Income Tax Return (ITR) filing: Remember these 5 basic rules to file your ITR on time
Every year before July end, a taxpayer must communicate all her or his income earned from salary and other sources in a financial year to the I-T department.
The July 31, 2019 deadline is nearing for filing Income Tax Return (ITR) of fiscal year 2018-19. The Income Tax Department has already opened the window for filing ITR forms like ITR1, ITR2, ITR3, ITR4, ITR5, ITR6 and ITR7. ITR allows a taxpayer to carry -forward of loss and claim refund from income tax department. Not only that, by filing ITR you also reduce the burden of tax payments. Every year before July end, a taxpayer must communicate all their income earned from salary and other sources in a financial year to the department.
Talking about ITR filing, Archit Gupta, Founder & CEO ClearTax said, "Many of you must be collating the details of your income, navigating the various income tax returns and estimating your tax liabilities. The tax filing activity may seem tedious and time-consuming for many taxpayers. And the filing has to be done by the due date of 31 July 2019 for the FY 2018-19. Many people still find the tax filing process tedious and put off the task until the last minute."
Gupta lists outs few basic steps to facilitate your tax filing for the FY 2018-19:
1. Tax rules:
As a first step, you need to be aware of the changes in the tax rules that impact your tax liability for the current year
i.e. FY 2018-19. These are:
Introduction of flat standard deduction of Rs 40,000 against salary income in place of transport allowance of Rs. 19,200 and medical allowance of Rs 15,000 claimed by employees earlier.
A levy of health and education cess of 4% in place of education cess of 3%.
Rebate under section 87A is reduced to Rs 2,500 from Rs 5,000. The rebate is available for resident individuals whose total income does not exceed Rs 3,50,000.
A long term capital gains tax was introduced on the sale of equity shares, equity-oriented mutual funds or units of business trust on gains in excess of Rs 1 Lakh per financial year.
2. Aggregating income and TDS:
Taxpayers need to aggregate their incomes from various sources for tax purposes. Your income may consist of income from salary, rental income from any property, other sources such as interest on savings bank accounts and fixed deposits, capital gains on the sale of assets and income from
business or profession.
Taxpayers have to aggregate their income, their investments and their Tax Deducted at Source (TDS) accumulated for the FY 2018-19. This information will enable a taxpayer in calculating income and tax liabilities for the FY 2018-19.
It is important to note here that taxpayers should also verify the TDS details with their Form 26AS. Form 26AS is an aggregated TDS summary statement showing all tax deducted against your PAN for a financial year e.g., TDS on salary, TDS on interest from deposits. In case of any difference between the TDS amounts shown in Form 26AS and taxpayer’s TDS certificates/Form 16, the taxpayer should have it rectified from their employer, banker etc.
3. Choosing the ITR form:
After aggregating the income, taxes and investments, you need to choose the ITR form for filing the income tax return. For the AY 2019-20:
ITR-1 can be used by resident individual taxpayers who have total income up to Rs 50 Lakh. Such taxpayers can report income from salary, one house property and other sources.
Taxpayers who are ineligible to file ITR-1 can file ITR-2. Specifically, a taxpayer who is a director in a company, or who is holding unlisted equity shares cannot file ITR-1.
Taxpayers who have income from business profession can file using ITR-3 or ITR-4.
4. Filling up the ITR:
You can fill in the details of income from various sources in the ITR form applicable to you. From the gross total income aggregated from various sources, a taxpayer can claim deductions for certain eligible investments such as provident fund contribution, life insurance premiums, repayment of housing loans and payment of tuition fees for children.
You should also claim deduction/credit for TDS on your salary, interest income etc., against their tax payable. TDS is the tax the employer deducts on salary earned or banker deducts on your interest income. Taxpayers can claim credit for the TDS while filing their income tax return.
5. Verification of ITR and other key details:
The other key details to be disclosed include:
The number of days of stay in India and in the earlier years under the classification of resident/non-resident in India.
Mention and link Aadhaar number while filing the income tax return (ITR). Also, mention the bank accounts held by the taxpayer and the bank account for receiving refund if any.
Verification of income tax return uploaded. The return can be e-verified using Aadhaar etc or a printed copy of the acknowledgement sent to the Central Processing Center Bengaluru.
On following these 5 steps, Gupta says, "will ensure that you are ready for the returns filing activity. Also, taxpayers should keep all the documents that acknowledge the income, investments, deductions, and exemptions handy. This will expedite the process of filing."