- Date : 18/12/2020
- Read: 4 mins
Here's a rundown of everything you need to know while filing ITR for FY 2019-20 as a salaried individual.
The deadline for filing your Income Tax Return (ITR) for Financial Year (FY) 2019-20 has been extended till 31 December 2020. With just about 15 days to go, as a salaried professional, you need to get acquainted with all the requisite changes in IT rules, important updates, list of documents, and tax-saving instruments that can help streamline your tax filing process.
Understanding the tax regimes
During Budget 2020, the Finance Minister announced a new income tax regime with a revised income tax slab. Under the new regime, the Central government has further sub-categorised income slabs, primarily for those declaring incomes between Rs 5 lakh to 15 lakh. Both tax regimes will continue to coexist, and here’s how they will affect people across income categories:
- Salaried employees earning up to Rs 10 lakh can benefit from opting for the new tax regime.
- Those earning up to Rs 15 lakh can stay with the old regime if they are able to save over Rs 3 lakh from various deductions.
- Salaried professionals earning over Rs 15 lakh may choose to continue with the old structure if they have a well-planned tax system in place.
Which ITR form to use as a salaried professional?
Salaried professionals earning up to Rs 50 lakh from the following sources can use a simplified one-page form ITR-1, also called SAHAJ.
- Salary or pension
- Income from single house property
- Income from other sources (excluding lottery, race horsing, legal gambling, etc.)
If you earn more than Rs 50 lakh a year or have earned an income through any of the following sources, you will have to use ITR-2:
- Income from more than one house property
- Short- or long-term capital gains (taxable)
- Income from the lottery, race horsing, legal gambling, etc.
- Hold shares of an unlisted company
- Hold assets or financial interest outside India
- Claim relief for double taxation under Section 90/90A/91
How to file ITR online if you are a salaried employee
- Visit the official website of the Income Tax department here
- Under the top right tab, register yourself (if new to e-filing) or log in using your existing credentials
- Go to the ‘E-File’ section and select the applicable ITR form and assessment year
- Fill all income details from Form 16, including composition/break-up of salary, Tax Deducted at Source (TDS)/other taxes paid, deductions claimed, etc.
- Recheck and confirm the accuracy of all the details and upload the form
- E-verify ITR-V through netbanking/Aadhaar OTP/EVC
How to save on income tax
Provisions in the Income Tax Act allow you to make certain deductions or claim exemptions that can reduce your taxable income.
Section 80C – deductions available up to Rs 1.5 lakh under the following tax-saving options:
- Tax-saving mutual funds – ELSS
- Life insurance premium/ULIP for self, spouse, and dependent children
- 5-year tax-saver fixed deposits with bank or post office
- Public Provident Fund (PPF)
- National Savings Certificate (NSC)
- Home loan principal repayment
- Tuition fees for children
Other deductions that you can avail of:
- Section 80D: Health insurance premium – up to Rs 75,000 for self, spouse, and dependent parents
- Section 80CCD: Investment in National Pension Scheme (NPS) – up to Rs 50,000
- Section 24: Interest paid on a home loan – up to Rs 2 lakh
- Section 80TTA: Interest earned on a savings account – up to Rs 10,000
Taking advantage of various deductible investments will help bring down income tax on salary.
Changes to keep in mind
Those employed in the formal sector can claim another Rs 50,000 as a standard deduction in lieu of Leave Travel Allowance (LTA) and medical allowance.
Filing of ITR is mandatory in case of high-value transactions such as:
- Electricity bill in excess of 1 lakh during the fiscal year
- Expenditure of Rs 2 lakh or more on foreign travel
For any further information or clarifications on how to file your income tax return, please consult your chartered accountant. 5 Tax filing mistakes that can get you a tax notice