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June 29, 2021

Know who is eligible to file ITR1 and who is not

by CA Shivam Jaiswal in Income Tax

Know who is eligible to file ITR1 and who is not

Q.1 Who is eligible to file ITR-1 for AY 2021-22?

Answer: ITR-1 can be filed by a Resident Individual whose:

  • Total income does not exceed Rs. 50 lakh during the FY
  • Income is from salary, one house property, family pension income, agricultural income (up to ₹5000/-), and other sources, which include:
    • Interest from Savings Accounts
    • Interest from Deposits (Bank / Post Office / Cooperative Society)
    • Interest from Income Tax Refund
    • Interest received on Enhanced Compensation
    • Any other Interest Income
    • Family Pension
  • Income of Spouse (other than those covered under Portuguese Civil Code) or Minor is clubbed (only if the source of income is within the specified limits as mentioned above).

Q.2 Who is not eligible to file ITR-1 for AY 2021-22?

Answer: ITR-1 cannot be filed by any individual who:

  • is a Resident Not Ordinarily Resident (RNOR), and Non-Resident Indian (NRI)
  • has total income exceeding ₹ 50 lakh
  • has agricultural income exceeding ₹ 5000/-
  • has income from lottery, racehorses, legal gambling etc.
  • has taxable capital gains (short term and long term)
  • has invested in unlisted equity shares
  • has income from business or profession
  • is a Director in a company
  • has tax deduction under section 194N of Income Tax Act
  • has deferred income tax on ESOP received from employer being an eligible start-ups
  • owns and has income from more than one house property
  • is not covered under the eligibility conditions for ITR-1

Q.3 What are the changes in ITR-1 as compared to previous years?

Answer: In ITR-1 for AY 2021-22, there is an addition of section 115BAC. If you wish to opt for the new tax regime under section 115BAC, select Yes in the new ITR form, else select No. Please note that option for new tax regime u/s 115BAC will be available only till due date of filing of return u/s 139(1).

Q.4 What documents do I need to file ITR-1? 

Answer: You would need Form 16, house rent receipt (if applicable), investment payment premium receipts (if applicable). However, ITRs are annexure-less forms, so you are not required to attach any document (like proof of investment, TDS certificates) along with your return (whether filed manually or electronically). However, you need to keep these documents for situations where they need to be produced before tax authorities such as assessment, inquiry, etc.

Q.5 What precautions should I take while filing the return of income?

Answer:

  • Download Form 26AS (Annual Information Statement) and check the actual TDS / TCS / tax paid. If you see any discrepancy, you should reconcile it with the Employer / Tax Deductor / Bank.
  • Compile and carefully study the documents to be referred to when filing your ITR, like bank statement / passbook, interest certificates, receipts to claim exemptions or deductions, Form 16, Form 26AS (Annual Information Statement), investment proofs, etc.
  • Ensure details like PAN, permanent address, contact details, bank account details, etc. are correct in the pre-filled data.
  • Identify the correct return for you (from ITR-1 to ITR-7). Provide all the details in the return such as total income, deductions (if any), interest (if any), taxes paid / collected (if any), etc. No documents are to be attached along with ITR-1.
  • e-File the return of income on or before the due date. The consequences of delay in filing returns include late filing fees, losses not getting carried forward, deductions and exemptions not being available.
  • After e-Filing the return, e-Verify it. If you want to manually verify your return, send the signed physical copy of ITR-V Acknowledgement (by ordinary post or speed post) within 120 days of filing the return to Centralized Processing Center, Income Tax Department, Bengaluru 560500 (Karnataka).

Q.6 How do I know which ITR I need to file?

Answer: Different tax returns are prescribed for filing by individual taxpayers depending on their source of income and residential status. To determine the correct ITR to file, you can use the Help me decide which ITR Form to file option. You can then proceed based on questions displayed to determine the correct ITR to file.

Q.7 What is Form 26 AS (Annual Information Statement)?

Answer: Form 26AS is an annual information statement which shows various details including Tax Deducted / Collected at Source, Advance Tax / Self – Assessment Tax, Specified Financial Transactions Demand / Refund Pending / completed Proceedings for a taxpayer’s PAN as per ITD’s database.

A taxpayer may pay tax in any of the following forms:

  • Tax Deducted at Source (TDS)
  • Tax Collected at Source (TCS)
  • Advance Tax or Self-Assessment Tax

The Income Tax Department maintains a database of the total tax paid by all taxpayers, which is called tax credit in the taxpayer’s account. The ITD generally allows taxpayers to claim the credit of taxes as reflected in their Form 26AS.

8. What should I do if there are errors and omissions in my Form 26AS (Annual Information Statement)?

Answer: Errors or omissions in your Form 26AS (Annual Information Statement) may happen due to several reasons, such as:

  • Non-filing of TDS return by Deductor
  • Non-payment of TDS by Deductor
  • Quoting of wrong AY or wrong PAN (or no PAN)
  • Incorrect challan details in the TDS returns submitted
  • Challan details wrongly quoted in the TDS return by Deductor or in details uploaded by the bank

You can take the following action to correct the details in your Form 26AS:

  1. Provide a correction statement (via NSDL website) for only those records that require correction.
  2. In cases of a mistake made by the Deductor (e.g., your employer), you should contact the Deductor and request them to:
  • File the TDS return if it is still pending
  • Furnish a revised TDS return if they filed the return with incorrect details / wrong or no PAN
  • If there is a mistake made by the bank (e.g., in tax amount, PAN), you should request the bank to rectify it in the challan details uploaded by the bank

Especially in cases of tax amount being wrong, it is mandated that you get it corrected – else you will not get a tax credit for deductions that are not mentioned in Form 26AS.

9. There is a mismatch between the details in my Form 26AS and TDS certificates (Form 16 / 16A). What should I do?

Answer: Some of the common errors leading to mismatch between Form 26AS and Form 16 are as follows:

  • Non-filing of TDS return by Deductor
  • Wrong PAN number of the employee quoted by the Deductor.
  • Wrong PAN / TAN of Deductor / AY quoted
  • Wrong Challan Identification Number (CIN) of TDS payment quoted in TDS Return
  • Omitted detail of TDS payment
  • Challan-wise annexure in TDS Statement does not mention details of the employee (e.g., name or gender)
  • False / Excess TDS amount claimed in the return

Compare the figures in Form 26AS with that of Form 16 and Form 16A. Mismatches between your Form 26AS and Form 16 or TDS certificates may lead to less refund or more taxes payable. If you find that any of the above details don’t match:

  • You need to inform the party responsible for deducting TDS from your income (i.e., your employer).
  • The employer has to file a revised TDS Return. Ensure that the details are correct in the revised TDS return to avoid another mismatch.

10. I am a joint owner of a house with my spouse. We do not have any additional property. Can I file ITR-1 in AY 2021-22?

Answer:

Yes, you can file ITR-1 for the AY 2021-22 in case the following conditions are met:

  • If you are a single or joint owner of a single property, you can file ITR-1 for AY 2021-22
  • If you own more than one property, you can’t file ITR-1 (even as a single owner)

11. What precautions should I take to avoid issues while filing my ITR?

Answer: To avoid issues while filing your return and getting your refund, ensure you do the following

  • Link Aadhaar and PAN.
  • Pre-validate your bank account where you want to receive your refund.
  • Choose the correct ITR before filing it; else filed return will be treated as defective and you will need to file a revised ITR using the correct form.
  • File the return within the specified timelines.
  • Verify your return and you can opt for e-Verification (recommended option – e-Verify Now) is the easiest way to verify your ITR.
  • File the responses for the notices received from the ITD within the specified timelines.

12. What is Advance Tax?

Answer: For salaried individuals, advance tax is mostly taken care of through TDS by employers. But other forms of income such as interest on savings bank accounts, fixed deposits, rental income, bonds, or capital gains increase the tax liability. One’s tax liability needs to be estimated beforehand. If tax amounts to more than ₹10,000/- per year, taxpayers need to pay advance tax in quarterly instalments (June, September, December and March).

13. How is Advance Tax and Self-Assessment Tax calculated and paid?

Answer: Advance Tax: Advance Tax must be calculated as given below:
a) In case of all assessees (other than the eligible assessees as referred to in section 44AD and 44ADA of the Income Tax Act):

At least to 15%On or before 15th June
At least to 45%On or before 15th September
At least to 75%On or before 15th December​
100%On or before 15th March

b) In case of eligible assessee as referred to in section 44AD and 44ADA:

100%On or before 15th March

Any tax paid on or before 31st March will be treated as Advance Tax paid during the same FY. The deposit of Advance Tax is made through challan ITNS 280 by ticking the relevant column, i.e., Advance Tax.

Self-Assessment Tax: After filling out your ITR form with the TDS and advance tax details (if paid), the system computes your income and checks whether tax is still payable. You need to pay it and then fill in the challan details in the return before submitting it.

Q.14 What is the difference between allowance and perquisite? Are these considered as my income?

Answer: Allowances are fixed periodic amounts, apart from salary, which are paid by an employer, e.g., conveyance allowance, travelling allowance, uniform allowance, etc. Allowances are considered income and will increase your gross total income on which you will be taxed. Allowances can be taxable, partially exempted, and fully exempted. Perquisites are benefits you receive because of your official position, and are over and above your salary or wage income. These perquisites can be taxable or non-taxable depending upon their nature.

Q.15. Are all donations 100% exempted from tax?

Answer: No, not all donations qualify for 100% exemption from tax. The categories for tax deduction, based on whom you donated to (charitable institution, fund set up by Government, scientific research, etc.) are as follows:

  1. Donations entitled for 100% deduction without qualifying limit
  2. Donations entitled for 50% deduction without qualifying limit
  3. Donations entitled for 100% deduction subject to qualifying limit
  4. Donations entitled for 50% deduction subject to qualifying limit

You need to check the exemption limit on your donation receipt and claim deduction accordingly while filing your return.

Q.16 Is e-Filing and e-Payment the same thing?

Answer: No. e-Filing is the process of electronically submitting your Income Tax Return on the e-Filing portal and e-payment is the process of electronically paying tax.

Q.17 I made a calculation mistake in my filed ITR. Can I correct it and re-submit my return?

Answer: Yes, you can re-submit return in case you have already filed your Income Tax Return and later discover that you have made a mistake. This is called a Revised Return. Your return has to be revised three months before the end of the relevant AY. For AY 2021-22, the due date for filing revised return is 31st December 2021.

Q.18 Can I file ITR for last 3 years now?

Answer: No, you can only file Income Tax Return for one AY in the current financial year. Tax filing beyond the last one year is only possible when you receive a notice from the Income Tax Department.

Q.19 What happens if I file Income Tax Return after the due date u/s 139(1)?

Answer: In case you miss filing the ITR within the due date u/s 139(1), you can still file your Income Tax Return but you maybe required to pay a late filing fee of up to ₹5000/-. Additionally, you will also be required to pay interest on the tax liability (if any).

Q.20 Do I need to file returns if tax has been deducted by my employer / bank?

Answer: Yes, employers and banks deduct tax at source on salary and interest income respectively. You still need to disclose the income on which tax has been deducted and claim credit for TDS in the Income Tax Return.

Q.21. Will I get a refund if I have paid excess tax?

Answer: Yes, any excess tax paid by you can be claimed as refund by filing your Income Tax Return. After your return is processed, ITD checks and accordingly accepts your refund claim, and then the amount is credited to your bank account. You will also get a message on your email ID registered on the e-Filing portal.

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