Filing ITR-1 with Cash Earnings: A Comprehensive Guide
Filing ITR-1 with Cash Earnings
Can you file an ITR-1 if your employer pays you in cash and does not provide you the Form 16 or 16A? Yes, you can file ITR-1 and report your income as salary provided you can establish that there is an employer-employee relationship between you and your employer. However, if your employer does not provide Form 16, there could be two reasons: your income might be below the taxable limit or your employer has not declared you as an employee on their books. In such cases, you can still file ITR-1 by showing your cash earnings as consulting income under Profits/Gains from Business/Professional Services.
Gross Salary Reporting and Exempt Allowances
You can get a salary certificate on the letterhead from your employer, which will serve as evidence of your salary earned. By collecting your monthly salary slips and verifying them with bank statements, you can compute the total salary for the year. It is crucial to report the gross salary, excluding exemptions like tax deductions at source (TDS), provident fund (PF), and other stipulated benefits. Non-exempt allowances such as conveyance, medical, and HRA allowances need to be included in the taxable salary.
Income from House Property
If you are the owner of any house property, you must include the rent received or any interest paid on a housing loan as income. Remember to deduct 30% of the rental income as a standard deduction and claim municipal tax on the property in your house property income. This net figure must be reported as income from house property.
Other Sources of Income and Capital Gains
The next step is to compute your income from other sources, which can include interest on bank deposits, recurring deposits, fixed deposits, gifts, commissions, etc. Sum up all the income and report it under the head 'income from other sources' when filing your ITR. Additionally, report any capital gains from the sale of mutual funds, shares, or flat lands. Short-term and long-term capital gains must be reported based on the profit and loss statement provided by your broker.
Claiming Tax Benefits under Section 80
Under Section 80, you can claim various tax benefits, such as investments in National Savings Certificates (NSC), Life Insurance Corporation (LIC) policies, tuition fees, Public Provident Fund (PPF), and repayment of the principal of a housing loan. Donations to charitable institutions can be claimed under Section 80G, and payments towards the premium of a medical insurance policy can be claimed under Section 80D. Keep a meticulous record of all tax-saving investments and report them under the appropriate heads in your ITR.
Calculating Income Tax and Claiming Credits
After computing your income from all sources, subtract the deductions as listed in Section 80. The resulting computation will be your taxable income. Use the income tax slab rates for the financial year 2014-15 to calculate the income tax on this amount. Verify your Form 26AS to confirm the TAN and TDS details, and ensure that the information matches with TDS certificates from your employer or bank. If there is any mismatch, contact your employer or bank immediately to rectify the issue.
E-filing ITR
Finally, you can e-file your ITR through online tax filing sites such as the Income Tax Department (ITD) portal. Ensure that you provide all the necessary information, including the TAN and TDS details for Form 26AS. If you have any tax liability, you will need to pay the shortfall amount. If you are due a refund, it will be directly credited to your bank account.
To learn more about Form 16, you can watch the following video:
Watch Video on Form 16