Filing of income tax returns by salaried Individuals

Whether ITR-1 or ITR SAHAJ is really much SAHAJ (simple) as it is portrayed, or it has some hidden secrets? 

Let us learn.

1. Applicability (who can file ITR-1 Sahaj)

Following are the conditions which can be considered as eligibility to file Income tax return 1 Sahaj

• Individuals who is Resident in India
• Income for the financial year does not exceed Rs 50 lacs 
• Income consist of Income from Salary or pension or
• Income from ONE HOUSE PROPERTY (if individuals have more than one house property, he should not file ITR-1) or 
• Income from other sources.

To check above eligibility criteria in opposite way we can get in-eligibility to file ITR-1 Sahaj

• Individual who is Director in any Company or LLP
• Individual who has held shared of unlisted Company during the year
• Individual has any financial asset outside India or financial interest in any entity outside India  
• Individual having income from any source outside India.
• Person having income from business, agricultural income, income from more than one house property

2. What are the common ‘neglected Income sources’ earned by Salaried persons while filing ITR 1 Sahaj and if such incomes are earned then they not eligible to file ITR 1 Sahaj

As we discussed who is eligible to file ITR-1 and discussed what are the income which forms part of ITR 1 Sahaj. Now lets see few examples of Income which an Individual earns but are prone to get neglected while filing ITR.

• Income from trading in share market can be classified as business income, speculative income or capital gains income based on the period of holding the shares and bonds.
• Government employees receiving arrears of Salary as may be revised by Pay Commission, Department of Expenditure of State and Central Governments.
• Maturity of Life insurance premium where premium payments were more than 10% or 20% of sum assured.
• Amount realized from Sale of Mutual Fund / Maturity of SIP’s can be classified as income from short-term or long-term capital gains.
• Maturity of Equity Linked Savings Scheme (ELSS) of life insurance companies can be categorized under capital gains income.
• Income from house property purchased in the name of spouse who is dependent on individual can be clubbed under income of the individual by the provision of income tax act.

Above are few examples of Income which Salaried persons may have earned but go undisclosed while finalizing income tax return (ITR-1)

3. Impact of Finance Act 2020, applicable for FY 2020-21 onwards

Finance act, 2020 has made many changes in the personal taxation which requires taxpayers to check all the sources of income earned during the year and its taxation.

Some of the changes suggested by Finance Act 2020 are

1. Change in the definition of residential status of individuals
2. Dividend are taxable in the hands of receiver
3. Alternative tax slab rates without claiming deduction under section 80C
4. TDS on interest on securities
5. TDS on dividend from Companies and Mutual Funds.

4. Filing of ITR with AVENIR BUSINESS ADVISORs

So as discussed above, there can be lot of queries and analysis to be done before filing income tax return for salary earning individuals.

We at AVENIR BUSINESS ADVISOR have detailed procedure mentioned below to finalise the income tax return

1. Checking FORM 16 provided by the employer.
2. Checking Form 26AS to tally TDS deducted by employer with Form 16.
3. Checking Form 26AS for any other income earned by taxpayer.
4. Scrutiny of Bank statement to check any income earned by taxpayer not reflected in Form 16 or 26AS. 
5. Discussion with taxpayer about transfer of monies and properties to spouse or relatives and check applicability of clubbing of income provisions.
6. Scrutiny of DEMAT account statement and Mutual fund statements 

Above procedure are conducted to prepare error free and transparent income tax computation for the taxpayer which can assist him in filing the ITR-1 Sahaj and for his or her financial planning.

5. Concluding remarks:

Filing of ITR-1 Sahaj may be a simple one but preparing the income computation sheet and noting all the sources of income earned during the year might require you to take help from an expert.

Please remember, income not disclosed in ITR can attract penalties upto 100% of the Income as per section 147 and section 148 of the Income tax Act, 1961.

So, we will suggest you visit your Financial Doctor, get your income health checkup done and then proceed to file the income tax return.

Don’t play with Income tax department as the world is becoming more and more digital and your PAN, AADHAR card and bank accounts are all linked. Income tax department has power to scrutinize the income you report in the income tax return with all the available source with them.

We at Avenir Business Advisor offer ITR-1 Sahaj filing assistance starting from Rs 500/- per ITR. Remember, filing income tax return is a one-time task in a year. 

So, be aware before you go to online sources/websites which offer filing of income tax returns for free. Filing of ITR-1 Sahaj might be an easy task but analyzing the income earned by you might require an expert. 

Decision is yours. 

Filing ITR -1 through online facilities/ websites for free is SAHAJ but fling ITR-1 after analyzing your income earned is always a decision taken with SAMAJH (a wise decision)