Income tax in India is imposed by the Government of India. Everyone who is earning in India has to pay income tax. The income could be pension, salary, or could be earnings from a savings account. Income Tax is a tax you pay directly to the government based on your income or profit. Income tax is collected by the Government of India. Taxes are of two types - direct tax and indirect tax.
Filing taxes is a mandatory affair in the country, as long as you meet some basic eligibility criteria. Being a resident of the country along with earning more than the minimum threshold of Rs. 2,50,000 during a fiscal year are the most prominent ones. As an acknowledgement for filing Income Tax returns, tax-payers are provided with ITR-V. It stands for Income Tax Return Verification; the IT department generates this for taxpayers to verify the legitimacy of their e-filing. It applies only to those who file without a digital signature.
Steps to Download ITR-V
It is very easy and simple to download your ITR-V. You can download it online from the official website of the Income Tax Department, Government of India from the comfort of your home and office. You can follow these steps below:
Visit the official website of the Income Tax Department of India and log in using your credentials.
Click on the View Returns/Forms option to see your e-filed tax returns.
Select the acknowledgement number to download the ITR-V. You also have the option to e-verify your income tax account. To e-verify, select the option ‘Click here to view your returns pending for e-verification’.
After e-verification, select the option ITR-V/Acknowledgement to begin the download.
The following file will be downloaded as a locked PDF document, which requires a standard password for access.
The password is your Permanent Account Number followed by your date of birth.
Additional Reading: Know Your Income Tax Rates: Income Tax Slabs
When and Who needs an Income Tax Clearance Certificate?
An income tax clearance certificate is required to ensure that a non-resident has duly paid all the taxes on the income earned in India using employment or business before he leaves the country. The following 3 conditions have to be met to check the requirement of income tax clearance certificate:
a. He/She is not a resident of India;
b. Has come to India in connection with business, profession or employment; and
c. Has income derived from any source in India
Why is Income Tax Returns Important to File?
An income tax return is a legal document that stands as your proof of income. Even if you are not eligible for filing a return and are not mandated by the Income Tax department, it is advisable to file your IT return. Apart from financial discipline, filing income tax returns has several advantages.
To put it simply, your Income Tax Return is a summation of all your incomes from various sources in the said financial year, your tax liabilities, the tax you have already paid and any refunds you are liable to. It is important to file your income tax return as it is a disclosure of your income. It is considered legal proof of your income.
Filing your income tax return on time has many benefits. You can apply for refunds if your tax liability is lower than what you have already paid. Income tax returns are also important while applying for loans. Some banks also ask for IT returns against an application for credit cards. If you are a corporation, you can apply for tenders. If you are a startup, you can apply for funding if you have filed your income tax returns timely. Even if you are not eligible for income tax returns, it is advisable to file your returns as it is a legal proof of your income and can be used later for loans or credit cards.
Important Dates Pertaining to Income tax
Some of the important dates to remember for individuals who fall under the bracket to pay Income Tax for the year (FY 2019-20 & AY 2020-21) is mentioned in the table below:
Before January 31 - Individuals must submit their proof of investment
Before March 31 - It is the deadline before which any investments under Section 80C of the Income Tax Act, 1961 must be made
Before 31 July - Due date to file an income tax return
Between October and November - Tax returns must be verified
Additional Reading: What types of incomes are taxable in India?
Income Tax Deductions and Return
Income tax deductions help you to reduce your tax liability as they lower your net taxable income. For example, if you invest in an ELSS mutual fund, you qualify for a deduction of up to Rs. 1.5 lakh under Section 80C. This amount is then deducted from your gross income to give you your net taxable income.
The Income Tax Act allows you to claim deductions under several Sections when you make certain investments or expenditures. For instance, Section 80D allows you to claim up to Rs. 15,000 for health insurance premiums and Section 24B allows you to claim up to Rs. 2 lakhs based on home loan interest repayment.
An income tax return is a mode via which you can file returns at the close of the financial year. Through this form, you provide tax details such as your gross income, annual deductions, and net liability. Depending on your profile, you will have to choose the right one from the 7 ITR forms available. For instance, individuals earning less than Rs. 50 lakhs can use ITR-1, proprietors can use ITR-3 and those under the presumptive tax scheme can use ITR-4.
Income tax certificate comes in the form of ITR-V. This certificate can be received when you file your I-T return online. The I-T Department needs to verify the authenticity of your e-filing which does not have a digital signature. On receipt of Form ITR-V, you have to sign the copy of the form and submit it to the I-T Department CPC, Bangalore to complete the filing process.