Things to know: E-filing mandatory for income above 10 lakh
Although e-filing was introduced few years back, only small tax payers or salaried individuals were using it successfully. People had misconceptions that it's a cumbersome process and e-returns have more probability of picking up for scrutiny, which has cleared with experience. The process is now becoming the preferred mode for all class of income tax payers.
This year, filing Income Tax returns electronically, has been made mandatory for individuals/HUF earning more than Rs 10 lakh income. Along with this there are several changes in the tax filing rules some of which may have a significant impact on the information you disclose.
Here are few tips on e-filing of returns which will help readers:
1. How to do e-filing: One has various options when it comes to e-filing of returns. You can do it yourself by downloading the required ITR form from the website. The instruction manual along with form helps you in the process. Individuals who are salaried and do not have any other source of income will find this easier. Alternatively, there are portals like taxspanner.com, myitreturn.com and others that offer online filing of returns for a fee which varies based on the level of assistance you require. For example, if you are doing it yourself the fee can be as low as Rs 99 but if you require assistance to prepare your returns the fee may go up to Rs 600. Many chartered accountants also file ITR online on behalf of their clients for a fee which may not be a bad idea if he/she has been with you for long. The probabilities of errors are far less than manual filing.
2. Forms to be used: If you have income from salary, pension or rental income from property then ITR 1 (Sahaj) need to be filled up. For same class, ITR 2 will be applicable if there is rental income from more than one property or there is holding of any foreign assets. ITR3 is designed for partnership firms while ITR4 is to be used by taxpayers who have business/profession income or holding of some foreign assets. There is also ITR4S (Sugam) for business/profession income more than 8% of gross receipt but less than 60 lakh a year.
3. Bank Account Details Mandatory: When you are filing ITR online you are asked to provide your bank account details. This is a very important step, especially when you have refunds to claim as they can be directly credited to bank accounts now. Ensure that you fill up bank name, your account number and MICR code correctly to avoid any disappointment.
4. Send ITRV within 120 days: When you e-file your ITR by posting XML generated file on website, it generates ITRV which has to be sent to CPC Bangalore within 120 days of filing your returns. If not, you get repeated communication on your email-id or through SMS of ITRV not received. Resend it. Do remember that if you fail to send this, you might have to go through the process again.
5. File before the Deadline- Although there is a provision of filing your ITR up to 31st March of next year, taxpayers who file it before 31st July enjoys some privileges. The biggest advantage is that you can revise your returns n number of times only if you have filed it before the due date. So if you miss out any information or did some mistakes, you can always correct it. There are other provisions like carry forward of short or long term losses from stocks which is not allowed if filed after the deadline.
6. Note the Changes: Some changes have been made in filing tax returns this year. The most important is the declaration of any asset you own abroad. This will include bank accounts, immovable property, interest in any company and even authority to sign a bank account held abroad. Also, if you have claimed any relief on tax paid abroad it has to be declared with information on income, tax paid and TAN in that country. IT/ITeS professionals working on projects abroad will have to compulsory file their ITR online now even if they are not in the tax net. The other biggest change is declaration of percentage ownership in property which means if you are earning any income from the property it will get divided among joint owners. All these changes may be good but will result in confusion this financial year.
There is always a huge traffic on Income Tax Department e-filing website during the last day of the deadline. Although the date do get extended by 3-4 days every year due to this reason, it’s always beneficial to file your returns well before 31st July.
The author is a Certified Financial Planner and founder of JS Financial Advisors. You can reach him at firstname.lastname@example.org