Income Tax

Form 12BB for Claiming Income Tax Deductions by Employees: Section 192 of the relevant Income Tax Act states that anyone who is liable for paying every salary shall be charged “Under the Head Salary” must exempt TDS.

As a consequence, section 192 applies only if the three specifications mentioned below are met.
There are two types of people present in the scenario: employers and employees.

• The employer’s contribution to the employee comes in the form of a paycheck.
• The benefit chargeable under the head wage is in excess of the estimated sum not considered for taxation. (In accordance with the relevant Income Tax Slab)

 

TDS is expected to be accumulated by all companies. The employer’s legal standing (e.g., HUF, business corporation, etc.) is inconsequential under the act. Besides this, the number of workers used by the employer when measuring and deducting TDS is similarly of no use and does not play any role.

What is TDS?

Citizens, but even more so compensated individuals, who are expected to pay tax ahead of time, also widely recognized as tax deducted at source (TDS), are compelled by their business owners to apply investment declarations at the beginning of each new budgetary year.

• Such tax-deductible expenditure statements will reduce the tax burden because TDS is withdrawn from your estimated income statement.
• Tax Deducted at Source or the popularly referred to as TDS is a nominal sum that is withdrawn anytime a specific payment is made, such as a paycheck, commission, rent, interest, professional fees, and so on.
• The person who contributes deducts tax at the source and collects the payment/income is obligated to pay tax.
• It reduces tax-dodging since tax is paid at the exact hour of the payment made.
• You have to make an initial estimate of the funds you aim to introduce at the beginning of the monetary year.
• Legitimate documents are not deemed necessary until the end of the following economic year. You have the alternative of investing less or more than the amount mentioned earlier. The ultimate investment decisions often will not have to be essentially precisely as said.
• You are not necessary to request evidence of investment as part of this declaration. However, documentation of investment is asked for at a later point in time; that’s exactly where Form 12BB comes into the equation.

 

What Exactly is Form-12 BB?

Form 12BB is a clear statement of an individual employee’s eligibility for tax deductions.

Form 12BB is the form that you fill out with the appropriate credentials and send to the employer – and most importantly, not the Income Tax Department – because then your employer can determine the total how much income tax to exempt from your monthly income.

Fundamentally, it includes information on tax-deductible investments and savings that you will generate during the current budget season.

You can exclude qualifying tangible assets or expenditures for which a tax refund is issued.

Each and every tax-paying individual should never forget that Form 12BB must be filed alongside factual evidence of assets or expenditures on which state subsidies are being tried to claim, and it applies to all employed tax-paying citizens.

There really was no uniform format for declaring the tax-deductible spending and contributions formerly. With impact from June 1st, 2016, the Income Tax Department has incorporated a standardized framework for Form 12BB.

12BB Format

Form 12BB is now in a regular format owing to the Income Tax Department. The taxpayer must prepare it in accordance with Income Tax Rule 26C.

You can get the form 12BB online in pdf or word template, download it, fill it out, and consequently email it to your boss along with the required proof documents.

Additionally, you can fill out Form 12BB electronically and mail it to your HR team, or you can print, sign, and email it to your boss along with the appropriate certificates.

Is It Necessary To Submit Form 12BB?

With force from June 1st, 2016, each and every employed individual is supposed to declare Form 12BB with his employer in exchange for receiving tax benefits on such savings and expenditures.

And therefore, it is likewise necessary to submit proper supporting documentation along with Form 12BB.

What Do You Do Well Before Figuring Out Form 12BB?

Examine the CTC structure closely to determine if HRA or LTA are included with your kit.

• You can only assert these allowances if the company clearly and explicitly has them in the CTC arrangement.
• Go to the bank or download your interest certificate, loan repayment plan, and bank account balance online.
• Organize and keep in hand’s reach all of your receipts for all of your tax-exempt income costs and deposits, such as rent receipts, LIC rate receipts, tuition fees receipts, gift receipts, so on and so forth.

 

Which Statements Am I Required To Produce on Form 12BB?

When filing Form 12BB, you can report the following tax-deductible income elements, along with relevant verification certificates (where applicable):

Allowance for Housing Rent or the HRA

You will seek the tax exclusion for Housing Rent Allowance in the very first section of Form 12BB (HRA). To assert HRA, you would have to have the necessary statement and information:

1. Payment slips with the homeowner’s name and address, as well as the,
2. landlord’s PAN (in case the annual rent charged exceeds Rs.1 lakh)

Points to consider when requesting the HRA tax exemption:

• One can only guarantee HRA tax exemption if and only if HRA is part of one CTC.
• If your HRA is not included in your CTC and you reside in a rental home, you can obtain a tax break under Section 80GG.
• Rent invoices are only requested if the monthly rent surpasses Rs. 3,000.
• In case you live in your very own residence, you cannot demand HRA.
• If you pay your parents’ rent, remind them to include it as profits as they file their income tax return.
• Never email altered rent receipts; doing so might land you in hot water with the IRS.

Regardless of when the boss would not request a tenancy lease, it is smart to have one written on Rs. 500 stamp paper or at the rate of your state for documentation for future reference.

Allowance for Leave Travel or the LTA

The employee may also identify LTA for accounting purposes.

Section 10 (5), according to the Income Tax Act of 1961, provides tax-advantaged treatment for an employee’s LTA.

However, one should always acknowledge that the taxpayers can only seek tax incentives on LTA for domestic travel and only up to two times in a four-year period.

Points to bear in mind while asking for LTA tax exemption:

1. One can only confirm LTA tax exemption if and only if LTA is part of one CTC.
2. Clients must attach travel documents such as boarding passes, airline fares, travel agency invoices, boarding passes, and so on to their employers in order to receive LTA.

You may invoke LTA on behalf of yourself, your partner, your children, your dependent parents, and your responsible sibling.

1. It can be asserted twice in a four-year span.
2. Under a situation where you only claimed one LTA in the previous four-year phase, you will continue and use the second LTA, but you should really do so in the first year of the current four-year frame.
3. It is only permitted for domestic travel, not overseas travel.

Home Loan Interest

When completing form 12BB, the employee will claim tax deductions on the home loan under sections 80C (principal repaid) and 24 (home loan interest payment).

You may also subtract filing fees, excise duty, and brokerage fees for tax purposes in different provisions.

The applicant should always fill out the following details on Form 12BB:

During the fiscal year, interest payable/paid to the debtor

• The name and the corresponding residential address of the lender from which the loan is obtained
• PAN of the lender: Financial Institutions/Employers/Others, from which the loan is obtained

 

The following documents are eligible to demand a deduction under Section 24B for home loan interest payments:

A statement or certificate specifying the overall EMI owed, but also the interest and primary elements.

• Authorization certificate of possession/completion of a building
• Employee self-declaration about whether the house is owned or rented.

 

Details one should keep in mind when seeking the Interest on Home Loan Tax Exemption:

1. In case you happen to take a home loan on a partnership basis, you will claim the interest deduction percentage-wise.
2. If you obtained a home mortgage from a lender except for a bank, such as associates, family, or a moneylender, the cost of borrowing would be deducted under section 24 only while you issue a certificate of interest from the source to whom your interest accrues.

The reimbursement of principal on loan purchased by associates, family, or another moneylender, except maybe a trust, is not taxable under section 80C.

Parts 80C, 80CCC, 80CCD, 80D, and 80E Deduction

One may assert a variety of deductions under section 80C and its provisions when filing form 12BB.

Chapter VI-A mentions income tax deductions under different sections such as 80C, 80D (Medical insurance), and 80G (Donation). Scientific proof of spending or expense sustained is necessary to obtain a deduction.

After deducting the claimed income tax exemptions, the remaining gross income will be charged at the individual’s income tax slab rates. The following are the benefits permissible under different provisions of Chapter VIA of the Income Tax Act.

1. Section 80C: Life insurance premiums or investments in PPF, ELSS, NPS, PPF, kid’s tuition fees, etc., with a gross cap of Rs. 1.5 lakh.
2. Section 80CCC: Reimbursement for annuity contract premiums charged
3. Section 80CCD: Additional NPS interventions
4. Section 80D: Health care premiums charged
5. Section 80E: School or any other education filed related loan interest
6. Section 80G: Donations to designated charities
7. Section 80TTA: Interest as gained on a savings account

What Happens In The Event If You Fail To Attach Your Form 12bb To Your Employer?

In case you fail to apply form 12BB to the employer within the specified timeframe specified, the employer will be unable to provide you with the benefits of deductions and other tax exemptions. As a direct consequence, any overpayment of TDS will be withdrawn from your monthly wage.

You may, furthermore, seek a refund of such excess TDS when filing your income tax return.

What Is The Objective Of A Declaration Of Investment?

Workers must file a report detailing the deductions and privileges they choose to assert. Based on these declarations, the contractor will withhold TDS from the employee’s wages.

In many of these circumstances, the concerned taxpayer must make these contributions through the employer’s HR portal.

Understanding Form 16 – Tax on Income: Form 16 is like a certificate that is issued by the employer, and this Form contains all the information that one needs for preparing and filing his/her tax return. Employers must issue this Form every year on or before 15th June of the next year, which is immediately after the financial year in which the tax got deducted. Form 16 has two distinct parts which are Part A and Part B. In case a person loses his/her form 16, then he/she can apply for a duplicate one from his/her employer. Form 16 is meant for dealing with the tax on taxable salary and tax deducted at source.

Understanding Form 16 – Tax on Income Overview

Form 16 contains information that is related to the employer and employee. Information such as name and address of the employer, PAN/TAN of the deductor, name and designation of the employee and PAN information of the employee. People have to disclose their assessment year, period of employment, address of CIT (TDS) and a summary of tax deducted at source in a detailed manner in Form 16. The summary includes quarter-wise information of receipt numbers of quarterly TDS returns in Form No 24Q, amount of tax deducted, and amount of tax deposited or remitted.

Form 16 is meant to show the employee’s gross salary along with the perquisites and profit instead of salary. In the section ‘Income under Head Salaries’, the employee can report his/her income from other sources. Under section 192(2B) and Rule 26B of the Income Tax Act, when an employee is having any other income despite his/her salary (not being a loss) in the same financial year, which is chargeable under any head such as income from capital gain or income from other sources, the employee must give a statement of such income and any tax deducted thereon to the employer so that he/she can take it into consideration while deducting tax from the employee’s salary.

When other incomes are added to the income under head salaries, one can get the gross salary of the employee. Gross salary is the total salary an employee gets after adding all the allowances and benefits but before charging the taxes. This is explained in detail in form 16 – part 1.

Calculating Tax

After calculating the employee’s taxable income, the ones whose income exceeds the amount that is exempted under Income Tax Act is known as assessee. On the income of the assessee, tax is charged at a rate fixed under the finance act for the relevant assessment year. Income tax also depends on the type of assessee. There are different types of assessee such as Individual, Hindu Undivided Family (HUF), Firm, Trust etc. In the case of an individual, the tax calculation depends on:

• Gender
• Age
• Residential status

For the income that is earned between 1st April 2011 and 31st March 2012, the financial year is considered as 2011-2012, and the assessment year is considered as 2012-2013.

For a resident Indian for the assessment year 2012-2013, the income tax slab is as follows:

Tax	Men	Women	Senior Citizen (60 years – 80 years)	Very Senior Citizens (More than 80 years)
Basic Exemption	180000	190000	250000	500000
10% tax	180000 – 500000	190001 – 500000	250001 – 500000
20% tax	500001 – 800000	500001 – 800000	500001 – 800000	500001 – 800000
30% tax	Above 800000	Above 800000	Above 800000	Above 800000
Surcharge	No surcharge is charged in the case of an individual, Hindu undivided family, Association of persons and body of individuals
Education Cess	3% on the income tax

Tax Computation for Males

Tax computation for males in India is as follows:-

Level of Income	Tax
When the total income of the employee does not exceed Rs 1,80,000	Nil
When the total income of the employee exceeds Rs 1,80,000 but does not exceed Rs 5,00,000	10 percent of the amount that exceeds the income  Rs. 1,80,000/-
When the total income of the employee exceeds Rs 5,00,000  but does not exceed Rs 8,00,000	Rs. 32,000/- plus 20 percent of the amount that exceeds the income  Rs. 5,00,000
When the total income of the employee exceeds Rs 8,00,000	Rs. 92,000/- plus 30 percent of the amount that exceeds the income  Rs. 8,00,000

After the tax is calculated, surcharge and education cess is added to it. Let’s discuss these terms in brief:

Surcharge

The surcharge is meant to be an additional charge or payment that is charged on the taxable income of an employee. It acts like an extra fee that is added to another fee or charge. For example:

• The fuel surcharge is meant for representing additions due to jet fuel prices.
• Sea freight charges are meant for representing additions due to oil prices.
• The surcharge is charged when payments are made through cheque, credit or debit card.

Education Cess

It is considered to be a contribution that is made towards the Secondary and Higher Education development in the country’s economy. All taxes that are levied in India are subject to an education cess, which is fixed at 3% of the total tax payable. Please note the 3% is not charged on the income tax but on the income tax payable.

Annexure A or Annexure B

An employee also gets Annexure A or Annexure B along with Form 16 depending on the type of the employer; they are also called the Deductor type because they are the ones who deduct tax from the salary of the employee. Annexure is something which informs about the details of the tax deducted and deposited in the Central Bank account with the help of a challan.

• Annexure A is used if the employer or deductor type is Government.
• Annexure B is used if the employer or deductor type is others.

Relief Under Section 89

Relief under Section 89 under the Income Tax Act is considered to be one of the most important tax rebates that are offered to the employees by the Government. It deals with the taxation of the salary when the salary is believed to be paid in arrears or in advance. Government employees are the ones who get higher salaries because of these arrears.

The Strengths of Completing ITR within the pre-defined Time Frame

Submitting your ITR on time makes you feel responsible and comfortable for yourself, but the advantages don’t stop there. Filing your ITR on time will help you in a variety of ways, including:

Simple Loan Approval Registering

The Income Tax return will essentially support clients when requesting a car loan (2-wheeler or 4-wheeler), a home mortgage and so on.

Request a Tax Refund

If you are subject to reimbursement from the Income Tax Department, you can download your Income Tax Return as soon as feasible to get your reimbursement as quickly as practicable.

Income and Address Confirmation

An income tax return could be regarded as concrete evidence of your income and address used when applying for a loan or visa.

Prompt Visa Approval

At the hour of passport application, most embassies worldwide ask you to outfit copies of your financial records for the past couple of years.

Retain the Losses Forward

On the off chance that you release an income tax return on time, you will be permitted to carry forward losses to the coming years. This cause could very well apply this to eliminate taxes in the next few years.

Avoiding Punishment and Litigation

If you do not document your ITR, the income tax officer will recommend proceedings for prosecution for a period of 3 months to 2 years, and therefore a levy.

In case you end up owing more than Rs. Twenty-five lakhs in taxes, authorities can stretch the term to 7 years. The IT department will not launch the proceedings mentioned above if the net money liability is only about Rs. 3000.

The Cutoff Time for Filing The Individual Tax Returns

The government of India gives citizens several exemptions to document their ITR, but we’re all individual human beings, and we sometimes are not able to file on time. The timeline for filing ITR for the financial year 2020-2021 was January 10, 2021.

Individuals predominantly have until July 31 to complete their tax statements for any particular year.

Regrettably, considering the recent influx of COVID-19 and its implications on every major enterprise, the GoI agreed to extend the due date for filing tax returns for 2020-2021 to November 30, which itself was eventually replaced to December 31.

Negative Repercussions of Late Registration of ITR

The following are recorded underneath:

Interest according to Section 234A of the Income Tax Act of 1961:

Section 234A enforces an interest payment for missing to file income tax returns where any tax is owed.

Failure to file an ITR can draw in the interest of 1% monthly and partly before the return is filed on the neglected outstanding tax sum.

Then, if you have a remaining tax payable of Rs. 8,000 and failed to file your ITR by the given deadline of July 31, and you file your financial records on October 15, you will then have to pay an interest penalty of 1% per month x 3 months on the remaining tax aggregate amount of Rs 8,000, i.e., Rs 240.

Losses cannot be carried forward

Losses will not be permitted to be carried forward if the income tax return is filed well beyond the closing date. Nevertheless, even though the refund of gain/loss is filed after the due date, the loss under the heading “Income from house property” will indeed be brought forward.

Demand for Tax Reimbursement

Interest on refund under section 244A can be overlooked if the gap in Filing is liable to you for the time in which you lodged a late return. Section 244 A provides that an applicant is subject to interest on the sum of income tax refund received on their income tax return.

Where an applicant has filed their income tax return, and the estimated taxes payable outweigh the assessee’s financial obligations, and the assessee claims the surplus taxes paid as a refund and the same is found to be expected to him, the income tax scheme enables for the interest payment on the total of income-tax refund to the

Fine under Section 234F

If a person declines to file a tax return by the given deadline, the assessing officer can enforce the accompanying charge:

The deadline of Filing	Payments That Can Be Levied
If the return is submitted past the closing date but on or before December 31	Rs 5000
Any other event	Rs 10000

Make note that, If the individual’s taxable profit doesn’t relatively equal to or exceed five lakh rupees, the fee incurred under this clause is confined to one thousand rupees only.

Lawsuit for Failing to Supply Return of Income:

If the return of income is not reported by the given deadline, you can consider obtaining a letter of prosecution under Section 276CC.

What Technically is a Belated Return?

A belated return is a return that is not filed on or before the due date as mentioned in the Income Tax Act.

Section 139 of the corresponding act specifies that any citizen who has not yet completed their income tax returns are entitled to several types of returns from the IT department, prompting them to do it anyway. The late return is lodged following Clause 139(4) of the Act.

Thus, according to Section 139(4) of the Income Tax Act:

• If an applicant or an individual is incompetent to file income tax returns before the specified deadline enumerated in Article 139(1), then
• The applicant or agency might very well further register late or belated income tax returns within that year since the end of the relevant taxation year or before the termination or conclusion of the assessment as per Section 144, whichever happens, earlier.
• Taxpayers or individuals who file income tax returns late may suffer Rs 5,000 fines under Section 271F of the Act.

But even so, the IT department would implement no tax on income returns that were not expected to be automatically paid as per the conditions outlined in Section 139(1), even though the returns were reported after the year’s end.

In addition, an individual can focus on providing a belated return if he delays filing a return within the period specified in a notice under the provisions of Section 142. (1).

The taxpayer should file belated ITRs before the end of the relevant analysis year or after the end of the assessment year.

It is vital to recognize that filing a belated return is the same as filing an income tax return before the actual due date.

Will a Corporation Be Obligated To File Income Tax Returns Even If It Was Not In A Commercial Enterprise During The Financial Year?

A corporation or organization that did not perform any sales or activities during the relevant fiscal year has the luxury of considering to choose whether or not to register its income tax returns.

What is the procedure for filing an ITR?

Any taxpayer can file an Income Tax Return in two distinct ways:

• Offline
• Online

Offline Protocol With Detailed Step-By-Step Instructions

To document an income tax return in the offline format, the user will have to do the following steps:

Step 1: At first, the concerned applicant must visit the official Income Tax e-Filing portal, i.e., https://www.incometaxindiaefiling.gov.in/

Step 2: Next, they must select the “IT Return Preparation Software” option from the tab “Download”. Then, they will have to mention the appropriate “Assessment Year” and download the proper ITR form either in JAVA or Excel format as desired.

Step 3: Then, the applicant will have the Fill the ITR form with valid credentials.

(To save time, the client can likewise download the Pre-filled XML for pre-filling the individual and different subtleties. To download client is needed to Login into the e-Filing entry and snap on “Download Pre-Filled XML” under the menu “My Account”)

Step 4: The applicant will have to Confirm all the sheets of the ITR form and consequently Calculate the gross Tax payable.

Step 5: They must then Generate and Save the XML for future records.

Step 6: After Login in to the e-Filing portal successfully, they must choose the Income Tax Return option from under the e-File menu tab.

Step 7: PAN will be auto-populated, and hence, they will have to Select Assessment Year, ITR Form Number and mention the Filing Type as “Original/Revised Return” and Submission Mode as “Upload XML.”

Step 8: Then, they will be required to choose any one of the following options to check the Income Tax Return:

• Digital Signature Certificate (DSC)
• AADHAAR OTP sent to the linked phone number
• Then generate EVC through the “Generate EVC” option available in “My Account.”
• I would like to e-verify later. Please remind me. Then click on the “Continue” tab.
• I would not want to e-verify this Income Tax Return and would also like to mail a signed ITR-V to “Centralized Processing Center, Income Tax Department, Bengaluru-560 500.”

Step 9: Subsequently, they will have to Add the ITR XML File and click on the “Submit” option available in a box at the end of the screen

Step 10

• In case the “DSC” option is clicked by the applicant in “Step 8”, then they will have to Attach the Digital Signature
• On the off chance that “AADHAAR OTP” is chosen in “Step 8”, then they must Enter the AADHAAR OTP received in the mobile number registered with UIDAI
• If “EVC” is selected from in “Step 8”, they will be required to Enter the EVC received in the registered mobile number.
• If the “E-verify later” option is chosen in “Step 8”, then the portal will submit ITR only, but the process of ITR filing is not complete until it is verified.
• If the “I don’t want to e-verify” option is chosen in “Step 8”, then, you can either e-verify the same by clicking on the “e-verify return” option under the menu “My Account” or send the signed ITR-V to CPC, Bengaluru.

Step 11: Finally, the applicant can Submit the ITR.

Online Protocol with detailed Step-by-Step Instructions

This mode is only likely to apply to ITR-1 and ITR-4. To file an ITR online, the applicant must take the measures outlined herein. As a result, people with Salary income and/or income from other sources or house assets will only file returns in this format.

Step 1: To start, the claimant must go to the official Income Tax e-Filing website, which is located at https://www.incometaxindiaefiling.gov.in/.

Step 2: After Login into e-Filing, they must pick the Income Tax Return under the E-file Menu tab.

Step 3: PAN will be auto-populated on the website against the pre-entered credentials. Therefore, the applicant must Select Assessment Year, Select ITR Form Number, Mention the Filing Type as “Original/Revised Return” and Submission Mode as “Prepare and Submit Online.”

Step 4: Then, they will have to Fill the relevant and mandatory fields of the ITR form with appropriate particulars.

(It is advised that you always click “Save Draft” to prevent data loss.)

Step 5: In the next step, the applicant will have to click on the appropriate verification option in the tab “Taxes Paid and Verification.”

• I would like to e-Verify (To use this alternative, you must have a legitimate Aadhar/PrevalidatedDemat Account/Digital Signature certificate recorded in e-Filing against your PAN.)
• I would like to e-Verify later within 120 days from the date of Filing.
• I don’t want to e-Verify and would like to send signed ITR-V through normal or speed post to “Centralized Processing Center, Income Tax Department, Bengaluru-560 500” within 120 days from the date of Filing.

Step 6: Until uploading the document, ensure that the applicant double-checks all of the data by clicking the “Preview and Apply” button to review all ITR data.

Step 7: Then, they must Submit the ITR by clicking on the button available at the bottom of the screen.

Step 8: Steps to be followed for e-Verification of ITR:

• On the off chance that the “I’d like to e-verify” alternative is clicked in “Step 5,” then the applicant must enter the AADHAAR OTP received in the mobile number identified with UIDAI, followed by the EVC received in the enlisted mobile number.
• If the “E-verify later” alternative is selected in “Phase 5”, the portal will submit the ITR. Still, the portal will not complete the procedure of ITR filing until it is validated.
• In the event that the “I don’t want to e-verify” option is selected in “Step 5”, you could always e-verify the same by deciding on the “e-verify return” option under the “My Account” menu or else submit the signed ITR-V to CPC, Bengaluru.

Step 9: The claimant must enter the EVC/OTP within 60 seconds, or else the ITR will be auto-submitted and must be e-verified later by clicking on the “e-verify return” option under the “My Account” menu.

Income Considered for Taxation Under The Header “House Property”: Property value from home, whether a dwelling or land appurtenant to it, of which the taxpayer is the landlord, is assessed under the category “Income from house property.”

A property estate may be your apartment, an office, a store, a building, or any land attached to a building, such as a parking lot. The Income Tax Act makes no clear distinction between industrial and residential properties.

In the income tax return, all forms of assets are assessed under the header’ income from house land.’

When land is used for a particular trade or some profession that draws in revenue or for freelance work, it is accounted for under the ‘income from business and profession’ label. Replacement and maintenance expenditures are covered under business and corporate expenses.

As a whole, profits are taxable under this heading “Income from House Property” if the following three conditions have been met competently:

• The property should have any buildings or lands that are attached to it.
• The applicant must necessarily be the property’s primary stakeholder.
• The property also shouldn’t be utilized by the landlord for any business or occupation taken on by them, the revenues of which are considered for taxation under the corresponding Income Tax Act.

How Many Categories Of House Property Are Eligible Under This Taxation System?

1. Possession of a Self-Occupied House: A self-occupied house is one that is only used for residential uses. This may be populated by the taxpayer’s relatives (parents, spouse, and children). For Accounting Purposes, an empty apartment property is termed as self-occupied.
2. Rent Out the House Estate: For tax reasons, a house property that is rented for the whole or a portion of the fiscal year is called a let-out house estate.
3. Passed Down Property: Based on its use, an inherited house, i.e., one passed down by family, grandparents, and so forth, maybe either self-occupied or let out.

Portions of Sections 22 to 27

Sections 22 to 27 of the corresponding Income Tax Act deal with the taxation of revenue from residential real estate.

The portions are summarized in the following points –

• Section 22 – Whose Revenue from House Property Is Subject to taxation?
• Section 23 – Annual Value Estimation
• Section 24 – Authorized Exemptions for Household Income
• Section 25 – Income from House Property Aspects or Sums Not Liable to any deduction
• Section 25AA – Unquantifiable rent found after 1.4.2001
• Section 25B – Rent arrears obtained
• Section 26 – Estate shared by co-owners.
• Section 27 – Classified ownership circumstances for income liable for taxation on residential property

What is the Annual Value of Property?

The annual valuation of real estate is the sum of funding that it will theoretically or potentially earn in any given accounting period year or financial year.

Based on the current Income Tax Act, the Annual Value of the property is the property’s underlying potential to gain income and is taxable to the owner. The revenue considered for taxation may be the Gross Annual Value (GAV), Net Annual Value (NAV), or Annual Value, as deemed suitable for the situation.

The estate’s gross annual Value will be the greater of

• rent paid or receivable
• fair book value
• Municipal assessment

The Net Annual Value would be the Gross Annual Value minus the local taxes charged by the resident.

Annual Value, as mentioned, is the Net Annual Value subtracted Section 24 Concessions?

According to Section 24, the following exemptions for income from house property should be deemed necessary while making calculations:

• Section 24(a) Deduction mentions a 30 percent deduction on the Net Annual Value.
• Equity interest lent to purchase, construct, fix, renew, or reconstitute estate is exempt under Section 24(b).

How to Estimate House Property Income?

Given below is a complete step by step guide as to how to figure out how much money you can generate from a house:

1. At first, assess the property’s Gross Annual Value (GAV): It needs to be noted that A self-occupied house has no gross annual valuation. It is equivalent to the rent received for a house on rent for a let-out home.
2. Lower Property Taxes: While assessed, property taxes are excluded from the GAV of the estate.
3. Following, one needs to Estimate the Net Annual Value (NAV), which equals the Gross Annual Value minus the Property Tax.
4. Subtract 30% of NAV as an average tax reduction: Section 24 of the Income Tax Act lays down a provision for 30% deductions from NAV. Such costs, such as painting and maintenance, cannot be listed as tax deductions in violation of the 30% cap under this provision.
5. Evaluate your benefit from residential properties: The amount that results is your revenue from house property. This is assessed at the applicable slab rate deemed fit for your purpose.
6. The risk from house property: If you purchase a self-occupied house with a zero GAV, demanding the home loan interest exemption would lead to the loss of house property. This deficit will be compensated by revenue from other sources.

Income from a Property Is Exempt From Taxation

Income from a property is exempt from taxation in the following contexts:

Although that accounting of revenue from house estate comprises any conceivable building or house that may exist, there are very few exceptions. The following property assets are not included in the revenue computation:

• Property used by the occupant for the benefit of his or her own residential purpose
• Property rights in a single property, but the property is not used as a dwelling commodity because the occupant lives somewhere else due to employment obligations.
• Farmhouses boosting agricultural production and income
• Anyone property that can be deemed as a palace used by an ex-ruler
• A municipal government’s domain
• Any licensed trade union’s land
• Property financed by a Scheduled Tribe member
• Any agency Established by law or an organization or group sponsored by the state to further the needs of Scheduled Castes, Scheduled Tribes, or maybe both.
• Such a government-created corporation that promotes the rights of members of a minority community.
• Any cooperative organization founded to further the preferences of Scheduled Castes or Scheduled Tribes members or perhaps both.
• Property revenue from the renting of repositories for the storing, distribution, or facilitation of commodity marketing by an authority established under some policy for commodity marketing
• Any institution contributing to the advancement of ‘Khadi and Village Industries
• An individual’s house property which is occupied by them and that has not been available for rent in the preceding year
• Household lands kept for voluntary interests of some kind which might include charity
• Any political party’s owned property

Which Income Tax return Form Should Be Used To Record Income From A House?

A person who pays tax and receives income from a single house property must file ITR 1 or ITR 4. Consequently, by claiming earnings from home, a taxpayer may classify the house as ‘self-occupied or ‘let out for the financial year.

In the current ITR 1 and 4, a new alternative ‘deemed let out’ is provided under the classification of ‘kind of house.’ The three possible options for ‘kind of house’ are now available:

1. Self-Occupied
2. Let-out
3. Deemed let-out

For the case of a residential property that has not been reported as self-occupied by the taxpayer, the alternative of ‘deemed let out’ must permanently be opted.

The concerned taxpayer should use ITR 1 and 4 only and only for income from a single resident home. A taxpayer could choose the proclaimed let-out alternative in scarce circumstances.

For a House Property Loan, Submit An ITR-1

Particulars must be recorded in the personal information column to register ITR-1 with house property. In the revenue streams column, input the total taxable annual earnings. Track down the taxable profits in Form 16 and enter your company’s particulars, including the TDS figure.

• The first stage in reporting your ITR-1 for a home loan is submitting your identifying information in the first tab titled ‘Personal Data.’ This section allows the user to access your first, middle, and last names and your sex, residential address, and birthdate.
• After entering your individual identifying information, you will have to go to the following page, named ‘Income Sources.’ There are five other tabs under the main heading: Salary, Other Income, House Property, Capital Gain, and Business and Profession.
• Firstly, you must upload documents about your salary money by downloading your Form 16 or individually entering your taxable earnings and allowances.
• Following that, you must make a rough estimate of your sum considered for taxation in Form 16, after which you must enter the Salary TDS figure, including the particulars of your company. In case you switched jobs within a year and should include the payments from all employers in the section deemed relevant for this purpose.
• Having followed that, you will be required to enter details about your other revenues, such as gifts, fixed deposits, bank balances, and so on, before specifying any excluding earnings, such as interest from PPF schemes, ULIPs, mutual funds, agricultural income, so on and so forth.
• If you’ve had a home mortgage on a house that you inhabit, the concerned taxpayer must report the interest on the mortgage. The value of the property address, and also any co-owners, should have been included.
• To follow that, you must declare the entire tax deductions you are entitled to under Section 80C, including mutual funds, LICs, and the like. The taxpayer also must mention any other appropriate assumptions under the ‘More Deductions’ heading. Be absolutely sure that you enter all deductions correctly, as discrepancies will lead to complications later on without any room for any doubt.
• Once you’ve finished the preceding steps, submit the form and save the pdf and acknowledgement for reference in the future.

Section 80EE

Section 80EE of the relevant Income Tax Act helps first-time mortgage holders to exclude loan interest charges.

Even though the IT department initially implemented this deduction only for the budget year 2013-14, it has again been prefaced with effect from the financial year 2016-17 onward.

Individuals that are first-time homeowners are the only ones that may invoke the exemption under Section 80EE. If a HUF, business, or partnership firm takes out a loan to purchase a property, they cannot request a deduction. The taxpayer must have noted that One can only obtain 80EE deductions on the interest element of a home loan, not the principal sum repayment.

Important Note

• Section 80EE applies on a per-person basis rather than a per-property basis.
• Property acquired in a joint venture would also be liable for deductions of up to Rs.1 lakh per shareholder.
• You are not compelled to reside in the acquired estate.
• Borrowers who live in a rental apartment will exclude expenses for taxation under Sections 80EE, 80C, and 24.
• Taxpayers can essentially seek 80EE deductions in addition to the Rs.1.5 lakh exemption as applicable for self-owned assets.
• This clause allows you to demand a maximum deduction of Rs.50,000.
• A mortgage finance corporation or a financial institution should approve the loan.
• You should not own any land in your name on the same day the loan is authorized.

Section 80EE-Applicable ITR Form

If most of the provisions mentioned above are met, the taxpayer may request exemptions under Section 80EE while submitting his or her ITR. Individual people and HUFs will say 80EE on all ITR levels, including ITR 1, ITR 2, ITR 3, and ITR 4, focusing on their revenue sources.

If the tax audit is not appropriate, the threshold for filing ITR is July 31st of the following monetary year.

Aside from the primary and standard documentation such as Form 16, PAN, and so on, the only required paperwork to demand this deduction is the document endorsing and verifying the Interest on Housing Loan for First House.

Claiming Exemptions Under Sections 80EE and 80GG at the Same Time

This will be possible only if the assessee:

1. lives in rented housing and pays the rent for that.
2. He enjoys no House Rent Allowance (HRA).
3. He sought a loan to buy his first residential home.
4. The applicant should not live in an estate. To calculate income from house land, a residence project can be considered as let out.

Who Are Required To Submit their IT Returns?

Citizens with earnings of more than Rs 5,00,000 must submit their income tax returns online, with or without an electronic signature.

Although it has made ITD’s job easier, taxpayers have left no stone unturned to fill out ITR forms on their own consequently feel the need to consult experts such as CAs, etc.

Nevertheless, with technological advancements, many portals and websites have evolved to assist those taxpayers in cost-effectively filing their ITRs.

What is the e-filing of ITR?

At the point when you record your Income Tax Returns (ITR) on the web, the practice is known as e-Filing, and it is becoming more common due to its simple design. ITR filing is required for all Indian people with certain annual earnings because you will not need to travel to the Income Tax Department to report your returns, unlike in the old days. Instead, you can e-file your taxes from the luxury of your very own house.

Taxpayers can complete E-filing from almost anywhere and at any time, which provides convenience.

Why Use The Online Method Of Filing ITR?

In particular, e-filed returns usually are handled quicker than manual returns.

E-filing income tax returns suggest that all of your records, including the bank loan acknowledgements and income certificates, are appropriately secured away in one specific place so that you don’t have to scramble for them in case of emergencies.

The income tax server will save your records, which you can view and print if necessary, by signing into your account on the income tax website.

If you are fully cognizant, the standard method of filing income tax returns requires you to enter accurate data, make estimates, deductions, and enter precise details, all of which will result in several errors of judgement. E-filing has a data authentication and tax estimation software that guarantees there are almost no or, as for that matter, very few mistakes.

Since the time limit for correcting the errors in just 15 days, e-filing is once again a more innovative option.

On the income tax department’s website, a new Grievance Redressal component has been presented.

It enables individuals to pose a question, and department officials can respond with feedback and quick fixes. Why subject yourself to the wrath of the income tax authorities by contacting them while you still can do so from the comfort of your own home?

Whether independent and online, many software is ready to support you file your income tax return in a jiffy.

Documents Required for ITR Filing Process

It is always advisable to Keep scanned copies of the following documents before beginning your ITR filing process:

• Aadhar card
• PAN card
• Bank account documentation
• Form 16 credentials
• Investment/Capital Gains Statistics

List of Standard Websites for Filing IT Returns

The following is a list of standard websites for filing IT returns:

Official Website of Income Tax India

It is the leading site of the Income Tax Department of the Government of India, from which any taxpayer can e-file their income tax returns. All Income Tax Returns, including all those provided by other software and e-filing portals, must be transferred to this website only at the end of the day.

The database allows you to schedule ITR-1 and ITR-4 returns online using a convenient GUI.

They provide customer service phone numbers for taxpayers that will be operational 24 hours a day, all the seven days available every week during the month of March. These benefits that are offered to all taxpayers bear no expense.

For all ITR types, the model also provides Excel and Java utilities. Users enter the required information, which is authenticated against predefined checks and then compiled to XML format. The customer will file the return online by uploading the XML file.

If you are a newcomer, you must first register or log while using the official portal.

Suppose you are a salaried employee or a company owner, regardless of whether you understand the fundamental terminology to follow when filing the ITR. In that case, you can conveniently file it via the online webpage.

Benefits of the Income Tax India E-filing Platform

• Highest possible Confidentiality: Since you do not have to reveal your salary or company records or credentials with others, you can document immediately from the department’s website, assuring privacy.
• Entirely free to use: The income tax department’s website is entirely free to access; therefore, you won’t have to spend a dime to file your ITR.

Under the circumstance where you have the littlest familiarity with ITR filing and do not want to pay for help, this is the smartest choice.

Major Drawbacks of the Income Tax India E-filing Site

• For a beginner, it is challenging to use.
• When you upload an excel file to the server, you should allow specific excel options, including Macros.

Clear Tax

ClearTax, which was established in 2011, is the number one platform in 2021. ClearTax has become one of India’s best online tax filing portals, with over 40 lakh taxpayers relying on it to register their ITRs online. Besides this, it allows 20,000+ CAs and tax experts to aid their clients with all tax regulations through software and a website.

The best attraction of this website is that females, retired people, and Indian Defense Personnel can file their income tax returns for free. Individuals who request CA assistance should pay a fee ranging from Rs 599 to Rs 1,800, based on the level of support required.

ClearTax will assist NRIs with their savings, sort out their refunds and obligations, and e-file their Income Tax Return.

And it also has the option to auto-import facts from your Form 16/Form 26AS (Tax Credit Statement) and updates your tax return, presenting guided assistance in the filing period.

ClearTax’s Benefits

• Convenient User Interface: Clear Tax has a simple software approach that allows you to file your ITR without any headache securely.
• Paid Assist – If you are experiencing difficulties figuring out your ITR, you can choose a paid package to get professional support at any point.
• Tax Saving Investing: To save funds, you will get instant investment advice on tax-saving instruments such as ELSS funds. You will also get an instantaneous invoice for your expenditure, which you can post as tax-saving evidence.
• You also can use a mobile application to execute your ITR.

ClearTax’s Shortcomings

• The primary assistance package does not provide for all the components of ITR.
• TaxSmile ITR Software

TaxSmile lets you practice your ITR in an elementary Question answer template, and it is relatively simple to interpret your ITR on your own.

Tax Smile would not overwhelm you with a slew of alternatives. You can either document the ITR manually for free or pay Rs. 500 to have the TaxSmile professional do the same for you.

The very first thing you’ll find in this portal is a huge sticky window with an email address for emergency assistance.

TaxSmile, on the other hand, charges you with some “Value Added Services.” As a consequence, you can pay an additional fee price for each service which you want to access.

You should submit Form-16 and keep the rest to Taxsmile for Rs. 500.

TaxSmile, similar to ClearTax, is a recognized e-Return Intermediary with the Income Tax Department, implying you can file your returns exclusively through their site without really checking into your Income Tax Account.

TaxSmile’s Perks

• Prompt Process – TaxSmile has a straightforward GUI that enables the user to prepare the ITR for free or have the team file the ITR.
• Value-Added Services – You can pay according to your needs. If you’d like some value-added services, including certain post-filing assistance, you must pay for those and those only. As a result, the benefits are very capable of adapting to the needs of the customer.

TaxSmile’s Shortcomings

• Only ITR-1 and ITR-2 programs were developed for limited form filing.
• There is no all-inclusive package; if a person requires all of the resources, he must pay for them on an individual basis.

MyITReturn Income Tax Software

MyITReturn is a famous digital ITR filing platform with over 26 lakh users that assists users in determining their taxes and compiling their ITRs online via their portal. The first income-tax return in India was registered using their app, which was created specifically for the Income Tax Department.

MyITReturn is an ideal substitute if you plan to initiate tax preparations in order to turn a profit on taxes.

Aside from their platform, the website also assists over 200,000 clients in calculating, paying, and uploading their tax returns using their android app for Android and iOS, making the operation very seamless.

Besides, English consumers can access over 9 Indian languages (Hindi, Gujarati, Marathi, Tamil, Telugu, Kannada, Malayalam, Bengali and Punjabi).

After completing the signup process, MyITReturn will contact you for professional tax preparation recommendations.

Not only can they help you prepare, but if you get a notice from the Income Tax Department for whatever occasion, they will also lead you through the process of resolving the matter.

They have over six different plans to meet the demands of their customers.

MyITReturn is also a licensed e-Return Intermediary with the Income Tax Department, authorizing you to send your ITRs immediately from their site to the IRS server.

MyIT Return’s Greatly Benefit

• Tax Preparation – With adequate preparation from a CA, MyITReturn assists you in tax planning and saves money in the long term.
• Affordable Cost – Should you need assistance with ITR reporting, you will be charged a very rational and relatively inexpensive fee. And if you belong to the elite group, with a gross income of about Rs.10 lakh, you will still just have to pay Rs.599 to have your taxes filed, which is a token amount.
• Disclaimer Comment back – You get professional assistance on how to write a sincere and accurate response in the event that you receive a warning from the income tax department.
• You can also fill up your ITR using a mobile app available in the Google Play store.

MyITReturn’s Inconveniences

• Not for professionals who prepare specific tax returns for clients.

TaxSpanner

TaxSpanner is said to be India’s biggest and most trusted platform for online preparation and filing of individual Income Tax Returns (ITR).

This is the one website where there is no free support, and fees begin at Rs 449.

Customers dealing with the State Bank of India will benefit from approximately half of the total discount.

If you have foreign revenue, TaxSpanner is the best option. You should schedule a one-on-one consultation with a specialist. For freelancers, contractors, or writers with overseas revenue outlets, this is extremely helpful.

You must pick the alternative “ITR residents with foreign income properties.”

Second, the TaxSpanner computes taxes using sophisticated algorithms to provide you with precise data.

Salary e-file, Investor e-file, and Business e-file are the three categories. Charges vary depending on the plan, such as Plus, Supported, or Optimizer.

The Strengths of TaxSpanner

• Trustworthy Expert Opinion – If the primary source of revenue is overseas, you can get expert advice about filling out your international income correctly to break free fines.
• Tax Advice – Chartered Accountants will provide tax advice on financial issues to help you maximize your profits and expenses.
• Complete Accounting Service – Whether you have a tiny startup or SME (Small and Medium-sized Enterprise), you should apply to the comprehensive accounting plan to avoid the hassle of keeping payroll books, submitting GST returns, or looking for a nearby accountant.

TaxSpanner flaws Expert

• Advisory plans are more expensive.
• Since it is a cloud-based network, you must have access to the internet.

H&R Block

The H&R Block online policy is tailored to the client’s tax situation and facilitates unrestricted e-filing. The machine read Form 16 remotely, having saved your time.  Other systems personalized to NRI, US tax filing in India are also available.

The interface helps you to plan your ITR on your own using an easy-to-use chrome browser.

It also requires the facility to auto-read Form 16 to populate the credentials relating to payroll income and the related TDS in your ITR, which keeps adding to the simplicity.

Notwithstanding that, the free bundle contains live chat and phone help and support during the Income Tax Return e-filing timespan.

Benefits of H&R Block

• The interface helps you to plan your ITR on your own using an easy-to-use chrome browser.
• It also requires the facility to auto-read Form 16 to populate the credentials relating to payroll income and the related TDS in your ITR, which keeps adding to the simplicity.
• Notwithstanding that, the free bundle contains live chat and phone help and support during the Income Tax Return e-filing timespan.

H&R Block’s limitation

• The biggest drawback of H&R Block’s operation is the cost of Online Assist. Any competitors’ features, such as TurboTax Live, offer less expensive one-on-one technical assistance.
• Accounting department support is more expensive than alternatives. If you need this amount of support, it will increase the average cost of the software.
• Provides a variety of tax preparation tools as well as numerous other outlets. These choices can be advantageous for others, but they can also be confusing for newcomers.
• Because there are different price tiers, you probably have to pay for features you may never use.

Gen IT Income Tax Return E-Filing Software

If you enter the cash flow statement data, the Gen Income Tax programme instantaneously measures income, self-assessment, advance tax, and interest calculation under section 234A,234B,234C of the Income Tax Act.

You can also integrate information from Tally or Busy accounting applications to assemble the income tax archives of several clients and file ITR into the system.

If you need additional functionality for annual expense calculation with cutting-edge highlights, such as unfulfilled obligations alleviation computation, pay allowance, deterioration guide, or converse assessment estimation, Gen IT is the best program.

The Perks of Gen IT Tech

• Gen IT senses the class of money and then induces the ITR form analysis of the financial group. Gen IT also continues to generate e-challans, transitions current data to the following year’s appraisal, adjusts losses, and continues to perform a wide array of functions.

There is no other program that can go so far as to cover anything relating to income tax return registration and maybe even more.

• Direct e-filing eliminates the need to download files and afterward upload them sequentially to the income tax department’s website. You can file your ITR directly only through the app.
• Comprehensive customer service team – SAG Infotech has the highest quality customer service in the industry. You can approach them primarily through email or phone, and they will do their best to overcome your issue at the earliest.

Inconveniences of Gen IT Software

• The user interface seems to be out of date.
• Its operation is somewhat challenging to decipher

Income Tax Rebate Under Section 87A: According to the Intermin Union Budget of 2019-20, as presented on 1 Feb 2019, the finance minister has decided that in case of an individual resident of India who has a total income below 5 lakh rupees is entitled to a rebate of Rs 12,500 for the financial year 2019-20. For the financial year 2018-19, the Rebate is Rs 2,500 with a taxable income of 3.5 lakhs. The previous tax rates will be exercised for individuals who earn more than Rs 5 lakh every year. A person can only claim the Rebate under section 87A only when one files the ITR. This article explains the Income Tax rebate under section 87A in detail. There is other information on 87A, how much income tax rebate can one claim under section 87A, and how Income Tax Rebate under section 87A is calculated with examples of when to Claim Income Tax rebate under Section 87A differences between Exemption, Rebate and Deduction.

Synopsis of the Rebate Under Section 87A

For the convenience of the individual taxpayers to lower the tax outflow from their pocket, a new section 87A was introduced. Section 87A provides an income tax rebate of Rs 2,000 for individual resident taxpayers not having more than 5 lakh. The various characteristics of Income Tax Rebate under the Section 87A are discussed as follows:

1. The tax amount rebate under the new section 87A limited to a maximum amount for 2018-19 is Rs 2500. If the calculated tax payable is less than Rs 2,500, the tax rebate shall be limited to that lower amount. The Government has increased the Income Tax Rebate from Rs. 2500 to Rs. 12,500 in Budget year 2019-20 and is applicable from the Financial Year 2019-20 itself.
2. An individual needs to file Income Tax Rebate to claim the particular Rebate.
3. Rebate under Section 87A is available to all categories of Individuals, regardless of sex and age. They are eligible to claim Income Tax Rebate under Section 87A. Other forms of assesses like HUF, Companies, Partnership Firms, LLP etc., though, are not eligible to claim the Income Tax Rebate under this new section.
4. Income Tax Rebate under Section 87A is eligible for the Resident Individuals and not for the Non-Resident Individuals.
5. Education Cess and SHEC would be charged on the Tax payable only after allowing for Income Tax Rebate.
6. Total Income before cess cannot exceed a defined limit, which is 3.5 lakhs for 2018-19 but 5 lakh for 2019-20.
7. Super-Senior Citizens, that is, individuals above 80 years of age, cannot enjoy the advantages of this Rebate. Their earned income up to Rs 5 Lakh has been previously excluded from the charge of Income.

Rebate is Unlike Tax Exclusion

1. A tax exemption is when the earned Income does not attract Tax. For example, Agricultural Income made by a taxpayer in India is excluded from the tax levy.
2. A rebate on Tax is the amount of tax that an individual is exempted from Payment.
3. In the interim budget 2019-20 on 1 Feb 2019, the finance minister has announced a rebate and not an exemption. After all the deductions, people whose taxable income is higher than ₹5 lakh will apply the old tax rates. For example, an individual with a taxable Income of ₹10 lakh will have to pay a 5% tax on his taxable Income between ₹2.5 lakh to ₹5 lakh.

Rebate for Financial Year 2019-2020 (AY 2020-21) According To Budget

A person can claim a tax rebate of up to 12,500 if his total income (after deductions) is equal to less than Rupees 5 lakhs if you are a resident Individual, including Senior Citizen. The general conditions to claim a Rebate are:

1. A person has to be a resident Individual.
2. His Total Income, excluding deductions (under Section 80), must be equal to or below Rs 5 lakhs.
3. The maximum amount of Rebate one can claim Rs 12,500. If the total tax payable is below Rs 12,500, then that amount will be the Rebate under section 87A, applicable to the total Tax adding the 4% educational cess.

Rebate for Financial Year 2018-2019 (AY 2019-20) Under The New Section 87A

An individual can claim the tax rebate under this particular provision having fulfilled the following conditions:

1. The individual resident condition is still valid here.
2. A person’s Total Income, excluding the deductions (under Section 80), must be equal to or below Rupees 3.5 lakhs.
3. The rebate amount has been restricted to Rs 2,500. If the total tax payable is less than Rs 2,500, that amount will be the Rebate under section 87A and applicable to the total Tax before adding 4% educational cess.

Who Gets The Benefits of Tax Rebate Under Section 87A?

Benefits or leverage under section 87A is available only to the resident individuals below 80 years of age with a net income up to Rupees 5 lakhs.

The Rebate will be available under the following eligibility criterion:

1. The person paying the Tax has to be a resident individual who is less than 80 years old.
2. The Total Income must be Rs. 5,00,000 or below that.

Advantages of tax rebate do not apply to other assesses like HUF, AOP, BOI, Company, Trust, LLP, Partnership Firms, etc., including individual NRIs.

Since When Has The Rebate Been Conditioned Under Section 87A?

• The maximum Rs 2000 rebate for total Income up to 5 lakhs was introduced from Financial Year 2013-14 onwards.
• The finance minister made an increase in the Income Tax Rebate to Rs. 5000, which was Rs.2000 earlier for total Income up to 5 lakhs in the Financial year 2016-17.
• The Income Tax Rebate was reduced to Rs. 2500 where the total Income is 3.5 lakhs in financial years 2017-18 and 2018-19.
• The Income Tax Rebate was again increased to 12,500 for total Income up to 5 lakhs in 2019-2020 as per Interim budget 2019-20.

What is the Meaning of Total Net Income?

Total Net Income is defined as the taxable Income excluding any tax deductions under 80C to 80U. For example, an individual’s income is Rs. 5,70,000 and with a total saving of Rs 1,00,000 under section 80C. The total net income, in this case, will be Rs. 4,70,000, which allows the individual to claim a tax rebate under section 87A.

How Much Amount Of Income Tax Rebate Can A Person Claim Under The New Section 87A?

The tax rebate amount is restricted to the total Tax payable with a maximum of Rs 2,000. Suppose the total Tax payable comes to Rs 1,600, then the Government would limit the tax rebate to Rs 1,600 with no tax refund of the unused amount.

If I Claim Less Than The Maximum Limit Under Section 87A, Will I Get A Refund?

No, there will be no tax refunds for the unclaimed Rebate amount.

How to Calculate the Income Tax Rebate Under Section 87A?

To compute the Rebate, the tax rebate is to be deducted from the total payable tax. To calculate this, an individual is required to:

• Add up all incomes, including his salary, house income, gains from the capital, revenues from business, profession or other sources.
• After that, the eligible amount is to be deducted under 80C to 80U and under section 24(b) (Home Loan Interest) to get the net taxable income.

How Can One Claim A Rebate Under Section 87A?

An individual can claim the Rebate under section 87A while filing the Income Tax Return (ITR). The Rebate under section 87Ais the deduction from the Tax payable. This Rebate would be the amount of Tax payable itself or Rs, 2000, whichever is less. This Rebate shall be claimed while filing the return before adding the Education Cess, Secondary & Higher Education Cess. Using the E-filing Excel Utility or Java Utility, this Rebate is calculated automatically.

Is the Rebate Under Section 87A Available In Case Of An Overdue Return, i.e. After The Due Date Has Gone?

Yes, you can claim a rebate under section 87A while filing ITR also. Rebate has nothing to do with a time limit.

Can I Claim A Rebate If The Total Income is above Rupees 5 lakh?

If your total income is above Rupees 5,00,00, and by claiming deductions under various sections, a Rebate of Rs 2,000 can be claimed as the section deals with actual revenue and not the gross income.

Can a Senior Citizen Also Claim A Rebate Under Section 87A?

A rebate on Tax under section 87A is also available to a senior citizen considering his total Income is below Rs. 5 lakhs. Regardless of gender, a senior citizen is not needed not to pay any tax if the total income is up to Rs. 2,70,000. This is only eligible for senior citizens whose age is less than 80 years because the Income up to Rs. 5 lakhs has already been exempted.

What is the Fundamental Dissimilarity between Exemption, Rebate and Deduction?

An exemption means your Income is taxable, but under some Income Tax section, you can claim a portion of it as the exemption is not subjected to Tax. Again, Income Tax Exemptions allowed being declared under head Capital Gains under Section 54, 54EC, 54F, etc. So Income Tax Exemptions are allowed to be claimed only from a specific source of income and not from the Total Income. Unless claims for it, the whole amount would be taxable. Deductions are eligible to be claimed if the taxpayer has incurred some specified expenditure or made specified investments. The best example of Income Tax deduction in section 80C, where an individual can claim a deduction for his investment in LIC, PPF, ELSS, etc. To get this deduction, he must make investments in section 80C regardless of the type of Income, whether salary income or Income from business and profession. The difference between exemption and deduction is that, while exemptions are deducted from their respective mentioned sources as discussed in the Income Tax Act 1961, deductions are subtracted from Gross Taxable Income after adding up all taxable incomes.

Examples of Income-tax Deductions

Few examples of Income-tax deductions allowed are as follows:

• Deduction under Section 80C
• Deduction under Section 80TTA for Interest on Savings Account
• Deduction under Section 80D for Payment of
• Medical Insurance Premium
• Deduction under Section 80E for repayment of Interest on Education Loan
• Deduction under Section 80G for Donations
• Deduction under section 24 section for house property

A rebate is to be claimed from the total payable tax.

Exemptions from Income Tax and Income Tax Deductions are appropriated from the Income, whereas Rebate is claimed from the Tax payable.

Understanding Notice Under Section 143(1): Income tax is a necessary form of tax levied by the central government on the income earned by the citizens and businesses in a particular financial year. The proceeds collected from income tax are spent on different public welfare activities. The Government uses the money collected from tax for providing better transport and medical facilities to the public.

The Centralised Processing Centre or CPC verifies the tax return that is filed by the taxpayers online on the income tax portal. After the return is verified and processed by the CPC, the income tax department issues the notification of the same to the taxpayer under section 143 (1).

If the tax return is not processed for some reason, then the income tax department issues a notice which says “communication of proposed adjustments” under section 143 (1) (A). If a taxpayer receives such notice, he/she should not panic because the notice comes with a 30 days time limit for response.

If a person receives a return notice under section 143 (1) (A), and the details mentioned in such notice is valid, then he/she has to agree to the notice and file a revised return. In this article, we will discuss in detail the tax return notice under section 143 (1) and section 143 (1) (A).

Return Notice Under Section 143 (1)

The notice that is issued under section 143 (1) is nothing but an intimation of the return filed by the taxpayer. When a taxpayer files a return, his/her return is processed by the Centralised Processing Centre. On the successful validation of the return statement, the taxpayer is notified through the issuance of notice under section 143 (1).

The notice issued by the income tax department under section 143 (1) does one of the following works:

• The notice can state that the return filed by the taxpayer matches the assessment and is validated successfully by the AO. In such a case, no further action is required by the taxpayer.
• Suppose the amount of tax paid by the taxpayer is more than the tax amount. The notice in such cases might intimate a refund of the excess amount into the taxpayer’s bank account as mentioned in the return statement.
• If the taxpayer has underpaid the tax amount, the notice intimates a demand for the tax amount due. The taxpayer has to pay the due amount within 30 days without fail.

Return Notice Under Section 143 (1)(A)

The income tax department issues notice under section 143 (1) (A) when a person’s return statement does not satisfy the statement present with the AO. When a person does not disclose certain facts regarding his/her income, the IT department issues a mismatch notice under section 143 (1) (A). If you ever receive a notice regarding facts mismatch, you need not worry because the notice comes with a time limit of 30 days to respond. One has to respond to the notice for clarifying the mismatch of facts and filing a revised return.

Types And Time Limit of Notice Under Section 143 (1)

Basically, there are three types of return notices issued by the income tax department under section 143 (1). The types are as follows:

• The first type of notice is confirmation notice. Under this notice, it is mentioned that the IT department has successfully validated the details of the return filed by the taxpayer. In simple words, his/her tax has been successfully filed.
• The second notice that can be issued under section 143 (1) is a refund notice. Under the refund notice, the income tax department states to refund the excess amount of money paid by a taxpayer against tax return.
• The third notice is a demand notice, under which it states to pay the amount of tax due against the taxpayer’s tax return. Here the AO finds a deficit in the tax amount deposited by the taxpayer and demands the amount be deposited.

The notice under section 143 (1) is issued before the expiry of one year from the end of the financial year in which it was filed. The intimation under section 143 (1) is sent to the e-mail id of the taxpayer as mentioned on the return statement.

Document With Return Notice Under Section 143(1)

So far, we have discussed the notice under section 143 (1), Now let’s see what documents are attached with the notice issued by the IT department.

The first part of the document attached with the notice under section 143 (1) contains details of the taxpayer including, Name, address, PAN number, ITR type, Assessment year, E-filing acknowledgement number, communication reference number and Date of an order. The date of order is when the intimation was passed under section 143(1) by the CPC.

The second part of the document contains the tax computation as conducted by the income tax department. It shows the taxpayer’s income under various heads, and the deductions claimed, the taxable income, tax paid, tax due, advance tax, etc. It shows all this information in two columns. One column is for the details provided by the taxpayer, and the other column is for the details as computed under section 143(1). A taxpayer must always check the TDS claimed, advance tax and self-assessment of tax to avoid error in computation.

A taxpayer might notice minor differences in calculations, but one should not worry as the differences might occur due to rounding of the tax amount.

Section 288 (A) and 288 (B) of the Income-tax act deals with the rounding off of tax. According to section 288 (A) of the income tax act, the total tax computed under various sections shall be rounded to the nearest ₹10. For the purpose of rounding off, the paise in the tax amount is ignored. If the last digit of the tax amount is equal to or greater than 5, then the amount should be increased to the next higher multiple of 10. In contrast, if the last digit of the tax amount is less than 5, then the amount should be reduced to the nearest multiple of 10. For example, if the tax amount is ₹75,684, then the tax amount shall be rounded off to ₹75,680. If the tax amount is ₹68,636, then as per section 288(A), it shall be rounded off to ₹68,640.

As per section 288(B), the rounding off of the tax shall be done only to the total amount of the tax computed or refundable. The rounding off under this section cannot be done to the tax computed under several heads. The same procedure is followed to round off tax under section 288(B) as under section 288(A) of the income tax act.

In The End…

Filing of tax return is the duty of every citizen. The proceeds of the tax return are used for various public welfare activities, including the construction of roads, hospitals, providing education and many more. One should not avoid paying tax and should file the return on time.

 

Filing Of Income Tax Return for Financial Year 2019-20

Note: The last date for Income Tax Return filing has been extended to 31st December 2020 due to a delay in filing because of the COVID pandemic and lockdown procedures.

• A person does not have to fill ITR V if the Aadhaar Number is available and provided.
• Form ITR 2A is to be filed by a HUF or an individual who does not have any income from profession/business, income from foreign asset/any foreign income or capital gains. Taxpayers have to file ITR 2A for more than one house property but don’t have any capital gains.
• There will be only three pages in the Form ITR 2 and ITR 2A.
• Electronic Verification Code (EVC) has been introduced as an alternative for NOT sending ITR-V to Central Processing Centre (CPC), Bengaluru. For availing this feature, either Aadhaar based OTP can be used for which a person has to link his phone number with the Aadhaar number, or a person can log in through his bank account using his net banking facility or through Digital Signature. From the above-mentioned ways, any one of them can be availed by a person for filing an online income tax return to avoid sending a physical copy of ITR-V to Bengaluru.
• Taxpayers need to provide details of every bank accounts with Bank name, Account number and IFSC code. Details of accounts that are dormant or are not operational during the last three years are not required and therefore should not be provided.
• For any details of foreign travel, the Passport Number is to be provided if available to Forms ITR-2 and ITR-2A. Details of the trip or expenditure related to the trip are not to be furnished.
• Form ITR 1 is to be filed by individuals who come under exempted income without any ceiling (excluding agricultural income exceeding ₹5,000). In Form ITR 4S, a proposal of similar simplification for individuals/HUF.
• A foreign individual who is present in India on a student visa (expatriate), employment or business purposes are not liable to report any foreign assets acquired by him/her during the preceding years when he was non-resident and if any income is not derived from such assets during those relevant prior years.

Filing Income Tax Return for Financial Year 2019-20 Or Assessment Year 2020-21

Official Notification is available at the official Income tax website

PDF Forms can be downloaded for Income Tax Return Filing from the official website.

Necessary details of filing returns can be found on the website.

New And Old Tax Slabs for The Financial Year 2019-20 Or Assessment Year 2020-21

As per Chapter VI-A of the Income Tax Act, if an assessee’s gross total income before claiming deductions exceeds the maximum permissible amount, which is not chargeable to income tax, the assessee is obligated to furnish his/her return of income. There are two tax regimes now, the new and the old. The new tax regime was brought for those individuals who claim fewer deductions, and therefore they are charged less tax on their income. While the old tax regime charges higher tax but provides a lot of tax-saving deductions. Individuals are free to choose the tax regime that suits them better at the time filing Income Tax Return. Both the tax regimes benefit different classes of people, and therefore a person who can choose with higher tax-saving investments can opt for the old tax regime. In comparison, a person with lower investments will go for a new tax regime. However, the new tax regime provides a maximum deduction of ₹1.5 lakhs on investment in the Public Provident Fund (PPF).

The maximum permissible amount on which income tax cannot be charged is different for individual categories, which are as follows:

Annual Income	Men And Women		Senior Citizens Between 60 To 80 Years		Super Senior Citizens Above 80 Years
	New Tax Regime	Old Tax Regime	New Tax Regime	Old Tax Regime	New Tax Regime	Old Tax Regime
Up to ₹2.5 lakhs	Exempt	Exempt	–	–	–	–
Up to ₹3 lakhs	–	–	Exempt	Exempt	–	–
From ₹2.5-5 lakhs/₹3-5 lakhs (senior citizen)/ up to ₹5 lakhs (super senior citizen)	5%	5%	5	5%	Exempt	Exempt
From ₹5-7.5 lakhs	10%	20%	–	–	–	–
From ₹7.5-10 lakhs/From ₹5-10 lakhs (senior citizen and super senior citizen)	15%	20%	20%	20%	20%	20%
From ₹10-12.5 lakhs/Above ₹10 lakhs (senior citizen and super senior citizen)	20%	30%	30%	30%	30%	30%
From ₹12.5-15 lakhs	25%	30%		30%		30%
Above ₹15 lakhs	30%	30%		30%		30%

Note:

For annual income between ₹2.5-3 lakhs and ₹3-5 lakhs, tax rebate under section 87a is applicable.

A surcharge is applicable as follows:

• Above ₹50 lakh, income tax of 10% on total income.
• Above ₹1 crore, income tax of 15% on total income.
• Above ₹2 crores, income tax of 25% on total income.
• Above ₹5 crores, income tax of 37% on total income.
• Health and education cess of 4% is applicable with the income tax liability for all cases.

E-Filing Videos Of Income Tax Return

A video (10 min) is provided by the Income Tax Department, which provides a run-through of the e-filing website, a short introduction on the e-filing process and how to register for e-filing.

CBDT: CBDT is under the Ministry Of Finance, Government of India, the Central Board of Direct Taxes (CBDT) is a division of the Department of Revenue. It provides crucial inputs for policies and planning of direct taxes in India. It is also responsible for governing the implementation of different direct tax laws through the Income Tax Department.

What Is The Importance Of The ELECTRONIC VERIFICATION CODE?

Electronic Verification Code is a unique 10-digit alphanumeric code sent to the phone number of a tax filer who is registered and has linked his/her phone number with Aadhaar while filing income tax returns online. This unique verification method is introduced to ascertain the identity of a tax filer while filing income tax returns online. Individuals availing of this method do not need to send a signed acknowledgement copy of ITR-V to the office of Central Processing Centre (CPC) of the Income Tax Department, Bengaluru. The whole process of the Income Tax Return will be complete when the verification process is done.

The various methods of verification as introduced by the Government are:

1. Aadhaar Number based OTP on mobile
2. Login through his/her bank account using his/her net banking facility
3. Digital Signature

Individuals can opt for any of the above methods while filing income tax returns online to evade sending a physical acknowledgement copy of ITR-V to Central Processing Centre, Bangalore. 

Changes In Income Tax Return Filing For AY 2020-21 or FY 2019-20

ITR-1

1. Individuals have to report section-wise details of investments under Chapter VIA-B of the Income Tax Act which includes Section 80C (PPF, LIC, NSC, etc.), Section 80D (Mediclaim), Section 80G (Donation), etc. made in the period 01/04/2020 to 30/06/2020 (Assesses were allowed to make investments for the financial year 2019-20 as many of them could not invest due to COVID pandemic and lockdown).
2. It is mandatory for individuals to file Income Tax Return even if he/she does not fall under any of the tax slabs if he/she deposits in one or more than one current bank account an amount more than ₹1 crore or incurred expenditure of more than ₹1 lakh on electricity consumption or more than ₹2 lakhs on foreign travel during the preceding year.
3. After the Income Tax Return has been filed; the generated acknowledgement will not contain any details of total income, deductions claimed, tax liability, refundable amount, etc.
4. Individuals need to furnish the employment nature, which can be Government, Public Sector Undertaking, Pensioners and Others.
5. Under Section 80D, a new schedule has been introduced to calculate total eligible deductions for mediclaim premium with a list of different subheads. Several questions have been introduced for the assesses, such as:

• ‘Whether any of your parents is a senior citizen?’
• ‘Whether you or any of your family members (excluding parents) is a senior citizen?’

ITR-2

1. Multiple schedules of ITR 2 have made it mandatory for the assessee to disclose the PAN of the tenant, second party, inter-alia, buyer etc.
2. For the financial year 2019-20, ITR 2 form requires directors to disclose information regarding ‘type of the company’. A drop-down list will be provided of the type of companies, and any one of them is to be chosen.
3. It has been made mandatory by CBDT for authorities to state Document Identification Number (DIN).
4. Changes to ITR 2 has been made for claiming deductions under Section 80EEA and 80EEB in respect of interest on the loan for electric vehicles and interest on the house loan.
5. Multiple bank accounts can be chosen by the assessee for the credit of tax refund.

ITR-4S

1. Details of tax deduction claims for any payments or expenditure or investments that are made in the period 01/04/2020 to 30/06/2020.
2. Returns that are filed under section have been separated between files in response to notices and normal filing.
3. Under ‘Schedule BP’, gross receipts or turnover from the authorized electronic form are received before the specified date.

Filling ITR 1-Form: People with a yearly pay of more than Rs. 2.5 lakh (for those under 60 years old) or Rs 3 lakh (for those over 60 but under 80 years old) or Rs 5 lakh are obligated to document the Income Tax Returns (for those over 80 years old).

Further to that, if a client desires to claim a refund from the Income Tax Department or apply for a loan or a visa, they must document the Income Tax Returns.

These exemption thresholds change on a regular schedule, contingent upon federal guidelines and notices.

Types of ITR Forms

The various types of ITR forms:

• ITR 1 is also known as SAHAJ
• ITR 2
• ITR 3
• SUGAM or the ITR 4
• ITR 5

Individuals must file the Income Tax Return whether they have more than one stream of revenue (capital gains, house land, etc.) or have acquired cash flow from overseas investments within the economic year.

What Exactly is the ITR 1?

This procedure should always be used by resident Indians who fall into one of the underneath referenced classes:

• A pension or salary is the sole source of income.
• A single house property generates income. But nevertheless, if the taxpayer carried over the damages through the past year, the exemption is permitted.
• If the client’s agricultural production generates revenue of less than or equal to Rs.5,000
• The overall income obtained is restricted to a maximum of Rs.50 lakh. Income derived from other causes, such as winning horse races, the auction, so on and so forth.

Specific types of salaried citizens must file their returns using different programs, such as ITR or ITR-2A.

Who Can’t Choose This Particular Choice?

Individuals who come underneath the categories listed are not qualifying for filing the ITR-1:

• On the occasion that the total revenue obtained by the taxpayer passes Rs.50,000
• In the event that people own capital gains that fall under taxation scheme
• On the occasion that income is received by more than just one house property.
• If the taxpayer in question made any transactions in non – listed equity capital during the monetary year
• In the event that you are a Non-Resident Indian (NRI) and a Resident Other Than Ordinary Resident (RNOR)
• In the event that the income produced by agriculture equals Rs.5,000 or more
• If your money comes from a profession or a company
• If the client is the Chairman of an organization
• Suppose any income is obtained from a residential project outside of India in case a person has foreign bank accounts or foreign revenue.

What is The Procedure To Download Form ITR-1?

A taxpayer must take the measures outlined below to download Form ITR-1:

• Step 1: At first, the concerned applicant must Visit the official website of Income Tax https://www.incometaxindiaefiling.gov.in/home
• Step 2: In the following step, they have to click on the “Offline Utilities” option available under the Download tab.
• Step 3: Following, they have to select the “Income Tax Return Preparation Utilities” option present.
• Step 4: Then, the applicant must Choose their respective Assessment Year.
• Step 5: Next, they will have to click the “Excel Utility” option to manually fill the credentials under the ITR 1 column and, consequently, download it.
• Step 6: In the next step, they will have to Extract the downloaded file and fill in the required particulars.

Details to Keep Handy and Organized before COMPLETING filing YOUR ITR-1

• FORM 16: This form is issued by all of your supervisors for the given Monetary Year
• FORM 26 AS: Make sure to double-check that the TDS included on Form 16 is in accordance with the TDS shown on Part A of the Form 26AS
• BANK INVESTMENT Accreditation testaments: Credit account data – bank passbook or FD certificate – interest account details.
• RECEIPTS: This comes in handy when you’re unable to submit confirmation of such exclusions or deductions (such as HRA allowances or Section 80C or 80D deductions) to your company on deadline. In that case, keep all these receipts on record so that you could always report them specifically on your income tax return file without fail.
• AADHAAR CARD is Necessary FOR Income Tax return filing: The Income Tax Department has made it obligatory for all taxpayers to link their Aadhaar card to their PAN on the Income Tax Return official portal for better evaluation and faster record keeping.
• Bank Account credentials:
  • In 2015, the Income Tax Department made it compulsory for all taxpayers to include all bank account transaction details in their tax returns. This also pretty much holds in the case of shared accounts.
  • When e-filing an IT return, the department wouldn’t need to have you include any of your financial institutions compulsorily. However, in the event of opening another new savings account, the completion of KYC and the submission of a PAN number are deemed necessary.
  • Since the pan number is connected to the income tax return details, the government has the whole idea and information of all bank accounts that you may have. It is not obligatory to mention the subtleties of the inactive accounts.
  • As a result, specifics of accounts that have not been in service for the past 36 months will be skipped because they are deemed inactive or dormant.

Offline Form ITR-1 Completion Procedure

• If an assessee’s annual revenue is less than Rs 5 lakh, they might document the ITR offline mode.
• They can either pick the form from the Income Tax Office or download it from the income tax official portal, i.e., incometaxindia.gov.in.
• The concerned authorities must duly forward it to the relevant Assessing Officer or designated helpdesks such as “Aaykar Sampark Kendra” within the prescribed deadline.
• Together with the ITR form, they must essentially complete the acknowledgement form, which takes into account a rundown of the ITR.
• Following application, the applicant receives a validated copy of the acceptance form with an official stamp.

Filling Out Form ITR-1 Online

• Taxpayers must first register an account on the Income Tax Department’s official website.
• It is a one-time operation, and the login subtleties can be reused in all the coming future years.
• In particular, concerning the standard Excel utility, the I-T Department has likewise introduced a particular Java-based utility with several innovative features, such as direct upload, a simpler GUI, so on and so forth.
• Taxpayers may opt to apply their information using an excel/java utility or even without it.

Using a Java/Excel Utility to File the ITR 1

In order to help guide the individual, each section/schedule is explicitly intended with a particular colour code system. The following are the various kinds of cells in the sheets:

1. The necessary which compulsorily need to be filled are highlighted in red. The entered data would have a green background (Certain fields are mandatory under clear, specific conditions only).
2. Entering data columns with optional/non-mandatory fields has black font on a green background.
3. Categories with auto-calculated/auto-populated values have a blue font and a white background colour. Corresponding Linked fields have a blue font for the labels and white background; therefore, no data is inputted by the individual, but a value is picked up from an existing cell elsewhere within the document.
4. The numbers are all in Indian Rupees.
5. Dates must be inserted in the dd/mm/yyyy configuration in all date fields.
6. Just insert values up to two decimal places in percentage sections. (The percentage mark is not needed.)

Including more rows: Schedules such as TDS, TCS, IT, and so on facilitate consumers to enter data in a structured and tabular format. The applicant may fit as many rows as required by tapping the ‘Add rows’ button available under these tables.

Step-by-step Protocol

• First, the taxpayer must log in to the official portal, i.e., (https://incometaxindiaefiling.gov.in/) and then choose the appropriate ITR-1 Form.
• After which, they must download the ITR Java or Excel utility and submit all of the requisite credentials.
• It is critical to affirm the subtleties as referenced in Form 16 or Form 16A or Form 16B, as applicable, and Form 26AS.
• Upon being authenticated, the taxpayer can browse the Income Tax website and upload the return automatically using Java Utility.
• Alternatively, the taxpayer can generate an XML version of the return form and upload it to the portal.
• Following successful verification and uploading, an Acknowledgement message will be highlighted on the phone screen of the number linked with the portal.
• The taxpayer must then Download the ITR-V/Acknowledgement by clicking on the given link.
• The ITR-V likewise provided, which must be emailed by the taxpayer to the I-T Department’s email address as specified on the form.

Procedure for Creating the XML Version of the ITR-1

The following is the procedure for creating the XML version of the ITR-1

• At first, the taxpayer must authenticate all of the data inserted into the ITR Utility.
• Next, they should opt for the ‘Generate XML’ feature on the page.
• This should revalidate all of the sheets and take the concerned taxpayer to the confirmation tab, which in turn will demonstrate the different schedules (and the number of rows created per schedule) that are being developed.
• Upon confirmation, the applicant will create and save the XML by clicking on the ‘Save XML’ button.
• After accurately generating, a text with the name and location of the saved XML will be shown.
• The XML file should then be submitted to the e-filing website.

Income From Other Sources: Income from Other sources like the interest of Fixed Deposit, Saving Bank Account, Senior Citizen Saving Scheme(SCSS), and Recurring Deposit needs to be shown in the Income Tax return. This article describes Income from Other sources, about what kind of income comes under this head. It discusses Income Tax Return with specific cases of ordinary income such as Saving Bank Account, Fixed Deposit, RD, etc.

Overview of ITR’s Charged on Other Income Sources

ITR-1 used to ask only for the total amount of ‘Income from other sources for the FY 2017-18 or AY 2018-19, but from FY 2018-19 or AY 2019-20 years, all individuals will be required to give a detailed break-up.

Not all income falls under Salary’s heads; House Property, Capital Gain and Business & Profession will be conducted under the head Income from Other Source.

In ITR1 for Financial Year 2018–19 or Annual Year 2019–20, the Income from other sources consists of Interest from Deposit (Fixed/Post office/Cooperative Society//Recurring of Bank), also interest from Saving Bank account, Interest from Income Tax Refund and Any other.

Interest from Other Sources of Saving Account in ITR

Interest that gets gathered in an individual’s savings bank account must be submitted in their tax return under income from other sources. Note that the bank on savings bank interest does not deduct TDS. Interest from both recurring deposits and fixed deposit is taxable, while interest from the account of savings bank and post office deposits to a certain extent are tax-deductible. But all of them are displayed under income from other sources. All are shown under this head for Interest income from savings fixed deposits, bank accounts, or post office savings accounts.

Claim 80TTA Deduction for Interest on Saving Account

Interest on account of savings bank earned up to ₹10,000 per year is allowed as a deduction of the Income Tax Act under Section 80TTA. This limit of ₹10,000 covers interest from all savings accounts with banks, post offices and co-operative banks. If the interest earned from these mention sources exceeds ₹10,000, the additional amount will be taxable under the head of ‘Income from other sources.’

A crucial point to note here is that the deduction under Section 80TTA available is not made as per bank account but on the total interest earned on all the individual’s bank accounts.

Interest earned on time deposits such as fixed deposits, recurring deposits or any other time deposits is not allowed Deduction under Section 80TTA. Also, on bank savings accounts, no tax is deducted at the source of interest income.

Section 80TTA does not apply to senior citizens. The senior citizens under a different section enjoy a higher tax benefit. Interest gained on saving deposits and fixed deposit with the post office or co-operative banks or banks for a max amount of ₹50,000 earned is eligible for deduction under Section 80TTB only by the senior citizen.

Also, there shall be no deduction of tax at the source up to ₹50,000. For every bank individually, this limit of ₹50,000 has to be computed.

Interest on Fixed Deposit and ITR and Income from Other Sources

Fixed deposit interest that a person receives is added along with other income that one has, such as salary or professional income, and the individual at a tax rate that applies to that individual will have to pay tax on that income. TDS is deducted when earned on interest income, even if the individual has not paid it.

Example: The bank will deduct TDS charged on interest accumulated each year on an FD for five years. Therefore, only when the FD matures is that every individual pays the taxes on an annual basis instead of doing it. From 1 April 2018, senior citizens up to Rs 50,000 on the interest income they receive from fixed deposits with post offices, banks, or co-operatives will enjoy an income tax exemption under Section 80TTB.

What is it about Income from Other Sources?

Income earned can be classified into categories during the particular year like :

• Income from Capital Gain
• Income from Salary
• Income from House Property
• Income from Business & Profession
• Income from Other Sources: Income that does not fall under the heads of Salary, Capital Gain, House Property, and Business & Profession will come under the category of Income from Other Source. Hence, this is considered as the residuary head of income.

This income is NOT made a fee, i.e. under the Income Tax Act 1961, it is taxable. Section 56 deals cover all such taxable income and with this residuary head of income. Every person is required to enter data of all income earned by you during the year.

Recurring Deposits, Term Deposits and Post office Monthly Income Scheme

Reporting Fixed Deposits

If one has three FDs open, then sum up all the interest income and enter it under the ‘Other interest income’ option.

• Reporting Recurring Deposits: In the case of Recurring Deposits, Post office term deposits interest earned is taxed as Income from Other Sources. A 10% tax will be deducted on interest earned. The interest earned should be manifested in ‘income from other sources.
• Exempt Income: The EPF and PPF amount one withdraw after maturity is exempt from tax and must be declared as excluded income from other sources. Note that: After five years of continuous service, the EPF is only tax-exempt.
• Senior Citizen Scheme: If the interest total income is more than Rs 10,000 in a year, then the TDS or tax deducted at the source is cut. So this amount is treated in the same way as Fixed Deposit.
• Family Pension: If one is collecting a pension on behalf of someone who is deceased, then one must show this income under income from other sources. There is a deduction of one-third of the family pension or Rs 15,000 received, whichever is lower than the Income through Family Pension. This will be added to the taxpayer’s income, and tax must be paid at the applicable tax rate.

Steps To Find The Deduction Amount From Pension

Mentioned here are few steps to find the Deduction amount from Pension:

Find 1/3 of the amount of the pension.

Check whether the pension is less than 15,000. If yes, then calculate the deduction amount, which is 1/3 of the pension amount; else, it is 15,000

Deduct the pension amount from the pension.

Show the final amount in the previous Step as Income from Other Sources.

Examples of Income from Other Sources

Some examples of Income from Other Sources

Various types of income under Sub-section 2 to section 56 count to be chargeable to tax under the Income from Other Sources head. Few examples of certain incomes normally taxed under or fall under the category of income from other sources are given below:

Dividends: Dividends depending on the residential status of the company are taxable as income from other sources, which are required to pay them out as ordered.

• Dividend from an India-based company: If the individual company on this receipt has paid Dividend Distribution Tax, the dividend is exempted from chargeable tax. However, the income tax act under section 115BBDA, if a resident firm/individual/HUF received dividends in surplus of ₹ 10 lakhs from Indian companies, then the total amount exceeding the ₹ 10 lakhs mark is taxable at 10% of the total amount.
• Dividend from a foreign company: Dividend gained from foreign companies as income from other sources is subjected to tax.

One-time income: One-time incomes, which involve winnings from lotteries, card games, crossword puzzles, horse races, and other games of any sort, similar to gambling or betting of any form or nature, are all covered under-compensation.

Compensation ON Interest: Interest received by a resident or taxpayer on the amount of reimbursement or compensation given in situations like compulsory acquisition is taxable under the head of income from other sources.

Interest on securities if the income comes under “Profits and Gains of Business or Profession”, then it is not taxable.

Gifts: Gifts such as any amount of money and immovable or movable property that’s acquired without consideration are also taxable.

Any sum of money received in the course of negotiations as an advance or otherwise for the transfer of a capital asset or wealth shall be charged to tax under this head, if:

1. Such sum is relinquished; and
2. The negotiations do not succeed in the transfer of such capital assets.

The following receipts are categorised as income from other sources only if they’re not liable as “profits and gains of business or profession.”

• Employees’ contribution to welfare schemes.
• Interest in securities like government debentures or bonds.
• Rental income from letting out machinery, furniture or plant owned by the assessee.
• Rental income from letting out machinery, plant, or furniture, along with a building, where these two cases of letting out are inseparable
• Receipts under Policy of Keyman Insurance.

Examples of Other Receipts Chargeable As Income From Other Sources

Here are few examples of other receipts that automatically happen under this category.

• Income made from subletting of house property by a resident
• Casual income
• Insurance commissions earned by the assessee
• Family pension payments collected by the legal heirs of dead employees
• Interest on deposits with companies and bank deposits
• Interest on given loans
• Remuneration accepted by Members of Parliament
• Rent collected from land or vacant plot.
• Agricultural income collected from agrarian land situated outside India
• Interest paid on excess payment of advance tax by the Government.

Income from Other Sources in ITR2

In ITR2, an individual has to fill Schedule-OS for Income from other sources:

• Against item UNDER 1a and 1b, enter the necessary details of aggregate income through interest and dividend, which is not exempt.
• Against item 1c, indicate the total income from plant or furniture or machinery let on hire and also such income from the building where its letting is integrated from the letting of the said plant or furniture or machinery under the head Profits and gains of business or professionif it is not chargeable to income-tax.
• Income from maintaining and owning racehorses is to be calculated separately as loss from maintaining and owning racehorses cannot be adjusted against income from any other form of sources and can only be brought forward for set-off against comparable income in subsequent years.
• Winnings from lotteries, races, games, gambling, betting, crossword puzzles, etc., as per section 115BB of the income tax, are to be subject to special rates of taxation and entered on a gross basis; hence a separate article is provided, and the income from such sources cannot be adjusted against the arising losses under the Income from other sources HEAD.
• The total income chargeable and computes the Item 5 of this Schedule adds under the head “Income from other sources” and the item 3 + item 4c. If the balance in item 4c, which shows income from maintaining and owning racehorses, is a loss, enter the total of item 3, and please enter 0.

Most of us would have interest in fixed deposits, recurring deposits, savings bank accounts, and company deposits that everyone needs to add together and fill in Interest Gross 1(b).

Irrespective of whether income is exempt from tax or taxable, one should publish it in their return. This article was all about Income from Other sources, what it is, how, how to show it Income Tax Return. In the case of aggregate deposit scheme, which traverses multiple financial years, Recurring Deposits, Fixed Deposits, etc. is recommended that one should show the income earned interest in every financial year. One-time incomes, which involve winnings from lotteries, card games, crossword puzzles, horse races, and other games of any sort, similar to gambling or betting of any form or nature, are all covered under-compensation.

All such conditions mentioned interest income is taxable under “Other sources”. One will be liable to tax based on their income slab. Further, an individual can enjoy a deduction of up to Rs 10,000 on interest received from the recurring deposits and savings account. At the same time, senior citizens from their fixed deposits get a deduction of up to Rs 50,000 on their interest income.