NOTE: This guide is for Assessment Year (AY) 2014-15. For this year’s (AY 2016-17) tax return filing, please visit this link.
DISCLAIMER: Although the information has been checked for correctness, no guarantees are made to that extent. Please verify the information with other sources as well.
Income Tax return for income earned in a particular year (in this case April 1, 2013 to March 31, 2014) should be filed by July 31 of the immediate next year (2015).
Before we get into the process of filing returns, here are 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.
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 need to register 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.
Your PAN number will be your login ID. Remember to keep a strong 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 tax deposited in your Form 26AS
The first step is to go through your Form 26AS for the current year (Assessment Year). The Form 26AS has an itemized summary of all tax deposited under your PAN number. This includes tax deducted at source (TDS) by your employer on your salary and by banks on interest earned by you on bank deposits and fixed deposits, as well as tax that may have been deposited by you (Self-Assessment Tax).
The details of tax deposited by your employer (such as amounts and dates of payment) should tally with the details in the Form 16 given by your employer to you. In case of any discrepancy, you must bring it to the attention of your employer immediately. Likewise, tax deposited by banks on your interest income should also tally with the details in the Form 16A given by the respective banks to you.
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. Alternatively, you can view it on the TRACES website (first-timers will need to register): https://www.tdscpc.gov.in/.
3. Choose the appropriate ITR form
On the IT Dept. E-Filing website homepage, click on I Am > Tax Payer > Individual/HUF drop down menu option to see the list of ITR forms available and determine which form is applicable to you based on your sources of income.
The most common form is the ITR-1 form which is to be used by salaried people with one or more of the following sources of income:
- Income from salary
- Income or loss from one house property (such as home loan interest repayment and/or income from a property given out on rent)
- Income from other sources (such as interest income from bank deposits and fixed deposits, or income from a part-time business, profession or hobby provided such income is not substantial)
4. Download and open the ITR utility
On the IT Dept. E-Filing website homepage, click on Downloads > Income Tax Return Forms drop down menu to download the online return preparation utility for the various ITR forms. You can also download return preparation forms for previous Assessment Years by choosing the appropriate year at the top.
This year, the IT Dept. has introduced a Java-based utility, in addition to the Microsoft Excel-based utility used in previous years. Both utilities can be downloaded as a ZIP file.
NOTE: You can use either utility based on your preference, however in this blog post I will concentrate on the Java-based utility. For details on how to use the Excel utility, you can refer to last year’s blog post here.
The following are the contents of the Java utility ZIP file. You need to extract the ZIP file in a folder as shown below, and then double-click on ITR.bat file to launch the Java program (or ITR.sh on Linux).
5. Fill up the ITR form
The ITR-1 return preparation software consists of five modules (excluding Instructions): “Personal Information”, “Income Details”, “Tax Details”, “Taxes Paid And Verification” and “80G”. On each module, there will be fields that need to be filled in by you. There will also be some fields that are greyed out or green in color. You only need to fill the white fields. The grey and green fields will be filled in automatically depending on the values entered in other fields.
The utility also allows you to save the data entered if you wish to quit and continue later. To do so, click on “Save” button at the top and save the XML file generated. Next time, click on “Open” to import the data from the saved XML file.
Do go through the instructions on the first page before using the utility.
Let’s see how to fill each module, one by one.
a. “Personal Information” module:
In the Personal Information section, fill in your personal details as requested. Do ensure the PAN number, mobile number and E-mail ID entered are correct.
In the Filing Status section, select your employment category (Govt./PSU/Others) and mention your residential status (Resident/NRI). Leave the Tax Status field aside for now.
Fill the “Return filed under section” field appropriately as follows:
- If this is the first time you are filing tax returns for this year, then select “11 – On Or Before Due Date”, assuming you are filing the return before the due date. Otherwise select “12 – After Due Date”.
- If this is a “revised” return, then select “17 – Revised 139(5)” and mention the original ITR-V’s acknowledgement number and date below.
- If you are filing a return in response to a notice, select the appropriate option and mention the notice number below.
You can leave the “Income Tax Ward/Cirle” field blank. It will be automatically populated when you upload the XML file.
b. “Income Details” module:
In the Gross Total Income And Deduction section, you need to enter the details of income earned by you under various heads, i.e. (a) income from salary/pension, (b) income from house property and (c) income from other sources.
– Income from salary
Fill in your income from salary in Row B1, and deductions under Chapter VI A (under Sections 80C, 80CCC, 80CCD, etc.) in Rows C1 through C18 subject to respective limits. Leave aside 80G and 80TTA deductions for now – we will discuss them later.
You will get all the above details from the Form 16 provided by your employer(s). You just have to copy the values from the Form 16 to the corresponding fields in the ITR form. If you have multiple Form 16s (due to change of job), do ensure to add the respective values from all the Form 16s before populating the fields here.
NOTE: Amount entered in “Income from salary/pension” field (Row B1) should be the figure given in “6. Income chargeable under the head salaries” in your Form 16.
This takes care of income from salary and associated tax deductions.
– Income from other sources (i.e. interest income from bank deposits and fixed deposits, and income from part-time profession)
Any income earned by you via interest on bank deposits and Fixed Deposits (FDs) needs to be declared in Row B3 as “Income from other sources”, and any tax deducted by the bank on this income needs to be declared in SCH TDS2 table (more on this later).
You will get the necessary details from the Form 16A(s) which the bank(s) will send to you at the end of the Financial Year.
NOTE: If your bank hasn’t sent you the Form 16A, you can still get all the details online from your Form 26AS, so don’t worry!
In case of interest earned on bank savings accounts, interest upto Rs. 10,000 is tax free. You must add the total interest earned in Row B3 and claim deduction upto Rs. 10,000 (or the actual interest earned, whichever is lower) in Section 80TTA (Row C17).
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 from it and/or are repaying a home loan taken 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 are paying monthly EMIs towards your home loan, you can enter the amount paid as interest component of the EMI here (upto Rs. 1,50,000). The amount must be entered as a negative figure (i.e. -1,50,000).
You can get the details of amount paid towards interest on home loan from the Provisional Home Loan Interest Certificate which will be given to you by the home loan issuer upon request. The amount paid towards principal would already have been covered under Section 80(C) and mentioned in the Form 16 given by your employer.
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.
Once all these details are filled, the Tax Computation section will show the tax payable, along with penalties if applicable.
c. “Tax Details” module:
Here, you must enter details of all tax paid by you or deducted from your income.
– SCH TDS1 (TDS from salary)
In this table, enter the TAN number, name and address of every company you worked for during the previous year, in chronological order (add as many rows as required). You will get all these details from the respective Form 16s given by the companies.
Also, from each Form 16, you need to fill in the values for “Income chargeable under the head salaries” and “Total tax deducted”. Note that the total income from salary in SCH TDS1 table, if correctly entered, should add up exactly to the value entered in Row B1 in “Income Details” module.
– SCH TDS2 (TDS from income other than salary)
Here, you must enter the details of FD/bank deposit interest earned and tax deducted, using data from your banks’ Form 16As. The TDS deducted must be entered in Column (5). You can put the same value in Column (6) as well (i.e. claim 100% of the TDS deducted in the current year). Unique TDS Certificate No. (Column (3)) can be left blank. Deducted Year (Column (4)) must be specified as the previous year i.e. Financial Year (e.g. 2013).
NOTE: As mentioned earlier, if you haven’t received the Form 16A, you can refer to your Form 26AS online to get these details.
– SCH IT (Advance Tax and Self-Assessment Tax paid)
Here, you must enter details of any Advance Tax or self-Assessment Tax paid by you. We will discuss this later. Leave it empty for now.
d. “80G” module:
Let’s skip “Taxes paid and Verification” module for now and go to “80G” module.
Here, you need to declare any donations made by you to notified charities or funds that enjoy tax exemption under Section 80G of the IT Act. You can claim upto a 100% tax rebate on the amount donated.
Different charities enjoy different degrees of tax exemption, which may be either 50% or 100% of amount contributed. So if you donate, say, Rs. 5000 to a charity, you may get exemption on full or half of this amount based on what category the charity falls in. 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. run funds like Prime Minister’s Relief Fund, etc. fall under Table A (100% exemption without qualifying limit).
NOTE: You are eligible for tax benefit on donations only upto 10% of your gross total income. Any amount exceeding this limit will not be tax deductible. Refer to this link for details.
e. “Taxes paid and Verification” module:
In the Taxes Paid section, the values in greyed out Rows D13 through D18 will be automatically filled up based on tax deduction details entered by you in tables SCH TDS1 and SCH TDS2 on “Tax Details” module.
In the Bank Account Details section, you need to provide your bank account number, IFSC code and account type (Savings/Current) in Rows D19 through D21. This is for mandatory even if you are not claiming a refund.
Tax-exempt income must be declared in Row D22. This can be agricultural income, interest income earned from tax-exempt investments, etc. For the complete list of tax exempt incomes, click here.
Lastly, in the Verification section, enter your name, parent’s name, place of filing, date and PAN.
With this, the ITR form has been filled up!
6. Calculate tax
The most important rows in the ITR form are Rows D17 and D18 on “Taxes Paid And Verification” module. These rows will show the balance tax payable or refundable, respectively, once the ITR form is fully filled up.
After filling up the ITR form, you need to click on “Re-Calculate” button to update Rows D17 and D18.
- If the total tax payable by you is equal to the total tax paid so far (as calculated in Row D16), then the values in Rows D17 and D18 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 and 8 and go directly to Step 9.
- If the value in Row D18 is positive, it means you’ve paid more tax than necessary and are therefore entitled to a refund. You will then receive the refund in the bank account indicated by you in Row D19. Then, you can go to Step 9 directly.
- Most significantly, if the value in Row 17 is positive, it means you still need to pay some additional tax. The next section explains how to pay this balance tax due to you.
7. Pay balance taxes and penalties, if any
You can make any outstanding tax payments online as follows.
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”, “Education Cess” and “Interest”. The total of the three fields must add up to the total tax payable as shown in Row D17. Education Cess is 3% of the tax liability.
Example: If total tax payable indicated in Row D17 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.
So, in the above case, if interest penalty as indicated under Row D12 is Rs. 1,000, then the tax component is Rs. 10,000 – 1,000, i.e. Rs. 9,000. Then, the Income Tax component is (9,000 / 1.03) i.e. Rs. 8738, Education Cess is Rs. 262 (3% of Rs. 9000), and Interest is Rs. 1000. The three add up to Rs. 10,000.
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.
8. Update ITR form 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 SCH IT table in “Tax Details” module, which we left empty earlier. Enter one challan per row if you have made more than one payment.
Once done, click on “Re-Calculate” button again. Now, the value in Row D17 must be zero, indicating that no additional tax is payable. Also ensure “Tax Status” in Filing Status section is set to “Nil Tax Balance”.
NOTE: If a small amount of tax payable (in single digits) is shown in Row D17 even if all tax has been correctly calculated and paid, adjust income or TDS values slightly to make it zero and submit. This discrepancy is due to errors in rounding off values.
9. Submit ITR form
After verifying that all data entered by you is correct and no additional tax is payable, click on “Submit” button at the top to upload the ITR form data. This will bring up a submission dialog box. Enter your IT Dept. website password here (username is PAN) and click on “Submit” button below to complete the ITR submission.
Upon successful submission, the dialog box 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 with necessary corrections.
10. 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. This step is not necessary if your ITR submission was digitally signed.
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://portal.incometaxindiaefiling.gov.in/e-Filing/Services/ITRStatusLink.html?lang=eng
1. If you face unusual or unexpected errors, please ensure the appropriate Java JRE version (1.7 or higher) is installed on your system. In case of the Excel utility, please ensure that macros are enabled and editing is enabled. If still you face problems, go back to the IT Dept. website and download fresh copies of the ITR ZIP files.
2. If you have paid any Self-Assessment Tax using the ITNS-280 challan in Step 7, it is advisable to verify after 2-3 days that the tax paid by you is reflecting in your Form 26AS.
3. You can post multiple ITR-Vs in a single envelope. There is no need to send each ITR-V separately.
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.nsdl.com/etaxnew/tdsnontds.jsp
- ITR-V receipt status: https://portal.incometaxindiaefiling.gov.in/e-Filing/Services/ITRStatusLink.html?lang=eng