How to File ITR for Salaried Employees: Step-by-Step Guide

Filing income tax returns is important for every salaried employee, even if you don’t have any tax liability towards the government. The tax returns act as proof of income, which helps you to get access to various financial products like loans. 

For the assessment year or Financial Year, the last date to file your income tax return is 31st July. Therefore, before this date, you need to file your income tax returns or else you have to pay late fees. 

Any person employed in a public or private enterprise, drawing monthly remuneration in the form of salary needs to file income tax returns. If you are confused or don’t know how to file income tax returns online, this blog is for you. 

Before starting to file your income tax returns online, you need to calculate your total income for the financial year. 

The Form-16 issued by your employer helps to find out the total income you have earned through salary and total taxes deducted from the source. But, if you have other income sources like capital gains, house rental income, then you need to calculate beforehand. 

For salaried employees, there are two types of income tax return forms, ITR-1 and ITR-2. The ITR-1 is for individuals who have a total income of not more than INR 50 lakhs* from salary. Those whose income has crossed this threshold and who wish to claim expenses under the head “income from other sources” should consider filing ITR-2. 

Who is a salaried employee for e-filing of ITR?

A salaried employee, for tax purposes, is someone who earns a fixed income from an employer through an employment contract. This income includes salary, allowances, and benefits. They're required to pay income tax on their earnings after deducting eligible exemptions and deductions, according to tax laws. Filing an annual tax return is mandatory for salaried employees to report income, deductions, taxes paid, and refunds claimed. This ensures compliance with tax regulations and helps accurately assess tax liabilities and entitlements, promoting financial transparency and adherence to laws.

What are the Required Documents for a Salaried Person to File an ITR?

Ensure you gather all necessary documents for your income tax filing, including Form 16 (TDS certificate) and any other papers showing your income, deductions, and exemptions. If you lack Form 16, you can still calculate your income using alternate documents like salary slips, bank statements, and investment statements.

Access Form 26AS on TRACES through the Income Tax Portal to obtain information about your TDS and TCS. Keep Form 16A, along with exemptions under Sections 80D and 80U, and a capital gains statement, if applicable, readily available for reference.

Which ITR form is Applicable for Salaried Employees?

There are 4 ITRs available for different situations. The selection of the appropriate form depends on the nature of the income, which is critical for accurate tax filing. 

ITR-1 (also known as SAHAJ): Simplified form for resident individuals with total income below INR 50 lakhs. Suitable for those earning from sources like salary/pension, single-house property rent, interest, dividends, and agricultural income up to INR 5,000.

ITR-2: Intended for individuals and HUFs not qualifying for ITR-1. Applicable for those with foreign assets, unlisted equity shares, or directorships in a company.

ITR-3: For individuals with business/professional income alongside other sources like salary, capital gains, interest, and dividends.

ITR-4: Meant for individuals with income up to INR 50 lakhs, especially those under presumptive taxation sections 44AD, 44ADA, or 44AE, excluding directors or investors in unlisted shares.

When Should a Salaried individual File ITR?

As a salaried individual, it's crucial to file your income tax return only if your annual income exceeds the threshold limit. For FY 2022-23 (Assessment Year 2023-24), both old and new tax regimes maintain a basic exemption limit of INR 2,50,000. However, in FY 2023-24, the exemption limit under the new regime increases to INR 3,00,000. 

Essentially, you're required to file your income tax return for FY 2022-23 if your yearly income exceeds INR 2,50,000.

Why Should Salaried Individuals File Income Tax Returns?

A few reasons why salaried individuals should file income tax returns are:

Managing Capital Gains or Losses: Filing an ITR is beneficial for stock market investors as it allows carrying forward short-term capital losses for up to eight years, based on the submitted ITR.

Claiming Refunds: If the tax you've paid in advance exceeds your actual tax liability, you can claim a refund. Filing an Income Tax Return (ITR) allows you to request refunds, including those related to excess Tax Deducted at Source (TDS) on rent or fixed deposits.

Simplified Loan Applications: Financial institutions often require ITR as proof of income for loan applications, even if your income isn't taxable. Filing an ITR can enhance your chances of loan approval.

Visa Application: Some foreign embassies may request ITR receipts from the past two years for visa applications. This demonstrates your income source in India and can improve your visa approval prospects.

Basic Exemption Limits for FY 2022-23 and FY 2023-24

How to File Online ITR for Salaried Persons?

Steps to File ITR-1

Income Tax Returns can be filed offline and online, i.e., in two different ways.

Online

Follow the below steps for filing ITR online.

Step 1: Visit the Income Tax e-filling Portal. 

Step 2: Use your PAN No., Password, and Captcha to log in to the e-Filing Portal.

Step 3: Look up the “e-file” menu on the bar. Click on the “Income Tax Return” link.

Step 4: Once you are on the page, expect the following.

• PAN Details will have auto-populated values.
• Choose the “Assessment Year”
• Choose the “ITR Form Number”
• Under the Filing Type, choose “Original/Revised Return.”
• Click on “Prepare and Submit Online” present under “Submission Mode.”

Step 5: Click on Continue 

Step 6: Before proceeding, go through the instructions, and fill out all the mandatory details.

Step 7: Select the accurate verification type under the “Taxes Paid and Verification” tab. To verify your Income Tax Return, choose any one of the following: 

• I would like to e-Verify
• I would like to e-Verify within 120 days from the date of filing
• I don't want to e-Verify and would like to send signed ITR-V through normal or speed post to "Centralized Processing Center, Income Tax Department, Bengaluru - 560 500" within 120 days from the date of filing.

Step 8: After verifying all the data in the ITR, click on the “Preview and Submit” button.

Step 9: Submit your ITR

Step 10:Choose the e-Verify option and provide the OTP when prompted.

The CSV should be entered within 60 seconds to avoid any inconsistencies later. If it takes more than 60 seconds, the ITR will be auto-submitted.

Offline

Follow the below steps for filing ITR offline.

Step 1: Visit the Income Tax e-filing Portal. 

Step 2: Navigate to Downloads > IT Return Preparation Software and download the ITR utility.

Step 3: Open the utility once the zip files are successfully downloaded.

Step 4: The ITR form has all the applicable and mandatory fields; fill it out.

Step 5: Calculate the tax after validating the tabs of the ITR form.

Step 6: Save the XML once it is generated successfully. 

Step 7: Use your PAN No., Password, and Captcha to log in to the e-Filing Portal.

Step 8: Look up the “e-file” menu on the bar. Click on the “Income Tax Return” link.

Step 9: Once you are on the page, expect the following.

• PAN Details will have auto-populated values.
• Choose the “Assessment Year”
• Choose the “ITR Form Number”
• Under the Filing Type, choose “Original/Revised Return.”
• Click on “Prepare and Submit Online” present under “Submission Mode.”

Step 10: To verify yourself, choose from the list of options, i.e., tax return, Aadhar OTP, and EVC.

Step 11: Click on “Continue”

Step 12: Attach the ITR XML file

Step 13: If your verification method is DSC, attach the signature file.

Step 14: Enter the Aadhar No. and OTP that you will receive on your mobile number if that is your selected verification method.

Step 15: For EVC, enter the EVC you will receive on your phone.

Step 16: Submit the ITR.

How to Confirm if ITR is Filed

It is important to always confirm that your income tax returns are filed. There are a few ways to do this.

Step 1: Go to the official Income Tax Department’s website.

Step 2: Click on ‘My Account’ and select ‘View Returns/Forms’.

Step 3: Choose the assessment year for which you want to check the ITR status and click on ‘Submit’.

Step 4: Look for your ITR status; it should indicate ‘Return Filed’ or ‘Processed’.

Alternatively, you can follow these methods:

• Check your email for an acknowledgement receipt from the Income Tax Department.
• Contact the IT Department helpline at 1800 103 0025 or visit your local IT office for assistance.
• Use the Aaykar Setu app to track your ITR status conveniently.

Ensure that your ITR is verified, as this completes the filing process.

Different Types of Tax Saving Options to Consider

Sections 80C and 80D of the Income Tax Act provide various tax-saving options. Below is a list of available options to help save on taxes.

Under Section 80C (Up to INR 1.5 lakhs)

• Life Insurance Premiums
• Public Provident Fund (PPF)
• National Savings Certificate (NSC)
• Employee Provident Fund (EPF)
• Sukanya Samriddhi Yojana (SSY)
• Equity-Linked Savings Scheme (ELSS)

Other Deductions

• Health Insurance Premiums – Section 80D
• Education Loan Interest – Section 80E
• Charitable Donations – Section 80G
• Home Loan Interest – Section 24
• Personal Loans: While personal loan interest is generally not tax-deductible, if the loan is used for specific purposes such as business investments, you may be able to claim deductions under applicable sections.

Tax-Saving Schemes

• National Pension System (NPS) – Section 80CCD(1) and 80CCD(2)
• Atal Pension Yojana (APY) – Section 80CCD
• Rajiv Gandhi Equity Savings Scheme (RGESS) – Section 80CCG

Tax Exemptions

• House Rent Allowance – Section 10(13A)
• Leave Travel Concession – Section 10(5)
• Medical Reimbursement – Section 10(14)

Long-Term Investments

• Unit-Linked Insurance Plans (ULIPs) – Section 80C
• Mutual Funds – Section 80C
• Real Estate Investment Trusts (REITs) – Section 10(23FC)

Additional benefits such as tax-free bonds and senior citizen savings schemes are also available.

It is advisable to consult a financial advisor to determine the best tax-saving investment strategy tailored to your individual circumstances.

Tax laws and regulations are subject to change. It is recommended to double-check with a tax professional or the tax department.

Conclusion

Compared to earlier times, filing income tax returns for salaried persons online has become easy and can be done without seeking the help of any professional. For any person, it is an important document and one should file an income tax return even if he/she doesn’t have any significant income. It comes in handy and allows you to negotiate a competitive interest rate when taking a personal loan for salaried employees.

The last date of filing ITR in 2022 for salaried individuals with income less than INR 5 cr per annum is July 31, 2024.