How are Tax Returns Filed Electronically?

The Indian government created the Income Tax Act, which mandates that everyone whose income exceeds the limits set by the IT slabs must pay their owed taxes. The service, including one for income tax returns, is accessible offline and online (ITR). This makes it simple for individuals to file their income taxes.
The 31st of July typically marks the deadline for submitting income tax returns. Here is a brief primer to help you get acquainted with the aspects and return process of filing taxes, which is both important and complicated.

What is Income Tax?

The primary source of money for the government is taxation. Every Indian resident, organisation, and business must typically pay income tax on their annual profits throughout a fiscal year.
Salary, dividends, interest, capital gains, and other profits are all examples of taxable income. In this situation, the only acceptable option to defend one's income is to submit an income tax return.

What is a Tax Return for Income?

By filing an income tax return, you may have a particular that you paid taxes for a specific assessment year. The tax return evidence includes information about your yearly earnings and the amount of taxes you have paid. It is now simpler for taxpayers to determine their tax burden, plan their payments, and submit refund claims for overpaid taxes.
You should be familiar with the numerous ITR (Income Tax Return) forms associated with the entire procedure if you want to finish the income tax return process quickly and easily. Each year, the Central Board of Direct Taxes (CBDT) notifies the public of these forms.

Forms ITR

The following forms must be completed to submit an income tax return:

• ITR-1: For salaried individuals, owners of real estate, those who receive interest, and those whose total annual income is up to INR. 50 lakhs
• ITR-2: HUFs and those without a proprietorship-based source of income
• ITR-3: HUFs and people who make money via a sole proprietorship-based company or profession.
• ITR-4: For HUF, Individual, or Company Choosing Proposed Taxation Scheme
• ITR-5: For Limited Liability Partnerships, Businesses, Artificial Juridical Persons, Registered Societies, Private Discretionary Trusts, Local Authorities, and Cooperative Societies. But a person who qualifies under ITR-7 won't need this form to submit an income tax return.
• ITR-6: For businesses not seeking section 11 tax exemption
• ITR-7: Individuals and businesses required under sections 139(4E), 139(4F), 139(4D), 139(4C), 139(4B), and 139(4A) of the Income Tax Act of 1961 to prepare income tax returns
  

Due Date for ITR Filing: AY 2023–24

Before October 31, 2023, those who need to be audited must submit an ITR. The ITR filing deadline for individuals is July 31, 2023. As of yet, no extensions for AY 2023–24 have been published.

What Benefits Come with ITR Filing?

One valid technique to demonstrate income is via income tax filing. It is a significant record that goes further than Form 16 in proving your pay and tax deductions from your previous employment. ITR, however, also includes information from Form 16 and other sources of income.
ITR filing may be done at your leisure online. The taxpayer must go to the income tax department's official website, choose the ITR filing option, and pay the applicable taxes to submit an ITR online.
The advantages of submitting income taxes are:

1. Aids in loan applications
A house or auto loan applicant will benefit from timely ITR filing. Indian banks often request an income tax return copy as one of the crucial papers for loan approval. For instance, SBI asks applicants seeking a car loan for the most recent wage slip with all deductions and the TDS certificate/copy of ITR/Form 16 from at least two prior fiscal years. Additionally, it is helpful when a loan application is turned down.

2. Assists with refund claims
A tax refund is not available while there is an ITR in existence. Even if taxpayers primarily invest in FDs, a 10% source deduction is made for such investments. You are eligible to submit tax returns and get a complete refund if the total taxable amount is less than Rs 2.5 lakhs.

3. Carry Capital Losses Forward
Income tax filing is necessary to carry capital losses forward. In this manner, capital gains earned the next year might be modified. A long-term capital gain loss may immediately be carried over for eight years. Only a long-term capital gain is used to offset these losses, including any short-term losses.

4. Received ITR
The ITR receipt is a significant record that has various applications. It is a thorough document that includes your income, tax liability, and additional sources of money.

5. Useful as Address Proof
The ITR receipt, mailed to the registered address when you submit an ITR online or offline, may also be used as address verification.

6. Vital for the Processing of Visas
ITR receipts are helpful when applying for visas as well. Foreign consulates may request a copy of your ITR from prior years if you travel overseas, particularly when applying for a visa. If you travel to the US, UK, Canada, or any other European nation, you must have an ITR copy. You must maintain the accuracy of your ITRs regardless of the reason for your trip abroad.

7. Get High Life Coverage
Getting life insurance with a more significant amount of guard has become vital since accidental death rates are rising quickly. To provide the family with the most financial support in the event of the insured's untimely death, people prefer purchasing life insurance with a sum of Rs. 50 lakh and Rs. 1 crore. These covers are available in exchange for an ITR copy.
At the time of paperwork, some life insurance firms, including LIC, want a copy of the ITR. Even the level of protection provided by life insurance or term insurance plan is based on several variables, one of which is the policyholder's income.

8. Good for Independent Contractors
When Form 16 cannot be utilised, the ITR is the sole record demonstrating their income. The exclusive need is that the yearly income exceeds the basic exemption threshold of Rs. 2.5 lakh.

Business people may efficiently complete all financial operations using ITR evidence. It is valid proof of tax payment for independent contractors.

9. Government Contract
Providing ITR receipts from prior years when applying for government procurement is crucial. This serves as evidence of the applicant's financial situation and shows whether or not they are capable of handling the payment obligation. Nevertheless, it is not required. It can be different depending on the laws and policies of the state or federal governments.

Who May Online File Income Tax Returns?

People who fit into one of the following groups may submit an ITR:

• Those making more than Rs. 5 lakh
• Individual/HUF occupant with belongings outside the nation
• A company (covered by section 44AB rules), cooperative society, BOI, AOP, artificial judicial person, and local government (ITR 5)
• A taxpayer accountable for generating returns U/S 139 (4B) (ITR 7)
• Indian citizen with signature power on any accounts you have outside of India
• If you sought relief under sections 90 or 90A, or if section 91's deduction rules were followed,
• All businesses

You must provide a thorough audit report in accordance with sections 10(23C)(via), 10(23C)(VI), 10(23C)(v), 10(23C)(IV), 10A, 12A (1)(b), 44AB, 80IA, 80IB, 80IC, 80ID, 80JJAA, 80LA, 92E, or 115JB in order to present the evidence. Section 11(2) (a) mandates that the return filer notify the assessing officer.

Methods for Online Income Tax Filing

• For online income tax filing, a digital signature certificate (DSC) is required. To submit IT forms using a Signature Certificate, you must be a chartered accountant (DSC).
• A form called an ITR V is created for online tax filing without using DSC. You must print and sign this form. Then, after the formalities are through, you must send them to CPC, Bangalore. You may do this through the last post, but you must ensure that it arrives within 120 days after submitting your form.
• The use of an E-return intermediary (ERI) or a digital signature certificate (DSC) is not required when submitting an income tax return online.

Guidelines for Online ITR Filing

It might be challenging to decide which form to use when filing an income tax return online. You must choose your tax return forms based on the categories you fall into. The following table presents these categories:

1. Comparing Form 26AS with Form 16 for tax credits
Look at Form 26AS, which shows the amount of tax withheld from your pay and paid by your company to the IT department, before starting the online income tax return filing process. Make sure that Form 16 is the basis for the tax deducted. If you fail to submit your income tax returns electronically without any problems, the IT department will issue you a notification.

2. Add 80G, certificates of deposit, and other deductions to your claim.
You may make further deductions if you haven't already. If you have made gifts to charity organisations, you may also be entitled to claim deductions under section 80G.

3. Interest statement for money deposited in fixed-term investments and savings accounts
With the finest interest gained on your savings accounts, a deduction of around Rs 10,000 is allowed. However, the interest charged on bank deposits is a portion of the taxable income.
Along with the previously listed components, be sure to maintain these records close at hand:

• Statements of bank accounts
• Certificates for Source-Deducted Tax (TDS)
• Statement of Profit and Loss, Audit Reports, and Balance Sheet

Documents Required for Online Income Tax Return Filing

The list of papers you'll need is provided below for submitting income tax forms online:

1. General Information
Information about your bank account Number PAN

2. Reporting Income from Salary

• Rent receipts for HRA claims
• Payslips
• Form 16
  
  

3. Reporting Real Estate Income

• Address of your property's residence
• Co-owners' credentials, including their PAN credentials and shares,
• Interest charged on a mortgage
• Provide the building's completion date if it is still under development.
• Name of your renter and rental revenue for the property you rent

4. Disclosure of Capital Gains

• When completing your income tax return online, you must include the information about your purchase and a stock trading statement if you sold any shares.
• When completing an online income tax return, you must include the selling price, the buying price, the registration information, and the financial benefit made if you sell any real estate.
• Including your mutual fund statement, debt funds, ELSS, sales and purchases of equity funds, and SIPs, provide all the information.

5. Declaring more income

• If you have a deposit in a savings account, you must disclose the interest that has been collected on that money.
• When submitting your online income tax return, you must include any income sources, including interest on corporate bonds and tax-savings bonds.
• You must declare the revenue derived from any deposits you hold with the post office.

6. Recommended

• India's Form 16
• Slabs and rates for income taxes for the assessment year 2023– 2024

Steps for Online Income Tax Filing

Making an income tax file is now a straightforward procedure. Do the things listed below:

• Start by logging onto IncomeTaxIndiaeFiling.gov.in and creating an account. Your user ID is your Permanent Account Number (PAN).
• The TDS in your Form 16 must match the numbers in your tax credit statement, Form 26AS; if not, you must make the necessary corrections.
• Choose the fiscal year you wish to submit your taxes by clicking on the income tax return forms.
• The ITR form that pertains to you must then be downloaded. The correct form is ITR-2 if your exempt income is more than Rs. 5,000. If the relevant document is ITR-1 or ITR 4S, you may finish the procedure on the portal by clicking the "Quick e-file ITR" option.
• The next step is to launch the downloaded return preparation programme, excel utility, and fill out the form with all the necessary information using your Form 16.
• By selecting the "calculate tax" option, you may compute and get an estimate of the amount of tax due.
• Pay tax now, if necessary, and complete the challan information.
• Click the "validate" option to verify all the data shown in the spreadsheet.
• Save this as an XML file to your desktop after downloading it.
• Then, on the portal's panel, click "upload return" and upload the XML file you just saved.
• You will see a pop-up asking you to sign the file digitally. Select "Yes" if your digital signature is present. If you don't have a digital signature, choose "No".
• The acknowledgement form, ITR Verification (ITR-V), will be prepared and made available for download.
• Print out the ITR-V form and sign it using only blue ink.
• Within 120 days of electronically submitting your returns, mail this form to the Income-Tax Department-CPC, Post Bag No. 1, Electronic City Post Office, Bangalore, 560 100, Karnataka.

ITR1 and ITR4S filing procedures online

You may upload XML to the official website or submit your ITR 1 or ITR 4S forms online. The steps listed below should be able to help you:

• Log in to the e-filing programme.
• 'Prepare and Submit ITR Online' may be found by going to 'e-File'.
• Select the ITR 1 or ITR 4S Income Tax Return Form and input the assessment year.
• Complete the form, click "Submit," and, if a DSC (Digital Signature Certificate) option is offered, pick it. Click the "Submit" button now.
• Your acknowledgement information is shown after the submission has been completed.
• To read or print the acknowledgement of ITR V form, click the link.
• You must register DSC in the e-filing programme to utilise it. Log in to the IT Department's e-filing website and make the necessary changes to the "Profile Settings" section. You must choose "Register Digital Signature" under this area, then download the ITD e-Filing DSC Management Utility.

In addition, you may use various alternative websites to submit your income tax forms online. These websites often demand small fees between Rs. 250 and 300. Depending on the services they provide, this may be the case.

Things to consider when submitting electronically

A few things must be considered when you file your income tax returns online. Here is a complete list of each one of them:

• The site will see you as an entirely distinct person if your name appears on your bank papers or official statements differ even slightly from the name on your PAN card. Some taxpayers may list their father's name on their PAN card as their "middle" name, but they may not do so on their bank accounts.
• You cannot submit returns online until the necessary adjustment is made if more than four taxpayers supply the same cell phone number or email address. You, your wife, your mother, your father-in-law, and the Hindu undivided family (HUF), of which you are the Karta or the executor of a will, may all submit more than five returns, for instance.
• You will need both an India number and a foreign number to submit income tax returns if you are a non-resident Indian.

Conclusion

The ITR (Income Tax Return) filing procedure will be handled online. All document verification and uploading will occur on an internet platform, saving time and money for both the taxpayer and the government agency. This will enable taxpayers to submit their income tax returns in their spare time.