NOTE: This guide is for Assessment Year (AY) 2015-16. For this year’s (AY 2016-17) tax return filing, please visit this link.
For the purpose of this article, it is assumed that the reader has an account on the Income Tax e-filing website.
1. 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 against your PAN number. This includes (a) tax deducted at source (TDS) on your salary by your employer, (b) tax deducted by banks on interest earned by your bank deposits and fixed deposits, and (c) tax that has been deposited manually by you (Self-Assessment Tax).
The details of tax deposited by your employer (such as amounts and dates of payment) should tally with those in your Form 16. In case of any discrepancy, you must bring it to the attention of your employer immediately. Similarly, tax on your interest income should also tally with the details in the Form 16A given by the bank 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.
2. 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 and then click on the link under Which ITR should I file section to see the available ITR forms and who can use them, and determine the right form for 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
- Home loan for one house property (self-occupied or rented out)
- Interest income from bank deposits and fixed deposits
- Income from a part-time business, profession or hobby (provided such income is not substantial)
3. Download and open the ITR utility
On the IT Dept. E-Filing website homepage, click on the appropriate form link under Downloads section to download the online return preparation utility for the various ITR forms. You can use either the Excel-based utility or Java-based utility for filing your return.
NOTE: In this blog post I will concentrate on the Java-based utility as it is easier to use. For rough details on how to use the Excel utility, you can refer to my earlier 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 or Mac OS X). You must have Java version 1.7 or later installed on your computer, failing which you will be prompted to install or upgrade to the same.
4. Fill up the ITR form
The ITR-1 return preparation software consists of five tabs (excluding the Instructions tab): Personal Information, Income Details, Tax Details, Taxes Paid And Verification and 80G. On each tab, 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.
To save time and effort, click on Pre-fill button on the top. This will pre-fill most fields in the ITR. It will fill your personal details from your PAN records or previous ITR filed, and your financial details from your Form 26 AS. Do check and confirm that the details and figures entered are correct, though.
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 and continue from where you left off.
Let’s see how to fill each tab, one by one.
a. “Personal Information” tab:
In the Personal Information section, fill in the requested personal details. Do ensure that your PAN number, mobile number and E-mail ID are entered correctly.
In the Employer Category 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 originally filed return’s acknowledgement number and date below.
- If you are filing a return in response to a tax 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” tab:
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. Leave aside 80G and 80TTA deductions for now – we will discuss them later.
You will get all these 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 utility. If you have multiple Form 16s (due to change of jobs during the year), 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 one house property
If you own any house property (self-occupied or rented out) and are earning rental income and/or repaying a home loan taken for the same, you need to declare your net gain or loss in Row 2. In case of net loss, value must be entered as negative.
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. 2,00,000). The amount must be entered as a negative figure as it is a loss (i.e. -2,00,000). The amount paid towards principal component would have been included in the Section 80(C) deduction amount entered earlier and so should not be included here.
You can get the break-up of the total amount paid towards interest and principal components during the financial year in question from the Final Home Loan Interest Certificate which will be given to you by your home loan issuer upon request.
Rental income is a gain and must be entered as a positive value. So for example if your home loan interest repaid is Rs. 2,00,000 and rental income is Rs. 3,00,000, you must enter (3,00,000 – 2,00,000) i.e. Rs. 1,00,000 here.
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.
– 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. You can also get these details from your Form 26AS.
In case of interest earned on bank savings accounts, interest up to Rs. 10,000 is tax free. You must add the total interest earned on all your bank accounts plus fixed deposits and enter it in Row B3. You can claim deduction up to Rs. 10,000 (or the actual interest earned on bank accounts only, 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, then it is an income from business or profession and you must use ITR-2 instead. But if the income is casual in nature (e.g. advertising income from a personal blog or earnings from a hobby activity), it can be declared here.
Once all these details are filled, the Tax Computation section will show the tax payable, along with penalties if applicable.
c. “Tax Details” tab:
Here, you must enter details of all tax paid by you or deducted from your income. If you used the Pre-fill option, all of these fields would be filled up automatically from your Form 26AS.
– 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 or from your Form 26AS.
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” tab.
– SCH TDS2 (TDS from income other than salary)
Here, you must enter the details of interest earned and TDS deducted on bank and fixed deposits, using data from your banks’ Form 16As or your Form 26AS. 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 (2014).
– 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” tab:
Let’s skip “Taxes paid and Verification” tab for now and go to “80G” tab.
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. Different charities enjoy different degrees of tax exemption, which may be either 50% or 100% of amount contributed. 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 up to 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” tab:
In the Taxes Paid section, the values in greyed out Rows D13 through D18 will be automatically filled up based on details entered in tables SCH TDS1, SCH TDS2 and SCH IT on “Tax Details” tab.
Tax-exempt income must be declared in Row D19. This can be income from dividend warrants, interest earned on tax-exempt investments such as PPF, etc. For the complete list of tax exempt incomes, click here.
In the Bank Account Details section, in Row D20 (a), you need to provide the account number, IFSC code and account type (Savings/Current) of the bank account in which you wish to receive your tax refund, if any. This is for mandatory even if you are not claiming a refund.
Additionally, from this year, strangely, you also need to declare the other bank accounts you have (excluding dormant ones) in Row D20 (b) and provide the IFSC code and account numbers for each of them.
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.
5. Verify tax payable/refundable calculated
After filling up the ITR form, you need to verify the figures in 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.
6. 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.
7. 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” tab, 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.
8. Upload ITR XML
After verifying that all data entered by you is correct and no additional tax is payable, click on “Save” button at the top to save the ITR form data as an XML file. You then need to go back to the IT Dept. E-filing website (https://www.incometaxindiaefiling.gov.in), login, click on the “Upload Return” link on the left and upload the XML file.
9. E-verify the ITR submission
This year, the IT Dept. has launched an e-verification option which eliminates the need to post the ITR-V to the IT Dept. after uploading the ITR. From now on, the ITR uploaded can be verified online instantly as follows:
- For those having an Aadhaar number and linked successfully to their PAN record, an OTP will be generated and sent to the mobile number in your Aadhaar record. You can then enter the OTP and verify your ITR submission.
- For those who don’t have an Aadhaar number, they can login to internet banking of any of their bank accounts and then click on e-Filing option in their netbanking website and return to the IT Dept. E-filing website and e-verify the ITR submission.
For detailed steps for e-verifying your ITR, check this link.
Once the ITR is e-verified, it will be scheduled for processing and an ITR Acknowledgement will be generated. With this, your IT return is successfully submitted.
NOTE: The ITR Acknowledgement 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 Acknowledgement are correct. If not, you may need to file a revised return with necessary corrections.
- 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 e-verification process: https://incometaxindiaefiling.gov.in/eFiling/Portal/StaticPDF/e-Verification_User_Manual.pdf