The due date to file income tax return (ITR) by individual taxpayers who are not subject to tax audit under the Income-tax Act,1961 for the FY 2022-23 (AY 2023-24) is July 31, 2023. This article explains the most efficient way to file the return in Form ITR-1, including illustrative examples for easy reference
Who can file ITR-1?
Form ITR-1 can be used by an Ordinary Resident (ROR) Individual with a total income of up to Rs.50 lakh. This includes income from salary, one house property, and other sources such as bank interest, dividends, and agricultural income up to Rs.5,000
This form cannot be used by individuals who are either directors in a company, have invested in unlisted equity shares, or whose tax is deducted by banks on cash withdrawals under Section 194N. Those with deferred income tax on Employee Stock Option Plans (ESOPs) also cannot use this form.
Mode of filing ITR-1
While it is possible to file Form ITR-1 using the income tax department's Excel and Java utilities, it is recommended to utilise the online e-filing platform. This is because it offers the simplest method for filing one's tax return. Moreover, the e-filing website automatically populates various basic information and tax details into the ITR form.
Steps to e-file ITR-1
Step 1: Go to https://www.incometax.gov.in/iec/foportal and log in with your PAN/Aadhaar and password.
Step 2: Go to E-File > Income Tax Returns > File Income Tax Return from the menu.
Step 3: Select the relevant assessment year and mode of filing and click 'Continue' to proceed. The assessment year is the year in which income earned in the previous financial year is assessed. To file ITR for FY 2022-23, the assessment year is 2023-24. Here we have selected mode of filing as 'online'. If you are uploading JSON file generated from the department's utilities, you must select the mode of filing as offline.
Step 4: Select your status as Individual and click 'Continue'.
Step 5: From the dropdown of 'ITR Form', select 'ITR-1'.
Step 6: Even if the total income of an individual does not exceed the maximum exemption limit, the return filing is mandatory in certain situations. Select the reason for which you are filing the Income-tax Return and click 'Continue'.
Step 7: On the next page, you will find 5 sections to fill in:
(a) Personal Information
(b) Gross Total Income
(c) Total Deductions
(d) Tax Paid
(e) Total Tax Liability
Section 1: Personal Information
In this section, verify the data pre-filled from your e-filing profile. You cannot directly edit certain personal data in the form. However, you can make the necessary changes by accessing your e-filing profile. However, you can edit certain details like your contact, filing type, and bank details. You have to choose between the old or new tax regimes and the bank account in which you wish to receive the refund.
Section 2: Gross Total Income
In this section, review the pre-filled information like income from salary/pension, interest income, and dividend and enter any remaining or additional details, including exempt income.
Illustration on reporting of salary income: In the financial year 2022-23, Mr. A has a gross salary of Rs 10 lakh and an exempted House Rent Allowance (HRA) of Rs 2 lakh. The individual's salary will be reported as the sum of gross salary, exempt allowances, perquisites, and profit in lieu of salary. This figure will be adjusted by deducting the available deductions under section 16, such as standard deduction. While the details are auto-filled, it is important to cross-check the information in Form-16, salary slips, and bank statements to ensure accuracy.
Illustration on reporting of house property income:
For FY 2022-23, Mr. A earned a rental income of Rs 12 lakh. He has also paid a house tax of Rs 10,000 and interest of Rs 1.5 lakh on his housing loan. Additionally, he has received arrears of rent of Rs 1 lakh for the previous FY 2021-22. While reporting income from house property, the taxpayer must select the appropriate type of property, such as self-occupied, let out, or deemed let out. In the above example, we have taken a let-out property.
Rent arrears received by an assessee pertaining to a previous period are taxable in the year of receipt under the head "Income from House Property." However, a deduction of 30% of the arrears or unrealised rent is allowed from such rental income. ITR 1 does not provide the option to show a 30% deduction for arrears separately. Therefore, the taxpayer should report only the taxable portion of the rent arrears received during the year, which is the arrears of rent received minus 30%.
Illustration on reporting of income from other sources: For the financial year 2022-23, Mr. A has savings bank interest of Rs 12,000 and a fixed deposit interest of Rs 60,000. Additionally, he has earned an insurance commission of Rs 5,000. Some incomes, like, interest income, dividends, etc., are automatically filled from AIS (Annual Information Statement). However, taxpayers should remember to report the interest earned from savings accounts held with banks or post offices.
Taxpayers should ensure they claim a deduction of up to Rs 10,000 under section 80TTA for the interest earned on their savings bank account under 'Total Deductions' section. It is important to note that this deduction is not automatically populated from the above screen where the details of interest on the savings deposit have been reported. For senior citizens, Section 80TTB would be applicable for claiming a deduction of up to Rs 50,000 for total interest received from bank and/or post office deposits.
Total deductions
In the total deductions section, you are required to add and verify any deductions you intend to claim under Chapter VI-A of the Income Tax Act.
Tax paid
In the 'Tax Paid' section, you need to verify the taxes paid in the previous year. The tax details should include TDS from Salary/Other than Salary furnished by the payer, TCS, Advance Tax, and Self-Assessment Tax.
Total tax liability
In the 'Total Tax Liability' section, you need to review the tax liability computed based on the details filled in the previous sections.
After filling in the form's required details, click "proceed" to preview the return. If the filled-in details are correct, you may submit the return.
Step 8: Verification of return
Once the filing process is completed successfully, the next step is verification of the return. Failure to verify the filed ITR within 30 days will render it invalid. The processing of the return by the Income-tax Department commences only after verification of the return. Verification of an income tax return can be done using various methods, such as a Digital Signature Certificate (DSC), Electronic Verification Code, Aadhaar-based OTP, or by sending a signed copy of the acknowledgement to CPC Bengaluru. After the final submission, the taxpayer will receive an SMS and/or email confirmation indicating that the return has been filed.
(The article is written by CA Naveen Wadhwa, Taxmann and CA Tarun Kumar Madaan.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
