NOTE: This tutorial is for Assessment Years (AY) 2008-09 and 2009-10. For AYs 2010-11 and 2011-12, please refer to this blog post.
I have been filing my Income Tax returns online for the past three years, ever since the IT Dept. launched the online return filing facility at https://incometaxindiaefiling.gov.in.
Not only is it very convenient, compared to the rather tiresome, frustrating and time-consuming process of going to the IT Dept. office and filing it manually, it is also actually very easy and has only gotten easier over the years.
Not to mention, you get a terrific sense of satisfaction at having managed to file your tax returns yourself without any chartered accountant’s help. This is something our parents would never even have dreamt of doing back in their working days.
So I thought I should share the process of filing IT returns online, so many more of you can do the same and save a lot of your time, patience and effort!
Following are the steps:
1. Create an account on the IT Dept. E-filing website (https://incometaxindiaefiling.gov.in). It is exactly like opening an E-mail account, except that here your username will always be your PAN number. You must, of course, choose your password.
NOTE: If you don’t have a PAN card yet, you can refer to the instructions on this page to apply for one.
2. Login to your account and download the appropriate Return Preparation Software (Excel sheet) by clicking on “Downloads” tab at the top, and then clicking on the appropriate “Assessment Year” (AY) link from the drop-down menu.
There are various types of IT return (ITR) forms, labelled 1 to 8. For salaried employees (like me), the two important ITR forms are:
a). ITR-1: For individuals having income from salary and interest (from bank deposits and fixed deposits)
b) ITR-2: For individuals having income from salary and interest, and paying interest on a home loan
There is an Excel form corresponding to every ITR-x form. You can download it from the “Downloads” page.
3. Open the Excel sheet. But before that, make sure that Microsoft Excel (or OpenOffice Calc) doesn’t have macros and ActiveX controls disabled, otherwise you will encounter problems while filling the form.
The ITR-1 form will consist of three sheets/pages: “General”, “General2” and “TDS”. Each sheet will have some rows with black letters, and some with blue. You only need to fill the black rows. The blue rows will be filled in automatically depending on the values entered in other rows.
a) In “General” sheet, fill in your name, address, email ID and phone number, etc. Select your employment category (Govt./PSU/others) and whether this is your “original” or “revised” return (“revised” means you already filled and uploaded your returns, but later realised you left out something or made a mistake, and are now filing a revised return).
Now, you need to fill in your total income (in row 1) and deductions under Sections 80C, 80CCC, 80CCD, 80D, etc. (in rows 4(a) through 4(l), where each row has its maximum limits). For this, you need to refer to your Form 16 provided by your employer(s). This will have all the details, almost in the same order and format. You just have to copy the values from the Form 16 to the corresponding fields in the ITR form. Finally, the total of rows 4(a) to 4(l) needs to be copied in row 4(m) (you can just use the “Suggested value” shown beside). It’s really easy!
This takes care of income from salary. You may also have income from bank deposits or fixed deposits. This needs to be filled in too. You will get the information about interest earned and tax deducted at source by the bank in a document called Form 16A. The bank has to mandatorily send you this document, if they have deducted any tax on interest. The Form 16A will have details of how much interest was paid and how much tax was deducted, along with dates. You have to enter the total interest paid over the year in section 2(b) of the ITR form.
After filling up all the necessary fields, blue rows 5 and 7 in the sheet will be filled up automatically. Now you need to calculate the “Tax payable on aggregate income” in row 8(a) (using this table for calculation), and copy it to 9(a) (I’m assuming you have no agricultural income!). You also need to add the surcharge (if value in 9(a) is over Rs. 10 lakh, see notes at bottom) and calculate the corresponding education cess (3% of total of 9(a) + 9(b), see notes at bottom) and put the value in row 9(c). This will cause the blue rows 9(d), 12 and 14 (Total tax and interest payable) to be filled up automatically.
b) Now, let’s skip sheet “General2” and go to sheet “TDS”. Here, in Table 21, you need to enter the TAN number(s), name(s) and address(es) of the company/companies you worked for during the year. And also, from each company’s Form 16 given to you, you need to fill in the “Income chargeable under the head salaries”, “Deduction under Chapter VI-A”, “Tax payable” and “Total tax deducted”.
Note that the total income from all these figures, if correctly entered, will automatically add up to the value entered in row 1 on sheet “General”. Same goes for the total of all Chapter VI-A deductions, which must add up to the value in row 4(m) on the first sheet.
Now, in Table 22, you must fill the various entries using data from your banks’ Form 16As (you can add more fields by clicking on “+”). The total interest amount paid must add up to that in row 2(b) on the first sheet. Also fill in the total tax deducted for each interest payment alongside.
We will discuss Table 23 later.
c) Now let’s go to sheet “General2”. The values in blue rows 15 through 17 will be automatically filled in depending on what you entered in “Tax deducted” in Tables 21 and 22 on “TDS” sheet.
The most important rows in the ITR form are rows 16 and 17. These show the balance tax payable or refundable. If your tax paid so far (by your employer and, for interest income, by your bank(s)) is equal to the total tax payable by you (as seen from row 14), then the value in row 16 will be zero (barring any mistakes from your side). In that case, all your tax has already been paid. You just need to submit the IT return and your job is done.
If the value in row 17 is positive, it means you’ve paid more tax than necessary and are therefore entitled to a refund. You should then provide your bank account details in rows 18 through 20, so that the IT Dept. can refund your excess tax amount once your IT return is processed.
Most significantly, if the value in row 16 is positive, it means you still need to pay some more tax to cover the gap between what you are liable to pay and what has been paid on your behalf so far. We’ll cover this in the next section.
4. If you have additional tax payable (value in row 16 is non-zero), then you need to pay this amount before July 31, or else you attract a penalty (under Section 234A) of 1.25% per month (starting August 1) on the balance tax value. So if I pay my balance taxes in September, I have to pay a penalty of 2.5% (1.25 p.m. x 2 months) on the outstanding amount.
Additional tax is usually payable when you change companies during the year, but don’t provide the previous company’s Form 16 to the next company’s Finance Dept. So they cut less tax assuming you had no prior earnings during the year. Also, banks usually cut tax on interest income at 10%, assuming your taxable income falls in the lowest tax bracket. But if your taxable income falls in the 20% (> Rs. 3 lakh) or 30% (> Rs. 5 lakh) tax bracket, then you need to pay additional tax.
In previous years, you would need to go to a bank and deposit the balance amount, either in cash or via cheque. You would then get a “challan”, which is a receipt of the payment. But the good news is that from 2009, this can be done online! Here’s how:
a) Go to the Online E-Tax Payment System at https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp, and click on “Challan No./ITNS-280” (Payment of income tax).
b) On the next page, select the following:
– Tax applicable: (0021) Income tax – other than Companies
– Type of payment: (300) Self-assessment tax
c) Enter your other details (name, address, PAN number, etc.), choose the bank from which you want to pay online and click on “Proceed” at the bottom. You will be taken to your bank’s website where you can make the payment.
This payment value must equal your balance tax payable. You must also pay any applicable penalties under Sections 234A/B/C (refer to this blog post). Remember these values, as you need to enter it separately in the ITR sheet later.
d) After making the payment, you will be redirected back to the above website and shown the “e-challan” (e-receipt) for your payment. Save it on your PC and take a printout if necessary.
e) Now, in the ITR form, you need to enter this challan information in Table 23 on sheet “TDS”. You also need to enter the Section 234A/B/C penalty component calculated above in row 13(a) on “General” sheet. This will revise the value in blue row 14.
Note that the value in the “Amount” field in Table 23 will reflect in blue row 15(c) (Self-assessment tax) on sheet “General2”. Now, the value in blue row 16 must be zero. If not, double check all the entries again.
5. Finally, in the “Verification” section on sheet “General2”, fill up the declaration by entering your and your father’s name, place of filing, date and your PAN number. With this, your ITR preparation Excel sheet is filled up. You need to click on “Validate” tab on the top right to validate all your entries. If all is ok, you will see a “Sheet is OK” message. Do this for all three sheets. Finally, click on “Generate” to generate the actual IT return XML file that you will now upload to the IT Dept. website.
6. Now, you can proceed to submit your IT return online. To do this, log back into your IT Dept. account at https://incometaxindiaefiling.gov.in. Locate the “Submit return” link on the left panel, choose your form from the drop-down list and click “Next”. Now, select your XML file by clicking on “Browse” and finally click on “Upload”. This will submit your IT returns to the IT Dept!
7. After some time, you will receive an ITR-V (ITR Verification) form on your registered E-mail address. You need to take a print-out of this form, sign it and submit it to the address mentioned on the bottom of the form by ordinary post. You will get an acknowledgement by E-mail (called an E-ack) when your ITR-V form is received by them. Note that if you have a digital signature (see notes below), you don’t have to post the ITR-V to them. Uploading the IT return is enough.
It is also advisable to verify after 1-2 days if the Self-assessment tax paid by you has been credited to the IT Dept. You can do this via this link: https://tin.tin.nsdl.com/oltas/servlet/QueryTaxpayer. You just need to enter the bank’s BSR number, challan number, date and amount, all of which are clearly mentioned on the e-challan receipt.
Some miscellaneous points:
1. In some cases, you may need to fill up rows 10 and 11 (relief under Sections 89, 90 and 91). Refer to other sources for these sections, and check if they are applicable for you.
2. Surcharge is applicable for taxable income exceeding Rs. 10 lakh. It is calculated as 10% of taxable income exceeding Rs. 10 lakh (e.g. Rs. 20,000 if total taxable income is Rs. 12 lakh).
3. Educational cess is calculated as 3% of total tax payable (including surcharge).
4. I haven’t covered Table 24 on page “General2”. Please understand this table from other sources.
5. Tax-exempt interest income must be declared in row 25. This is interest income for which the bank has not deducted any tax (you can find this from the bank’s Form 16A).
6. If you have purchased (or paid for) a digital signature, you need not post the ITR-V form to the IT Dept. Your job ends with uploading the XML return file.
So that’s all that there is to filing your IT returns. Do let me know if I need to be more clear about something, or if I need to add or rewrite something.
UPDATE: E-mail from IT Dept. on quality & matching of TDS/TCS claims
This year, the IT Dept. has started sending E-mails to all tax payers which have an Excel sheet attached. The Excel sheet compares the amount of TDS/TCS deducted as entered by you in the IT returns, versus the actual amount of TDS/TCS received from your employer, banks, etc.
You must verify that the total TDS/TCS claimed by you tallies exactly with the total TDS/TCS actually received by the IT Dept. from the deductors. If there is any disparity, you need to take it up with your employer or bank, as the case may be.
Note that the Excel sheet is password-protected.The password is your PAN number in lowercase, followed by date of birth in DDMMYYYY format.
NOTE: You will need WinZip 11.0 (or above) or WinRAR 3.90 (or above) to open the ZIP file successfully, as older versions don’t work with password-protected files.
- Income Tax Dept. E-filing website: https://incometaxindiaefiling.gov.in
- Calculate interest under Sections 234A, 234B and 234C: https://finotax.com/income-tax/intt234-nc1617