Income Tax in India – Complete Guide to File IT Returns for A.Y 2019-20 (F.Y 2018-19)
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Income Tax Filing
July is when the taxman comes calling. The last day of the month is the deadline for filing your income tax return. That means you need to gather up all your income and investment-related documents. Belated income tax filing is possible but it comes with heavy penalties and other pitfalls. Better to get an early start and file income tax 2019 well before the due date.
If you have questions about income tax and income tax filing, get all the answers here.
Income Tax 2019 Calendar
As a taxpayer, you should mark the following income tax dates on your calendar:
- Last Date for Filing Tax Returns - 31 July 2019 is the last date for filing your income tax return. Miss the deadline and you could face a tax penalty of up to Rs 10,000. Once you file your return, you have a 120-day window to verify it.
- Last date for submitting proofs - 31 January 2020 is the last date for submitting proofs of your tax-saving investments. Don’t delay in providing these. Otherwise, excess tax-deducted at source (TDS) may be deducted from your income.
- Last date to finalise your tax-saving investments - 31 March 2020 is the last date to finalise your tax-saving investments for Financial Year (FY) 2019–20.
Income tax Basics
Income tax is charged on your earnings. But your earnings may be of different types. For instance, you could be earning a salary, profits from a side business, and even rental income on a property you own.
Types of Income Tax
- Direct Tax - Direct tax is charged directly on your earnings. You cannot pass on this tax burden to somebody else. Income tax paid by individuals and corporate tax paid by companies are examples of direct tax.
- Indirect Tax - The burden of Indirect Tax falls on the end-consumer who purchases goods or services. A retailer or an intermediary collects the tax and passes it on to the government. An example is Goods and Services Tax (GST), which is included in the price of the goods or services you buy.
When filing your income tax return, keep in mind these five income classifications:
1. Income from salary and pension
2. Income from other sources (e.g. interest earned on savings bank account, winnings from a lottery)
3. Income from house property (rental income)
4. Income from capital gains (e.g. earnings from the sale of shares or a house)
5. Income from business or profession (e.g. the earnings of doctors, chartered accountants, and business owners)
Make sure to classify the income sources correctly when filing your income tax return. This will allow you to claim appropriate deductions against them. For instance, standard deduction of Rs 40,000 is applicable in case of salaried income. Meanwhile, business owners could claim deductions on rent, repairs, and insurance for their office space.
Income Tax Slabs
Income tax slabs for FY 2018–19 and assessment year (AY) 2019–20:
1. Individual, Hindu United Family (HUF), Association of Person, Body of Individual, and other artificial juridical person:
Income Tax Rate for Individual & HUF Below the Age of 60 Years Tax Rate Up to Rs 2,50,000 Nil Rs 2,50,000 to Rs 5,00,000 5% Rs 5,00,000 to Rs 10,00,000 20% Above Rs 10,00,000 30% 2. Resident senior citizen (60–79 years):
Income Tax Rate for Senior Citizens aged 60 Years and Less than 80 Years Tax Rate Up to Rs 3,00,000 Nil Rs 3,00,000 to Rs 5,00,000 5% Rs 5,00,000 to Rs 10,00,000 20% Above Rs 10,00,000 30% 3. Resident super senior citizen (80 years and above):
Income Tax Rate for Super Senior Citizens aged 80 Years and Above Tax Rate Up to Rs. 5,00,000 Nil Rs. 5,00,000 to Rs. 10,00,000 20% Above Rs. 10,00,000 30% - Rebate under Section 87A: Taxpayers whose income does not exceed Rs 3.5 lakh get a rebate on their total income tax or Rs 2,500, whichever is lower.
- Surcharge:
a. 10% surcharge on income tax where total income is between Rs 50 lakh and Rs 1 crore.
b. 15% surcharge on income tax where total income is above Rs 1 crore.
- Health and education cess: 4% of applicable income tax and surcharge.
Income tax slabs for FY 2019–20 and AY 2020–21:
1. Individual, HUF, Association of Person, Body of Individual, and other artificial juridical person:
Income Tax Rate for Individual & HUF Below the Age of 60 Years Tax Rate Up to Rs 2,50,000 Nil Rs 2,50,000 to Rs 5,00,000 5% Rs 5,00,000 to Rs 10,00,000 20% Above Rs 10,00,000 30% 2. Resident senior citizen (60–79 years):
Income Tax Rate for Senior Citizens aged 60 Years and Less than 80 Years Tax Rate Up to Rs 3,00,000 Nil Rs 3,00,000 to Rs 5,00,000 5% Rs 5,00,000 to Rs 10,00,000 20% Above Rs 10,00,000 30% 3. Resident super senior citizen (80 years and above):
Income Tax Rate for Super Senior Citizens aged 80 Years and Above Tax Rate Up to Rs 5,00,000 Nil Rs 5,00,000 to Rs 10,00,000 20% Above Rs 10,00,000 30% - Rebate under Section 87A: Taxpayers whose income does not exceed Rs 5 lakh get a rebate on their total income tax or Rs 12,500, whichever is lower.
- The rates for the surcharge and the health and education cess remain the same as for AY 2019–20.
Remember, not all of your earnings are subject to income tax. If you earn Rs 4 lakh per year, that places you in the 5% slab. But the first Rs 2.5 lakh is tax-exempt. So, your taxable income will be:
Rs 4 lakh - Rs 2.5 lakh = Rs 1.5 lakh.Here, Rs 1.5 lakh is your taxable income. But it is subject to income tax deductions, which may bring down the taxable amount further.
Income Tax Deductions
An income tax deduction reduces your total taxable income and thus reduces your tax outgo. Here’s a quick look at some of the common income tax deductions for which you might be eligible:
Income Tax Section Deduction Deduction limit 80C Investments in instruments like: - Public Provident Fund
- National Savings Certificate
- Sukanya Samriddhi Account
- Unit-Linked Insurance Plan
- Equity-Linked Savings Scheme
- Five-year tax-saving fixed deposit
- National Pension Scheme (NPS)
- Etc.
Expenses such as:
- Life insurance premium
- Children’s tuition fee
- Payment towards home loan principal
- Payment of stamp duty and registration of home
- Etc.
Rs 1.5 lakh 80CCD(1B) Contribution to NPS Rs 50,000 (additional to 80C deduction) 80TTA(1) Interest from savings account Rs 10,000 80GG Rent paid (when house rent allowance [HRA] not received from employer) The lesser of: - Rent paid minus 10% of total income
- Rs. 5,000 per month
- 25% of total income
80E Payment towards education loan interest Interest paid for up to eight years 80EE Payments towards home loan interest by first-time homeowners Rs 50,000 80D Medical insurance premium - For self, spouse, and children (under 60 years): Rs 25,000
- For parents (under 60 years): Rs 25,000
- For parents (above 60 years): 50,000
80DDB Medical expenses on self or dependent for diseases under Rule 11DD - Patient under than 60 years: lesser of Rs 40,000 or actual amount paid
- Patient over 60 years: lesser of Rs 1 lakh or actual amount paid
24 Payment towards home loan interest - Self-occupied house: Rs 2 lakh
- Property on rent: No upper limit, but rental income must be mentioned in income tax return
Tax-saving Schemes
By investing in tax-saving schemes you benefit by reducing your tax burden and generating long-term savings. Here is a quick look at certain tax-saving instruments that fetch financial benefits.
- Public Provident Fund (PPF): PPF is a safe and flexible option. With a lock-in period of 15 years, it encourages long-term savings and the returns are tax-free.
- National Pension Scheme (NPS): Save tax on NPS investments of up to Rs 2 lakh under Sections 80C and 80CCD(1B). Any contributions made by your employer are not taxable.
- Equity-Linked Savings Scheme (ELSS): The three-year lock-in period is the shortest among all the Section 80C instruments. Plus, exposure to the equity markets brings high returns.
- Unit-Linked Investment Plans (ULIPs):ULIPs combine life insurance with long-term investment. The earnings are tax-free as under Section 10(10D).
- Sukanya Samriddhi Yojana: Invest in this scheme for your girl child’s future. The interest rate is linked to the yields of government bonds. Claim deductions on up to Rs 1.5 lakh under Section 80C each year.
Read more on Tax Saving Investments in India
Income tax calculator
Calculating your tax liability in advance is a good practice. It can help you to plan your tax-saving investments in a better way. You could use an income tax calculator online, or simply take the manual approach:
1. List out your income from different sources.
2. Subtract the exempted amounts.
3. Subtract the deductions and exemptions applicable to you (e.g. standard deduction, deductible expenses and investments).
This will give you the taxable income. Now, check which income tax slab you fall under and calculate your actual tax burden.
Income Tax Payment
Taxpayers in India can pay their income tax dues in three ways:
1. TDS: Your employer deducts TDS when making payments to you. To help your employer deduct the right amount, you must furnish your tax-saving documents on time. Otherwise, they could end up deducting excess tax. Banks also deduct 10% TDS when paying out your interest. When filing your tax return, check if they have deducted too much or too little as per your income tax slab.
2. Advance tax: Self-employed individuals pay this every quarter after calculating their current and future payments until 31 March. Business expenses and Section 80C deductions can be deducted from the income. Tax must be paid as per the schedule provided by the Income Tax Department.
3. Self-assessment tax: This is the additional tax that you pay when filing your income tax return.
Taxpayers must use Challan 280 to pay advance tax and self-assessment tax online.
Read more on How to Pay Income Tax Online
Income Tax Return
The income tax return that you file each year is a form that summarises your income and tax liabilities. It also highlights your applicable income tax deductions and exemptions. Businesspersons and professionals need to disclose expenses, turnovers, and profits as well. If you have paid excess tax during the year, you can apply for a refund in your income tax return.
Filing Income Tax Return
The income tax return that you file each year is a form that summarises your income and tax liabilities. It also highlights your applicable income tax deductions and exemptions. Businesspersons and professionals need to disclose expenses, turnovers, and profits as well. If you have paid excess tax during the year, you can apply for a refund in your income tax return.
The Income Tax Department has made it mandatory for everyone to file their income tax return online. However, the following categories of people do not have to file their returns:
- Individuals with a gross total income of less than Rs 2.5 lakh
- Individuals aged above 60 years and less than 80 years with income of up to Rs 3 lakh
- Individuals above 80 years of age with income of up to Rs 5 lakh
It is advisable to file your income tax return by the due date. Otherwise, you could face late fees of up to Rs 10,000 as per Section 234F. If you also have taxes due, you would have to pay interest on the amount.
Furthermore, a belated filing could delay the processing of refunds. And you may not be able to carry forward losses in some cases.
Once you file your return, complete the verification process. You can either:
1. e-verify the ITR-V form, or
2. take a printout of the ITR-V form, sign it, and send it to CPC, Bangalore.
Income Tax Return Forms
Income Tax Section Deduction Income Tax Forms Who it applies to ITR-1 SAHAJ Resident individuals with income up to Rs 50 lakh (from salary, one house property, other sources like interest) and agricultural income up to Rs 5,000 ITR-2 Individuals and HUFs with no earnings from profit of business or profession ITR-3 Individuals and HUFs with earnings from profit of business or profession ITR-4 SUGAM Resident individuals, HUFs, and firms (except LLPs) with income up to Rs 50 lakh and with income from business/profession computed under Sections 44AD, 44ADA, or 44AE ITR-5 Anyone other than individual, HUF, company, and person filing ITR-7 ITR-6 Companies (except companies with exemptions under Section 11) ITR-7 Persons and companies that compute returns under Sections 139(4A) or 139(4B) or 139(4C) or 139(4D) only Documents for filing income tax return
You do not need to attach supporting documents with your income tax return. However, it is important to have the documents in place. If you ever face an issue with the return for a given year, you will have the paperwork to support your case.
Here are the general documents you might need:
- PAN card
- Form 16/Form 16 A, monthly salary slips
- Documents relating to taxable allowances received and the amount claimed as exempt (e.g. HRA, leave travel allowance)
- Proof of interest income (e.g. savings bank statement or passbook, TDS certificate from bank)
- Form 26AS
- Receipts for tax-saving investments and deductible expenses
- Statement of stock trading for taxation under capital gains
Filing Income Tax Return: FAQs
1. Is it necessary to file income tax return?
If you are not a senior citizen and earn more than Rs 2.5 lakh, it is mandatory for you to file income tax return. Senior citizens and super senior citizens do not need to file income tax return if they earn up to Rs 3 lakh and up to Rs 5 lakh, respectively.
2. What are the benefits of filing income tax return?
a. You can claim a refund if you have paid excess tax for the year.
b. You may find it easier to get loans.
c. You are more likely to get visas for foreign travel
d. You can carry forward losses against capital gains
Read more about the Benefits of filing ITR
3. Is it mandatory to attach supporting documents when filing income tax returns?
There is no need to provide such documents when filing your return. However, you must store the supporting documents in case there is an assessment or inquiry in future.
4. How do I file my income tax return online?
Log on to www.incometaxindiaefiling.gov.in and use the free e-filing software to generate your e-return digitally. You will also find instructions on how to use the software. Call 1800 4250 0025 if you have any queries.
5. How do I get my tax refund?
If you have paid excess tax during the year, claim it on your income tax return. Once the Income Tax Department accepts and processes your claim, it will transfer the refund to your linked bank account. You should also receive an email notification at this time.
Link your bank account with your PAN number and pre-validate the account on the e-filing website. This will ensure a seamless refund process.
Read more on How to Check Income Tax Refund Status Online
Income Tax glossary
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Form 16:
Employers provide this form to salaried individuals. The form contains details of your taxable income, tax benefits, allowances, tax deducted each quarter, and Section 80C deductions that you have claimed through your employer.
Read more about Form 16 -
Form 16A:
This is similar to Form 16. Only, it is provided to those providing freelance services. Banks also issue Form 16A if they are deducting TDS.
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Form 26AS:
This is a statement provided by the Income Tax Department. It summarises all the tax payments you have already made, whether through TDS, advance tax, or self-assessment tax. Read more about Tax Credit Form 26AS
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ITR-V:
Here, ‘V’ stands for verification. After you have filed your income tax return, you must sign this one-page document and send it to the tax authorities.
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Challan 280:
You use this challan to pay your taxes online.
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