Salaried employees constitute around 22% of India’s working population. While the joy of getting your bank account credited with salary might be immense, it also comes with tax liability. If you are a salaried employee, you must file an ITR every year if your income during that year exceeds the basic exemption limit.
Income tax return filing as a salaried employee is not just a legal obligation but also a smart financial move. While it is not mandatory to file ITR if your income is within the exemption limit, doing so helps you claim tax refunds, get easier loan approvals, and avoid penalties.
If you’re wondering how to file an income tax return online for salaried employees, this guide will help you understand the process and choose the right ITR form.
Which ITR Form is Applicable for Salaried Employees?
- ITR-1: ITR-1, also known as Sahaj, is an ITR form applicable to individuals whose income does not exceed Rs.50 lakhs. This form is appropriate for those who earn income from sources such as salary, pension, rent from single house property, interest, or dividends.
- ITR-2: ITR-2 is applicable to both HUF and individuals who meet the specific criteria. The criteria include not having income from a business/profession, holding foreign assets, being a director in a company, or investing in unlisted equity shares.
- ITR-3: ITR-3 is for individuals having income from business/profession along with salary, capital gain, and dividend income. However, salaried individuals cannot file ITR-3 unless they also have income from a business/profession.
- ITR-4: ITR-4 is applicable for those individuals with income upto Rs.50 lakhs, especially those with business income under presumptive taxation sections 44AD, 44ADA, and 44AE. However, ITR-4 cannot be filed by individuals who are directors of a company or have invested in unlisted shares of a company.
Why Should a Salaried Employee File Income Tax Returns?
Salaried employees should file income tax returns for the following reasons –
- Claiming Refunds – It is important to file your ITR if you want to claim an income tax refund, as it is the only way to prove that you have an income tax refund due from the Income Tax Department.
- Easy Loan Approvals – Your ITR acts as proof for banks and financial institutions. Even if your income is not taxable, it is always beneficial to file your ITR as it helps you get loan approvals easily.
- Visa Application – Some foreign embassies ask for your last 2 years’ ITR before applying for a Visa. It acts as proof of your income source in India and can increase your chances of getting the visa.
- Managing Capital Gains/ Losses: Even if your income is not taxable, if you file your ITR, you can carry forward your capital losses and set them off against profits for the subsequent 8 years.
- Avoid Penalty: Filing ITR helps you avoid penalties and notices. Irrespective of whether your income is taxable or not, there are certain incomes that must be disclosed. Therefore, you must file your ITR to avoid any penalties and notices.
How to File Income Tax Return for Salaried Employees?
If you are a salaried individual and are confused about how to file your ITR online for salaried employees, don’t worry! With Tax2win, you can experience seamless and hassle-free ITR filing. Whether you want to file your ITR yourself or need expert assistance, we have got you covered.
- File ITR Yourself
If you have some knowledge about taxes, you can consider filing your ITR yourself with Tax2win. Our AI-enabled e-filing software automatically selects the applicable ITR based on your income source and auto-populates most of the information to avoid manual entry. Moreover, with Tax2win, you can file your ITR in less than 4 minutes. Our user-friendly interface further makes it easier to complete your ITR-filing.
- Get Expert Assistance
If you find taxes confusing, don’t worry! Our CAs are here to help you every step of the way. Right from tax planning to tax filing and notice resolution, our experts can help you with everything related to taxes. All you have to do is get online CA services from Tax2win, share some necessary information, and let our experts handle your taxes for you.