Income tax in India 101: Rules, Returns & E-filing for FY 20-21

0

The constitution of India entitles the central government to levy a tax on the income of individuals, except agricultural, under the Income Tax Act 1961. It is one of the biggest sources of revenue for the government. The Income Tax Department releases a tax slab at the end of every financial year according to which the eligible taxpayers are supposed to pay their taxes. The taxpayers are also liable to file income tax returns by 31st July of every year. However, amid the nation-wide lockdown that was imposed in March’20 to fight the COVID-19 pandemic, this date has been extended till 30th November’20.

Considering the outcomes of the lockdown, the government also made some changes to the rules of tax imposition. To abate possible confusion in the calculation that may arise because of these changes, one can use an income tax calculator by Scripbox. This income tax calculator can easily help a taxpayer in calculating his tax liabilities by taking the basic details of his income into account.

Manual calculation of income tax can be a tiresome and time-consuming process.

Income Tax Rules in India

As per the currently active Income Tax Act, every citizen of India whose income falls under the slab system created by the government is liable to pay income tax. The NRIs (Non-Resident Indians) are also supposed to declare their income to the Income Tax Department. The tax slab can be amended from time to time and the taxpayers are bound to abide by them accordingly. This mostly creates confusion in the tax amount one has to pay for which he can easily take help of an income tax calculator which is easily available online.

Changes Made For The FY 20-21

The government made some serious changes in the tax rules for FY 20-21 keeping the current economic situation into consideration.

  • The biggest announcement is that the taxpayers who do not derive income from any business can pay tax as per the old regime.

  • The dividends received by investors from domestic companies and mutual funds will be added to their income and taxed as per the slab system. In this case, it is advisable to use an income tax calculator to make this complex calculation simple.

  • The NRIs who accrue income more than 15 lakhs in a financial year from India will be charged tax if their stay in the country exceeds 120 days.

  • The timeline to avail affordable home loans in order to be eligible for the deductions under 80EEA has been extended till March’21.

  • The employers who make more than INR 7.5 Lakh contribution to the EPF (Employees’ Provident Fund), NPS (National Pension System) and superannuation fund will be taxed on the amount exceeding the defined amount.

The taxpayers who fail to pay their income tax within the declared time slots are declared as defaulters by the tax department. There are legal consequences of this failure if it persists for a period of time. This is why the income tax calculator is designed to help them in doing accurate calculations.

Income Tax Slab and rates for the FY 20-21

Age Group

Annual Income

Tax Rate (old)

Tax Rate (New)

For All Individuals

Till 2.5 Lakhs

NIL

NIL

2.5 – 5 Lakhs

5%

5%

 

5-7.5 Lakhs

20%

10%

 

7.5-10 Lakhs

20%

15%

 

10-12.5 Lakhs

30%

20%

 

12.5-15 Lakhs

30%

25%

 

Above 15 Lakhs

30%

30%

 

Why Is Filing Income Tax Returns Important?

Filing an income tax return is as important as paying the tax in the first place.

  • The government of India mandates every taxpayer to file a return if their income falls under the defined slab. As a responsible citizen of the country, one should not fail to file his tax return because it is more than just a formality. Also, it is extremely important to maintain an income tax return file as it has to be submitted in case one wishes to make adjustments to past losses.

  • There are many individuals who take this task very lightly and fail to maintain an ITR file. Most of the taxpayers only do so in case they need it for availing loans. The best option is to use an income tax calculator for paying the accurate amount of tax which reduces a lot of burdens while filing the tax return.

  • Traditionally, this entire process was manual wherein the taxpayers had to collect all the documents, fill the application form, and then post it to the Income Tax Department office. This entire process can now be easily completed through the e-filing option. It not only saves a lot of time and effort but also facilitates the maintenance of e-file. Additionally, the income tax calculator has assuaged the difficulties by a great extent,

Income tax calculators are available online which eliminates the need for manual calculations.

What Is The Process of e-filing?

The process of e-filing income tax returns is very simple. It includes the following steps:

1. Create an account on the official website of the Income Tax Department and login to that account.

2. Select the option of the income tax return by going to the e-file section on the site.

3. One can only fill two forms on the online platform, that is, ITR 1 and ITR 4S. Select the form type and choose the financial year.

4. Click on the “prepare and submit ” button to create the e-file.

5. Fill up the bank account details and then click continue.

6. Submit the DSC (Digital Signature Certificate) that is registered with the e-filing account. This has to be submitted for completing the process.

7. Once the DSC file is uploaded, click submit.

In case one does not have the DSC, he will be given a link on the display of his computer. Download the ITR-V form, sign it manually, and then submit it to the CPC (Central Processing Centre) within 120 days.

It is the responsibility of every Indian citizen to declare their actual income to the government and pay the income tax applicable against it. The revenue generated from this tax is used for the development and growth of the country. Thus, it is not just a legal pressure created by the government but also a social duty that must be done honestly. The availability of income tax calculators online has eased out the process of tax calculation. The e-filing process is also there to help the taxpayers in doing their duty conveniently. So, know the income tax rules and pay them on time.

LEAVE A REPLY

Please enter your comment!
Please enter your name here