Income tax returns (ITR) filing: Deloitte's Anurag Jain on last minute tax tips
Income tax returns (ITR) filing: People who failed to file their taxes would be regarded as non-compliant tax payers. Besides the interest and penalty levied by the tax department, they would also start receiving notices and investigations from the I-T dept.
Income tax returns (ITR) filing: There is only so much that can be done in a day, but even the laggards must not lose hope. However, they must strive hard to complete the process. Anurag Jain, Senior Manager, Deloitte India, in an interview with Zee Business, shared some smart tax planning tips for these last minute tax filers, and explains why failing to do so could be a headache. Jain also discussed all the changes that will be introduced from the financial year 2018-19. Here are edited excerpts from an interview:
1) March 31 deadline is almost upon us? Is there any hope left for the taxpayers who neglected their tax planning?
We are technically left with just one day. Saturday is the last day when one can deposit their taxes, make investment in tax savings instruments and accordingly file their returns. The good thing is, as notified by the tax department, the banks will remain open tomorrow until 8 pm. Taxpayers can still make some investments, and claim those deductions while filing their return.
March 31 is the deadline for filing belated and revised tax returns too. This time, we are dealing with two financial years: FY16 and FY17. One can file their belated/revised tax returns for FY16 by tomorrow. Belated tax returns for FY17 should also be done by tomorrow.
2) What would happen to those who genuinely failed to file their taxes?
People who failed to file their taxes would be regarded as non-compliant tax payers. Besides the interest and penalty levied by the tax department, they would also start receiving notices and investigations from the I-T dept.
3) Any last-minute tax tips for taxpayers?
In terms of last minute tips, I would say don't leave everything for 11th hour, meticulously plan your investments, deposit taxes and accordingly file returns. With just one day to go, taxpayers should reconcile their form 26AS with the TDS certificates and the self-assessment taxes they may have deposited. They should verify their personal details whether they have put in correct PAN number, address and bank account details etc.
Lastly, once the tax calculations are done, and there remains some taxes to be paid, they should deposit those taxes first before filing ITR return, otherwise at the processing stage itself, they would not be able to upload the returns.
4) Standard deduction for salaried employees is going to be introduced from the next financial year. How will it change tax scenario for salaried assesses?
With a standard deduction of flat Rs 40,000 for salaried class, an interesting change is being re-introduced from April 1. The government may have given SD, but they have taken away medical and conveyance. Effectively, nothing much changed in terms of tax liability. The only benefit that I see is about administrative convenience. Salaried employees no longer need to maintain their medical bills etc.
5) Can HRA and housing loan be claimed at the same time? If so, how could it be done?
HRA is a typical compensation component for a person who is employed. Employees eligible for HRA can get a deduction on account of actual rent paid to landlords. Simultaneously if they are paying any interest on housing loan, they can avail that deduction too, provided the other property is vacant, let-out or the employee is unable to occupy the property for some reason.
6) What are some primary objectives taxpayers should strive for the next financial year?
One of the most important objectives is to stay totally tax compliant. July 31, 2018 is the deadline for filing tax returns for FY18. Taxpayers should ensure filing ITR on or before this date. Because over and above the interest amount, a penalty of Rs 5,000 will be charged in case returns are filed after the due date but before the December 31 of FY18 or Rs 10,000 in case it is filed after December 31 of FY18.
There is a marginal relief for people earning less than Rs 5 lakh. They would pay a nominal fee of Rs 1000 if they fail to file ITR before due date.
7) What are some key changes that taxpayers should watch out for the next financial year?
Besides standard deduction, another important change is that the government has increased education cess from 3 per cent to 4 per cent. Considering the SD and hike in cess, there will be a nominal increase in tax liability for all.
Major changes will be kicking off for the welfare of senior citizens. Senior citizens earn interest income from FDs and post office schemes. Now, they can claim Rs 50,000 tax deduction on account of those interest income instead of Rs 10,000. There is a hike in health insurance premium from Rs 30,000 to Rs 50,000. Lastly, deduction limit on medical expenditure for certain critical illness has been increased from Rs 60,000 (in case of senior citizens) and from Rs 80,000 (in case of very senior citizens) to Rs 1 lakh for all senior citizens.