Every person whose income surpasses the basic exemption limit is required to file income tax returns (ITR). Many believe that filing ITR is an additional responsibility, but in reality, it is not so. Income tax return is the announcement of your income from different sources of income, details of all the taxes paid and refunds if any. The income tax department provides an adequate time period of 4 months to each individual to file ITR after the end of the financial year. The rationale behind giving such a huge timeframe is that taxpayers need to collect essential documents.
How to Prepare and File Income tax returns
Things to be kept in mind
1. The due date for individuals filing ITR is 31st July. However the businesses liable to tax audit can file it till 30th of September. However, you shouldn’t wait till last to file income tax returns. If you file your return after the due date then you could not carry forward the losses except that of loss from house property. In the case of a belated return filed by taxpayer even though taxes have been paid on time for all such losses.
2. The tax slab is different for different age group. For the taxpayers below 60 years it is nil up to 2.5 lakh. It is 5 percent on income between 2.5 and 5 lakh and 10 percent on income become 5 to 10 lakh. A taxpayer earning above 10 lakh is required to pay 30 percent.
3. The exemption limit is 3 lakh for the taxpayers who are aged 60 but not 80. The taxpayers aged 80 and above enjoy an exemption limit of Rs 5 lakh.
4. Essential documents required for filing of ITR are PAN, bank account details, IFSC code, address, mobile number and mail id. If you have a functional Aadhar you should link it with PAN. Aadhar has been made mandatory for e-filing ITR. However, taxpayers without an Aadhar can also file return this year.
5. Income tax return does not cover a calendar year. Income tax return covers the period of a financial year starting from 1st April to 31st March. You are required to file your income tax return for a financial year.
6. Identify the other source of income, if any. Identifying income from other source is an important task, People often get confused identifying other sources of income.
7. Form 26AS is a consolidated document of taxes deducted on your behalf and quarterly tax paid by you, if applicable. The Form 26AS is available on income tax department website and can be downloaded from there.
8. Ready with your Form 16. Form 16 is basically a certificate issued by an employer that Tax Deducted at Source (TDS) has been deducted from the salary. Income Tax Act, mandate that it is the duty of the employer to issue Form 16 once in a year on or before 31st May of the financial year, immediately following the financial year in which tax is deducted.
9. Be ready with income-related documents. Stock trade documents would be required to obtain the details of sale or purchase of shares and mutual funds made during the financial year. Bank account statement or interest certificate would need to be referred to obtain details of interest earned during the financial year. Bank account statement is required because Form 26AS have only the details of interest on which taxes have been deducted by the bank.
10. Section 80 C of the income tax allows an individual to claim principal amount of the loan as an exemption. However, there is a limit of Rs. 1 lakh under this section. If you have already exhausted this option then it is not available to take benefits. The investment made under NSC, ULIPS, PPF, ELSS qualify for deduction up to Rs. 1.5 lakh under section 80 C of the Income-tax Act.
11. Once all the document required have been collected you need to find appropriated form for tax e-filing. Usually, the fallowing form is applicable for salaried persons.
ITR1 Sahaj Form – This form is applicable to individuals having salary income, one house property but not the case of brought forward loss, another source of income that doesn’t include lottery or horse racing
ITR2– Applicable for Hindu undivided family not having any income from business or profession.
ITR2A- Applicable for Hindu undivided family having more than one housing property and not having any income from business or profession or capital gain and do not hold any foreign asset.
12. Income tax return would mandatorily require being e-filled if your income exceeds Rs. 5 lakh. Form ITR-V is generated by the tax department as soon as your return is e-filled. In Form ITR-V, ‘V’ stands for verification. The taxpayer is required to verify the summary in the form and then print the form sign it and send it to the centralized processing center of income tax department by post within the period of 120 days from the date of your e-filing. In case of non-submission of ITR-V within 120 days your income tax return will stand cancelled.
The above-mentioned tips will make income tax return e-filing a breeze. Follow this instruction and e-file ITR easily.