How to File ITR for Salaried Employees?

When it comes to financial responsibilities, management, and taxation, filing the ITR diligently is an important step for salaried employees. Filing the ITR for salaried persons is a crucial step that ensures legal compliance while allowing effective financial management. 

A salaried employee is an individual who receives a fixed salary each month from an employer for providing their services. The income includes the salary, perquisites, allowances, and other benefits. Under the Income Tax Act 1961, every salaried employee should file an ITR and pay income tax after deducting all exemptions and deductions.

The following sections explain how to file ITR for salaried employees to complete the task more efficiently.

Who Should File ITR?

Before digging into how to file income tax return online for salaried employee, let’s understand who should file them. Individuals falling into the following categories must file ITR:

• An individual whose gross income exceeds the basic exemption limit before exemptions or deductions under sections 80C, 80CCD, 80D, 80TTB, and 80TTB. 
• A person with earnings or investments in foreign assets.
• An account holder with deposits over Rs 1 Crore in their current accounts.
• An individual who spends more than Rs 2 Lakh on a foreign trip.
• An assessee who pays more than Rs 1 Lakh on electricity bills annually.

ITR Form for Salaried Employee

A salaried person may use any of the following ITR forms according to their eligibility:

1. ITR-1: An individual earning up to Rs 50 Lakh from salary, agriculture, house property, or other sources must use the ITR-1 form to file an ITR. However, the assessee must not own more than two house properties, and their agricultural income should not exceed Rs 5,000.
2. ITR-2: HUFs and individuals without income from profession or business should file the ITR using form 2. Moreover, people with more than one residential property should file ITR-2. Additionally, those who generate income from capital gains or other sources besides business or profession should also use this form.
3. ITR-3: Salaried employees receiving income from profession, business, house property, capital gains, and other sources should use Form 3 to file ITR.

Documents Required for Filing ITR for Salaried Person

One must provide these documents to file an ITR for a salaried person: 

• Aadhaar card 
• Pan card
• Salary slips
• Bank statement/Passbook
• Form 16, 16A, and 26AS
• Capital gains statement
• Exemptions under Section 80D and 80U

How to File Income Tax Returns Online?

After gaining familiarity with filing ITR for salaried persons, let’s elaborate on how to file ITR for salaried employees. Simply follow these steps:

• Visit the e-filing portal of the Income Tax Department. 
• Log in to the portal with a user ID (PAN), password, and a CAPTCHA code. One may also sign up using their PAN as a User ID. 
• Reach the e-file section, click ‘Income Tax Return’, and select the relevant assessment year. 
• Select and download the appropriate ITR form.
• Select the filing type as ‘Original’ if it is not a revised return.
• Choose the submission mode.
• Fill in the ITR form and ‘Save The Draft’. 
• Calculate the payable tax amount, pay the tax, and enter challan details in the ITR.
• Select ‘Submit’ to file ITR online.
• Verify the return through an Aadhaar OTP, bank account number, Demat account number, registered mobile number, net banking, or bank ATM.

How to File Income Tax Returns Offline?

Follow these steps to file ITR for a salaried person offline:

• Visit the Income Tax e-filling Portal. 
• Navigate to Downloads > IT Return Preparation Software and download the ITR utility.
• Open the utility after successfully downloading the zip files.
• Fill out all the applicable and mandatory fields in the ITR form.
• Validate the tabs and calculate the tax.
• Once the XML is generated successfully, save it at a relevant location on the computer.
• Use a password, PAN, and Captcha to log in to the portal.
• Look for the “e-file” menu and click “Income Tax Return”.
• Choose the “Assessment Year”, “ITR Form Number”, “Original/Revised Return”, and click “Prepare and Submit Online.”
• Choose tax return, Aadhar OTP, or EVC for verification.
• Click “Continue.”
• Attach the ITR XML file.
• Attach the signature file for the DSC verification method.
• Enter the Aadhar Number and OTP.
• Enter the EVC and submit the ITR.

When should a Salaried Employee File an ITR?

Is it mandatory to file ITR for salaried persons? According to the current income tax law, filing the ITR is compulsory only if an individual's annual gross income exceeds a basic exemption limit. Here are a few conditions that apply:

• The basic tax exemption depends on the individual’s age and chosen tax regime.
• An individual below 60 must file ITR if their gross total income exceeds Rs 2.5 Lakh in a financial year under the old regime and Rs 3 lakh under the new regime. 
• Investors looking for twin engines of quality and growth must file ITR, which includes investments in technology and human capital.
• Senior citizens must file ITR if their income exceeds Rs 3 Lakh under the old tax regime and Rs 2.5 Lakh under the new tax regime.
• Super senior citizens above 80 have a basic exemption limit of Rs 5 Lakh under the old tax regime and Rs 2.5 Lakh under the new tax regime.

Why should Salaried Employees File ITR?

Filing the ITR helps a salaried taxpayer in the following ways:

• Claim Refunds: Based on self-assessment, if an individual pays more tax in advance, they can claim a refund for excess tax deductions, including TDS on fixed deposits or rent.
• Simpler Loan Approvals: ITR is a crucial document lending institutions require as proof of income. Even if the income is not taxable, an ITR makes the approval process for a Personal Loan easier for salaried employees from Hero FinCorp or any other lending institution.
• Visa Application: Some foreign embassies request ITR receipts when approving a visa. It demonstrates an individual’s income source in India and enhances the chances of obtaining a visa.
• Capital Management: Filing the ITR is particularly beneficial for stock market investors. Based on the ITR, an investor can carry forward the short-term capital losses for up to eight years.

Last Date of ITR Filing for Salaried Employees

The income tax return filing date for salaried employees is generally 31st July of the subsequent financial year. For instance, the ITR filing's last date for salaried employees for FY 2023-24 is 31st July 2024. However, the Central Board of Taxes may extend this date as deemed suitable. For instance, for FY 2019-2020, the authority extended the last date to 31st December 2020 due to the pandemic. 

If an individual misses the last date, they can still file a belated return under Section 139(4) or file the return after paying a late filing penalty under Section 234F of the Income Tax Act.

Conclusion

Filing an ITR for a salaried person is essential to avoid legal complications in India. Furthermore, it offers several benefits to the taxpayer. Therefore, follow the above online and offline process to file the ITR accurately before the ITR filing last date for salaried employees.

Frequently Asked Questions

1. Which ITR is required for salaried employees?

ITR-1, or SAHAJ, is a simplified tax form for resident individuals with a total income below Rs 50 lakh. It is a deal for those earning from sources like salary, pension, rent from a single-house property, and other income like interest and dividends.

2. Can a salaried person file ITR-1 or 2?

ITR-1 is necessary for individuals earning up to Rs 50 Lakh from salary, agriculture, house property, or other sources. ITR-2 is for HUFs and individuals with no income from profession or business.

3. How much salary is required for ITR filing?

An individual earning up to Rs 50 Lakh from salary, agriculture, house property, or other sources must file an ITR.

4. What will happen if we don't file ITR?

Those who do not file the ITR before the income tax return filing last date for salaried employees can still file a belated return under Section 139(4) or file the return after paying a late filing penalty under Section 234F of the Income Tax Act.

5. Is ITR 1 for salaried employees?

ITR-1 is necessary for individuals earning up to Rs 50 Lakh from salary, agriculture, house property, or other sources.

Disclaimer: The content presented in this blog is derived from research and is subject to potential variations depending on the year or any new amendments.