All about Income Tax Return and deductions
This blog is updated as per the amendments and reforms brought by the finance minister on 20th September 2019.
Income tax is a tax levied by the Government, on the income earned by a person. It is a direct tax to be paid directly to the government. It is calculated at specified rates for specified persons. An income tax return is a statement showing the income of a person and the tax paid on it.
The income tax slabs for FY 2018-2019
Individual and HUF (Hindu Undivided Family)
| Income | Tax Rate | ||
| Age less than 60 years | From 60 years to less than 80 years | From 80 years and above | |
| Up to Rs. 2,50,000/- | Nil | Nil | Nil |
| Rs. 2,50,001/- to Rs. 3,00,000/- | 5% | Nil | Nil |
| Rs. 3,00,001/- to Rs. 5,00,000/- | 5% | 5% | Nil |
| Rs. 5,00,001/- to Rs. 10,00,000/- | 20% | 20% | 20% |
| Above Rs. 10,00,000/- | 30% | 30% | 30% |
Other than Individuals
| Business Structure | Tax Rate(Base Rate) |
| Partnership Firm/LLP | 30% |
| Domestic Company | |
| ⁃Not availing any exemptions or incentives | 22% |
| ⁃ Manufacturing companies incorporated after 1st October 2019 and not availing any incentives or exemptions | 15% |
| ⁃Availing any exemptions or incentives- turnover up to 400/- crore during FY 2017-18 | 25% |
| Foreign Company | 40% |
| In any other case | 30% |
Surcharge and education cess is levied additionally
Who has to file an Income tax return?
- Every person liable for paying tax
- Every person who wants to claim a refund; even a person is not liable for paying tax
- An Indian resident who has signing authority in a foreign account or has an asset or financial interest outside India
- In cases of long term capital gain
- One can also file a voluntary income tax return which will help in taking a loan or financial assistance
Due date
The Income tax return filing due date for F.Y 2018-2019
There are some consequences if the return is not filed within the due date other than the taxpayer is liable for interest at 1% and penalty as under:
| Particular | Penalty |
| Return is filed after the due date but before 31st December of A.Y and total income do not exceeds Rs. 5 Lakh | Rs. 1000/- |
| Return is filed after the due date but before 31st December of A.Y and total income exceeds Rs. 5 Lakh | Rs. 5000/- |
| A Return filed after 31st December of A.Y | Rs. 10,000/- |
Mode of filing an Income tax return
A taxpayer has to file ITR electronically. There are some exemptions as under.
- An individual above the age of 80 years
- An individual with income less than Rs. 5 Lakh and has no refund to be claimed
Revised Income Tax Return
- Income Tax department allows to revise the ITR if the original ITR includes omission or wrong statement unintentionally
- A taxpayer can file the revised return up to the end of A.Y (for F.Y 2018-2019, 31st March 2020) or before the completion of assessment whichever is earlier
- Revised ITR can be filed for any number of times with genuine case
Benefits of filing income tax return
- To claim the tax refund
- To carry forward losses
- To file an application for government tenders
- To avail loan
- To avoid scrutiny from the income tax department
- It helps in processing visa
List of some major deductions allowed to an Individual
| Type of deduction | Maximum limit |
| Under section 80C, 80CCC, 80CCD for insurance policies, LIC, PF, | Rs.150,000/- |
| Interest on saving bank account | Rs. 10,000/- |
| Equity saving scheme | 50% of the total amount invested but maximum Rs. 25000/- |
| Medical Insurance Premium under 80D (including senior citizen parents) | Up to Rs. 75000/-* |
| Medical Insurance Premium under 80D for senior citizen (including senior citizen parents) | Up to Rs. 100,000/-* |
| Interest on loan from financial institutions for higher education | Interest- maximum for 8 years subject to conditions |
| Interest on loan from financial institutions for the acquisition of residential property | Rs. 50,000/- |
| Interest received from savings bank account | Rs. 10,000/- |
| Investment in long term infrastructure bond notified by government | Rs. 20,000/- |
| Donation to trust/charitable institutions under 80G | Depends on the type of donation |
*It is not the exclusive list of deductions.
Documents required
There is no need to attach any documents while filing ITR. But the following documents must be to ease the filing.
- PAN and Aadhaar card
- Form 16, Form 26AS
- Bank Statement
- TDS certificate
- Receipts for investment to claim deduction under various sections such as PPF, LIC, donation receipts etc
Conclusion
The reporting period starts as soon as the current financial year ends. It is mandatory to report the income and expense statement not only to the Income Tax department, but to other Ministries also. Fulfill all your compliance’s within due date to avoid penalties.
CS Shivani Vyas
Shivani is a Company Secretary at Legalwiz.in with an endowment towards content writing. She has proficiency in the stream of Company Law and IPR. In addition to that she holds degree of bachelors of Law and Masters of commerce.
