Planning To File ITR On Your Own? Salaried Taxpayers Need To Know These Things

Section 203 of the Income Tax Act, 1961, has made it mandatory for employers to issue Form 16 to their employees.

Income Tax Return Filing AY 2024-25: Even as the income tax department has enabled online ITR filing for the assessment year 2024-25 (or financial year 2023-24), taxpayers can now file their returns. Though salaried individuals wait for their Form 16 to come to file their ITR as it contains income tax data for the entire fiscal, they can do it without the Form. A large number of individuals file ITR themselves, without the help of accountant. Here’s what you need to know if you are filing ITR on your own.

The income tax department has enabled online filing of income tax returns (ITRs) 1, 2 and 4, filed by individuals, professionals and small businesses, for the financial year 2023-24 (or assessment year 2024-25).

Who Is Eligible To File ITR Under ‘Salaries’ Head?

It is only in the case of the employer-employee relationship that the individual is taxed under the head “salaries”. In the case of a consultant, contractors and freelance or gig workers, the income may not be subject to tax as salary. The Income Tax Act, 1961, provides an option of presumptive taxation for specified professionals (such as medical, legal or accountancy professionals and engineers). Here, in the case of eligible taxpayer with gross receipts up to Rs 75 lakh, only 50 per cent of the gross receipts is considered as income of the taxpayer.

Choose Correct ITR Form

Tax return filers need to choose the correct ITR. ITR 1 is the simplest form for tax filers not having a business income, whereas ITR 4 is the simpler form applicable for tax filers opting for presumptive tax. There are several restrictive conditions for the simplified forms and you may be required to submit ITR-2 (no business income) or ITR-3 (business income), if ITR-1 is not applicable due to violation of such conditions.

Know Due Date of Tax Return

An annual income tax return (ITR) is required to be filed by an individual in India by July 31 immediately following the end of the tax year i.e., July 31, 2024, for financial year (FY) 2023-24 and 31 July 2025 for FY 2024-25.

Rebate or Tax-Free Income Limit

Taxpayers have the option to choose either the old tax regime or the new tax regime. The default scheme would be the new tax regime.

Under the new tax regime, a resident individual (whose net income does not exceed Rs 7 lakh) can avail rebate under section 87A. The amount of rebate is 100 per cent of income tax or Rs 25,000, whichever is lower.

Under the old tax regime, a resident individual taxpayer (whose net income is up to Rs 5 lakh) can avail rebate under section 87A. The amount of rebate is 100 per cent of income tax or Rs 12,500, whichever is lower.

Moreover, a marginal relief may be available to taxpayers under the default regime in case their total income exceeds Rs 7 lakh and the income tax payable on the total income exceeds the total income over Rs 7 lakh. Such marginal relief would be computed as the difference between the income tax liability on the total income (before rebate u/s 87A) and the total income over Rs 7 lakhs.

Section 80C- Deduction for Specified Investments

Section 80C provides a host of tax-saving investment options to individuals such as life insurance premiums, contribution to PPF, investment in Sukanya Samridhi Yojana, principal repayment for housing loan, tuition fees paid for children’s education in India, etc. However, the maximum amount of deduction available under this section is Rs 1,50,000 for a particular financial year.

Deduction under Section 80TTA/TTB

Interest on Bank Deposits: These sections allow individuals to claim deductions against interest accrued in their bank accounts during the year. Section 80TTA allows a deduction up to Rs. 10,000 on savings accounts maintained with a bank or a post office. In the case of senior citizens, section 80TTB enhances the maximum limit to Rs. 50,000 and also allows interest received on time/fixed deposits.

Favourable Tax Treatment of Certain Perquisites

Non-monetary benefits provided by an employer to their employees in addition to salary or wages are termed as perquisites. For instance, rent-free accommodation, use of motor vehicle, medical expenses reimbursement, interest-free loans or loans at concessional rates to employees are some of the examples of perquisites. In several cases, the taxable value of perquisites in the hands of employees is much lower than the actual cost of such perquisite to its employer.

Exemption with respect to remuneration of employees of foreign enterprises in certain cases

Such remuneration for services rendered during the stay in India is exempt if the foreign enterprise is not engaged in any trade or business in India; his stay in the aggregate does not exceed 90 days in that financial year; and such remuneration is not liable to be deducted from the employer’s income chargeable to tax in India.

Remuneration of a non-resident for services rendered in connection with his employment on a foreign ship is exempt from tax if his total stay in India does not exceed 90 days in the financial year. However, the relevant tax treaty, if any, needs to be referred to in the case of foreign employees rendering services in India.

Review and Reconcile Form 16, 26AS, AIS, TIS and Your Bank Statements

It is important to review and reconcile the information submitted in Form 16 as well as Form 26AS and Annual Information Statement (AIS)/ Tax Information Summary (TIS) before furnishing the return and in case of any discrepancies, take steps to correct the same. You must ensure that the credit for taxes paid by way of TDS, advance tax and TCS is duly reflected. This will reduce the chances of your return getting picked up for scrutiny or tax demands as well as expeditious processing of tax refunds.

Section 203 of the Income Tax Act, 1961, makes it mandatory for employers to issue Form 16 to their employees.