The time of yearly income tax filing is nearing. This guide will talk about five efficient and effective income tax filing tips to help you take the stress out of filing the returns.
If you happen to be a salaried taxpayer who is nervous about the necessary evil of the yearly ritual of filing income tax returns, familiarity with current changes in Indian income tax rules can help in easing the process.
Tip 1: Delay Is Going To Cost You Money:
For a lot of taxpayers, income tax return filing is dreaded so much so that it is often put off even after the due date is over. This year on such procrastination will result in having to pay a lot more. The late filing penalty till 31st July is Rs. 5,000/-, if the deadline is extended to 31st December, the fine doubled to Rs. 10,000/-. Therefore, be inquisitive and start the process as soon as possible.
Tip 2: Be Aware of The Changes In Tax Rules:
Before starting the process of filing returns for the AY 2018-19 (Assessment Year) or FY 2017-18 (Financial Year), one needs to know about some key changes to the fundamental rules and ITR (Income Tax Return) forms this year. For example, knowing about slab rates can help compute the tax liabilities correctly.
The applicable slab rate for individuals having taxable income between Rs. 2.5 lacs — Rs. Five lacs has reduced from ten per cent to five per cent. This year the taxpayers owning multiple properties and still claiming tax benefits upon home loan interest will no longer be able to do so. Till the FY 2016-17, tax break could be availed on entire interest paid, which was considered as ‘loss’ – upon home loan for properties used as let-out.
This ‘loss’ could be set off against any other income without limits. From this year, the changed tax rules have restricted benefits of set-off loss from the house properties to maximum Rs. 2 lac per FY and balance loss may be carried forward to the next eight years.
This move from the government hurt taxpayers investing in property. But yet another change has been made to their benefit, regarding the capital gains/losses on the investments in immovable properties. The holding period for the capital gains for the immovable property has now been reduced from 3 years to 2 years. Also from now on, the year 2001 will be considered the base year for capital gains calculation. The new index for cost inflation has now been released.
Tip 3: Be Aware of The Changes In Tax Forms:
ITR forms this year have undergone significant changes. Up till the last year, only the net taxable figures of income from house property and salary needed to be disclosed. This year on detailed calculations regarding income from salary and house properties are to be put in ITR-1 and ITR-4. Addresses of properties need to be put down alongside house property income.
Till the last AY, if any individual or HUF (Hindu Undivided Family) was a partner in any firm, they could use ITR-2 if they did not have other sources of business income. Now any such individual or HUF has to file an income tax return in ITR-3 irrespective of other business income. This time the forms will provide separate columns for claiming the capital gain exemptions under the sections such as 54, 54EC, 54B, 54EE, 54GB, 54F and 115F.
Tip 4: Be Aware of The Right ITR Form For You:
It is important to identify the necessary form for filing income tax returns. Using private tax filing portals helps to choose the exact form automatically for filing returns based upon the income and assets of the taxpayer. However, using the online portal from the income tax department insists that the taxpayer himself chooses the relevant form. The Income Tax Department released seven forms this year. For the salaried professionals and pensioners, most relevant forms would be ITR-1 and ITR-2.
ITR-4 is for professionals that are self-employed or are running small businesses. The taxpayer must ensure a match between the name as it is on the ITR form and the way it is printed on the PAN card. The returns will not process if there is a mismatch. It is of utmost importance to update the primary e-mail ID and the mobile number for receiving timely free communication regarding the processing of returns and refunds. Quoting the Aadhaar is also a must for the resident taxpayers.
Tip 5: Verify The Details of TDS In The Form 26AS:
For this, first access the Form 26AS or the tax credit statement which is available upon the e-filing portal. Then check if taxes deducted by the employer and the other deductors tally with the Form 16 and the TDS certificates. In case of there being any mismatch, it ought to be addressed to either the employer or any payer of that income. Accessing the Form 26AS is also possible through the netbanking account.
When you’re ready to file returns, make sure to keep some key documents handy, such as the Form-16 that is issued by the employer, bank statements corresponding to the interest income, the records of investments, records of donations, and a copy of last year’s returns. This reduces both time consumed and the scope for possible errors.
Bonus Tip: What to Look Out For:
Keep it in mind that only the interest earned through savings bank account will be exempt under Section 80TTA. Interests that are earned from fixed and recurring deposits will be fully taxable at applicable rates for the individual taxpayers. TDS is 10% of interest earned on the deposits. If the taxpayer is under a higher tax bracket, he needs to pay additional tax. If a taxpayer ignores reporting the income from the interest, and the Form 26AS shows TDS upon interest income, he will receive a demand for additional tax from the tax department, and penalties may be levied.Also ensure the claiming of all the tax benefits entitled to you, under the circumstances of missing upon mentioning them in the investment declaration that is submitted to the employer. The chief amongst such is donations made towards charitable institutions, as the employers generally do not account for the deductions under the section 80G.
Finally, never delay e-verifying returns or dispatching ITR-V, duly printed and signed, to the Bengaluru CPC by either regular or speed post within the 120 days of online returns filing.