Monday 27 July 2015

Done filing your Income Tax Return Yet?

I had come up with this post on July 2015 using the notes I had taken as I filed my Income Tax returns to the Government of India during Assessment Year (AY in short) 2015-16. As on July 2016 I am updating this post to make this more generic, up-to-date and helpful.

A note before you start to read:
1. This is for those who want to do electronic filing of the IT returns, not the paper-based filing or ITR excel sheets.
2. This is for those who use ITR1 - salaried professionals with no additional income to declare and a zero refund. Zero refund stage can be achieved after e-Payment of any tax that is due.

Other than the information from the necessary IT forms, i.e. Form 16, 26AS, 16A etc, all you will need to go ahead:
- Netbanking account
- loads of patience!!

Some banter before we start.
How did this post come into being?
I had done e-filing during AY 2014-15 and as I remembered, it was without too many glitches. As I was getting ready to file ITR for AY 2015-16 I was basking in that confidence and I lazed around until just a week was left to file the returns. Contrary to my expectations, it took me half a day (a full 4 hours) to finally get through everything and be done with the returns submission. Some of it was because I did not keep track of a few things I did the previous year and some because the IT department had introduced a couple of new processes like e-Verify returns, link to Aadhar, etc. During the filing for AY 2016-17 I found that there was further learning about the process which could potentially be useful to others if shared. More so because I could not find a single website that was 100% helpful in resolving all my questions as I was going through the filing process. So there, let me maintain this page as a running log of all the learnings and I hope this will be helpful for people like me (DIY) who attempt to file the IT return on their own and that too the easy way (well almost easy.. after all our IT Dept is still learning her game in the digital world), without going through the hassles of the paper-based filing process.

Some gyaan before we proceed to efiling.
About the ITR process:
  • First point to note is that the given steps are applicable only for those who do not have any other income apart from Salary and interest income. Capital gains (sale of property, stocks, mutual funds, bonds, other such assets) if any will have to be dealt with differently (using ITR 2 or above)
  • First step to do is to check your Form 26AS which is available in the income tax efiling website. It shows what all income has been recognized by the IT department, including any interest payments on your Savings accounts or Fixed deposits. The details that you fill in the Quickfile ITR format online or Excel sheet should be decided on this basis rather than just the Form 16. Form 16 captures only Salary income unless one has declared all other possible income from other sources to the Employer, including Interest income.
  • If you have ignored other income, there is a chance for getting a demand notice from I-T department (that is why online returns are preferred by them because calculations are automated in this case. Manual returns are more difficult to track from their perspective).
  • If you have any additional exemptions or rebates to claim, that you had not submitted to your employer (it could be even your last month Insurance premium for example that had not been considered by the employer), then your chance to claim it is during returns-filing. Possibly you may receive a refund. Refunds are really fast these days.

Steps to efiling:

1. The website you will need is https://incometaxindiaefiling.gov.in
[I saved the URL this time for good. Because initially I went to
http://www.incometaxindia.gov.in/ and did some looking around ;) ]

2. Dig up your ID / password to login to the e-filing site.
[When I was not able to locate it,
I had to use the "Forgot password" option. FYI - there were multiple options for how I wanted to reset the password, the likes of OTP and secret question. The rules for setting a 'strong' password were not very transparent too. So there, save the login details for good.]

3. If you have to reset password, ensure that you pick a 'strong' password.
[In spite of abiding by all rules given, i.e. upper case and lower case letters, number and a special character the website somehow would not accept the passwords I gave. It kept showing up as 'weak'. This could b
e because of my choice of special character. (I hate pressing the shift key when typing passwords). Finally I got a 'strong' password after multiple tries and promptly saved it; it is not something I would want to repeat every year]

4. The "Quick e-File ITR" is the quicker and easier process compared to the excel worksheet. It saves me the extra step of generating the XML and uploading it. So choose it if you qualify.
[The only hitch here is that you have to save the d
raft periodically. Also the session times out frequently so it helps to have all information handy before you start]


What do you need handy?
- Form 16 issued by your employer
- Form 26AS from the IT efiling website
- IFSC codes and details of your bank accounts
- this blog post for reference, of course!

5. Once you click on quick e-File, choose the ITR1 option and assessment year. Unless you have a digital signature generated by a service provider, you do not want to check the last option.
[It helps to opt to fill in the address details from your previous return. More than half of your initial tab will be prefilled in this case.
One item where I have goofed up is the assessment year. It is NOT the same as financial year, i.e. the year for which you are submitting the data. This is rather the year when the assessment is done. If you check your Form 16, it has the assessment year clearly printed on it.
Also note that if you time out your session and come back to re-open the form in progress, you only need to select the same inputs as the first time (i.e. ITR1 and assessment year) to be taken to your last saved draft]

6. First tab has the instructions (didnt help me much!) and second tab onwards have your personal information (prefilled if you opted for it), income details, tax details, info about taxes paid and the 80G deductions.
[In personal information tab, the main updates were to the filing status section, as the rest was prefilled. Not much confusion here]

7. On income details tab, the figures need to be filled from your Form 16. Mainly B1 and B4.
[The first time I spent some time figuring out B1 - Income from Salary/Pension. This is your gross salary before deductions and should match the 'Total Amount Paid' reported by your employer in Form 26AS
]

8. Verify your net tax payable, if it matches the figure printed on your Form 16. (This is how I came to know of the mistake mentioned above)

9. In Tax details tab verify the details of tax paid by your employer. It would be prefilled

10. In Taxes paid tab, again mostly prefilled, verify the details. Refund will be zero for most of us. Add here any other bank account you may be holding.
[I have wasted time getting the bank details everytime. So save info l
ike IFSC code, account number for faster processing next time]

11. 80G tab - fill in all details depending on entitlement for the donations.

12. Now for the additional steps if you have income from other sources, say interest income from banks. The bank in this case would have submitted the details of TDS (tax deducted at source) to the IT Dept, so the details will be prepopulated in the 'Tax Details' tab. If you can view this entry you most likely will not be getting a zero refund amount during the steps 1 through 11. The tax amount deducted for your interest income will show up as a refund amount due to you from the IT Dept. This is because you have not declared your interest income just yet.

12a. Enter your interest income against 'Income from other sources' in the 'Income Details' tab. You will now see that the 'Tax Payable' amount is auto-populated if you are in a tax slab higher than the default 10% that the bank has used. This amount needs to be paid to IT Dept before the form can be submitted.

12b. Click on 'E-Pay Tax' on the left hand side, and you will be redirected to another website. 
12c. Select Challan 280. The webpage for filling details will open up. When filling your details note the below.
Tax Applicable should be '(0021)INCOME-TAX (OTHER THAN COMPANIES)'
Type Of Payment should be '(300)SELF ASSESSMENT TAX'
12d. Once done you will be redirected to the selected bank's website to login to netbanking and complete the payment
12e. After the payment is done, login to the netbanking website and generate the challan. There will be a 'BSR Code' given there as reference.

12f. In the 'Tax Paid' tab, make an entry for this self assessment tax payment using the BSR Code and the date of payment.
12g. Now, your refund amount will be updated to ZERO!

13. If you have reached till this point, you are almost there. Go ahead and press Submit.
[Upon submission if y
ou get a message that your disclosed salary is less than 90% of the salary reported in TDS1, you can double check the figures and continue to submit. The message is only informational and pops up when the difference between the two figures mentioned in #7 above is high. For instance, where your rent claim is high]

14. Next step is to e-Verify the return. This is something that was newly introduced in 2015, and works instead of printing a hard copy of the acknowledgement form and sending it by post to the Bangalore CPC office. There are two ways you can do this. First is to use your aadhar and the second using an EVC ((Electronic Verification Code). If your income is below 5L, the EVC can be generated to your registered mobile number and email ID. For income above 5L, you have to do it via the registered bank. The options are presented to you on completion of submission.
If you are one of the few whose details in PAN match your Aadhar, you can follow a different set of steps than what is explained below. I was one of the unlucky many whose 'Link your Aadhar' did not work, hence I had to generate an EVC to complete the e-Verification process. Assuming this is the first time you are trying, you should choose the option to Generate EVC at the screen given to you post submission.

[Note added on 2017: After the many hiccups on aadhar linking is sorted out, the process is now a breeze. I did not have my initial expanded in my aadhar, and yet the linking went through successfully without an issue. Further the e-verification of return took just a few seconds as I chose the option to generate OTP via aadhar. Things do get better with time.. ☺]

15. If your income is above 5L, you should choose to generate EVC via Netbanking. Again assuming here that your account whose detail is with the IT office is netbanking-enabled.

16. On choosing the option, a list of banks will be presented to you from which you can choose yours. From here you will be redirected to your bank's netbanking portal. You will need to talk to your bank if you are unsure of how to complete the e-Verification process.
[I hold an ICICI account and I can explain the steps for that. Login -
-> Payments & Transfer --> Tax Centre --> Income tax e-Filing. Once you click on submit you will be taken back to the e-Filing website for completion]

17. You have to click on e-Verify to complete the process. You will recieve an email and sms with the generated EVC.

18. Yes, now is the time to do that happy dance. Finally you are DONE!

Note: If you are stuck at any point there is the IT e-filing call centre you can contact. The Bangalore number worked for me, and the person was quite helpful too. So there, Happy Filing!

As a Footnote, here are the Minor(!) irritants that I have faced with the efiling process. You might want to keep an eye out for these:
  • While preparing the ITR, very frequently the session expires and then you have to click "Quick eFile ITR" and enter all required details like 'ITR-1' and Assessment Year before the form opens up again for editing. Remember, it doesn't mean that your login session has expired, it refers only to your editing session
  • Many a time after painstakingly logging in (c'mon there are 4 fields to type in, none of them allow copy-paste), I get the message that "session is expired" as double clicks are disabled. Then I started to hit Enter key (slowly and carefully) instead of using the mouse.
  •  In my notebook screen, each time I click a different tab on the ITR page it opens at the top left corner of the page. I then have to realign the page so that all required details are visible and continue editing. Can't be helped if you are using one of the small screen devices.

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