While filingincome-tax returns, necessary precautions must be taken to avoid litigation at a later date. Filing income-tax return is a yearly ritual followed by all taxpayers. While filing the return, necessary precautions are to be taken to avoid confusion and litigation at a later date. Here are some key points to be taken into consideration for a hassle-free filing of tax return.
Traditionally filing of Income Tax Return is seen as a complicated and tiresome task, and therefore, most people keep putting it off till the last possible moment. But in the recent years, thanks to the initiatives taken by the government in simplifying the rules and the filing process, the task has become less daunting. With increasing prosperity and higher income levels, larger numbers of people have become eligible for filing Income Tax Returns.
What is Income Tax and who is liable to pay Income Tax?
Income tax is a tax paid to the central government on personal income. It is the direct tax paid on income by an individual or a company/firm within a given financial year (April-March). The Indian Income Tax department is governed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue under the Ministry of Finance, Government of India.
The Income Tax Act, 1961 as amended by Finance Act 2010, under Section 139 makes it obligatory upon any person to file return if the person's total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax.
Provided that a person referred to, who is not required to furnish a return under this sub-section and residing in such area as may be specified by notification in the Official Gazette, and who during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or at any time during the previous year fulfils any one of the following conditions, namely: is in occupation of an immovable property exceeding a specified floor area, whether by way of ownership, tenancy or otherwise, as may be specified; or is the owner or the lessee of a motor vehicle other than a two-wheeled motor vehicle, whether having any detachable side car having extra wheel attached to such two-wheeled motor vehicle or not; or has incurred expenditure for himself or any other person on travel to any foreign country; or is the holder of a credit card, not being an "add-on" card, issued by any bank or institution; or is a member of a club where entrance fee charged is twenty-five thousand rupees or more.
The tax liability to be computed for Assessment Year 2010 - 2011 is as per the under:-
(i) In case of individuals (other than women and individuals who are of the age of 65 years or more at any time during the financial year 2009-10)
Upto Rs. 1,60,000 : Nil
Between Rs. 1,60,001 - Rs. 3,00,000 : 10% of income in excess of Rs. 1,60,000
Between Rs. 3,00,001 - Rs. 5,00,000 : Rs. 14,000 + 20% of income in excess of Rs. 3,00,000
Above Rs.5,00,000 : Rs. 54,000 + 30% of income in excess of Rs. 5,00,000
(ii) In case of women (other than women who are of the age of 65 years or more at any time during the financial year 2009-10)
Upto Rs. 1,90,000 : Nil
Between Rs. 1,90,001 - Rs. 3,00,000 : 10% of income in excess of Rs. 1,90,000
Between Rs. 3,00,001 - Rs. 5,00,000 : Rs. 11,000 + 20% of income in excess of Rs. 3,00,000
Above Rs.5,00,000 : Rs. 51,000 + 30% of income in excess of Rs. 5,00,000
(iii) In case of individuals who are of the age of 65 years or more at any time during the financial year 2009-10
Upto Rs. 2,40,000 : Nil
Between Rs. 2,40,001 - Rs. 3,00,000 : 10% of income in excess of Rs. 2,40,000
Between Rs. 3,00,001 - Rs. 5,00,000 : Rs. 6,000 + 20% of income in excess of Rs. 3,00,000
Above Rs.5,00,000 : Rs. 46,000 + 30% of income in excess of Rs. 5,00,000.
It is mandatory to file a return, irrespective of the fact that tax has been deducted at source by your employer or not, and whether you are eligible for a refund or not.
Availability of details:
The taxpayer must keep all the details required for filing the return with him before resorting to actual filing work. Though the tax returns are annexure-less, keeping all the details in hand and filling-in the tax return form meticulously could make return filing a simple single stroke work.
By registering with www.incometaxindiaefiling.gov.in, taxpayers may also know the amount of tax deducted at source or collected at source standing to their credit and accordingly adjust the tax liability or make a claim for refund.
Quantum and eligibility for deduction under Sections 80C, 80D, 80DD, 80DDB, 80E, 80G, 80GGC and 80U in the light of any recent changes may also be kept in mind for utilising the correct deduction. A wrong claim might result in slapping of penalty and a non-claim could be set right only by filing revised return later.
Filing the return on or before the ‘due date' would mean no interest under Section 234A of the Act. Even if the assessment is made subsequently with upward revision of income, the levy of interest under Section 234A would not be possible if the return is filed on or before the due date.
E-based return:
Recent experiences in return filing has shown that e-filing of tax returns has been efficient, effective and trouble-free for taxpayers.
Though intimation in respect of those returns have been trickling in only over the last few weeks, the experience shows that e-filing is worth the waiting time for getting response in the form of intimation under Section 143(1) of the Act. A first hand experience of obtaining refund for e-returns might also motivate many more taxpayers to opt for e-filing of returns.
AIR data:
For filing the tax return, relevant and accurate data is to be keyed in. The taxpayers must also remember that high value transactions are liable for disclosure by various authorities under ‘Annual Information Report' (AIR).
It is necessary to fill in the relevant columns of the tax return correctly. In the event of mismatch between the return filed and AIR, the case might be selected for scrutiny under computer aided scrutiny system adopted by the tax department.
Scope for revision:
July 31 is the ‘due date' for filing returns by all taxpayers except those whose accounts are liable for audit under the income-tax law or any other law. Filing return before the ‘due date' entitles the taxpayer to file a revised return in the event of any error or omission therein. Whereas a return filed beyond the ‘due date' is not eligible for such revision.
Supporting Documents:
Supporting documents that you require to calculate tax liability while preparing IT Returns are:
Form No. 16 (received from the employer): Form 16 is the Annual Salary Statement issued by your employer and provides details about the income earned and tax deducted during the year.
Form No. 16A (received from all the payers who have got their tax deducted): This form needs to be collected from the parties who have deducted the tax while making payment to you during the year. This includes banks and companies (with whom you have kept fixed deposits and so on).
Form No. 26AS
The Income Tax Department through the National Securities Depository Limited (NSDL) sends taxpayers a document called the 'Annual Tax Statement' or Form 26AS. This statement gives information about tax deducted and collected at source by entities such as employers and banks for your permanent account number (PAN) in a certain year. It also lists information about advance tax/self assessment tax/regular assessment tax deposited by you in the bank. You may view the status of tax credit online by registering at the NSDL website
Summary of account: It is important to have a summary of all bank accounts that you operated in the last fiscal year. The bank statements have details of the interest income earned and the expenditures incurred during the year.
Details of property owned: If you own some property or bought a new one during the last fiscal year, keep receipts of property tax paid during the year and rent received (if any).
Details of sale & purchase with respect to investments or assets sold during the year.
Details of any other tax payments made during the year.It is also mandatory to quote the Permanent Account Number (PAN) while filing the return.
Manual Filing
In case you prefer to file your return manually, you would need to take the following steps:-
Download and complete the appropriate ITR form.
File the return with the concerned ward in the Income Tax Department of your jurisdiction.
Obtain receipt for your return
There is no need to attach any supporting documents with your return. However, you must have these available in case called for.
E-Filing
There was a time when people had to travel miles and wait in long queues outside the Tax Department to file their Income Tax returns. But a few years ago, the Income Tax Department introduced a convenient way to file these returns online. The process of electronically filing your Income Tax Returns through the Internet is known as e-filing of returns . It offers convenience of time and place to tax payers and is available round the clock to taxpayers located in any place in the world.
Electronic filing, or e-filing, of tax returns first began in India as part of a proposal for Internet-based electronic tax administration system for service tax. The Central Board of Excise and Customs's efforts made the introduction of e-filing of tax returns possible for the first time in India in April 2003, but its benefit was available only to a few service tax providers.
Considering the comfort for taxpayers across the country and also technology lending a helping hand, both the Central and State governments decided to extend e-filing of tax returns to the other types of taxes, including Income Tax, Excise and VAT.
Under the Income Tax law, this facility was introduced by the Central Board of Direct Taxes (CBDT) for the first time during assessment year 2006-07, wherein corporate assessees had to mandatorily e-file their income-tax returns.
At present, it is mandatory for companies and firms requiring statutory audit under Section 44AB to e-file their Income Tax Returns. Also, the e-filing benefit has been extended to all assesses except for trusts.
Steps for E-filing
Login to the official website for Income Tax e-filing
Read the instructions given on the website
Select and download the appropriate Income Tax Return form
Download Return Preparation Software for selected Return Form.
Fill your return offline and generate XML file.
Register and create a user id/password.
Login and click on relevant form on left panel and select "Submit Return".
Browse to select XML file and click on "Upload" button.
3 ways to file returns electronically
Option 1: Use digital signature , in which case no further action is required.
Option 2: File without digital signature, in which case ITR-V form is to be filed with the department. This is a single page receipt-cum-verification form.
Option 3: File through an e-return intermediary who would do eFiling and also assist the assessee file the ITR -V Form
.
On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement/ITR-V Form
In case the return is digitally signed, on generation of "Acknowledgement " the Return Filing process gets completed. Assessee may take a printout of the Acknowledgement for his record. All corporate returns have to be digitally signed by director.
In case the return is not digitally signed, on successful uploading of e-
Return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form. The tax payer has to fill-up the verification part and verify the same. A duly verified ITR-V form should be submitted with the local Income Tax Office within 120 days of filing electronically. This completes the Return filing process for non-digitally signed Returns.
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