As we are aware, filing income tax returns is a mandatory duty of individuals and businesses to fulfill their legal obligations, as an income tax return serves as a declaration of an individual's or business's income, expenses, tax deductions, investments, and taxes owed. As per the Income Tax Act, of 1961, taxpayers are obligated to file an income tax return in various situations. Filing an income tax return involves reporting the yearly income of a taxpayer. However, there are various instances where the filing of an income return is necessary, even when there exists no income, such as carrying forward losses, claiming tax refunds, or availing tax deductions.
To regulate and ease the procedure, the Income Tax Department offers electronic filing, known as e-filing, for income tax returns. Before delving into the steps involved in e-filing, taxpayers need to gather the required documents to accurately calculate and report the necessary data in the income tax return (ITR).
Who can file an income tax return?
As per the Income Tax Act, of 1961, the following entities are required to file an income tax return every year:
- Salaried Individuals whose gross income exceeds the threshold limits set by the tax authorities are required to file an income tax return before deductions under Section 80C to 80U.
- Individuals engaged in self-employment or operating a business, irrespective of their income level, are generally required to file an income tax return.
- Taxpayers who have undertaken significant financial transactions during the financial year, such as buying or selling property, making large investments, or conducting substantial monetary transactions, may be required to file an income tax return.
- All private limited, LLP, or partnership firms irrespective of profit or loss they make.
- Individuals whose dividends come from mutual funds, bonds, equities, fixed deposits, and other sources.
- Trusts, estates, and other similar entities are typically required to file income tax returns to report their income, deductions, and tax liability.
- Individuals with foreign income or assets who have earned income from foreign sources or hold foreign assets.
How to file your Income Tax Return Online
As we know there are two ways to file your income tax, one is offline and the other is online. Let's look at the online process of filing your income tax:
Step 1: Visit the Income Tax e-Filing Portal.
Step 2: Login using user ID(PAN), Password, and Captcha code and click ‘Login’
Step 3: Thereafter, click on e-File > Income Tax Returns > File Income Tax Return
Step 4: Select the assessment year and mode of filling
Step 5: Select the status as applicable to you (available options: Individual, HUF, Others)
Step 6: If you are aware of the Income Tax Return form (ITR) applicable to you, select it; otherwise, you can take the help of the system to determine the correct ITR form. Then, proceed to fill out your ITR.
Step 7: After selecting the applicable ITR, note the list of documents required and click on Let’s Get Started.
Step 8: Select the checkbox applicable to you for the question displayed on the screen which will ask you the reason for filing Income Tax Return.
Step 9: If you wish to opt for the New Tax Regime, select Yes in the Personal Information Section. Note the changes in the new tax regime. Review your pre-filled data and edit it if required. Click Confirm after every section.
Step 10: Enter your income and total deductions and other details in the corresponding sections. After completing and confirming all the sections, click on Proceed.
Step 11: In the event, there exists a tax liability, there are two options that will be displayed Pay Now & Pay Later. It is recommended to use the Pay Now option to avoid liability to pay interest on tax payable if considered as a taxpayer in default. In the case, there is no tax liability, or you are eligible for a refund, you will be taken to the Preview and Submit Your Return page.
Step 12: If you click on ‘Pay Now’, you will be redirected to e-pay Tax Service, then click Continue.
Step 13: After successful payment through the portal, a success message is displayed. Click ‘Back to Return Filing’ to complete the filing of the ITR.
Step 14: Click Preview Return.
Step 15: Select the declaration checkbox on the Preview and Submit Your Return page, then click Proceed to Review.
Step 16: Preview your Return, then click Proceed to Validation.
Step 17: After Validation, click Proceed to Verification on Preview and Submit your Return page.
Step 18: Select the preferred option on the Complete your Verification page and click Continue.
(The verification is mandatory and the easiest way to do so is through e-Verification (through E-Verify Now).
Step 19: In case you select e-Verify Later, you can submit your return under the condition that you verify your return within 30 days of filing your ITR.
(If you select Verify via ITR-V, you need to send a signed physical copy of your ITR-V to Centralized Processing Center, Income Tax Department, Bengaluru 560500 by speed post within 30 days)
Step 20: Once you have e-Verify your return, the transaction ID and Acknowledgement Number will be displayed with the success message. A confirmation message will also be sent to your mobile number and email ID registered o the e-Filing portal.
How to file your Income Tax Return Offline
Another way to file your ITR is to file using the offline mode instead of online mode, taxpayers are required to utilize the Offline Utility. This utility allows users to generate a JSON file that can be uploaded for filing ITRs in two ways:
- Post Login to the e-Filing Portal.
- Directly through the Offline Utility.
Further, the e-Filing portal provides two separate offline utilities for filing ITRs:
a. ITR-1 to ITR-4
b. ITR-5 to ITR-7
To avail of this service, taxpayers must fulfill the following prerequisites:
- Be a registered user on the e-Filing portal.
- Possess a valid user ID and password for filing ITR through the offline utility.
- Download the relevant offline utility for either ITR-1 to ITR-4 or ITR-5 to ITR-7.
Steps to Follow
Step 1: Without logging in, you can download the relevant offline utility from the "Downloads" section on the e-Filing portal's homepage by installing the utility on your computer.
If you are logged in, go to e-File > Income Tax Returns > File Income Tax Return > Select the current AY and Mode of Filing (Offline). Then download the offline utility.
Step 2: Install and open the offline utility and then click Continue.
Step 3: Now you will be taken to the Income Tax Returns page where you will see the following tabs:
- Draft Version of Returns
- Pre-filled Data
Step 4: Under the Returns tab, click File Returns, and select the following options:
- Pre-filled Data Download
- Pre-filled Data Import
Step 5: Select your status and click the 'Continue' button to proceed.
Step 6: On the next screen, choose the appropriate ITR form under 'I know which ITR Form I need to file' and continue.
Step 7: Click the 'Let's Get Started' button on the following screen.
Step 8: Select the correct reason for filing the income tax return and click 'Continue' to proceed further.
Step 9: Fill out all the required fields in the ITR form to complete it, then click the 'Proceed' button.
Step 10: On the 'Confirm Your Return Summary' page, review the tax computation summary based on your entered information. If there is a tax liability, you will have the option to 'Pay Now' or 'Pay Later.' If you choose to pay immediately, select 'Pay Now' and enter your challan number and BSR code in the payment details.
Step 11: After reviewing your return, check the declaration box, provide the required declaration, and then preview and validate the return.
Step 12: Check for any errors by selecting the appropriate error, which will take you to the corresponding field. You can also obtain the JSON file.
Step 13: After all the errors have been corrected and the validation is successful, click 'Proceed to Verification' to complete the verification process.
Step 14: The site will redirect you to log in to the income tax e-filing portal.
Step 15: Choose the 'Upload Return' option.
Step 16: To finalize the ITR filing process, you must e-verify the return. You have the option to e-verify immediately or at a later time. These steps are specific to filing ITR-1, ITR-2, ITR-3, and ITR-4 forms.
Benefits of filing your income tax return online
- Accessibility and Convenience - Online income tax return filing provides round-the-clock accessibility and taxpayers can conveniently file their returns from anywhere with an internet connection, eliminating the need for physical visits to tax offices.
- Faster Processing and Confirmation - Filing income tax returns online ensures swift processing by the tax authorities. The automated system swiftly validates the information provided, reducing processing time compared to manual methods. Additionally, taxpayers receive immediate confirmation of successful submission, providing peace of mind and eliminating concerns about lost or delayed paperwork.
- Enhanced Accuracy and Error Reduction - The online filing system incorporates built-in validation mechanisms, minimizing errors and omissions. It automatically checks for inconsistencies, incomplete fields, or mismatched data, reducing the likelihood of errors in the filed returns. This feature helps taxpayers ensure accuracy in their filings, leading to fewer tax-related issues or audits.
- Prompt Refunds and Status Tracking - When eligible for tax refunds, filing returns online expedites the refund process. The automated system enables faster processing and disbursal of refunds directly to the taxpayer's bank account.
- Prompt Access to Tax Forms and Documents - The online platform provides taxpayers with immediate access to tax forms, instructions, and other relevant documents. This eliminates the need to obtain physical copies from tax offices or rely on mail delivery. Easy accessibility to updated tax resources enables taxpayers to stay informed and comply with the latest regulations.
- E-filing Benefits and Support - Online filing offers additional benefits, such as pre-filled forms, auto-calculation of tax liabilities, and guidance throughout the process. The system populates certain fields with pre-existing data, reducing manual data entry.