ITR is one of the most dreaded words for almost all salaried employees. Most of us have our taxes deducted at source yet, most individuals somehow find the process of filing the ITR tricky as we often get confused about the forms, deductions and exemptions. Hence, we end up either outsourcing the task or not filing the ITR at all.
So today, with the due date fast approaching to file the ITR, let’s deep dive and simplify the ITR filing process for salaried employees.
Benefits of Filing ITR
- Easy Loans
Irrespective of the fact that you have a taxable income or not, filing your ITR increases your prospect of loan approval as compared to an individual with the same income but no ITRs.
- Visa Application
Most countries ask for the ITRs of 2-3 years to assess if you are a good source of revenue in your country. ITR filing also eases the visa approval process.
- Claim Tax Refunds
In case you could not submit the proof of your savings in time to the accounts department and your TDS was deducted, filing your ITR ensures that you get a refund of any extra tax deducted at source.
- Set off Capital Gains and Losses
If you invest in the equity market and have incurred losses. You can set off those losses by carrying them over upto 8 years.
ITR Forms for Salaried Employees
- ITR-1 (Sahaj)
ITR-1 is meant for employees who have a total income of up to ₹50,00,000 including earnings under the ‘Income from Other Sources’ alongside salaries. Also, to file an ITR-1, an assessee should not have more than one house property and your income from agriculture should not exceed ₹5,000.
ITR-2 is meant for employees whose total income is greater than ₹50,00,000. And have individuals more than one house property. You can also use ITR-2 form, if you get a revenue/income from capital gains and/or other sources, but not from profits or gains from business or profession.
ITR-3 is to be filed if you receive income from salary, business or profession, house property (one or multiple), capital gains, and other sources.
Points to take care of while filing the ITR
- Choose the right Tax Regime
If you are wondering how to go about figuring out whether you should opt for the new or the old tax regime, you can use this calculator to determine your tax liability as per both regimes and know which one saves you more money.
- HRA [Section 10-13A]
- Leave Travel Allowance [Section 10(5)]
It is an exemption for allowance/assistance received by the employee from his employer for travelling on leave. This exemption is available for only two journeys performed in a block of four calendar years.
The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. The exemption is also limited to LTA provided by the employer.
For example, if the LTA granted by the employer is Rs 30,000 and actual eligible travel cost incurred by the employee is Rs 20,000, exemption is available only to the extent of Rs 20,000 and balance Rs 10,000 would be included in taxable salary income.
In case an employee has not availed exemption with respect to one or two journeys in any of the block of 4 years, such exemption can be carried over to the next block provided she/he avails this benefit, in the first calendar year of immediately succeeding block.
- Children Education and Hostel Allowance [Section 10(14)]
You can claim the following as well
- Children’s Education Allowance: INR 100 per month per child up to a maximum of 2 children.
- Hostel Expenditure Allowance: INR 300 per month per child up to a maximum of 2 children.
It amounts to Rs.9600 annually which can be claimed against such expenditure made.
You can claim reimbursement of expenses made by you on behalf of the company you work for by submitting the original bills to the employer. Such payments should be taken as reimbursement and not as special allowance. As such reimbursements are tax exempt.
Meal coupons provided by the employer are tax exempt u/s 17(2)(viii). The value of such coupons should not exceed Rs 50 per meal and can be given for two meals per working day.
A calculation based on 22 working days and 2 meals a day results in a monthly benefit of Rs 2,200. The annual allowance for meal coupons works out to be Rs 26,400 and is tax-exempt in the hands of the employee.
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