On 1st February 2020, the new budget for this year has been announced. The new budget, as published by the Finance Minister of India, has a new regime for income tax. So, the question of the hour is, ‘How to file ITR this year?’ The proposed new regime for income tax is optional. Individuals can either select the new regime or file their taxes as per the one regime. Before we continue further, let us understand the income tax better to know how to file ITR and how does a tax saver plan fit into the equation.
Income Tax in India
Taxes in India can get classified as direct and indirect taxes. Direct tax is what you pay to the government directly based on your income. Whereas indirect tax is what somebody else collects on behalf of you and then pays it to the government, for example, restaurants, e-commerce websites recover taxes from you for the commodities you purchase or the services you use.
This tax gets passed down to the government after collection. Indirect taxes can be taken in many forms, such as service tax on restaurant bills and theatre’s movie tickets, value-added tax or VAT on commodities like electronics and clothes. The goods and services tax that has been recently introduced unifies taxes and has replaced the indirect taxes that businesses used to deal with.
Basics of Income Tax
In India, individuals who earn or get an income are subjected to income tax (Both resident and non-resident). The income can be your salary, pension or from your savings account that is accumulating interest on it. Even prize money received by an individual gets taxed. Moreover, you can earn tax-saving benefits on your income tax payable with the help of various tax saving options in India. But before we talk about the different options that can feature in your tax saver plan, here is a breakdown of various incomes according to the Income Tax Department–
- Income from salary
- Income from other sources
- Income from house property
- Income from capital gains
- Income from business and profession
The new Income Tax slabs under new tax regime applicable to FY 2020-2021
Under the Indian income tax laws, taxpayers get taxed differently. Though firms and Indian companies have a fixed tax rate of 30% of profits, the individual, HUF, AOP and BOI taxpayers get taxed on the basis on the income slab they fall under. An individual’s incomes get grouped into blocks known as tax brackets or tax slabs. Each of these tax slabs has a different tax rate.
|Total income (Rs) Simplified||Tax Rates Under Old Regime||Optional Tax Rate Under New Tax Regime|
|Up to Rs 2.5 lakh||Nil||Nil|
|2,50,001 to 5,00,000||5%||5%|
|Rs 5,00,001 – 7,50,000||20%||10%|
|Rs 7,50,0001 – 10,00,000||20%||15%|
|Rs 10,00,001 – 12,50,000||30%||20%|
|Rs 12, 50,001 – 15,00,000||30%||25%|
|Above Rs 15,00,000||30%||30%|
Exceptions Under The Tax Slab
Individuals must bear in mind that not all income can get taxed on the basis of tax slabs. Income from capital gains is an exception to this rule. Depending on the asset one owns and the duration for which they had it decides the capital gains. Whether an asset is for long term or short terms gets determined by the holding period, and it is also used to determine if the nature of an asset is different from other assets.
How to file ITR- Steps for filing Income Tax Return (ITR) Online
The process where an individual files their ITR electronically over the internet is called e-filing. The e-filing process is quick, easy and can get completed from anywhere. When an individual uses e-filing ITR, it helps them save money as they don’t have to hire an individual to file ITR for them. Neither does anyone need to ask how to file ITR as it is a step by step process when you file your ITR online. If you are looking for the answer to ‘how to file ITR,’ here is a step-to-step guide on how to file ITR:
- Step 1: Visit the e-filing website https://incometaxindiaefiling.gov.in
The e-filing homepage has several options to choose from. Choose the option most relevant for you.
- Step 2: Register or Login to e-file your returns
If you already have registered yourself on the portal, select ‘Login Here.’ And, if you have not registered yourself, then select ‘Register Yourself.’
- Select the User Type
To register with the Income Tax Department, you will first have to select a ‘User Type.’ The options include Individual, Hindu Undivided Family (HUF), Other Individual/HUF, Chartered Accountants (CA), Third-Party Software Utility Developer and External Agency.
After that, you need to enter your current and permanent address before you can enter the captcha code and hit ‘submit.’
- Necessary details must be filled up
Here, you will have to fill in your personal information such as name, PAN and date of birth. Use the PAN and your user ID to log in to the e-filing portal. You also need to enter your contact details like mobile number and email ID.
- Verification of PAN
Once your PAN gets verified by the system, your transaction ID and contact details will get displayed on the screen.
- Activation of Account
The last step is the activation of your Income Tax Department account via a link sent to your registered email ID.
Your Guide for How To File ITR Offline
Now that we have covered how to file ITR online. Let us now understand how to file ITR offline.
For individuals who are 80 years old and above are provided with an option to file ITR offline during the financial year. Also, individuals or HUF who have an income lesser than Rs.5 lakh can file their ITR offline but are not entitled to receive any refund. Take a look at the steps on how to file ITR offline:
- Request for Form 16.
- Submit the ITR returns (Paper form) at the Income Tax Department.
- After the form submission, you will receive an acknowledgement slip from the Income Tax Department.
Reasons To File ITR
Filing your income tax returns is an annual activity and is seen as a moral and social duty of responsible citizens of the country. Governments determine the amount and means of expenditure of its country’s citizens and also provide an assessment platform to claim refunds, among various other forms of relief from time to time. One must know how to file ITR, so make use of the benefits it provides. Here is why one should know how to file ITR and what benefits it brings:
- When you file ITR, it shows that you are a responsible citizen.
- Most loan and card companies ask to see your returns.
- Claiming adjustment on past losses needs ITR.
- Useful in case of amended returns.
Be A Responsible Citizen, File ITR On Time
Filing ITR is a crucial part of your tax-paying journey that starts with the initiation of a tax saver plan. Investing in different tax saving options in India helps you minimize your taxable income. On the other hand, by filing ITR, you become eligible to receive refunds on any additional tax that you might have paid earlier. To make sure that you have maximal tax savings, you must create a comprehensive tax saver plan that comprises of the best tax saving options in India, from the beginning of the financial year, and eventually file your ITR on time.
Top tax saving options in India life insurance policies from reputable insurers such as Max Life Insurance allows you to safeguard your family’s future simultaneously earn significant tax savings. Moreover, having a tax saver plan helps you provide financial support to your family against any medical emergencies and unexpected loss of income. So, be a responsible family person and a citizen – invest in your future and file ITR on time.
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