Income Tax: Deductions, Slabs, IT Returns, and E-Filing

India’s revenue functions are a part of the Ministry of Finance. Under that, there’s the Central Board of Direct Taxes (CBDT), which deals with direct tax; income tax is one of it. The CBDT plays a key role in framing policies and planning. This department also looks after the direct tax laws. The income tax department works under the Central Board of Direct Taxes.

Income tax is calculated for a year. This year is the financial year, which means the duration is from April 1st to 31st March.

In income tax parlance, the duration for which income is earned is termed as previous year and the duration in which tax is charged is termed as the assessment year. For example, if the current period is January 2020, then the previous year is 2019-20 while the assessment year is 2020-21.

Income tax is to be paid by individuals, companies, as well as any other judicial persons. The exact category of entities that fall under the definition of ‘person’ is mentioned in The Income Tax Act.

The government collects income tax through advance tax, tax deducted at source, tax collected at source, and self-assessment tax. It is a constitutional obligation on every individual’s part to calculate the income and pay the corresponding tax.

The tax rates are mentioned in the annual budget declared by the Ministry of Finance. They can be the same or vary every year. The tax rates for the assessment year 2020-21 can be found here. The link has information about tax rates pertaining to individual, Hindu Undivided Family, Senior Citizen, Super Senior Citizen, Partnership Firm, Local Authority, Domestic Company, Foreign Company, and Co-operative Society.

You can seek help from tax professionals to understand and file tax. Chartered accountants and financial advisors can help you out in tax planning.

One also has to file income tax returns before the due date and not just relax after paying the tax.

An Assessing Officer belongs to the income tax department and has jurisdiction over a designated area.

The word income can have diverse meanings. For an employee, the salary received is the income. If the salary is received in kind then that is also income. For a business owner, the net profit is the income. You also earn income from interest received on your investments. Money received from sale of property is also income. The exact definition of income is described in The Income Tax Act.

There are different types of incomes one can earn. However, there are certain incomes that are termed as exempted. Tax is not charged for exempted income. The amount for which tax is charged is termed as taxable income.

Revenue receipts are those receipts that occur on a frequent basis. For example, salary is a monthly phenomenon so it is a revenue receipt. Receipt generated due to sale of property is a capital receipt, such transactions do not take place as often as those for which revenue receipts are generated.

No, agricultural income is not taxable. However, it is imperative to get a full understanding of the terms agricultural income, it is mentioned in section 2(IA) of the income tax act.

No, income from animal husbandry does not fall under agricultural income.

It is important to keep a record of proof of earning for tax purposes. For example, maintaining a record of salary slips.

It is a good habit to keep a record of proof of earning if you are an agriculturalist or belong to any other profession.

Yes, income tax is calculated on earning from lottery or winning a prize in a competition. The rate is 30%. Usually, this amount is deducted at source and the balance is paid to the winner.

Yes, section 91 of the Income Tax Act has provisions related to double taxation.

Here are the sections as per which you can make income tax deductions – 80C, 80CCD(1B), 80CCD(2), 80D, 80DD, 80DDB, 80E, 80EE, 80G, 80GG, 80TTA, and 80TTB.

Profession includes any vocation you pursue. For example, architecture, writing, etc.

Contact details of the income tax ombudsman can be found here. The link contains details pertaining to each Indian state. In most cases, the details contact, name, address, phone number and email id.

You can pay tax before the completion of the previous year. It can also be done before the period via advance tax. Primarily, there are four means through which tax is collected, self-assessment, advance tax, tax deducted at source, and tax collected at source.

The five heads of income as mentioned in The Income Tax Act are Salary, Income generated from house property, capital gains, profit from business, and income from other sources.

There are five heads of income under which income is classified for computing income tax. The total of all five heads of income constitutes gross total income.

There are certain deductions that can bring down your payable tax. Total income is arrived at when these deductions are subtracted from the gross income. For example, if your gross income is 10 lakhs, and your deductions come to 2 lakhs, then your total income comes to 8 lakhs.

Self-assessment tax is the tax paid after 31st March but before filing returns.

No, there is no specific time. Taxes can be deposited 24×7 due to net banking.

ITR stands for income tax returns. This is a form that needs to be filled and submitted after paying tax. Income tax returns need to be filled before the deadline, which is usually around the end of July. This form can get you a refund on income tax in case excess tax has been computed with regards to your income and deductions.

There are different income tax return forms as per the category of taxpayers. These forms are ITR1, ITR2, ITR3, ITR4, ITR5, ITR6, ITR7 and ITR – V.

You can file income tax return via following modes; paper format, digital signature, electronic verification code, and by Form ITR – V (electronic).

There is no need to submit supporting documents while filing income tax returns. However, it is suggested to keep all proof of investment handy in case there are any inquiries or audit.

Yes, there is a portal through which you can file income tax returns electronically. The income tax department has created a different portal for filing tax returns electronically, here’s the link.

The stepwise process to file income tax online electronically is mentioned here.

In case you have difficulty in e-filing of returns, you can contact 1800 180 1961.

There are no negative effects of filing income tax returns. However, you can be penalized if you do not do so.

It is your duty as an Indian citizen to file income tax returns. Not doing so can get you penalized. It can help you to improve your creditworthiness.

We live in the era of digitization. Nowadays, everything is online! How can e-filing of tax returns stay behind? E-filing or ITR online can be done online in an easy manner, you can do it from anyway irrespective of the time of the day. Besides, online filing gets processed faster than manual returns.

Usually, the deadline to file income tax returns is July 31st. in some cases, the authorities might extend this date to the next month. In that case, the deadline will be end of August. If you fail to meet the deadline and the extended deadline, you might be charged a penalty. You will have to pay a penalty only then will you be able to file your income tax returns.

Yes, you can get a tax refund if it is calculated that you have paid more tax. This might happen in cases where you are a salaried employee and your company has already taken the tax into account while paying your salary. You have some other sources of income and those sources have also taken your tax into account. Then you go and make investments at the last moment, which increase your deductions. While income tax returns filing, the deductions will come into play and your refund amount (if applicable) will be transferred in your bank account at the earliest.

– October 5, 2020

The ongoing COVID-19 pandemic has had a severe impact on the world and national economy. A lot of administrative and operational tasks have also been affected due to it. One such task affected by it is the belated filing of the Income Tax Returns for the Financial Year 2018-19 (Assessment Year 2019-20). The Central Board of Direct Taxes (CBDT) has changed the filing date for belated and revised returns. This date has been extended to 30 November 2020. Initially, the date in question was 31 March 2020. However, due to several concerns related to the COVID-19 pandemic, the date was extended to 30 June 2020. Further, there was another extension that changed the date to 31 July 2020. After 31 July 2020, the date was again extended to 30 September 2020. And as per the recent CBDT statement, the date is extended till 30 November 2020.

– October 1, 2020

There has been a change in the Income Tax Act (IT Act). A new section has been added to the act. This new section is 194-O. The change is per The Finance Act, 2020 and pertains to e-commerce operators. The new insertion mandates that from 1 October 2020, a business referred to as an e-commerce entity shall account for 1% income tax. This deduction shall be on the amount (referred to as gross) for the sale of goods or services. It also pertains to sale of both. The sale in this regard must be facilitated through the e-commerce company’s digital platform or any other electronic facility. There has also been an insertion of a subsection per The Finance Act, 2020. This subsection is known as 1-H and pertains to 206C of The Income Tax Act. It mandates a seller to collect a 0.1% tax from the buyer based on certain conditions. This is also with effect from 1 October 2020. The Central Board of Direct Taxes (CBDT) said that these new provisions would not apply to certain transactions.

– September 11, 2020

The Income Tax Department (IT Dept.) announced that it has refunded IT refunds worth more than Rs. 1 lakh crore to more than 27 lakh taxpayers. This is for the period between 1 April 2020 to 8 September 2020. The refunds include Personal Income Tax of more than Rs. 30,000 crore, which has been issued to more than 25 lakh taxpayers and corporate tax refunds of more than Rs. 70,000 crore, which has been issued to close to 2 lakh taxpayers for the said period. Through a tweet, the Central Board of Direct Taxes announced the details of the IT refunds to both Personal Income Tax and Corporate Tax. The announcement comes amid difficulties posed by the general public due to various restrictions of the pandemic. The IT department is striving to provide tax relief to taxpayers by not delaying IT refunds during the pandemic. The IT department has accordingly cleared the current refunds. The novel coronavirus was declared a pandemic in March this year which led to lockdown measures to contain the spread of the virus. Since then there have been several restrictions on travel and movement of people leading to delays in several activities.

– July 20, 2020

The IT Department has issued more than Rs. 71,000 crore refunds to about 21 lakh taxpayers from 8 April to 11 July 2020. The IT refunds include Rs.24,603 crore as Personal Income Tax and Rs. 46,626 crore as Corporate Tax Refunds. The department added that all refunds are being processed on priority and may be completed by 31 August 2020. The statement issued by the IT Department said that the government has taken utmost priority to provide relief to taxpayers without any issues during this difficult period of novel coronavirus pandemic in the country. Also, it further said that taxpayers need to respond to emails from the department to process the refund as soon as possible. There are several taxpayers who need rectification, tax credits or appeal effects and the department is working on these issues in a timely manner. Also, all refunds have been processed online and have been refunded directly to the taxpayers’ bank account.

– July 3, 2020

The COVID-19 pandemic has caused a lot of inconvenience across sectors. The number of cases is on the rise in India and the economy has also been affected. In such a situation, people are finding it difficult to manage day-to-day activities. With the intent to provide some relief to the tax-paying population, the deadline for making tax-saving payments or investments for FY 2019-20 has been extended by the authorities. The renewed deadline for making tax-saving investments for FY 2019-20 stands at 31 July 2020. This extension can be helpful for the tax-payers to plan their investments, which can be used to claim deductions as per the Income Tax Act. The date for income tax return (ITR) filing for the AY 2020-21 has been revised to 30 November 2020. The tax audit report furnishing date has also been extended to 31 October 2020.

– June 30, 2020

Now employees who go on tours or are transferred to another region can claim the cost of travel or ordinary daily charges incurred by them when absent at their daily place of work, can claim conveyance allowance. However, non-alcoholic beverages and free food cannot be claimed if given in exchange for paid vouchers or when made available by the employer during office hours as refreshments for the employees. The tax slabs start from Rs 2.5 lakh to Rs 5 lakh and those who earn this sum will have to pay a tax of 5%. Those who earn Rs 5 and 7.5 lakh should be 10% tax, and for the people who earn between Rs 7.5 and 10 lakh are supposed to pay 15% tax. Similarly, for income between Rs 10 and 12.5 lakh, the tax rate is 20%, for Rs 12.5 and Rs 15 lakh tax rate is 25%, and Rs 15 lakh and above will have to pay a tax of 30%. The date of filing Income Tax returns has been extended till July 31 and November 30, 2020 for financial year 2018-19 and 2019-2020 respectively.

– June 26, 2020

Considering the current economic crisis faced by the Indian citizens due to the outbreak of Coronavirus, the Finance Department has extended the dates for filing Income Tax Returns. According to a statement released by CBDT, the returns for the financial year 2018-19 can be filled by July 31, 2020, while the IT Returns for FY 2019-20 can be filled by Numbember 30, 2020.  Now the returns that were supposed to be filed by July 31 and October 31, can be filed by November 30, 2020. Thus, the tax audit report can now be submitted by October 30, 2020. Consequently, the taxpayers can claim a refund for investments, payments, or donations under sections 80C, 80D, and 80G by July 31, for the financial year 2019-20. The extended dates for return filing can evoke mixed feelings as taxpayers who are suffering from financial crises need to wait longer for receiving the amount under tax returns. While those who had missed making investments or payments can breathe a sigh of relief as this extension can prove to be helpful for them.

– June 19, 2020

In an effort to contain the spread of the novel coronavirus in the country, the Centre has announced several relaxations to the tax filing process. Some of the initiatives were extensions of filing Income Tax Returns (ITR) and linking of Aadhaar and PAN and submission of tax-saving investments. Among the deadlines is the ITR whose deadline has been extended to 30 November 2020. So, taxpayers have to file their Tax Deduction at Source (TDS) before 30 June 2020, that is by the end of this month. Only after filing the TDS on or before the 30th of June, will you receive the Form 16. Also, for those who are yet to link their Aadhaar with PAN, the deadline is 30 June 2020. Hence, you get the two documents linked. Failure to link them will attract a penalty of Rs.10,000. Also, the PAN will be deactivated if it is not linked to Aadhaar. Prior to this deadline, the documents were to be linked by 31 March 2020, which is now extended to 30 June 2020. Also, revised ITRs for the last financial year need to be submitted by the end of this month.

– June 12, 2020

The new form will have details about outstanding tax demands. This will help in differentiating if a tax demand is under dispute or is outstanding. The taxpayer can then move on to the next step towards tax settlement. These steps could include filing of an appeal, the rectification of mistake, or application for donation for lapsed petitions. As per the Section 203AA, Rule 31AB of the Income Tax Act, 1961, the Form 26AS i.e. Annual Statement is a combined record for a taxpayer’s TCS, TDS, refund, etc. in simple terms, this form contains particulars of tax amount collected and taken from the taxpayer. This includes advance tax and self-assessment tax both.

– June 1, 2020

The Income Tax Department has revamped the Form 26 AS (Annual Information Statement) to include shares and real estate transactions. In its revamped version, the form will include information related to payment of taxes, specified financial transactions, refund/demand and completed/pending proceedings initiated by the taxpayer in a financial year. The new form will come into effect from 1 June 2020. Once this is implemented, taxpayers can download the comprehensive statement from the IT Department’s web portal using their PAN card. Form 26AS will contain details such as transactions related to shares and real estate.

– May 26, 2020

The safe harbour rate for the 2019-20 fiscal year for computation of transfer pricing by foreign establishments in India has been notified by the IT Department. Revision of Rules 10D and 10TE of IT Rules have been notified by the Central Board of Direct Taxes (CBDT). As per the notification, rates for the Assessment Year 2017-18 to 2019-20 will continue for 2020-21 as well. The Government of India introduced the Safe Harbour Rules (SHR) in Finance Act 2009. The first provisions were introduced in 2013, then a revision in rates in 2017, which was applicable until FY 2019-20.

– May 21, 2020

The Rebate scheme on payment of property tax has been extended by one month by the Pune Municipal Corporation (PMC) in the wake of the current lockdown measures to contain the spread of COVID-19. With the lockdown in place, citizens are finding it challenging to pay their property tax and avail the rebate. Keeping this in mind, the PMC has announced an extension to the scheme so that citizens can avail 5% to 10% rebate on payment of property tax. The deadline to pay property tax every year is 31 May, which has been extended to 30 June 2020. The rebate for property tax below Rs.25,000 is a discount of 10%, while those which are above Rs.25,000 will get a rebate of 5%. The corporation had sent messages along with the link to pay the property tax online, however, due to the lockdown, citizens were unable to take advantage of the scheme. The PMC has now started sending a hard copy of the property tax bill to the citizens.

– May 15, 2020

The Centre today announced that the deadline for filing Income Tax Returns for 2020-21 has been extended to 30 November 2020. The Finance Ministry announced several other measures to lift the sagging economy hit by the deadly coronavirus lockdown in the country. The ministry also cut TDS rates for non-salary payments by 25%. This will include payments for interest, rent, contracts, commission or brokerage and dividend payments. The Finance Minister also added that the IT department will speed up the processing of pending IT refunds to LLPs, charitable trusts, proprietary firms and non-corporate businesses, etc. Additionally, assessments which have a deadline of 30 September have been extended till 31 December 2020 and those with a deadline of 31 March 2021, which has been extended to 30 September 2021. The minister also said that the IT department has processed refunds worth Rs.18,000 crore where the limit was up to Rs.5 lakh.

– May 13, 2020

Under the Income Tax Act Section 80C, Non-Resident Indians can claim tax benefits for the premium paid towards an insurance policy. NRIs can claim tax deductions of up to Rupees one lakh and fifty thousand under this Section of the IT Act. If the NRI has a rental income it has to be reported under the head income from the house. Hence, while reporting rental income, NRIs are allowed to deduct property tax paid and the standard deduction of 30% of the rental income minus taxes paid. With the balance income, they can claim tax benefit on premium paid on the insurance policy.

– May 12, 2020

The State Government of Telangana has announced a 5% rebate in property tax in residential and non-residential categories. Also, this rebate has been extended to 31 May 2020 to ease taxpayers during the ongoing lockdown to contain the spread of COVID-19. The state government is referring to the scheme as ‘early bird scheme’ and said that it is applicable to GHMC and other municipalities. The property tax to which the rebate has been offered is for the financial year 2020-21 in all Urban Local Bodies, GHMC and other municipalities of the state of Telangana.

– May 11, 2020

The Government of India has amended Rule 44G for faster resolution of tax disputes of MNCs in the country. In an effort to resolve tax disputes with MNCs in the country, the government said that it has amended the income tax rules in which tax authorities will find solutions through mutual agreement procedure (MAP) within 24 hours. The CBDT has also changed the Form 34F to ensure the amendment is in full compliance. Also, once the dispute is resolved, the decision will be informed to the assessee who has 30 days to communicate if they accept or not. If accepted, then the assessee shall withdraw the plea and pay the agreed tax.

– May 5, 2020

The Income Tax (IT) Department has cautioned taxpayers not to fall prey to the promise of refunds through phishing emails. The department advised not to click on any fraudulent link promising refunds as these are phishing scams and are not issued by the IT department. Between 8 April and 20 April, the department has refunded about 14 lakh transactions worth about Rs.9,000 crore to taxpayers. The finance ministry said it will speed up the process to issue refunds of income tax of up to Rs.5 lakh benefiting nearly 14 lakh taxpayers in the wake of the lockdown which has impacted businesses and individual taxpayers.

– April 30, 2020

The deadline for submission of the GAAR and GST in their IT Audit Report has been extended to 31 March 2021. This is the third revision of the deadline by the IT department. The Central Board of Direct Taxes (CBDT) said that in the wake of the ongoing lockdown due to the coronavirus pandemic, the deadline for submission of the GAAR and GST in the IT Audit Report has been extended till the end of March 2021. The decision was taken after the board received several memorandums about the issues faced by businesses due to the ongoing lockdown.

– April 14, 2020

Amid the lockdown announced by the central government in the wake of the rising COVID-19 infections, in relief to taxpayers the centre will clear all pending IT refunds where the claim amount is less than Rs.5 lakh. The move will benefit about 14 lakh taxpayers in the country. Along with this notification, the centre also said that pending GST refunds and customs refunds of MSMEs will be cleared. The Ministry of Finance has granted about Rs.18,000 crore to the revenue department to clear the pending dues. The ministry said that in relief to business entities and individuals due to the ongoing lockdown, all pending IT refunds will be processed with immediate effect.

– April 13, 2020

Taxpayers have been asked to keep their e-filing account secure and inform any misuse. The Income Tax Department issued the advisory to taxpayers amidst rising attacks and vulnerability on online systems as India and the world fight the deadly COVID-19 pandemic. Several online systems are being utilised amid major scaling down of human interface. The IT department said that if taxpayers feel their e-filing may have been attacked by an unauthorised person, then you may be a victim of a cybercrime. In such cases, taxpayers need to inform the cyber-cell or the concerned police as a primary step to stem such cyber-attacks. The IT department also advised taxpayers not to share credentials or sensitive details as a general precaution. They asked taxpayers to file an online complaint or FIR on https://cybercrime.gov.in/.

– April 9, 2020

The IT Department has cautioned taxpayers to be aware of any break into their e-Filing account and report any such incident to the police cyber security wing. In an advisory, the IT Dept. said that if any taxpayers feel there is a possible breach which has been accessed or compromised in an unauthorised manner, then there could be a cybercrime being committed. The advisory comes amidst the increased attacks and vulnerability on online systems as India battles the deadly Novel Coronavirus in the country. A person can also file an online criminal FIR/complaint by visiting the cybercrime website: https://cybercrime.gov.in, which has been launched by the centre to report cybercrimes online. It said that taxpayers are advised not to share login details or password or other sensitive information.

– April 2, 2020

In an effort to provide relief to taxpayers due to the lockdown in the wake of the Coronavirus infections across the country, the government has amended the IT Act to extend the deadline for filing ITR, central excise and customs returns. The government also amended the IT Act to provide tax relief for PM CARES fund which is as same as to the PM NRF. Under Section 80G of the IT Act, donations shall be eligible for 100% deduction. Also, the limit on the deduction of 10% of gross income is included in the concession offered under the amended IT Act. In the wake of the deadly Novel Coronavirus infection in the country, the government has mandated a 21-day lockdown to arrest the spread of the infection. The government started the new PM CARES Fund to tackle the COVID-19 virus in the country and donations made to the fund shall now be 100% tax-free.

– April 1, 2020

The Finance Ministry of India has said that there is no special extension of the deadline for filing ITR by NRIs in India. This is applicable for NRIs who are not liable to audit under Section 44AB of the IT Act 1961. NRIs need to file ITR if their total income exceeds Rs.2.5 lakh during the assessment year or has deposited an amount more than Rs.1 crore in one or more current accounts in a bank during the fiscal year. Also, if the NRI has incurred expenses of more than Rs.2 lakh for themselves or for persons during the fiscal year will be considered as to file an ITR. Even if the NRI has incurred expenses of Rs.1 lakh or more on use of electricity during the fiscal year, he has to file tax in India.

– March 30, 2020

The Finance Minister has announced that the deadline for Income Tax Saving for the financial year 2019-20 has been increased by three months. This means that taxpayers have till time until 30 June 2020 to include tax-saving components. Usually, taxpayers rush to make investments during the month of March before the deadline of 31 March ends. However, with the current lockdown situation in India due to the deadly Coronavirus infections, banks and other mutual fund institutions are shut for business and taxpayers may find it difficult to invest in tax-saving instruments. To ease the burden on taxpayers, the government has announced the change in the deadline.

– February 19, 2020

The Indian finance minister said that the new tax regime which is an exemption-free and reduced rate of the tax regime does not have any timeframe to remove all exemptions. During the Budget 2020, the FM announced an optional tax regime that has lower tax rates and more tax slabs and one can opt it if they are ready to forego all exemptions and deductions. The FM further said that only some exemptions have been removed despite the initial intention was to remove all exemptions.

– February 17, 2020

The 2020 Budget announced a new tax regime in which taxpayers will forgo about 70 exemptions for a lower income tax rate. To make it easier to calculate income tax in both regimes, the IT department has launched the new IT calculator. By entering details such as age, income and deductions, the calculator provides the total income tax to be paid in both cases. Taxpayers can use this calculator to understand which suits them better and file for Income Tax Returns (ITR).

– February 12, 2020

The Income Tax (IT) Department has introduced a new IT calculator for citizens to calculate their income tax based on the new IT regime introduced in the 2020 Budget. The new IT calculator is designed to make it easier for IT payers to file their Income Tax Returns (ITR) without any assistance. Taxpayers can visit the website and know which tax regime is better. Taxpayers need to enter details such as age, income for the assessment year, and total exemptions and the new income tax calculator will let you know the tax amount in both the old and the new tax regime.

– February 4, 2020

Taxpayers opting the new, optional income tax regime to forgo exemptions and deductions on tuition fee, Provident Fund (PF), insurance including the standard deduction of Rs.50,000.  However, this new tax regime is optional and taxpayers can choose to pay income tax through the existing tax regime. Income tax on the income of up to Rs.2.5 lakh is nil and for income from Rs.2.5 lakh to Rs.5 lakh, the income tax is 5%. Under the Budget 2020-21, taxpayers choosing the new tax income tax regime cannot raise claims against deductions under Section 80C of the IT Act. Also, deductions and exemptions under 80CCC, 80D, 80E, 80EE, 80EEB, and 80G can be claimed under the new tax regime.