How to File an Income Tax Return for a Salaried Employee

How to File an Income Tax Return for a Salaried Employee (2022)

Income Tax Returns: An Overview

The Income Tax Act was incorporated in 1961 and dealt with salaried individuals or self-employed individuals. According to the Income Tax Act, Indian taxpayers must disclose their salaries and pay the applicable tax amount.
 
The assessee has to pay the applicable tax amount and file his Returns by submitting the Income Tax Returns Form, also known as ITR Form, to the Income Tax Department. In any case, you cannot miss the ITR filing if you fall under the taxable bracket.

If you fail to pay your income tax on time, you may invite legal hassles.

You have to declare your exact income in a Financial Year in the ITR. A Financial Year in India starts from 1st April and ends on 31st March of the following year. If you earn more than the exemption limit, you must pay income tax.

Some sections like Section 80C, 80D, 80TTB under which rebates on tax can be claimed. However, if your overall income(before deductions) is more than the exemption limit, then filing of ITR is mandatory. The table below shows the exemption limits for ITR.

If you belong to any of the below groups, you are liable to pay tax and file returns. These are some of the indicators only:

• Any individual who has more than one earning source like rental property, investments, and ventures.
  
  
• Individuals who have invested in foreign assets and are earning continuously from them.
  
  
• Any person who has deposits of more than INR 1 crore in one or multiple bank accounts.
  
  
• Any individual who has spent more than INR 2,00,000 for foreign travel for themselves or someone else’s ( even if not related) travel.
  
  
• Any individual who has paid electricity charges of more than INR 1,00,000 in a Financial Year.

Points to Remember While Filing itr for salaried employees

Before filing ITR, salaried employees should know several points. By being informed, you can file your Income Tax Returns accurately. Also, last-minute confusion can be cleared if you know the ITR process in detail. 

Some important points to know before filing ITR are mentioned below.  

• Who are liable to file ITR?

The income limit for filing ITR is also subject to a few conditions set by the Income Tax Department of India.

So if your income exceeds INR 2,50,000 in a given Financial Year and you are below 60 years of age, you have to file the Income Tax Returns on time. 

For individuals aged between 60 to 80 years (senior citizens), the exemption limit is INR 3,00,000. This means that if a senior citizen in India earns more than INR 3,00,000 in a given Financial Year, they have to file ITR. 

For super senior citizens, the exemption limit is INR 5,00,000. If any individual over 80 years of age earns more than INR 5,00,000 in a year, they have to file ITR. 

An individual who wants to avail of a tax refund or owns foreign assets, or carries a loss/debt forward under any income head will be required to file ITR.

• Choosing the right ITR form

The Income Tax Department of India has launched several forms for different categories of assessments. You should choose the right form for filing ITR accurately. Different forms for filing ITR and their conditions are as follows:

1. ITR 1 form has to be filled by salaried employees who do not earn more than INR 50,00,000 in a given Financial Year. It also includes income from other sources besides salary from an organisation.
   
   Also, individuals who choose the ITR 1 form should only have a single house property. If people filing the ITR 1 form earn from agriculture, the agricultural income should not exceed INR 5,000.
   
   
2. ITR 2 form is for people who earn an income salary of more than INR 50,00,000 OR have more than one house property OR are earning from capital gains and have other sources of income. People who earn via business profits do not have to choose the ITR 2 form
   
   
3. ITR  3 Form is for people who are earning from employee salary, property, business profits, and other sources. You will have to choose the ITR 3 form. 

One should be clear about which form applies to him/her based on their sources of income and income level.

• Know about TDS

Individuals can claim the TDS (Tax Deducted at Source) amount while filing ITR. TDS amount can be deducted by your employer or bank at the source. One can verify the TDS amount deducted from their income by checking Form 26AS available on the official website of TRACES.

If the deducted TDS amount is not reflected in Form 26AS, check with your employer or bank. Your TDS claim can be rejected if the deducted amount is not being reflected in 26AS.

• Proof submission

If you are claiming any deduction while filing ITR, you should ensure to have the related proofs. For example, people declare deductions and investments like rent, insurance premium mutual fund investments, loan interest to their organization.

There should be proof for all of these. If you provide incorrect or forged proof for claiming deductions, you can be subjected to a penalty of 50% to 200%.

• Investment planning and deduction claims under some sections

While making investments, you need to know each investment has a pre-defined limit up to which you can claim deductions. For example, consider that you have paid a life insurance premium along with depositing money in provident fund, mutual fund, and superannuation fund.

In addition to these, you have also repaid the principal amount of your house loan. For all these payments, your deduction claim limit is INR 1,50,000. If you want to claim more than the limit, you will have to invest in other schemes like the National Pension System.

• Disclosing your income

While filing the ITR, an individual has to disclose income from all sources. It includes income from professional services, business profits, rental income, capital profits, house property, and other sources.

If you have won a cash prize or lottery, you will have to disclose it while filing ITR. If an individual is found withholding any information about their income, penalties are levied. Do not misreport or under-report your income while filing ITR in any case.

• ITR filing due to date

Individuals should file their ITR on time to avoid further hassles. If you fail to submit ITR before the due date, a penalty of INR 5,000 or more may be applied. 

Also, interest charges of 1% on the outstanding tax amount will be imposed by the Income Tax Department. You may also be deprived of several benefits if you fail to file your ITR on time.

• Updated particulars

While filing ITR, your personal details should be accurately mentioned in the form. Your name, PAN number, bank account number, mobile number, email ID, and other details should be correct.

If your personal details have changed, update them as soon as possible. Your email ID and contact number are used for further communication related to ITR and should be correct.

How to File an Income Tax Return Online for Salaried Employees?

For added convenience, you can file your Income Tax Returns online through simple steps. Now that you are aware of ITR formalities let us see the steps to file ITR online.

• Visit the official website of the Income Tax Department, i.e., www.incometaxindia.gov.in. Visit the e-filing section on the official website to file ITR.
  
  

• Provide your login credentials on the e-filing portal. You have to provide the user ID (PAN number), password, and the respective captcha code to log in. If you are filing ITR for the first time, register yourself by providing your PAN, which will later serve as your user ID.
  
  
• From the drop-down menu, find the ‘Income Tax Return’ button. You then have to choose the relevant assessment year for which ITR is to be filed. You also have to download the required ITR Form from the official website.
  
  Salaried employees have to choose any form between ITR 1, ITR 2, and ITR 3 based on their earnings.
  
  
• If you aren’t filing revised Returns, choose the option for ‘Original’ filing
   
• You have to tap the ‘Prepare and Submit Online’ icon as the submission mode for filing ITR. Once you have selected the submission mode, tap the ‘Continue’ button.
  
  
• You have to now fill out the related ITR form in its entirety. Provide your income and investment details along with deductions and exemptions. You also need to add tax payment details paid via advance tax, TDS, or TCS.
  
  Cross-check whether each entry is accurate before submitting the form. If you have a fear of losing your data due to technical errors, click on ‘Save the Draft’ occasionally.
  
  
• Calculate the payable tax amount and pay it online. You then have to provide the challan details in your ITR. If you don’t have any tax payable, you don’t have to provide challan details.
  
  
• Cross-check all the details in your ITR form and tap the ‘Submit’ icon to complete your ITR process.

As you can see, you can complete your ITR filing process with these simple steps. 

Once you have completed the ITR process, a flash message will appear on your screen telling you about the successful filing of ITR. 

An ITR-V form will be generated after you have successfully filed the ITR. You have to then verify your Returns in the acknowledgement form. You can verify your Returns by using any of the below options:

• Aadhar OTP

• Bank account number

• Demat account number

• Registered mobile number

• Net Banking

• Bank ATM. 

• You may also send a physical copy of the acknowledgement to CPC, Bengaluru, for verification.

itr form number for salaried employees

As mentioned above, salaried individuals in India have to choose their respective ITR forms. Let us go through different ITR forms again, so you don’t commit a mistake.

ITR 1 ( also known as Sahaj) - This form is for salaried individuals with income up to INR 50,00,000. Besides professional salary, it also includes income from other sources (if any).
 
As per the rules, individuals having more than one property and generating over INR 5000 from agricultural income are not eligible for the ITR 1 form benefits.

ITR 2 - This applies to salaried personnel who earn more than INR 50,00,000. People with multiple house properties and multiple sources of income should also choose the ITR 2 form. However, your income should not include business/professional profits if you choose the ITR 2 form.

ITR 3 - This is for individuals who earn from multiple sources like business gains, capital gains, house property, professional gains, etc. Also, individuals having more than one house property should file with ITR 3.

Make sure you choose the correct ITR form based on your earnings and possessions.

When Should a Salaried Employee File ITR?

You should be aware of the necessary conditions for filing an ITR. A salaried employee has to file ITR when their income goes beyond INR 2,50,000. One should know their annual income accumulated in a given Financial Year.

If you are earning more than INR 2,50,000 in a given Financial Year, you have to file ITR before the due date at any cost.

Why Should Salaried Employees File Income Tax Returns?

One may think, why file ITR on time. Well, there are several benefits of filing ITR on time. Not to forget, filing ITR within the due date is also mandatory. Let us see the benefits for salaried employees on filing Income Tax Returns.

• If you want to adjust capital gains/losses, you need to file ITR on time every year. ITR is beneficial for individuals who invest in the equity market. If you are buying or selling shares/stocks, you must be aware of ITR and its benefits.
  
  Short-term capital losses can be carried for up to 8 years if you file ITR for a given Financial Year.

• If you want to claim tax refunds, you need to file ITR on time. Tax refunds are provided only after you have deposited the tax amount. After depositing the respective tax, you can submit an IT Return for any Financial Year.
  
  For example, refunds on account of applicable rebates and other types of refunds will only be provided after filing the ITR. Individuals who have filed their ITRs on time can only claim for desired deductions.
  
  
• ITR is more than just an obligation or a financial statement. Banks use ITR records for loan processing and much more. NBFCs often use ITR records for approving home loans or vehicle loans.
  
  Even if you aren’t earning a taxable income, file ITR on time. By doing so, you will increase your chances of loan approval.
  
  
• ITR filing is necessary if you want to apply for a VISA. During the VISA interview, you are asked to produce ITR receipts for the past few years. ITR receipts highlight whether the individual has a considerable source of income in his country.
  
  It further strengthens your VISA application and chances of approval.

Besides the above benefits, not filing ITR timely can be treated as a legal offence that can also lead to heavy financial penalties. 

The Due Date for Filing ITR for Individual Taxpayers

Usually, the due date to file an Income Tax Returns is 31st of July of the following year. For example, the due date for filing Returns for Financial Year 2020 – 2021 is the 31st of July, 2021.
 
However, the Income Tax Department of India usually extends the due date for filing ITR every year. CBDT (Central Board of Taxes) is responsible for extending the ITR due date whenever needed.

For example, in the 2019 – 2020 Financial Year, the due date was extended till the 31st of December, 2020, by CBDT.

Have you missed your ITR due date because of some unavoidable circumstances? Well, do not panic, as there is a way for you to file ITR even after missing the due date. Let us see how salaried employees can file Income Tax Returns even after missing the due date.

1. Go for belated ITR

   The Income Tax Department of India allows salaried employees to file ITR even after missing the due date. You can file the belated ITR if you have missed the due date.
   
   The process for filing a belated ITR is similar to filing ITR before the due date. The only difference is that you have to select ‘Return Filed under Section 139(4)’ when filing a belated ITR. The rest of the processes and steps are the same for filing a belated ITR.

2. Pay penalty charges

   You have to pay penalty charges whenever you miss the due date of ITR. In the Income Tax Act, section 234F clearly states that individuals will be subjected to penalty charges if they miss the ITR due date.
   
   The penalty amount can vary according to the time of ITR filing. The penalty imposed on salaried employees for missing the ITR due date is as follows: 

As you can see, individuals earning less than INR 5,00,000 have to pay INR 1,000 as a penalty charge when filing a belated ITR. For individuals earning more than INR 5,00,000, the penalty charges can be INR 5,000 or INR 10,000.

When someone files a belated ITR, he loses on certain deductions also. Carrying forward of losses is also not allowed when you file a belated ITR. Except for loss on account of house properties, you cannot carry forward other losses while filing belated ITR.

These details are clearly stated in Section 139(1). So it is best to file your ITR on time and reap the maximum benefits.

Is It Mandatory to File ITR for Salaried Employees?

Filing the ITR Returns on time is mandatory for salaried employees in India. Some people think that since they have paid tax (advance or TDS or even through challan), they are not required to file ITR.

One should understand that paying income tax and filing ITR are two different liabilities. You have to provide information about your income by filing ITR before the due date. Even if you aren’t earning a taxable income, you should file an ITR for better results.

When is a Salaried Employee Supposed to File ITR?

The Income Tax Department of India has set exemption limits for salaried employees. If you are earning more than the exemption limit, it is compulsory to file ITR.

For the current Financial Year, the exemption limit for salaried employees (below 60 years of age) is INR 2,50,000. If you earn more than INR 2,50,000 in a Financial Year, you are liable to file Returns. The exemption limit will differ for senior and super senior citizens in India.

Benefits of Filing Income Tax Return for Salaried Employees

Advantages of filing ITR on time are as follows:

• If you have paid more taxes than your current tax liability, ITR can help you in getting tax refunds. You cannot claim a tax refund without filing ITR on time. Not to forget, filing ITR is compulsory in the eyes of the law if you are earning taxable income.

• If you want to travel abroad and apply for a VISA, you may require ITR receipts. Usually, ITR receipts for the past three years are asked for during VISA inspection. By filing ITR on time, you can show that you have a significant source of income in India to VISA officials.
  
  

• Filing ITR on time can help you get future loans. For example, many lenders ask for ITR receipts for the past three years while processing a home loan. Even if you aren’t earning taxable income, file ITR on time for getting future loans easily.
  
  
• Filing ITR on time is mandatory for employees in several companies. If you do not file Income Tax Returns on time, you may receive notices from the tax authorities as well as your employer.

The Income Tax Department allows you to file voluntary ITR even though you aren’t earning a taxable income. It can help you in availing of the aforementioned benefits of ITR.

Conclusion

As a responsible salaried employee, you should know about the ITR process. Filing Income Tax Returns for a Financial Year is compulsory for salaried employees in India if your overall income before deductions is more than Rs.2,50,000.

Some responsible employers in India help their employees in filing ITR. On a personal level, one should know how to file ITR online. Make sure that you file ITR timely to avail the benefits and avoid a penalty for delay. Start filing your ITR online in 2022!

I hope you liked our article on how to file income tax return online for salaried employee, if you have any comments or suggestions do share them in the comments below.

Frequently Asked Question

Q1. What if a salaried employee does not file ITR?

Salaried employees should file ITR timely to avoid legal hassles. If you don’t file ITR on time, you have to pay penalty charges and interest charges.

If an individual continues to ignore ITR, the Income Tax Department may estimate your income on the basis of certain parameters and impose tax liabilities on you.

Also, a notice will be served to you for an explanation regarding the non-payment of income tax. Not to forget, you will face problems in getting loans, credit cards, VISA, and many other benefits.

Q2. Which document is mandatory for filing the Returns for a salaried employee?

Salaried employees should have Form 16 for filing Income Tax Returns. Form 16 is usually provided by the employer to its employees. Form 16 acts as a TDS document that states the income taxes deducted and deposited on the employee’s behalf in a Financial Year.

Salaried employees should also have their PAN number for applying for ITR. Besides these, all proofs of deductions and investments should be available for submission, if required.

Q3. What happens if I don’t declare tax?

The tax department will levy a minimum of 50% of your tax amount as penalty charges if you don’t file ITR. Declaring your tax is important and mandatory for all salaried employees in India.

Concealing or misreporting any tax-related information is a legal offence in India.

Q4. Do I need to submit proofs while filing Returns?

At the time of filing the Returns, you don’t have to provide any proof except for Form 16. Form 16 is issued by the employer and is a TDS certificate. However, you will have to provide information about investments (if any).

Only in case of scrutiny of your Returns, do you have to provide proof.