ITR filing: Who is eligible to file income tax return; last date, penalty, ways to do it

The last date to file your income tax returns (ITRs) for 2018-19 is just a fortnight away. According to the Central Board of Direct Taxes (CBDT), about 1.10 crore new tax filers were added to the tax base during the fiscal. So whether this is your first time filing returns, or you just need a refresher, here's a ready reckoner:

Who needs to file income tax returns?

Filing ITRs is mandatory for all Indians, including NRIs, with a total income of over Rs 2.5 lakh, before permissible deductions under Sections 80C to 80U. The threshold for senior citizens (above 60 years) is Rs 3 lakh while that for super senior citizens - those aged 80 and above - is Rs 5 lakh.

However, even those who are out of the tax net should consider filing a 'Nil Return' to keep a record. There are several instances where income tax serves as a proof, including applying for a passport and taking a loan.

Residents Indians boasting assets or financial interests in an entity located outside of India and those who are signing authorities in foreign accounts have to mandatorily file ITRs. "You are required to file an income tax return when you are in receipt of income derived from property held under a trust for charitable or religious purposes," says Cleartax, a leading online tax filing and investing platform.

In order to bring more people under the tax net, in Budget 2019 the government made ITRs mandatory for more categories of people from the next assessment year - those who have deposited more than Rs 1 crore in a bank account or bought foreign exchange of over Rs 2 lakh or paid an electricity bill of more than Rs 1 lakh.

Apart from individuals, Hindu Undivided Families [HUFs], Association of Persons [AOPs], Body of individuals [BOIs], Firms, LLPs, companies, local authorities, political parties, educational or medical institutions and trade unions have to file income tax returns. The last date for filing ITRs for the FY19 is July 31.

What's different this year?

Various measures announced in Budget 2019 will come into play when you file your ITR this year. For instance, all individual taxpayers are now required to file income tax returns electronically, the sole exception being super senior citizens, who can choose to do so in paper form. The Form 16 has also been beefed up. Previously, it used to mention gross salary but not the details of tax-exempt allowances and perquisites. Employers now have to provide a detailed break-up of all components, including remuneration received from former employer/s and all tax-related deductions availed of by the employee.

In order to make the tax filing process less cumbersome, the Income Tax Department will now provide pre-filled ITR-1 forms. These forms will have your salary, FD interest income and TDS details. So far, these details had to be manually filled by the taxpayer. However, one must keep in mind that this facility for ITR filing is available for the ITR-1 form filed online on the department's e-filing website (incometaxindiaefiling.gov.in). The software will use the taxpayer's PAN details from Form 26AS, the TDS return filed by the employer and the previous year's ITR.

Whether you choose the above route or the likes of Taxspanner and Cleartax, be prepared to furnish far more details than ever before. Apart from giving a detailed break-up of interest earned from savings bank accounts, fixed deposits and income tax refunds, you will have to share greater details of capital gains from selling equity shares, equity mutual funds or property. In case of sale of property, you will have to furnish complete details of the buyer. Moreover, taxpayers with overseas earnings and foreign assets will have to provide full details of the same. The aim of these measures is to minimise tax evasion.

"For 'resident and ordinarily resident' (ROR), the foreign bank account details have been re-framed to include information about foreign custodian, depository, equity and debt interest accounts," Kuldip Kumar, partner and leader, personal tax, PwC India, said.

How to file ITR online?

The first thing to understand is which form is applicable to you. For instance, if you are a salaried individual earning less than Rs 50 lakh (income from other sources and one house property are allowed in this case) can file ITR-1, so long as you are not the director of a company, have not held shares of an unlisted company during the financial year and do not own foreign assets. On the other hand, a self-employed individual will have to file ITR using the ITR-3 or ITR-4 form, depending on the type of income in FY 2018-19. If you fill the wrong form, your filing will be rejected and you may even get a notice regarding the same from the tax department.

Once you know which form to pick, just follow the following steps if you want to file your ITR on the Income Tax Department's dedicated portal:

1. Log into incometaxindiaefiling.gov.in and go to the e-file option and click on "Prepare and Submit ITR Online".

2. Select the form that applies to you and and the Assessment Year.

3. Fill in the details and click the 'Submit' button.

4. Upload a Digital Signature Certificate (DSC), if applicable so long as its registered with e-Filing. Click on "Submit".

5. On successful submission without DSC, your Income Tax Return Verification Form (ITR-V) would be displayed on the screen. Click on the link and download the ITR-V. You can then choose to either instantly e-verify your ITR - say, via Aadhaar on the same portal - or paper verify it by sending a signed copy of the ITR-V to the Department's Centralized Processing Centre (CPC) by post within 120 days from the date of e-filing.

What is the penalty for late filing?

Missing the July 31 deadline for filing income tax returns - unless the government announces an extension in the days ahead - can prove to be costly. The penalty for ITRs furnished on or before December 31 is Rs 5,000, but double that amount for later filings. However, if your taxable income is below Rs 5 lakh, the maximum penalty will be Rs 1,000. On the other hand, if the tax evaded "exceeds Rs 25 lakh the punishment could be 6 months to 7 years" the Income Tax Department says on its website.

If you have unpaid taxes, you will have to pay a penal interest of 1 per cent for each month of delay. According to experts, any loss incurred (except house property loss) during the financial year will not be carried forward to future years, which earlier could have been forwarded up to eight assessment years.

Also read: Union Budget 2019: New Aadhaar, PAN Card rules you need to know to pay your income tax

Also read: I-T Dept snooping on social media posts is a 'misconception', says CBDT Chairman