NOTE: This tutorial is for Assessment Year (AY) 2012-13. For AY 2013-14, please refer to this blog post.
I have been filing my Income Tax returns online ever since the IT Department launched the online tax return filing facility at https://incometaxindiaefiling.gov.in. Not only is it very convenient to file your tax returns online, compared to the rather tiresome, frustrating and time-consuming process of physically filing your returns, it is also actually very easy to do so and the satisfaction is well worth the effort!
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!
A few important terms that you need to know beforehand:
Financial Year (FY): This is the year (starting April 1) in which you earned the income for which you are filing your tax return.
Assessment Year (AY): This is the year (starting April 1) in which you are filing the tax return for a given Financial Year. This is right after the FY in question.
Return for income earned in a particular financial year (say April 1, 2011 to March 31, 2012) should be filed by July 31 of the immediate next financial year (2012-13). In this case, FY is 2011-12 and AY is 2012-13.
With that, let’s move on to the steps for filing your tax returns online.
1. Register on IT Dept. E-filing website (for first-timers only):
If you are filing your tax returns online for the first time, you must first create your account on the IT Dept. E-filing website (https://incometaxindiaefiling.gov.in). Click on the “Register” link on the home page to register. If you have filed your tax returns online before, you can skip this step.
Registering on this site 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. Check your tax deposited in Form 26AS
Before you start filing your tax returns, you must go through your Form 26AS for the current Assessment Year (AY). The Form 26AS has the summary of all tax deposited under your PAN number. This includes tax deposited by your company/employer, and by banks on interest earned by you on bank deposits and fixed deposits, etc.
The total tax deposited as shown in Form 26AS must tally with the sum of tax deposited by your employer (as indicated in your Form 16) and the tax deposited by respective banks (as indicated by their respective Form 16As). In case of any discrepancy, you must get in touch with your employer or bank, as the case may be.
You can view your Form 26AS by logging in to your account on the IT Dept. E-filing website. After logging in, click on My Account > View Tax Credit Statement. On the next page, enter the requested details and you’ll be taken to your Form 26AS.
You can also view the Form 26As by logging in here (first-timers will need to register): https://www.tdscpc.gov.in/
3. Download the appropriate ITR form:
Login to your account on the IT Dept. E-filing website and download the appropriate Return Preparation Software (Excel sheet). You can do this 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 available. For salaried employees like me, the most important one is the ITR-1 form (also known as Sahaj for AY 2012-13), which allows you to declare:
a. Income from salary
b. Income or loss from one house property (for those repaying a home loan and/or having income from a rented property)
c. Income from other sources (such as interest income from savings accounts and fixed deposits, or income from a part-time business, profession or hobby)
There is an Excel form corresponding to every ITR form. In this blog post, I will concentrate only on the ITR-1 form.
4. Fill in the ITR Excel form:
NOTE: Make sure that macros and ActiveX controls are enabled in Microsoft Excel, otherwise you will encounter problems while filling the form.
The ITR-1 form consists of four sheets: “Income Details”, “TDS”, “Taxes Paid and Verification” and “80G”. 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.
Let’s see how to fill each sheet, one by one.
a. “Income Details” sheet:
Fill in your name, address, PAN number, email ID and phone number, etc. Select your employment category (Govt./PSU/Others) and whether this is an “original” (first time) or “revised” return (“revised” means you already submitted your return, but later realised you left out something or made a mistake, and are now submitting a revised return).
Leave the “Income Tax Ward/Circle” field blank. This will be automatically populated when you upload the XML file, and will show in the ITR-V.
If revised, set “Return filed under section” to “Revised 139(5)” (assuming revised return is filed voluntarily and within stipulated time) and also specify the original return’s receipt number and date, as shown below.
– Income from salary
Now, firstly you need to fill in your income from salary in Row 1, and deductions under Chapter VI A (under Sections 80C, 80CCC, 80CCD, etc.) in Rows 5(a) through 5(m) subject to respective limits. Leave aside 80G investments for now.
For this, you need to refer to the Form 16 provided by your employer(s), which will have all the information mentioned above, 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.
NOTE: Enter the value in “6. Income chargeable under the head salaries” in Form 16 as the income from salary (Row 1).
As you fill in these fields, the total deduction (sum of Rows 5(a) to 5(m)) will be automatically calculated and updated in Row 6. Similarly, the total income (Row 4 – Row 6) will be updated in Row 7. It’s really easy!
This takes care of income from salary. Next, we need to declare income from interest earned on bank deposits or fixed deposits.
– Income from other sources (interest income from bank deposits or fixed deposits, and income from part-time profession)
Any income earned by you via interest on bank deposits and fixed deposits needs to be declared in Row 3 of the ITR form as “Income from other sources”, and tax deducted by the bank on this income needs to be declared in Table 24 (more on Table 24 later).
You will get the details of interest earned by you and tax deducted by the bank in the Form 16A which the bank will send you at the end of the Financial Year. This document will have the details of interest earned and tax deducted in a chronologically itemized manner.
NOTE: In case you haven’t received the Form 16A, you can still get the complete details from Form 26AS online, so don’t worry!
Income from part-time business, profession or hobby can also be declared under this head. However, you must be careful here. If the primary objective of the part-time profession is to earn additional income, it must be declared as “Income from profession” and ITR-2 must be used. If the income is incidental (e.g. advertising income from a blog or hobby website), it can be declared here.
– Income from one house property
Lastly, if you own any house property and have any rental income and/or loan repayments on it, you need to declare your net gain or loss in Row 2. In case of net loss, value must be entered as negative.
So, for example, if you are staying in a self-owned house and paying home loan EMIs for it, you can enter the amount paid as interest component here (upto Rs. 1,50,000). The amount must be entered as a negative figure (i.e. -1,50,000).
NOTE: For exact details of how income or loss from house property is calculated, refer to this blog post. Also, if you own more than one house property, you will need to use ITR-2 and not ITR-1.
b. “TDS” sheet:
First, in Table 23, you need to enter the TAN number, name and address of every company you worked for during the previous year, in chronological order (click on “+” to add more rows). You will get all these details from the respective Form 16s. Also, from each company’s Form 16, you need to fill in the values for “Income chargeable under the head salaries” and “Total tax deducted”. Note that the total of all the entries in Table 23, if correctly entered, will automatically add up to the value entered in Row 1 on sheet “Income Details”.
Next, in Table 24, you must fill the details of bank interest income and tax debited using data from your banks’ Form 16As. The TDS details must be entered in Column (6), and the total of the entries in Column (6) here must add up to the figure entered in Row 3 on the first sheet. Column (7) can be filled up the same as Column (6). Column (4) (Unique TDS Certificate No.) can be left blank. Column (5) (Deducted Year) must be specified as 2011.
As stated earlier, if you haven’t received the Form 16A, you can refer to your Form 26AS to get the details.
We will discuss Table 25 later. Leave it empty for now.
c. “80G” sheet:
Let’s skip “Taxes paid and Verification” sheet for now and go to “80G” sheet. Here, you need to declare details of all donations or contributions to you to any charities or funds that enjoy tax exemption under Section 80G of the IT Act. Different charities enjoy different degrees of tax exemption, which may be either 50% or 100% of amount contributed. Additionally, you need to confirm whether tax exemption is restricted to 10% of your gross total income.
So if you donate Rs. 3000 to a charity, you may get exemption on full or half of this amount based on what the charity is eligible for. To understand which entities qualify for 100% and 50% exemption respectively, refer to this link.
Enter the donation details in only one of the four tables (A, B, C or D) as the case may be. Most private NGOs/charities fall under Table D (50% exemption with qualifying limit). Govt. funds like Prime Minister’s Relief Fund, etc. fall under Table A (100% exemption without qualifying limit).
d. “Taxes paid and Verification” sheet:
Here, the values in blue rows 16 through 19 will be automatically filled in depending on tax deduction details entered by you in Tables 23 and 24 on “TDS” sheet.
You need to provide your bank account number in Row 20 and specify MICR code and type of account (savings/current) in Row 22. Select “Yes” in Row 21 to receive tax refunds directly to your bank account, or “No” if you want refunds via cheque.
Tax-exempt income must be declared in Row 26. This can be agricultural income, interest income earned from investments which are declared as tax-exempt by the Government (e.g. interest on PPF deposits, certain Govt. bonds, etc.), dividend income from shares and Mutual Funds where Dividend Distribution Tax has already been deducted, etc.
Lastly, fill up the “Verification” section with your name, father’s name, place, date and PAN. With this, the ITR form has been filled up!
5. Validate all sheets:
After filling in all the above sheets, you need to click on “Validate sheet” button on every sheet. The software will then check for any errors or details left out. You need to ensure that every sheet shows “Sheet is OK”.
If any errors are indicated instead, those need to be rectified before proceeding.
6. Calculate tax:
The most important rows in the ITR form are Rows 18 and 19 on “Taxes Paid and Verification” sheet. These show the balance tax payable or refundable, respectively. After filling in all sheets of the ITR form, you need to click on “Calculate tax” on the first sheet (“Income Details”). This will update the blue rows on all sheets.
- If the total tax paid so far is equal to the total tax payable by you (as calculated in Row 17), then the values in Rows 18 and 19 will be zero, barring any mistakes from your side. In that case, you just need to submit the IT return and your job is done. So you can skip steps 7, 8 and 9 and go directly to step 10.
- If the value in Row 19 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 20 through 22 (as indicated above), so that the IT Dept. can refund the excess tax once your return is processed. You also need to mark “Tax Status” field on first sheet as “Tax Refundable.” Then, you can go to step 10 directly.
- Most significantly, if the value in Row 18 is positive, it means you still need to pay additional tax to cover the gap between what you are liable to pay and what has been paid so far. If so, you must pay off this balance tax due as soon as possible. Additionally, you must also check if there is any interest penalty applicable to you due to late payment of tax under Sections 234A/B/C. We’ll cover this in the next section.
NOTE: If Row 18 shows a small amount of tax payable (in single digits) even if all tax due has been paid as per the income, just adjust either the income or tax paid slightly to make the figure zero. This discrepancy is due to rounding off errors in the ITR sheet.
7. Calculate penalties under Sections 234A/B/C:
Typically when balance tax is payable, there is also a likelihood of penalties under Sections 234A/B/C. These sections stipulate that penalty must be paid in case of delay in payment of income tax, insufficient payment of tax, and/or delay in filing tax return for a Financial Year.
To know if you are liable to pay any penalty under Sections 234A/B/C and to calculate the same, refer to this blog post.
If any penalty is applicable, then it needs to paid along with balance tax indicated in Row 18, and this penalty amount must be entered in Row 14 on the first sheet.
8. Pay balance taxes and penalties, if any:
In previous years, you would need to go to a bank and deposit the balance amount by cash or cheque, after which you would get a “challan” as a receipt of the payment. But the good news is that from 2009, balance tax payments too can be done online! Here’s how:
a. Go to the Online E-Tax Payment System at https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp.
b. Click on “Challan No./ITNS-280” (Payment of income tax). 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 your bank from the list and click on “Proceed” at the bottom. You will be taken to your bank’s website where you can make the balance tax payment.
d. On the payment page, you need to break up the tax payable into its components, i.e. “Income Tax” and “Education Cess”. The total of the two fields must add up to the total tax payable. Education Cess is 3% of the tax liability.
So if total tax payable indicated in Row 18 is Rs. 10,000, the Income Tax component is (10,000 / 1.03) i.e. Rs. 9,709, and Education Cess is Rs. 291 (3% of Rs. 9709). The two add up to Rs. 10,000.
Penalties calculated under Sections 234A/B/C must be summed up and entered separately in “Interest” field.
Enter the calculated values in the respective fields in the payment form and make the payment.
e. On completion of payment, you will be shown the “e-challan” (e-receipt) for your payment. Save it on your computer and take a printout for your records.
9. Update ITR and recalculate tax:
After paying the balance tax and penalties, enter the BSR code, date of payment, serial number and amount (Income Tax + Education Cess) from the challan into Table 25 on sheet “TDS”, which we left empty earlier (one challan per row). Penalty amount must be entered in Row 14 on “Income Details” sheet.
Next, you need to validate all sheets again and finally click on “Calculate tax” as before. This time, the value in Row 18 must be zero, indicating that all taxes due have been paid.
10. Generate and upload XML file:
After verifying that all data entered by you is correct and no additional tax is payable, you need to click on “Generate” button to generate the XML file. This XML file will be generated in the same folder as the Excel sheet.
NOTE: If XML file is not being generated for any reason, please ensure that Macros and ActiveX controls are enabled.
Next, log back into your IT Dept. E-filing account at https://incometaxindiaefiling.gov.in. Locate the “Submit return” tab on the left panel and click on “AY 2012-13” under Assessment Year (see below).
On the next page, choose your ITR form from the drop-down list and select “Yes” if you have purchased a Digital Signature, and click “Next”. On the next page, click on “Browse” and select your XML file, and click on “Upload”. This will submit your IT returns to the IT Dept.
Upon successful submission, the next page will show a link to your ITR-V (ITR Verification) form. Click on the link to download it. A copy of ITR-V will also be sent to your registered E-mail address.
NOTE: The ITR-V is password-protected. To open it, enter your PAN number (in lowercase) followed by date of birth (in ddmmyyyy format) as the password.
Please take a minute and verify if all the entries in the ITR-V are correct. If not, you may need to file a revised return (see above for what a revised return means).
11. Sign and post ITR-V to IT Dept.:
You need to take a print-out of the ITR-V form, sign it (in blue ink) and post it to the address mentioned at the bottom of the form by ordinary post.
Once your ITR-V form is received by the IT Dept., you will get an acknowledgement by E-mail (called an E-Acknowledgement). Keep a printed copy of this along with ITR-V for your records. You can also check ITR-V receipt status here: https://incometaxindiaefiling.gov.in/e-Filing/Services/ITRStatusLink.html
NOTE: If you have purchased a digital signature, you don’t have to post the ITR-V. Your IT return filing process is completed as soon as the XML sheet is uploaded.
Some miscellaneous points:
1. Tax Status field on “Income Details” sheet must be set to “Tax Refundable” if a tax refund is due, or to “Tax Payable” if additional tax is payable at the time of submitting return. By default it will be “Nil Tax Balance” which means neither any tax nor any refund is due.
2. In some cases, you may need to fill up Rows 11 and 12 (Relief under Sections 89 and 90/91). Refer to other sources to see if these sections are applicable to you.
3. If you have paid any balance taxes, it is advisable to verify after 2-3 days that the Self-Assessment Tax paid by you is reflecting in your Form 26AS.
4. If Row 18 shows a small amount of tax payable (in single digits) even though all tax has been correctly calculated and paid, adjust income or TDS values slightly to make Row 18 zero, and submit. This discrepancy is due to errors in rounding off values.
5. You can post multiple ITR-Vs in a single envelope. There is no need to send each ITR-V separately.
Diagnosing problems with the ITR sheet:
1. Make sure macros and ActiveX controls are enabled. Without this, the “Validate sheet”, “Calculate tax” and “Generate XML” buttons will not work. For details on how to enable them, refer to the text file named “HELP” in the ZIP file containing the ITR sheet.
2. If any unusual errors are seen while clicking on any of the buttons, or if the buttons simply don’t work despite enabling macros and ActiveX, download a fresh copy of the ITR sheet from the IT Dept. website, import your old ITR sheet by clicking on “Import old version” and then try again.
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.
- Income Tax Dept. E-filing website: https://incometaxindiaefiling.gov.in
- View Form 26AS online: https://www.tdscpc.gov.in/
- Online E-tax payment system: https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
- Calculate interest penalty under Sections 234A/B/C: http://www.vijaypadiyar.in/blog/2012/06/calculate-interest-under-sections-234abc
- ITR-V receipt status: https://incometaxindiaefiling.gov.in/e-Filing/Services/ITRStatusLink.html