ARE YOU SALARIED? FILE YOUR OWN INCOME TAX RETURN

WHAT ALL TO BE INCLUDED IN SALARY?

As per section 17(1) of the Income Tax act, 1961 salary includes

(i) wages;

(ii) any annuity or pension;

(iii) any gratuity;

(iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;

(v) any advance of salary;

(vi) any payment received in respect of leave not availed;

(vii) the annual accretion of RPF

(viii) transferred balance in employee’s RPF

(ix) employer contribution to pension scheme (section 80CCD)

(x) CG contribution to Agniveer Corpus Fund of the individual (section 80CCH)

Pro Tip: Arrears of salary is taxable in the year in which it is received. But do you know there is a benefit for it under section 89(1).

INCOME FROM SALARY: HOW TO IDENTIFY?

(i) The relationship between payer and payee should be of an employer and employee.

(ii) Employer may be an individual, firm, association of persons, company, corporation, Central Government, State Government, public body or a local authority. Employer may be operating in India or abroad.

(iii) The employee may be a full-time employee or part-time employee.

WHEN TO FILE SALARY ITR?

As a general rule, an individual must file ITR if his total income exceeds the basic exemption limit.

The table below shows the basic exemption limits as per new and old tax regime for different age groups:

Age Group	Old Tax Regime (FY 2023-24)	New Tax Regime (FY 2023-24)
Below 60 years	₹2,50,000	₹3,00,000
60 to 80 years	₹3,00,000	₹3,00,000
Above 80 years	₹5,00,000	₹3,00,000

However in below cases even if total income does not surpass the basic exemption limit, return filing is mandatory:

• If you’ve deposited Rs 50 lakh or more in your savings accounts.
• If deposited Rs 1 crore or more in current accounts within a financial year.
• When your gross receipts or annual sales turnover exceed Rs 60 lakh.
• If your professional income surpasses Rs 10 lakh in the previous financial year.
• If paid an electricity bill over Rs 1 lakh in a FY.
• If your TDS or TCS totals Rs 25,000 or more (Rs 50,000 for senior citizens).
• Spending more than Rs 2 lakh on foreign travel.
• Owning or being a beneficiary of a foreign asset, or having signing authority in a foreign account.

Pro Tip: It is always recommended to file ITR in the year when sale or purchase of immovable property takes place to reduce the chances of unnecessary litigation.

LAST DATE TO FILE SALARY ITR

• The last date to file Income Tax Return (ITR) for FY 2023-24 (AY 2024-25) for salaried individuals, without a late fee is 31st July 2024.
• Taxpayers filing their return after the due date will have to pay interest under Section 234A and a fee under Section 234F.

WHAT ARE BENEFITS TO FILE ITR ON TIME?

Filing your Income Tax Return (ITR) timely offers several benefits, including:

1. It helps you avoid late filing interest and penalties which can go upto Rs.10,000.

2. Losses in business or capital gains can be carried forward and set off against future income only if the ITR is filed on time.

3. Timely filing ensures compliance with the law, avoiding any notices or such other actions from IT department.

4. If you are eligible for a tax refund, filing your ITR on time ensures quicker processing and receipt of the refund.

5. Option to switch to Old Tax Regime is available only before due date of filing ITR.

TIME OF TAXABILITY OF SALARY

Salary is taxable on “due” or “receipt” basis whichever is earlier as per section 15 of the Income Tax Act.

Let’s understand with the help of below illustrations:

1. Mr. A’s salary is due on the last day of each month but is received on the 10th of the following month. Hence, March 2024’s salary which is due on March 31, 2024, but received on April 10, 2024, will be taxed in the FY 2023-24 on a due basis.

2. If Mr. B receives an advance salary for April and May 2024 in March 2024, this advance salary is taxable in the financial year 2023-24 on a receipt basis because it was received in March 2024, even though it is not due until April and May.

ITR FORMS APPLICABLE FOR ‘INCOME FROM SALARY’

Following ITR forms are applicable for salaried individuals depending on the source of income other than salary:

ITR 1 (SAHAJ)	Applicable for a resident individual (other than not ordinarily resident) having total income up to ₹50 lakh from sources such as salary/pension, one house property, other sources (interest, family pension, dividend, etc.), and agricultural income up to ₹5,000.
ITR 2	Applicable for individual/HUF not having income under the head profits and gains of business or profession and who is not eligible for filing ITR-1.
ITR-3	Applicable for individual and HUF having income under the head profits and gains of business or profession and who is not eligible for filing ITR-1, ITR-2, or ITR-4.
ITR-4 (SUGAM)	Applicable for an individual or HUF, who is resident other than not ordinarily resident, or a firm (other than LLP) which is a resident having total income up to ₹50 lakh and having income from business or profession computed on a presumptive basis (u/s 44AD, 44ADA, 44AE) and income from any of the following sources: salary/pension, one house property, other sources (interest, family pension, dividend, etc.), agricultural income up to ₹5,000.

CHOOSING BETWEEN OLD VS NEW TAX REGIME

The most persistent question? – which regime should we choose – New Tax Regime and Old Tax Regime ?

• W.e.f A.Y. 2024-25, new tax regime is the default tax regime for the assessee being an Individual, HUF, AOP (not being co-operative societies), BOI and Artificial Juridical Person.
• In case of “non-business cases”, option to choose the regime can be exercised every year
  directly in the ITR to be filed.
• In case of business income the assessee would be required to furnish Form-10-IEA to switch to old tax regime. The option will be available only once in lifetime.

STEP-BY-STEP ON HOW TO E-FILE ITR ON THE INCOME TAX PORTAL

Step 1: Login

•   Visit the official Income Tax e-filing website and click on ‘Login’.

•   Enter your PAN in the User ID section.

•   Click on ‘Continue’.

•   Check the security message in the tickbox.

•   Enter your password

•   ‘Continue’

Step 2: Click on the ‘e-File’ tab > ‘Income Tax Returns’ > ‘File Income Tax Return’

Step 3: Select the ‘Assessment Year’. Use the mode of filing as ‘Online’. Select the filing type correctly as original return or revised return.

Step 4: Select your applicable filing status: Individual, HUF, or Others.

Step 5: Select the ITR type which is applicable to you

Step 6: Choose the reason for filing ITR

Step 7: Validate your information carefully before you proceed further. Also, provide your bank account information.

Confirm the summary of your returns, validate the details and make the payment of balance taxes, if any.

Step 8: e-Verify ITR

Verify your return within the time limit (30 days). Failing to verify your return is equivalent to not filing it at all. You have the option to e-verify your return using different methods such as Aadhaar OTP, electronic verification code (EVC), Net Banking, or by sending a physical copy of ITR-V to CPC, Bengaluru.

Pro Tip: Try to avoid sending physical copies as it may lead to not getting accurately reflected on your IT Portal.

MASTER BRAINS CONSULTANTS: ONE STOP SOLUTION FOR YOUR ITR NEEDS

Contact Master Brains Consultants to understand more about the deductions, exemptions and benefits available to salaried taxpayers.

You can always prepare your return on your own and take the advise of Master Brains Consultants to review it to ensure all deductions & benefits are covered and disclosures are as per Income Tax Act.

However, if you think there are certain complications like sale-purchase of property, trading of shares/futures/options/crypto, salary is over 50 lacs, etc. Then getting a professional to guide you in preparation and filing of ITR is preferred so that you do err in disclosure requirements.

Reach out to our experts at +91-8595867402 or email us at masterbrains.office@gmail.com and our team will take it forward from there.