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Online ITR For Salary Income: Even as the income tax department has enabled the online filing for ITR 1 and ITR 4, individuals can now start filing their income tax returns for the assessment year 2023-24 or the financial year 2022-23. The majority of tax filing in India are salaried individuals. Here is all you need to know about the salary income before filing your ITR:
‘Employee’ or ‘Consultant/Contractor’: It is only in the case of employer-employee relationship that the individual is taxed under the head “salaries”. In case of consultant, contractors and free-lance or gig-workers, the income may not be subject to tax as salary. The Income Tax Act, 1961 provides an option of presumptive taxation for specified professionals (such as medical, legal or accountancy professional, engineers). Here, in case of eligible taxpayer with gross receipts up to Rs 75 lakh, only 50 per cent of the gross receipts is considered as income of the taxpayer.
Due Date of Tax Return: An annual income tax return (ITR) is required to be filed by an individual in India by July 31 immediately following the end of the tax year i.e., July 31, 2023, for financial year (FY) 2022-23 and 31 July 2024 for FY 2023-24. In case of salaried employees who also have business income (where audit is applicable), extended timeline of 31 October or 30 November, may be applicable.
Choose Correct ITR: The tax filer needs to choose the correct ITR. While ITR 1 is the simplest form for tax filers not having business income, whereas ITR 4 is the simpler form applicable for tax filers opting for presumptive tax. There are several restrictive conditions for the simplified forms and you may be required to submit ITR-2 (no business income) or ITR-3 (business income), if ITR-1 is not applicable due to violation of such conditions.
Rebate: Resident individuals whose total income does not exceed the threshold limit of Rs 5,00,000 (under old regime) or Rs 7,00,000 (under the default regime) can claim a deduction in the form of rebate from the income tax. The rebate in case of resident individual opting for the old regime would be an amount equal to (i) 100 per cent of such tax or (ii) Rs 12,500, whichever is lower. The rebate in case of resident individual opting for the default regime would be an amount equal to (i) 100 per cent of such tax or (ii) Rs 25,000, whichever is lower.
Further, w.e.f. FY 2023-24, a marginal relief would be available to taxpayers under the default regime in case their total income is exceeding Rs 7 lakh and the income tax payable on the total income exceeds the total income over Rs. 7 lakhs. Such marginal relief would be computed as the difference between the income tax liability on the total income (before rebate u/s 87A) and the total income over Rs. 7 lakhs.
Section 80C- Deduction for Specified Investments: Section 80C provides a host of tax saving investment options to individuals such as Life Insurance Premium, Contribution to PPF, investment in Sukanya Samridhi Yojana, Principal repayment for Housing Loan, Tuition fees paid for children’s education in India, etc. However, the maximum amount of deduction available under this section is Rs. 1,50,000 for a particular financial year.
Deduction under Section 80TTA/TTB – Interest on Bank Deposits: These sections allow individuals to claim deduction against interest accrued in their bank accounts during the year. Section 80TTA allows deduction up to Rs. 10,000 on savings account maintained with a bank or a post office. In case of senior citizens, section 80TTB enhances the maximum limit to Rs. 50,000 and also allows interest received on time/fixed deposits.
Favourable Tax Treatment of Certain Perquisites: Non-monetary benefits provided by an employer to their employees in addition to salary or wages are termed as perquisites. For instance, rent free accommodation, use of motor vehicle, medical expenses reimbursement, interest free loan or loans at concessional rate to employees are some of the examples of perquisites. In several cases, the taxable value of perquisites in the hands of employees is much lower than the actual cost of such perquisite to its employer.
Exemption in respect of Remuneration of employees of foreign enterprises in certain cases: Such remuneration for services rendered during stay in India is exempt if the foreign enterprise is not engaged in any trade or business in India; his stay in the aggregate does not exceed 90 days in that financial year; and such remuneration is not liable to be deducted from the employer’s income chargeable to tax in India.
Remuneration of a non-resident for services rendered in connection with his employment on a foreign ship is exempt from tax if his total stay in India does not exceed 90 days in the financial year. However, the relevant tax treaty, if any, needs to be referred to in case of foreign employees rendering services in India.
Review and Reconcile Form 16, 26AS, AIS, TIS and Your Bank Statements: It is important to review and reconcile the information submitted in Form 16 as well as Form 26AS and Annual Information Statement (AIS)/ Tax Information Summary (TIS) before furnishing the return and in case of any discrepancies, take steps to correct the same. You must ensure that the credit for taxes paid by way of TDS, advance tax and TCS is duly reflected. This will reduce the chances of your return getting picked up for scrutiny or tax demands as well as expeditious processing of tax refunds.
The Income Tax department has enabled online filing of income tax returns (ITRs) 1 and 4, filed by individuals, professionals and small businesses, for the financial year 2022-23 (or assessment year 2023-24).
In a tweet, the income tax department said, the software/utilities for preparing other ITRs/ Forms will be enabled shortly.
(The author is the founder of tax and risk advisory firm RSM India)
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