This post has been written by Archit Gupta, founder and CEO of Clear Tax.
Filing of tax return is compulsory for all those whose income exceeds basic exemption limit. The basic exemption limit for individuals is Rs 2.5 lakhs and for senior citizens, it is Rs 3 lakhs. So, if your income exceeds this limit, you need to file the tax return by the due date.
As per income tax regulations, the due date for filing tax returns for FY 2016-17 is July 31, 2017 for individuals and September 30, 2017 for businesses. Filing of tax return requires caution and especially if you are filing the return for the first time. Here are a few things you need to keep in mind to ensure that you are on track.
File your returns online.
Return can be file offline or online. Paper return (offline) can be filed only by an individual and HUF whose:
- Income does not exceed Rs 5 lakhs and who has not claimed any refund in the return of income.
- An individual at the age of 80 years or more at any time during the previous year.
In all the other cases, return has to be filed online on income tax e-filing website. This is good because online filing reduces chances of error and rework.
Choose the appropriate ITR Form.
There are 7 ITR forms available for e-filing. Make sure that you choose the right one applicable to you. For example, ITR 1 sahaj is for salaried individuals having income up to Rs 50 lakhs. ITR 2 is applicable for the individuals having income from capital gains, foreign income and agricultural income. ITR 3 is meant for the individuals having income from business and so on. The Income Tax department will refuse to accept your form in case you have chosen the wrong one. Here’s a list of which ITR is applicable for whom.
Link Aadhaar with PAN.
This is the most important change introduced by the government for filing return this year. Your Aadhaar must be linked with your PAN, otherwise you cannot file your returns.
Also you need to mandatorily quote Aadhaar number in the ITR Form. If you do not possess an Aadhaar card but have applied for it, then the Enrolment ID can also be quoted.
(When you apply for Aadhaar you have to visit an enrolment centre and fill the enrolment form. After giving demographic and biometric data and submission of proof of identity and address documents you get an acknowledgement slip which has your Aadhaar Enrolment ID or Aadhaar Enrolment number.)
Reporting all bank accounts
The income tax department has made it mandatory for taxpayers to report all their bank accounts held at any time during the previous year in their tax return. You can omit dormant bank accounts, which have been in-operational for the past 3 financial years.
Also, it is mandatory to disclose the cash deposits made during the period of demonetisation. A new column has been introduced in all ITR Forms to report on cash deposited by taxpayers in their bank accounts during the demonetization period, i.e., from November 9, 2016 to December 30, 2016. However, taxpayer are required to fill up this column only if they have deposited Rs 2 lakh or more during the demonetization period
List all sources including interest income
Almost all of us have bank accounts, fixed deposits, and some of us also hold post office savings account. All of these earn interest which must be reported in your total income while filing return. But many tax payers do not report this interest income in returns thinking that since tax has already been deducted by the bank. But even though TDS has been deducted on any of your income, it has to be disclosed in your return. You don’t have to pay tax again on it. Whatever TDS has been deducted on it, can be claimed as a deduction from your total tax payable amount.
Claim all the deductions.
Ensure that you have claimed all the deductions allowed under various sections of I-T Act that you are eligible for. For example, under Section 80C- PPF, PF, school tuition fees of children, insurance premium etc. Health insurance premium under sec 80D and so on. You can see the list of deductions here.
E-verify your return or send the ITR V acknowledgement on time.
The process of filing return does not get completed till the returns are verified. The govt gives you the option of either sending the ITR V acknowledgement within 120 days of filing the return to their office or you can e -verify your returns online also. If you e-verify the returns online, then there is no need to send the acknowledgement. There are various options given by the government for e-verifying your returns. E-verification can be done through Net banking, Bank Account Number, Aadhaar number and Demat Account.
