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Which form is used for filing ITR by a salaried employee?
A salaried employee receives a fixed amount of income from an employer for providing services under a contract of employment. The aforesaid income include salary, allowances, perquisites, and other benefits. The salaried employee is required to pay income tax on the income earned from employment during the assessment year under consideration after deducting the eligible deductions and exemptions under the Income Tax Act 1961.
The salaried employee is required to file an income tax return every year if his gross income exceed Rs. 2,50,000/-. Salaried person is required to report his details of income, deductions claimed, taxes paid, and refund claimed, if any as per the ITR form. Taxcellent helps you to file Income Tax Return in Delhi as well as anywhere in the world as per Income Tax Provisions
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What are the Basic Exemption Limits for FY 2022-23 and FY 2023-24?
Individuals having annual income of Rs. 3,00,000 or higher are liable to file their Income Tax Returns (ITR) under the new tax regime irrespective of their age. Whereas, under the old tax regime, the basic exemption limits were as follows:
- Rs 2.5 lakh for individuals below 60 years
- Rs 3 lakh for senior citizens between 60 to 80 years
- Rs 5 lakh for super senior citizens.
An assessment is mandatorily required to file their ITR if:
- Such assessee has income from multiple sources, such as investments, rental income, capital gains, and income from others sources.
- Such person has investments in foreign country or earnings from foreign assets.
- Deposits in current accounts for more than one crore rupees.
- If payment over Rs 1, 00,000 as electricity charges made in a year.
- Payments exceeding Rs 2, 00,000 for foreign travel made during a financial year.
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What are the documents required for filing an ITR by a salaried person?
An assessee needs to collect all the documents that are relevant to your income tax filing. These include Form 16 (TDS certificate) and any other documents that reflect incomes, deductions, and exemptions. However, if an assessee don’t have Form 16, then also income can be computed for offering it in ITR using other documents like salary slips, bank statements, and investment statements.
An assessee can also get information about their TDS and TCS from Form 26AS as available on TRACES through the Income Tax Portal. Other relevant documents such as Form 16A, documents related to exemption u/s Section 80D and 80U, and Capital gains statement are useful for income tax calculation if applicable.
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Applicability of ITR form for salaried employees
- Form ITR-1: ITR-1 is a simplified tax form provided by Income Tax Department for resident individuals whose total income is equal to or less than INR 50 lakh. This form is applicable for those who earn income from sources such as salary or pension, rental income from a one house property, and other sources like interest or dividends. Additionally, individuals with agricultural income up to INR 5,000 can also use this form.
- ITR-2: Form ITR-2 is applicable for both individuals & Hindu Undivided Families (HUFs) meeting specific criteria. The form is not applicable to person engaged in any profession or business. It is also applicable to an assessee who qualifies to file ITR-1, however such person hold foreign assets or has investment in unlisted equity shares, or being a director of any company.
- ITR-3: ITR-3 is used by such individuals who earn business and professional income in addition to income from other sources like salary, capital gain, interest, dividend income. However, the same is not applicable to salaried individuals unless they have earned income from business or profession.
- ITR-4: ITR-4 is applicable to those individuals with total income up to INR 50 lakh, specifically those with business income under presumptive taxation scheme as per sections 44AD, 44ADA, or 44AE. It’s pertinent to note that ITR-4 cannot be used by individuals who hold positions of a directors in any company or have invested in unlisted shares of a company.
ITR-1 and ITR-2 are typically suitable for salaried taxpayers, the applicability of the appropriate ITR form depends on the nature of an assesse income.
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When can a salaried individual file ITR?
If an assessee is employed, then such assessee should only file an income tax return when their income goes beyond a threshold limit. For the financial year 2022-23, both the old and new tax regimes have a basic exemption limit of ₹2.5 lacs. However, for the financial year 2023-24, the exemption limit under the new tax regime has been increased to ₹3,00,000 whereas for older regime, it remains same.
For better understanding, if an assessee is a salaried individual, then such person needs to file their income tax return for FY 2022-23 (Assessment Year 2023-24) only if their annual income exceeds ₹2,50,000.
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What are benefits of filing Income Tax Returns?
- Claiming Refunds: If an assessee has paid tax in advance, according to their self-assessment & is more than the tax owed according to the regular assessment, then such assessee is eligible to claim a refund. By filing an Income Tax Return (ITR) for a financial year allows everyone to request a refund for excess tax deductions, including refunds related to Tax Deducted at Source (TDS) on rent or fixed deposits.
- Loan Applications: An ITR is a most important financial document which substantiate the details of annual income. Banks and financial institutions are required as a proof when loans are applied, such as home loans or education loan. Even if income isn’t taxable, filing an ITR helps in obtaining loan approval.
- Visa Application: Foreign embassies always ask for your ITR acknowledgement of past three years when a person apply for a visa. This document substantiates income source in India and can increase the chances of obtaining visa.
- Capital Gains or Losses: Filing an ITR is helpful for individuals who invest in the stock market. Based on the ITR submitted for a financial year, short-term or long-term capital losses can be carried forward for up to eight years.
Taxcellent helps you in preparing tax computation as well as timely filing of ITR in India.
Taxcellent helps you in claiming tax refunds by filing ITR. We also helps you in obtaining loans such as business loans or home loans.
