The most recent episode of ‘Patriot Act’ had US comedian Hasan Minhaj touching every working individual’s nerve — taxes. Tax filing is seen by most as pain, and his punchline-laden monologue on the difficulty of it led me to recall how I started doing this on my own. Truth is, you can easily file your taxes as well.
I remember, that I was at my second job and my bank account was deposited with Rs 20,000 each month. I was new to the professional domain and tax slabs were structured differently then. Come May, I realised I had to file income tax returns. Since I didn’t know how, my mother put me through to the chartered accountant who used to help my father. He filed the returns for me and I shelled out Rs 1,000 (5% of my monthly pay) for this.
But once I looked at the return acknowledgement slip, my inquisitiveness got the better of me. I wondered if I could understand taxes since all it needed was the Form 16 from my employer and a little reading up. I have filed my own returns since then. Here’s a quick guide on how you can too.
Online returns on a government website for free
- Create a user login with your PAN on www.incometaxindiaefiling.gov.in. The website may not look all that fancy but this is where your CA does it too. If you have used a CA/adviser earlier, than you may have to reset your password (from the one they might have used for you), which is a fairly straightforward process.
- Once logged in you can click on the ‘e-File’ button and the ‘Income Tax Return’ link. Make sure that you have selected the filing type as ‘Original’ and ‘Submission Mode’ as ‘Prepare and Submit Online’. Press “Continue”.
- You would be happy to know that your employer would have already uploaded salary data of the year and the investment you furnished. This data is in Form 16 that your employer has provided. All you have to do now is just crosscheck the data; you could take the help of your salary slips to tally as well.
- If you have made additional investments that are tax deductible, you can fill them into the various sections. Each investment (let’s say health insurance, ELSS, ULIP, 5 -year term deposits) are generally written on the left hand of the form.
- Often one misses out on filing in income from other sources – this is applicable to paid work outside of your organisation was via official channels. Rent from your property and interest income from investments like FD (exceeding a certain limit) would also go into this section. Filling these in could increase your tax liability.
Next up is verification
- This can be done either online or offline. I choose the online option as it cuts down the hassle. The verification processes sit under the ‘Taxes Paid and Verification’ tab.
a) I would like to e-Verify
b) e-Verify later within 120 days from date of filing
c) I do not want to e-verify. I will send signed ITR-V through normal or speed post to Centralized Processing Center, Income Tax Department, Bengaluru – 560 500″ within 120 days from date of filing
- Click on ‘Preview and Submit’ button, verify the data entered in the ITR (Income Tax Return)
‘Submit’ the ITR.
- On Choosing ‘I would like to e-Verify’ option, e-Verification is possible through an EVC (electronic verification code) generated through bank ATM or Generate EVC option under My Account; Aadhaar OTP; Prevalidated Bank Account; Prevalidated Demat Account
If you do not e-verify immediately, your tax filing process will have to be completed later. You can e-verify when you are ready or send a hard copy of the verification slip to the Income Tax Returns office.
What you should know
- The income earned in the previous financial year (between April 1, 2019, and March 31, 2020) is assessed in this financial year (2020-21). Hence when you are filing your ITR remember to pick the right year. You can change the assessment year if you want to file an ITR for previous years.
- If you pay more than Rs 1 lakh in rent in a year, you would have to furnish your landlord’s PAN card copy to claim HRA (House Rent Allowance).
- Particularly for this year, the government has extended the tax-saving period to July 31, 2020. That means if you choose to invest now, to save on higher taxes, you can claim tax deductions in the 20-21 assessment year.
The government website may seem cumbersome to some. For an easier process, you can opt to file online via e-return intermediaries such as cleartax.com, eztax.in or myitreturn.com. These websites will auto-fill data based on your Form 16 and some questions you answer. However, you will have to verify the acknowledgement receipt with the government and sometimes pay for expert services. Be mindful that you could expose yourself to unsolicited emails/SMS from them for tax-saving products.
Generally, the deadline to file IT returns is July 31. However, very often this is extended by the government by a month. This year, owing to the pandemic, you can submit your returns by November 30, 2020. While tax filing is a crucial aspect, tax planning is another, which essentially means investment to bring down your liability.
All images: Getty Images