Tax Planning & Savings
28 April 2020
Tax filings, or Income Tax Return filings, is that annual process all of us engage in – involving a document we file with the Income Tax Department, profits and losses of your business, or salary. Plus, other deductions in addition to details about the tax refund you’re eligible for, or tax liability. Individual taxpayers are now required to file income tax returns electronically with the exception of super senior citizens who can file it in paper form. With all the hullabaloo around filing ITR, it’s easy to get confused, especially if you are a newbie. However, keeping a few things in mind can make the process a lot easier. Listed here are a few things to keep in mind while filing Tax this year:
Filing ITR is mandatory for all Indians as well as NRIs. 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. But, it is important to know the tax slab you fall under. You are liable to file Tax if :
Even if you do not fall in the tax net you must consider filing a ‘Nil Return’ for the record.
You need to have all the important documents required to properly file ITR. Some of those documents include – Form 16, Rental Agreement, Sale Deed and Purchase Deed (on sale of assets), Housing Loan Certificate, Tax Paid Proofs, Bank Statements, Proofs for Taxes deducted by employer, TDS certificates, Investment details like LIC, PPF, NSC, NPS, Health Insurance, AADHAAR Card, PAN Card, bankers, tenants, purchaser of property, proofs for deductions, etc.
Details of capital gains from selling equity shares, equity mutual funds or property must also be shared. If you have sold a property then you must provide complete details of the buyer. Taxpayers with overseas earnings and foreign assets need to declare the same too.
The Income Tax Department of India has made some changes in the various ITR forms and hence it is necessary to understand which is the correct ITR form for you. For example, a salaried person with earnings less than Rs 50 lakhs can file ITR-1. However, he cannot be the director of a company and hold shares of an unlisted company or own any foreign assets to do so. Self-employed individuals file ITR using the ITR-3 or ITR-4 form, depending on the type of income during the year.
The Permanent Account Number (PAN) is mandatory and should be correctly mentioned in the return. The Government has several numbers of reminder notices for the linking of your AADHAAR card with PAN. You can do the necessary on an e-filing website and this information is an important thing to be mentioned in your ITR form.
As a matter of fact, TDS deduction helps the Government in obtaining revenue throughout the year. To receive the benefits of this deduction, you should provide necessary details including investment proofs, rent receipts, etc. The Form 16 you receive from your employer each year entails details of all tax deducted by the employer and your taxable income after allowances and Section 80C deductions. A self-employed person with a tax liability of more than Rs 10,000 is required to pay Advance Tax to the Government every quarter.
The Income Tax Department now provides pre-filled ITR-1 forms. The pre-filled forms have your salary FD interest income and TDS details. While tax filing, you need to closely scrutinize the form. In case of any discrepancies, you will have the option of editing and then submit the details.
Tax filing is a compulsory process for every taxpayer so as to calculate their tax liability and pay advance tax/self-assessment tax before the end of the Financial Year. There is a penalty associated with late filing and hence you should not wait for the last minute to file your taxes.
If your ITR is not filed by the July 31 deadline then the penalty for ITRs filed on or before December 31 is Rs 5,000. It will go up to double that amount for later filings. However, if your taxable income is below Rs 5 lakh, then the maximum penalty will be Rs 1,000. If the tax evaded is more than Rs 25 lakh then the punishment could be 6 months to 7 years, as mentioned by the Income Tax Department.