Introduction 

We account for tax-paying as paying back to the nation for a better future and building a road to progressive development for the torchbearers of tomorrow. Almost every country has pertained to specific tax laws that ought to be followed by everyone. 

Be it buying any product, corporations, firms, LLP, associations of persons, bodies of individuals, municipal authorities, businessmen, entrepreneurs, and other categories fall under the government’s list of taxable income. Paying tax is an essential activity for nation-building, and when done righteously, they are regarded as worthy Indian citizens. 

Understanding tax can be complex with terms and conditions that could be complex for some. The tax world is challenging to understand as it involves law and numbers. But, understanding particular tax law is essential, and we are here to solve that dilemma for many out there.

This blog will help you in understanding and learning about:

• What is an income tax return (ITR)?
• Income tax checklist
• What is the ITR filing process?

This blog will take you around the 5Ws (what, when, where, why, who) + 1H (how) in the income tax return world. If you want to learn and keep finances in place by paying the tax morally, then continue to read.

What is Income Tax Return (ITR) 

If you go by the definition, an income tax return (ITR) is a document/form individuals fill out to report their income and taxes to the Income Tax Department. 

Their annual income determines a responsible taxpayer’s taxable income. While some consider that paying tax is an unfruitful or unnecessary deed, they are highly mistaken because the tax amount is used for the country’s development. 

Moreover, if the respective department finds that you have paid excess tax for the year, they have the opportunity for an income tax refund from the concerned authority. 

As per the Indian tax law, an individual or corporation that generates any income during a fiscal year is required to file a return each year. Here, the revenue could come from wages, business profits, income from real estate, dividends, investment income, interest, or other money sources.

Once the individual is aware of the yearly generated income from various sources, they must file before the specified deadline. However, if one fails to meet the deadline, they are liable to pay the penalty. 

If you wonder if filing ITR is a voluntary action, then don’t think long as it is a must action that needs to be exercised by every earning individual. If your income exceeds the basic exemption amount, you must file an income tax return. The rate of income taxation is predetermined for taxpayers. And as discussed above, a delay in filing returns will result in paying extra from the pocket as – a penalty, but that is not the end. Missing the deadline shall also reduce your chances of obtaining a loan or a visa for the trip.

The ITR document checklist for FY20-21

Want to file the income tax return on a successful note, then don’t forget to have these required documents. They are as follows:

• Form 16
• Form 26AS
• Form 16A
• Salary Slips
• Aadhaar Card
• PAN Card
• Any Investment Documents

There are certain expenses over which one has the right to claim for the deduction; therefore, you should always keep the following set of documents if you want to deduct the following charges.

• The offering made for provident fund
• Paying premiums in life insurance
• Repayment of principal on a mortgage loan 
• School fees
• Market-related investments in mutual funds or equity-linked savings plans

Note that you will need to submit a non-employee compensation (NEC) form when you work with freelance workers. And for that, you have to create a W9 form. And it will be helpful for remote or freelance workers. Of course, no worries because you can easily make it with a W9 maker. So it is better to pay attention here when filing an income tax return and working with it.

What is the ITR Filing Process? 

To begin with, we will first try to understand how an individual is expected to make the calculation. 

An individual must compute their income according to the income tax laws that apply to all. The estimate should account for all the income tangents, including salary, interest income, and other sources of income. 

Tax-saving investments, such as the premiums paid for the insurance, can be claimed by the taxpayer as mentioned under Section 80C of the Income Tax Act, 1961. Moreover, one should also consider credit for TDS, TCS, or prior tax paid (if any).

Note: One should total his TDS amount based on the TDS certificates for all four quarters of the fiscal year. Also, Form 26AS provides an overview of the TDS and tax paid during the fiscal year to the taxpayer.

Now, we will learn about ITR filing online manner. The steps are as follows:

Firstly, the taxpayer must determine the ITR form used to file their income tax return. Now, the taxpayer has the liberty to choose either of the two options to fill the income tax return (ITR) form, and they are – offline and online.

Earlier, people opted for the offline method because people found the online mode to be a bit confusing as online is a new concept. But with changing times and everyone vouching for digital India, many people have shifted their interest to online as it is easy, accessible, less time consuming, and convenient.

However, the online method is only accessible through the taxpayer’s login for ITR 1 and ITR 4; therefore, it is not provided for forms for other classifications of individual taxpayers. At the same time, one can upload offline documents by creating them in XML and uploading them.

Get the ITR utility from the Income Tax Website: Select the evaluation year and download – Microsoft Excel, Java, or JSON, depending on your preferences. But, keep in mind that the income tax agency will terminate the excel and java utilities in FYI 2020-21.

Fill in the details in the file: Fill in the required facts of your income and examine the tax payable or refund receivable based on the calculations after downloading the offline utility. The form can be used to fill out the information of an income-tax challan. Then, you have to click on the drop-down button and click on validate option to confirm whether the user has filled out all the required information or not.

Convert the file to XML Format: Once you validate through all the drop-downs, click ‘Generate XML’ to convert it to XML file format. Then, Insert the XML file into the tax website.

Once the file conversion is done, log into the income tax e-filing portal and click ‘Income Tax Return.’ Now, fill in the required information like – PAN, assessing year, ITR form number, and filing mode. 

Attach the XML file, click the ‘Submit’ button. Once you submit the file, select either of the verification methods: Aadhaar OTP or electronic verification. 

As mentioned earlier, the list of points was the checklist for ITR filing. 

Conclusion

Understanding tax might be challenging, but that doesn’t mean that you will not learn about it because once you enter the earning age, it becomes mandatory to understand them to lead a better life.

It also helps in bagging some monetary benefits, such as reimbursements from certain tax deductions friendly exceptions.

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