As the deadline (31 July) for filing your tax returns for the financial year (FY) 2017-18 approaches closer, you may have questions on the new ITR 1 form and what are the details that are needed to be filled using your Form 16.
Firstly, one needs to be aware of when to file the ITR 1 form. It is to be filed only if:
- You are a permanent resident
- You have income from salary or pension
- You have income from just one house property
- You have income from other sources that exclude any gains from lottery or horse races
You cannot file ITR 1 if:
- You are a non-resident Indian or RNOR
- Your income exceeds Rs 50 lakh
- You have more than one house property
- You have income from lottery, horse racing, legal gambling, etc.
- You have short term or long term capital gains
- You have agricultural income exceeding Rs 5,000
- You have income from business and profession
- You are a resident with assets outside India or signing authority in accounts abroad
- If you are claiming foreign tax relief of any kind
This article will only focus on individuals with salaried income, who can get detailed break up on their salary from form 16 to fill all the new details in ITR 1.
Income from salary
You are required to provide the following details in the new ITR1 form:
1. Salary: Basic salary excluding all allowances, perquisites, and profit in lieu of salary.
2. Allowances not exempt from tax: For FY2017-18, transport allowance is exempt from tax up to Rs 1,600 per month or Rs 19,200 annually. A part of your house rent allowance (HRA) is also taxed based on certain conditions.
3. Perquisites: It is the additional benefit you get as an employee for your position. The value of these will be calculated by your employer and mentioned in your Form 16. These are, however, not taxable at the same rate. Some can even be tax-exempt. They include the following as per section 17(2):
- a) Rent-free or concessional rent accommodation provided by the employer.
- b) Any sum paid by the employer on behalf of an employee because of employee's obligation like life insurance premium;
- c) Any benefit granted free or at a concessional rate to an employee;
- d) Any specified security or sweat equity shares allotted or transferred, directly or indirectly by the employer or former employer free of cost or at a concessional rate;
- e) Any contributory amount to an approved superannuation fund by the employer on behalf of the employee, that exceeds Rs 1.5 lakh; and
- f) Value of any other fringe benefit or amenity such as interest-free or concessional loans etc.
4. Profit in lieu of salary: Whatever you receive in addition to your salary or wages, like a payment received before joining the job or after leaving the employment.
Deductions under section 16
These are deductions one can claim on their salary. For the FY 2017-18, you can claim the following under section 16:
a) Deduction on entertainment allowance received by government employees only which is lower of:
i) Actual amount received
ii) One-fifth of the salary excluding any allowance, benefit or other perquisites
iii) Rs 5,000
b) Any professional or employment tax paid
From FY 2018-19 (AY 2018-19) a standard deduction of Rs 40,000 will be included.
Income from House Property
In the new ITR 1 form, you will have to give details about your property like whether it is self-occupied or let out, gross rent you have received or will be receivable, the taxes you have paid, interests on your home loan, the annual value of the house, etc.
If your house is let out, the gross rent received minus the municipal taxes (property or house tax) would be the taxable value.
If you do not reside in your property, nor have you let it out, it will still be deemed as rented and you will have to pay taxes on the deemed rental income.
If the house is self-occupied, you can only claim a maximum of Rs 2 lakh on interest paid on the home loan.