August 31 is the last date for filing your income tax returns (ITR) so procrastinators had best hurry to beat the last-minute rush. Filing income tax returns could be a cumbersome affair, especially for the newly-added 1.10 crore tax filers this year. If you have a total income of over Rs 2.5 lakh before permissible deductions under Sections 80C to 80U, you must file your income tax returns. Even if you do not fall in the tax net you must consider filing a 'Nil Return' just for the record. Here are five tips to ensure that you file your returns correctly and in a hassle-free manner:
All individual taxpayers are now required to file income tax returns electronically - the sole exception being super senior citizens, who can choose to file ITR-1 or ITR-4 in paper form. This means, unlike the previous year, individuals having income below Rs 5 lakh with no refund will also have to file online if their income is above the basic exemption limit.
In order to make the tax filing process less cumbersome, the Income Tax Department will now providing pre-filled ITR-1 forms carrying your salary, FD interest income and TDS details. So far, these details had to be manually filled by the taxpayer. However, one must keep in mind that this facility for ITR filing is available for the ITR-1 form filed online on the department's e-filing website (incometaxindiaefiling.gov.in).
A 'lite' e-filing facility was launched by the Income Tax Department earlier this month to facilitate the easy and quick filing of returns by taxpayers. The same can be accessed by clicking 'e-Filing Lite' button on the home page of the department's dedicated website (incometaxindiaefiling.gov.in). In addition, the department is already providing pre-filled ITR-1 forms carrying your salary, FD interest income and TDS details. So far, these details had to be manually filled by the taxpayer.
Verify pre-filled details
The pre-filled ITR-1 forms will list data collected from multiple sources such as banks, your Form 26AS, the TDS return filed by your employer, your previous year's ITR, stock exchanges, mutual funds, EPFO, State Registration Departments, etc. Verify the pre-filled data instead of blindly trusting it - when it comes to tax compliance, accuracy matters most. Doing it right in the first place means you need not do multiple revisions. It will also minimise scrutiny, help you avoid tax penalties and ensure quick refunds.
To ensure that there is no discrepancy in the information that the IT department has in its possession and what you are providing through ITR filing, check your Form 26AS as it lists all incomes and TDS paid. Form 26AS can be downloaded either on the TRACES website - an undertaking of the Income Tax Department for easy filing of TDS/TCS correction statements by deductors - or through the net-banking facility of authorised banks.
If you notice any discrepancies in the two forms, approach your employer/deductor and point out the same. The deductor can then file a TDS/TCS correction statement.
Keep your investment details handy
This year onwards, taxpayers have to furnish far more details than ever before. Apart from giving a detailed break-up of interest earned from savings bank accounts, fixed deposits and income tax refunds, you will have to share greater details of capital gains from selling equity shares, equity mutual funds or property. In case of sale of property, you will have to furnish complete details of the buyer.
Moreover, taxpayers with overseas earnings and foreign assets will have to provide full details of the same. For 'resident and ordinarily resident' (ROR), the foreign bank account details have been re-framed to include information about foreign custodian, depository, equity and debt interest accounts. The aim of these measures is to minimise tax evasion.
So before you start e-filing your income tax returns, keep your investment proofs handy along with your Form 16, Form 26AS, PAN and Aadhaar cards, and bank statements. Keep in mind that if you have not shared your investment details with your employer beforehand, your Form 16 will not carry all the tax benefits you may be entitled to.
Pick the correct ITR form
The Income Tax department has seven ITR forms in the current assessment year, so make sure you don't fill the wrong form in your haste to beat the deadline. If you fill the wrong ITR form, your filing will be rejected and you may even get a notice regarding the same from the tax department.
For instance, if you are a salaried individual earning less than Rs 50 lakh (income from other sources and one house property are allowed in this case) can file ITR-1, so long as you are not the director of a company, have not held shares of an unlisted company during the financial year and do not own foreign assets. ITR -2 is for individuals earning over Rs 50 lakh annually, those who own more than one house property as well as those who hold directorship in a company. On the other hand, a self-employed individual will have to file ITR using the ITR-3 or ITR-4 form, depending on the type of income in FY 2018-19.
Verify filing on time
Submitting your ITR is not enough. You have to verify it within the stipulated timeline of 120 days or your filing will be cancelled. One can digitally sign the return or e-verify it online through Aadhaar OTP or net banking. Otherwise, send a duly signed ITR-V to the Centralised Processing Centre (CPC), Bengaluru, by ordinary post or Speedpost.
Missing the August 31 deadline for filing income tax returns can prove costly. The penalty for ITRs furnished on or before December 31 is Rs 5,000, but double that amount for later filings. However, if your taxable income is below Rs 5 lakh, the maximum penalty will be Rs 1,000. On the other hand, if the tax evaded "exceeds Rs 25 lakh the punishment could be 6 months to 7 years" the Income Tax Department says on its website.
Edited by Sushmita Agarwal