attached with the income tax return form. The new return form are annexure less. Hence no documents need to be attached. But the financial records need to be kept for atleast 7 years. Paper Work A Necessary Headache (Dec 2011) is about the financial papers that need to be kept.

Calculation of Income Tax

The image below recaps the process of calculating income tax.

How to calculate income tax

Some calculators that might help you are incometaxindia.gov.in Calculator to calculate tax liability based on Total income

Income Tax return (ITR) Forms

To file Income tax returns one needs to fill different Income Tax returns form which are : ITR-1 (Sahaj) ,ITR-2 ,ITR-3, ITR-4  and ITR-4S( Sugam). ITR-5 and ITR-6 can only be filed through e filing mode. These forms are released every year by Income Tax Department. Details of forms for individuals and Hindu Undivided Family (HUF)  are as follows:

Forms for the year 2012-13 can be downloaded from Income tax website:NEW RETURN FORMS FOR ASSESSMENT YEAR 2012-13

Note: In a case where income of another person like spouse,minor child,etc.is to be clubbed with the assessee this return form can be used only if the income being clubbed falls in to above income categories

Where to pay Income Tax

If you have some tax to pay you can pay through
• Online deposit
• Nationalised banks

Challan No. ITNS 280 is used for payment of Income tax. It’s pdf from tin.nsdl website..

How to fill Income Tax Return

Computing and filing your I-T return could be done both offline and online.

Offline

• You could either hire a Chartered accountant(CA) who will do the entire groundwork as well as compute your tax liability, or
• you can do it yourself.

With CA you will provide the information required above. He will do the calculation, ask you to pay any extra tax amount due and sign on the relevant ITR form. The CA would also take care of the task of submitting the from to the income tax office concerned and provide you the acknowledgement. The CA may typically charge you anywhere between Rs. 200 and Rs. 3,000, depending on how varied your sources of income are and other factors such as complexity in calculating tax returns for ex: capital gains.

If you do it yourself then you would need to download the relevant ITR Form from www.incometaxindia.gov.in . Fill up the required details in the form, submit it at the ward concerned at the income-tax office and collect the acknowledgement.

Online

You can use Indian Govt tax e filing website which is free or non-govt e-filing websites such as taxspanner.com, taxshax.com, taxsmile.com and taxsum.com.

The non-government websites differ from each other on two counts, the number of income sources they cover and the process involved. They also have different packages, offers and discounts. Remember that when you file your returns online, you are sharing important personal financial details, such as your income, savings and investments, bank account details, and so on. So how should you choose a tax-filing portal?

1. Check whether the portal provides the form that you want. While most offer ITR 1 and ITR 2, only few have the others.
2. If the portal accounts for all the sections ex: Carrying forward losses from the previous years.
3. Most important step is to go through the site’s security and privacy policy. You must check that the portal encrypts the saved and transmitted data and is protected from hackers.

To check the authenticity of the portal, you can access the list of E-Return intermediaries (ERI) Know your ERI  on incometaxindiaefiling .gov.in  Most portals usually charge a fee only when you have to submit the returns, so you can go through these and choose the one in which the user interface is the smoothest. A good portal will prompt you to fill up a slot you have missed or ask you to rectify a mistake . This reduces the chances of making errors. Image below compares some of the e-filing websites( Ref:OutlookMoney:Many Happy returns(Jul 2011))

Submission of ITR V form

In AY 2015-16 Income Tax Department introduced E-Verification of Income Tax Returns through which one could electronically verify the submitted ITR . If one electronically verifies ITR then one . Our article E-verification of Income Tax Returns and Generating EVC through Aadhaar, Net Banking explains the process in detail.

If you don’t want to verify E returns then you have to print the ITR V form and send it by post to the Central Processing Centre (CPC) Bangalore within 120 days of e-filing your return. The ITR V form should be printed in black ink only and signed personally in blue ink. It should not be folded and the bar code should be clearly visible. Dos and Dont’s for printing and submitting of ITR-Vs to ITD-CPC Bangalore Address of CPC Bangalore is:

Post Bag No.1, Electronic City Post Office, Bengaluru, Karnataka-560100

You can buy and use a Digital signature also. A digital signature authenticates electronic documents in a similar manner a handwritten signature authenticates printed documents. If you file electronically using digital signature you do not have to submit a physical copy of the return.incometaxindiaefiling.gov.in FAQ on Digital signature.

• incometaxindia.gov.in:FAQ
• IncomeTaxIndiagov.in
• Incometaxindiaefiling.gov.in
• OutlookMoney:Many Happy returns(Jul 2011)

Did the overview help? If we missed out anything please let us know.